Legal and Institutional Reform of Financial Markets for Sustainable Growth in Vietnam: Insights from the European Union

Abstract

Sustainable finance has become an essential pillar of economic governance as countries seek to align capital allocation with long-term environmental and social objectives. Yet substantial differences remain between advanced regulatory systems and those of emerging economies, creating uneven pathways toward sustainability. This study examines these differences through a comparative institutional lens. The research aims to evaluate how Vietnam can strengthen its financial market institutions for sustainable growth and determine which components of the European Union’s (EU) sustainable finance framework can be adapted effectively. A qualitative case study approach is applied, drawing on documentary analysis of regulatory texts, policy reports, and peer-reviewed literature, supported by a comparative method. The results show that the EU has established a deeply integrated regulatory ecosystem centred on mandatory sustainability disclosures, a detailed taxonomy, robust supervisory coordination, and digitalized data infrastructures. In contrast, Vietnam’s system remains fragmented, with voluntary reporting, limited verification processes, and constrained institutional capacity. Nonetheless, several opportunities emerge: phased development of a national taxonomy, standardized ESG templates, cross-ministerial supervisory coordination, accredited verification mechanisms, and gradual digitalization of sustainability data. These measures could enhance transparency, strengthen investor confidence, and support more efficient capital allocation. The study concludes that selective, context-sensitive adaptation of EU practices – combined with capacity building and strategic policy sequencing – offers a viable pathway for Vietnam to accelerate its transition toward a credible and resilient sustainable finance system.