VNCG50 promotes best corporate governance practices

As an experienced partner in evaluating corporate governance for both the Listed Companies Voting and ASEAN Corporate Governance Scorecard (ACGS) over several years, Vietnam Institute of Directors (VIOD) has initiated the creation of the VNCG50 Scorecard, which has been supported by the State Securities Commission of Vietnam and the Vietnam Exchange.

The VNCG50 scorecard is based on the evaluation indicators of ACGS, following best practices, while also considering the corporate governance realities in Vietnam.

Phan Le Thanh Long, CEO of the VIOD, emphasised that in the context of Vietnam’s weak corporate governance foundation, it is necessary to develop a corporate governance criteria to improve and align with the average corporate governance score in Southeast Asia. This is a crucial foundation for building the VNCG50 index and advancing the strategic goal of developing Vietnam's stock market.

“This criteria evaluates corporate governance practices for listed companies, mainly based on regional best practices, and identifies 50 leading Vietnamese companies committed to ensuring good corporate governance practices,” he said.

“The VNCG50 scorecard aims to help listed companies in Vietnam improve their corporate governance practices according to the stock market development strategy for 2030. This will help bridge the corporate governance gap between Vietnam and Southeast Asia, raise the ACGS score to the regional average, improve the quality of market assets, enhance transparency, and attract investors.”

Phan Le Thanh Long, CEO of VIOD. Photo: Dung Minh

Explaining why the number 50 was chosen for the VNCG50, VIOD's CEO stated that according to regulations, Vietnam needs to select 100 companies for ACGS evaluation. However, only 69 companies were chosen this year due to the requirement for companies to publish information, especially annual reports in English. Not all companies met this requirement, and even those that did, often had low governance quality. Including such companies would lower Vietnam’s average score.

“On the other hand, selecting fewer than 50 companies for the VNCG scorecard would not be sufficient to raise Vietnam’s ACGS score to the ASEAN average. After analysing the data and ACGS evaluation results, the VNCG council agreed to choose 50,” Long said.

He emphasised that improving corporate governance is crucial not only for attracting international investment funds but also for creating a sustainable foundation for the Vietnamese stock market, especially as Vietnam strives to upgrade from a frontier market to an emerging market.

“This year, the VNCG50 is announced as an initiative and will be upgraded to the VNCG50 index in the 2025-2026 period. This index will become a reference for investment activities, and companies listed on it will benefit greatly as they attract investment funds,” Long added.

Emphasising the significance of governance-focused indices, Nguyen Khac Hai, managing director of Legal and Compliance at SSI Securities Corporation, highlighted that the market was increasingly shifting towards the development of governance-based indices driven by growing investor demand.

“Vietnam’s financial landscape is shaped by various factors, with liquidity and network strength of individual stocks within indices being among the most critical. However, beyond traditional financial metrics, indices like the VNSI, a sustainability index developed collaboratively by the domestic stock exchange, and the State Securities Commission, highlight the growing importance of governance-linked metrics.”

This stems from both institutional and retail investors, especially as institutional funds often pool resources from diverse investors.

Nguyen Khac Hai, managing director of Legal and Compliance at SSI Securities Corporation. Photo: Dung Minh

“SSI, as a key capital connector with its investment banking arm, has worked extensively with foreign investors. Their experience reveals a clear trend that beyond financial metrics, ESG and corporate governance are becoming essential considerations. While ESG and corporate governance may seem distinct, they are deeply interconnected. Companies with strong governance practices inherently enhance long-term sustainability and performance,” Hai said.

Good corporate governance, manifested through a strong board, competent leadership, and transparent disclosures, ultimately leads to better business results. These practices contribute not only to financial efficiency but also to broader social impacts for Vietnam’s listed companies, embracing such principles is vital.

“The VNCG50 initiative and its future governance index aim to elevate corporate governance standards. By helping listed companies achieve these benchmarks, we can attract greater investment, indirectly benefiting the funds these investors represent,” Hai said. “This dual focus on governance and sustainability is key to positioning Vietnam as an attractive destination for responsible and growth-oriented investments.”

Ha Thu Thanh, chairwoman of the board at the Vietnam Institute of Directors (VIOD). Photo: Dung Minh

Vietnam currently has over 70 enterprises producing financial reports in English, but few meet the governance standards required to compete among ASEAN’s top 100.

“To address this, the initial goal is to establish a group of 50 Vietnamese enterprises that achieve international governance benchmarks. This top 50 will serve as trailblazers, exemplifying the commitment to improved governance and transparency, while inspiring others to follow suit,” said Ha Thu Thanh, chairwoman of the board at the VIOD.

“The VNCG50 initiative prioritises governance over financial metrics, positioning corporate governance as the foundation for sustainable growth. By adopting these standards, Vietnamese enterprises can not only access international funding more effectively but also enhance their competitiveness in the ASEAN region, paving the way for long-term success.”

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