Legal and Institutional Reform of Financial Markets for Sustainable Growth in Vietnam

Insights from the European Union

Abstract

Sustainable finance focuses on long-term, socially responsible, and environmentally conscious investment and resource allocation, and has accordingly become a vital component of economic governance. Sustainability, however, progresses at different rates in less developed and advanced economies because of differing levels of regulatory development and infrastructure. Using a comparative institutional approach, this research identifies gaps in sustainable finance across advanced economies and positions Vietnam among these gaps. It also makes recommendations about sustainable growth and finance for the Vietnamese context. Finally, it analyzes the EU sustainable finance framework to identify potentially relevant components. The study employs qualitative case study methods and relies on a comprehensive and systematic documentary analysis of regulations and policies as well as of peer-reviewed literature. Results show that the EU has a regulatory framework with mandatory sustainability disclosures, detailed taxonomies, and sophisticated supervisory and data infrastructures. Vietnam’s framework, by contrast, lacks formal structure, and its sustainability disclosures are voluntary and minimally substantiated. Nevertheless, opportunities exist in the phased construction of a national taxonomy, ESG reporting, supervisory collaboration, verification frameworks, and the digital infrastructure to support sustainability data. These initiatives are likely to improve transparency, strengthen the confidence and trust of the investment community, and optimize resource allocation. The author believes the most promising solution is to combine selective practices from the EU, strategic policy sequencing, and capacity building in Vietnam.

KEYWORDS: Capital allocation, legal instruments, regulatory governance, sustainable finance, securities law.