The Board of Directors is the body with ultimate responsibility for setting a company's strategic direction and overseeing its risks, and is therefore also ultimately accountable for ESG. Investors and reporting standards such as GRI 2 and IFRS S2 all require clear disclosure of the Board's role in overseeing sustainability matters.
Key takeaways
- The Law on Enterprises 2020, Decree 155/2020/ND-CP detailing the Law on Securities, and the Corporate Governance Code of Best Practices are the main reference framework.
- Good practice: clear allocation of ESG responsibilities, Board competence, linking ESG to remuneration, approving reports.
- The Board is the last line of defence against greenwashing.
The reference framework in Vietnam
The Law on Enterprises 2020 sets out the rights and obligations of the Board of Directors. For public companies, Decree 155/2020/ND-CP provides guidance on corporate governance. The Vietnam Corporate Governance Code of Best Practices for public companies (2019) recommends that Boards take environmental and social issues into account in strategy.
Six good ESG governance practices
1. Allocate responsibilities clearly
Designate a Board member or committee responsible for sustainability; set out how often the Executive Board reports.
2. Strengthen Board competence
Provide regular training on climate risk and reporting standards; consider members with sustainability expertise.
3. Integrate ESG into strategy and risk
Add climate, supply chain and data security risks to the enterprise risk register (see climate risk management).
4. Link ESG to remuneration
Tie part of executive remuneration to measurable, verified ESG targets.
5. Approve and take responsibility for reporting
The Board reviews and approves the sustainability report and requires evidence for significant claims.
6. Ethics and integrity
Oversee the compliance programme, anti-corruption efforts and the whistleblowing channel.
Disclosure under GRI 2
GRI 2 (General Disclosures 2021) includes disclosures on governance structure, the role of the highest governance body in overseeing impacts and sustainability reporting, and remuneration policies. These are also the core topics of the Governance pillar in an ESG rating.
Frequently asked questions
Is it mandatory to set up a sustainability committee?
It is not required by law; it is good practice, especially for large companies and sectors with significant environmental and social impacts.
How often should the Board discuss ESG?
Good practice is to receive an ESG progress report at least every quarter and to review strategy, targets and the sustainability report annually.
What role do independent directors play in ESG?
Independent directors help ensure an objective perspective, balance stakeholder interests and increase the credibility of oversight.
VietESG — Independent ESG rating organisation. Ratings based on disclosed data, supporting evidence and a public methodology aligned with GRI and the SDGs.
