The default encoding is the one specified creating the Buffer (see Buffer.constructor)
Buffer.encoding read/write property
The Buffer.encoding property get or set the encoding to be used when converting the Buffer to a string
Example
-- init a Buffer with the unicode string "Héllo"
local buff = sys.Buffer("Héllo", "unicode")
-- prints the buffer as a string using "unicode" encoding
print(buff.encoding, "=>", buff)
-- change buffer encoding to "utf8"
buff.encoding = "utf8"
-- prints the buffer as a string using "utf8" encoding
print(buff.encoding, "=>", buff)