(Dân trí) – Facing mounting pressure from international audits, Vietnamese businesses are being compelled to standardize the “S” in ESG. The challenge is to ensure transparency and verifiability while keeping costs under control, particularly for SMEs.
Alongside environmental standards, the “Social” dimension of ESG is becoming a prerequisite for participation in global supply chains, particularly in the textile and garment and agricultural sectors—two industries that are labor-intensive and heavily dependent on export markets.
International buyers increasingly require businesses to pass rigorous independent social audits before signing contracts or maintaining existing orders.
Standards and audit frameworks such as SA8000 (Social Accountability International), BSCI (Business Social Compliance Initiative), and SMETA (Sedex Members Ethical Trade Audit) are gradually becoming essential “passports” for maintaining export contracts.
Businesses that fail to meet these requirements risk being removed from approved supplier lists, losing orders, or incurring higher audit costs due to poor compliance risk ratings.
Growing pressure from international social audits is forcing Vietnamese businesses to standardize the “S” (Social) dimension of ESG (Photo: Greenly).
In Vietnam, this pressure is particularly evident as the EU and the United States continue to tighten labor standards associated with free trade agreements (FTAs). At the same time, the International Labour Organization (ILO) is promoting the standardization of working conditions, occupational safety and health (OSH), and workers’ freedom of association in accordance with core international conventions.
However, the biggest obstacle for SMEs is not a “lack of willingness to comply,” but rather the absence of structured labor-management systems and concerns that initial compliance costs may exceed their financial capacity.
In practice, many requirements under the Social dimension can be implemented through a lean approach by leveraging digital technologies and international technical assistance programs to reduce financial pressure during the initial stages.
EXPERT Q&A
Question:
How should Vietnamese textile, garment, and agricultural businesses develop systems to manage the Social dimension of ESG in order to meet international social audit requirements? How can they measure and demonstrate labor compliance transparently without incurring costs beyond the financial capacity of SMEs?
Dr. Bùi Thị Thanh Hương – Department of Climate Change and Sustainability Science, VNU School of Interdisciplinary Sciences and Arts, Vietnam National University, Hanoi
To meet international social audit requirements, businesses need to build a transparent labor-management foundation starting with the most fundamental elements, rather than pursuing certifications merely for the sake of appearances. The key is not simply to “obtain certification,” but to develop the capacity to consistently demonstrate compliance through verifiable data and processes across multiple audit cycles.
First, businesses need to ensure that all employees have clear written employment contracts, supported by a digitized payroll system with complete historical records. This documentation is essential for demonstrating the absence of forced labor and child labor—two of the most sensitive criteria and among the highest-priority areas examined under SA8000, BSCI, and SMETA.
At the same time, a safe working environment should be established systematically in accordance with OSH standards. This includes conducting periodic occupational risk assessments, providing appropriate personal protective equipment (PPE) for each job position, and establishing procedures for reporting and monitoring workplace incidents.
Any occupational accidents that occur must be recorded, investigated to determine their causes, and properly documented in accordance with ILO requirements to ensure transparency and traceability during audits.
One element that is often overlooked, yet highly valued by auditors, is an internal grievance and feedback mechanism. Businesses should establish anonymous channels for employees to raise concerns, such as hotlines or employee welfare suggestion boxes, ensuring that workers can report violations without fear of retaliation.
The existence of such a mechanism provides direct evidence that the business has a proactive labor-management system rather than merely responding passively to compliance requirements.
Dr. Bùi Thị Thanh Hương – an expert in environmental communication and sustainable development (Photo: provided by the interviewee).
Regarding compliance costs, SMEs can adopt a lean approach by using low-cost digital platforms to collect and manage labor-related data.
Tools such as online forms—including Google Forms and KoboToolbox—as well as open-source human resource management software enable businesses to digitize employment records and create digital audit trails without requiring major investments in technological infrastructure.
In addition, participating in technical assistance programs provided by organizations such as the International Finance Corporation (IFC), the German Agency for International Cooperation (GIZ), or industry-specific initiatives such as Better Work—the ILO-IFC partnership program specifically designed for the garment industry—can help SMEs gain access to training, compliance advisory services, and audit support at significantly subsidized costs.
By effectively leveraging these support resources, SMEs can develop labor-management systems that meet international standards without creating excessive financial pressure during the initial stages of implementation.
About Dr. Bùi Thị Thanh Hương
Dr. Bùi Thị Thanh Hương is an expert in environmental education and communication and sustainable development, with more than 21 years of research and teaching experience at Vietnam National University, Hanoi.
She is the founder of VNU Greentech Spin-off and has authored more than 40 scientific publications, as well as developing numerous copyrighted software solutions. Her major research interests focus on ESG, particularly the Environmental (E) and Social (S) dimensions, with practical applications including smart waste bins, organic waste treatment, and the VNNETZERO carbon accumulation platform.
She also develops technological solutions aimed at promoting green behavior and environmental protection, as well as applying technology to environmental education and sustainable development.
Several of her projects have been recognized as intellectual property and implemented in communities. Notable examples include Smart Refill, 3SR, NPI – a school noise warning system, VNNETZERO, and Ecoschool. She is currently pursuing research on the circular economy based on smart waste-resource management, with the goal of contributing to a more sustainable living environment.