Raising ESG reporting standards must align with a company's business strategy

Raising ESG reporting standards must align with a company’s business strategy. To fulfill sustainable development responsibilities, a company needs to identify material issues and connect them to a concrete business strategy, then show that ESG implementation has been integrated and executed properly.

Current state of ESG reporting

At the kickoff conference of the 2026 Listed Companies Award at the Ho Chi Minh City Stock Exchange (HOSE) on the morning of 10 April, experts discussed the current state of ESG reporting.

For financial groups, ESG has been integrated into governance. Many credit institutions have established committees under the board, turning ESG from a commitment into a governance mechanism. They have also published specifics on green finance and inclusive finance, and figures on green debt and green bonds are beginning to be disclosed more concretely. Many entities are adopting new international standards beyond GRI, including approaches toward TCFD and ICMA.

For non-financial groups, experts described a polarization into three groups. The Pioneers have catalogued Scope 1 and 2 emissions and are starting to reach Scope 3, treating emissions data as a strategic asset. The second group is Compliance, producing reports at a “just enough” level—formally—without specific quantitative targets. The remaining group is the Delayed group, considered the most risky due to a lack of standardized data, which can lead to exclusion from global supply chains.

A positive signal noted by experts is the shift from ESG reporting toward value creation. Enterprises are also increasingly linking environmental and social responsibilities to local communities.

Key gaps and limitations

Despite progress, ESG activities in both financial and non-financial groups require improvement. Experts cited examples including over-reliance on GRI, limited use of industry-specific standards such as SASB, and insufficient coverage of climate risk under TCFD. Enterprises have not yet transitioned to IFRS S1 and S2 to assess environmental and social impacts alongside the company’s finances.

Double materiality assessment remains weak. Most reports do not address the two-way impact between the enterprise and the environment/society.

Scope 3 disclosure is also very limited. In the financial sector, most measurements are indirect emissions (such as paper usage and travel) and do not quantify financed emissions, which account for up to 99.5% of banks’ total emissions. In non-financial groups, Scope 3 remains the area with the most risk and opportunity, but emissions in the supply chain and product lifecycle are still not controlled.

Need for alignment with business strategy

According to Mr. Ton Thất Hạc Minh, representative of the Sustainable Development Award Selection Council, ESG must be aligned with the enterprise’s business direction. An ESG report should demonstrate organizational capacity by identifying material issues, tying them to a concrete business strategy, and showing ESG integration and proper execution, with results reflected in the report.

Defining purpose, scope, subjects and standards

Within the same framework, Ms. Le Hoàng Anh, Head of Internal Control, Sustainable Development and Standards at Vinamilk, shared practical experience on implementing ESG.

Vinamilk said ESG pressure is rising rapidly. Decree 96/2023 requires enterprises to publish ESG reports from 2026. In fundraising, ESG has become a prerequisite for investors. The EU CBAM and CSRD are also expected to affect value chains in export activities.

From a practitioner’s perspective, challenges include not knowing where to start amid the “maze” of ESG standards, dispersed data, lack of systems, and limited resources. Practitioners must address many criteria, while the value created is not always clear.

One important step in ESG reporting is to determine purpose, scope, objects, and appropriate standards. Ms. Trang noted that instead of asking “How to do ESG reporting?”, practitioners should ask “Where does our organization stand relative to the ESG standard we are aiming for?” This helps define the report’s purpose and audience—such as customers, investors, and export partners—and then select suitable standards.

Experts also emphasized identifying material aspects to avoid getting lost in hundreds of ESG indicators. Material aspects help connect ESG to business strategy and long-term corporate risk. For Vinamilk, identifying material aspects involved surveying stakeholders about the importance of different aspects and ranking priorities accordingly.

Five steps to start ESG

Ms. Trang outlined five steps to begin ESG in a company:

• ESG starts with leadership.
• Choose a standard first and follow through.
• Identify material aspects before collecting data.
• Build the team and processes early.
• Ensure report integrity: fewer indicators with strong evidence are more effective than many indicators without verification.

Avoid greenwashing and ensure integration

At the same time, ESG implementation should avoid greenwashing, copying others’ models, or using indicators without proper context. Experts also cautioned against assigning ESG to a single person or department without linking it to operations and other departments, and noted that companies should not wait for a perfect system before starting ESG.