Vietnam is intensifying its ESG regulations, which can affect corporate compliance, financing, and foreign direct investment. The country aims to comply with its commitment made during COP26 in Glasgow to become net zero emission by 2050. For companies planning to expand into Vietnam, or for already established enterprises, staying updated on these rules is essential to manage compliance, expectations, and long-term strategy.

Here is a breakdown on what is already operative on environmental law & implemented decrees:

• Decree 08/2022 is the legal foundation of the laws on environmental protection for Vietnam. It lays out the groundwork regarding green credits and green bonds, which are key sustainable financing structures for enterprises aiming to establish in Vietnam.

• National GHG mitigation framework. Decree 06/2022/ND-CP sets the national system for greenhouse-gas inventories and the roadmap for Vietnam's domestic carbon market. Companies in listed sectors such as energy, agriculture,land and forestry use should comply by monitoring, reporting, and verifying with their internal audit and internal control over financial reporting frameworks to ensure the assurance-quality data.

However, new regulations and amendments have been implemented, starting this year:

On 9 June 2025, the Government issued Decree 119/2025/ND-CP (which has started to be effective on 1 August 2025) to establish a national carbon registry, rules for allocating emission allowances, borrowing, transfer, and the use of carbon credits or offsets. For the next two years, the industries' emitters, especially in thermal power, cement, and steel, will begin under the pilot allocation, with a cap on offset use (up to 30% as communicated by officials).

The country has entered its pilot phases regarding the Emission Trading System or ETS, under Decree 06/2022 and Decision 232/QĐ-TTg. This should be cut into three different period of time in order to gradually implement the ETS system into Vietnam’s regulation, strategy, and commitment on carbon emission reduction. The implementation should respect the three following pilot phases:

Phase 1 (2025-2026): This first phase should be dedicated to the launch of the system, covering areas and industries of about 150 companies (mainly in steel, cement…) which will represent around 40% of the national emissions. This first trial, free of charge, will aim to build a first overview of the system in Vietnam, offsets will be authorized up to 30% of the company's emission, and quotas will be allocated for the first year on the basis of historical data of emissions.

Phase 2 (2027-2028): Vietnam will mostly go through the intensification of the system, and extend to other facilities or companies.

Phase 3 (2029 -): Vietnam believes that by 2029, it will be able to reach a full implementation of its trading system, allowing the introduction of auctioning mechanisms, alongside the extension to other sectors, mostly on transportation and commercial buildings. The compliance will then become mandatory to respect new environmental regulations, with the possibility of purchasing allowances of exceeding quotas. The mid cap of these phases is set to 2030, reaching 43.5% below BAU levels. 

Vietnam's regulatory updates from ESG disclosures under Circular 96/2020 to emission quotas in Decree 06/2022 and Decree 119/2025, and the new green taxonomy in Decision 21/2025 demonstrate a shift toward sustainable growth. For companies in tax, accounting, financial audit, internal audit, and FDI, this means compliance costs may rise, but so will opportunities for sustainable investment. Understanding these frameworks is fundmanetal to mitigate risks and recognize Vietnam's continuing growth potential.

PHC Advisory is a company of  DP Group: an international professional services conglomerate of companies with approximately 100 experienced professionals worldwide. We offer comprehensive services in tax, accounting, and financial consulting, including financial supervision, financial audit, internal audit, internal control over financial reporting, and support for audited financial statements and annual audits, ensuring clients' financial transparency and compliance. 

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The content of this article is provided for informational purposes only, financial advice must be tailored to the specific circumstances on a case-by-case basis, and the contents of this article do not legally bind PHC Advisory with the reader in any way. 

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