(Dân trí) – Vietnamese companies need to choose an ESG reporting framework now to prepare for the IFRS Sustainability Standards in 2026, avoid fragmented investment, and meet investor expectations.
Starting this year, the sustainability disclosure standards issued by the International Sustainability Standards Board (ISSB) are expected to become a common foundation for global financial markets, particularly for listed companies and organizations with international financial links.
The two core standards are IFRS S1, which sets out general requirements for the disclosure of sustainability-related financial information, and IFRS S2, which establishes requirements for climate-related disclosures. Many countries are incorporating these standards into their official implementation roadmaps.
The IFRS Sustainability Disclosure Standards, expected to be widely adopted from 2026, are creating an urgent need for Vietnamese companies to select an appropriate ESG reporting framework now (Photo: Premium Times).
Notably, the ISSB standards have been officially endorsed by the International Organization of Securities Commissions (IOSCO), paving the way for their incorporation into the regulatory frameworks of major capital markets. This means that Vietnamese companies seeking access to international capital will increasingly face requirements to comply with more globally aligned ESG standards.
In Vietnam, although there is currently no requirement for immediate mandatory adoption, government regulators and stock exchanges are studying ESG implementation roadmaps aimed at greater alignment with international standards. Meanwhile, foreign institutional investors increasingly demand ESG disclosures that are comparable and verifiable, rather than relying on companies’ self-reported sustainability information as in the past.
One of the biggest challenges today is the proliferation of multiple standards and frameworks. Companies face a range of options, from the Global Reporting Initiative (GRI) and ISSB/IFRS Sustainability Standards to ESG rating systems developed by organizations such as MSCI, Sustainalytics, and CDP.
This fragmentation can lead to scattered investment and inconsistencies in disclosure strategies. Therefore, identifying the appropriate reporting framework from the outset and developing a focused implementation roadmap have become critical to optimizing resources and ensuring effectiveness.
EXPERT Q&A
Question:
As IFRS Sustainability Standards and ESG rating systems are increasingly adopted from 2026 onward, which reporting framework should Vietnamese companies choose to ensure compatibility with international capital markets?
Is there a practical two-to-three-year implementation roadmap that can help companies avoid fragmented investment while still meeting investors’ increasingly demanding expectations?
Dr. Bùi Thị Thanh Hương – Department of Climate Change and Sustainability Science, VNU School of Interdisciplinary Sciences and Arts, Vietnam National University, Hanoi:
The choice of an ESG reporting framework should be aligned with each company’s size, capital-raising strategy, and specific business characteristics rather than applying a single standard uniformly to all companies.
For listed companies or large enterprises, early adoption of the ISSB standards, including IFRS S1 and IFRS S2, can help ensure a high degree of compatibility with international capital markets while enabling companies to proactively prepare for mandatory reporting requirements that may be introduced in the near future.
For small and medium-sized enterprises (SMEs), a more practical approach is to begin with the Global Reporting Initiative (GRI) Standards. This reporting framework is highly flexible, relatively easy to implement, and involves lower compliance costs, while remaining widely accepted by international financial institutions and institutional investors during the initial capacity-building stage. GRI can also provide a suitable data foundation for transitioning to ISSB standards as the company grows and market requirements become more demanding.
Dr. Bùi Thị Thanh Hương (Photo: provided by the interviewee).
How Should Vietnamese Companies Begin Their ESG Journey to Avoid a Mere “Box-Ticking” Approach?
Regarding the implementation roadmap, the first year should focus on three core priorities: (1) conducting a double materiality assessment to identify ESG issues with material financial and non-financial impacts on the business; (2) establishing an internal ESG data collection and management system; and (3) building the capacity of the team responsible for ESG. These are essential foundations that enable companies to clearly define what needs to be measured instead of collecting excessive and unfocused data.
In the second year, companies can publish their first ESG report using the core GRI Standards or the ISSB disclosure framework, while integrating ESG disclosures into their annual reports. This integrated approach can improve transparency while avoiding the significant additional costs associated with producing a standalone ESG report at an early stage.
By the third year, once the data system and reporting processes have been tested over two reporting cycles, companies should move toward independent assurance of their ESG reports. At the same time, they should assess whether to transition to full ISSB compliance if required by stock exchanges, institutional investors, or international business partners.
This three-stage roadmap enables companies to proceed step by step with clearly defined priorities, control compliance costs, and simultaneously build sustainable internal capabilities to meet the increasingly demanding expectations of capital markets and global supply chains.
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 designed to promote green behavior, support environmental protection, and apply technology to environmental education and sustainable development.
Many 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.