ESG Global Vision

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Environmental law

In force

Businesses generally in Vietnam

The Environmental Protection Law sets out requirements on climate change adaptation and mitigation, and environmental protection.

It also sets out requirements for companies operating in specific high-risk sectors to prepare environmental impact assessments and report periodically to the to the Ministry of Natural Resources and Environment.

A replacement Environmental Protection Law was passed in 2020 which will, in particular, align relevant provisions more closely with the Paris Agreement taking into account national policies set out above, and is to come into effect as of January 2022.

Environmental decree

Planned

Producers/importers/local government

The Vietnamese Government has released a draft decree mandating that producers and importers of products do one of the following:

• Recycle or arrange for the recycling of products according to the mandatory recycling rate and specifications
• Make a financial contribution to the Vietnam Environmental Fund

The following categories are affected:

• Electronics
• Batteries
• Oils and greases
• Inner Tubes and tires
• Vehicles, Motorbikes and Heavy Equipment.

Social law

In force

Employers and employees generally in Vietnam

The Labour Code contains generally applicable provisions of employment law in Vietnam, which include principles of non-discrimination, as well as protection of vulnerable persons, and restrictions on employing minors.

Financial and non-financial reporting

In force

Public companies in Vietnam

Circular 96/2020 requires public companies to provide annual ESG disclosures in a statutory form. The requirements are brief relative to the EU Non-Financial Reporting Directive.

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.