NET ZERO: ACTION FROM BUSINESSES

Green Transition

At the end of 2021, at the 26th United Nations Climate Change Conference (COP 26), Prime Minister Pham Minh Chinh pledged to bring greenhouse gas emissions to 0 by 2050 (Net Zero). This commitment became a historic milestone, laying the groundwork for building a green and sustainable economy.

This commitment comes at a time when Vietnam is facing many challenges from climate change and environmental pollution. Considering the realities and future threats, the Vietnamese business community is increasingly urging action towards Net Zero.

Mr. Hoang Huu Thang, Chairman of the Board of Directors of Intech Energy Joint Stock Company, shared that nature is seriously affected by negative environmental impacts caused by humans. Intech Energy chooses to develop green energy with the dual goals of protecting the environment and promoting sustainable growth.

At Vietnam Dairy Products Joint Stock Company (Vinamilk, code VNM), after completing the plan to plant 1 million new trees, the company is implementing tree planting to offset carbon with the goal of reducing greenhouse gas emissions by 15% by 2027 and reducing and offsetting 55% of emissions by 2035. The company expects to plant 2 - 3 million trees in the next 5 years.

For many years, Loc Troi Group Joint Stock Company (code LTG), an agriculture-focused enterprise, has also been very focused on sustainable development. Mr. Nguyen Duy Thuan, General Director of Loc Troi, stated that by 2030, Vietnam is expected to generate 120 million tons of carbon emissions, with rice cultivation accounting for half of this emission. Loc Troi and farmers in the Mekong Delta, the largest rice bowl in the country, must take action to contribute to reducing greenhouse gas emissions. Currently, the Group is implementing rice cultivation on 2 million hectares, with 1 million farmers working in the company's agricultural management system.

The emission reduction plan of this agricultural group is based on three main activities, including improving bio-products, applying circular economy principles, and promoting green development. Loc Troi's goal is to generate 10 million carbon certificates in the Mekong Delta.

In the textile and garment industry, more and more businesses are aware of the importance of green production, producing environmentally friendly products to take advantage of export opportunities to "demanding" markets such as the United States, the European Union, etc.

Since 2017, Thanh Cong Textile Garment Investment Trading Joint Stock Company (TCM) has established the Research and Development Center (R&D), intensifying research, testing, and improvement activities to apply recycled and environmentally friendly materials in fabric production, such as sugarcane, corn, seaweed, plastic bottles, recycled clothing, and sustainable wood and paper-based recycled products.

Mr. Tran Nhu Tung, Chairman of the Board of Directors of TCM, said that sustainable development is the core value of the company. In production and business activities, the company always seeks solutions to minimize environmental impact.

Green transition opens up opportunities for businesses to effectively utilize export advantages. On July 5, 2023, the European Commission approved a proposal to amend the Waste Framework Directive with the goal of extended producer responsibility (EPR) for textile products in all EU member states. Manufacturers will have to bear the cost of managing textile waste, which will also encourage them to reduce waste and increase the circularity of textile products, designing better products from the outset. The amount that manufacturers will pay for the EPR program will be adjusted based on the environmental performance of textile products, a principle known as "ecological modulation."

To ensure that textile waste is properly managed within the waste hierarchy system specified in Directive 2008/98/EC, manufacturers must ensure that all textiles and footwear collected separately comply with classification activities for reuse, meeting the market demand for recycled textiles and global recycling in the EU.

To export goods to the EU market, textile businesses must comply with these regulations, promoting the development of a circular economy. Circular economy is shaped by the 3R principle (Reduce, Reuse, and Recycle) and should be applied throughout the production, consumption, and resource recovery cycles.

Opportunities from "Greening"

Sharing with Securities Investment Newspaper, Mr. Nguyen Van Quan, Chairman of the Board of Directors and CEO of Thagaco International Investment Joint Stock Company, said that green conversion is a matter of survival for businesses. So far, the company has proactively built smart and green factories, meeting standards for green and environmentally friendly products for export.

"If we do not change, do not green our production, we will lose orders from current customers and cannot reach new customers," Quan said.

Vietnam aspires to be the manufacturing center of the region, promoting exports while seeking large markets such as the United States, the European Union, and Japan. In these markets, consumers are very concerned about environmental issues and sustainable development. Even in the EU-Vietnam Free Trade Agreement (EVFTA), there are many provisions integrating environmental issues into the import regulations of goods.

Currently, global brands are racing to become green brands, and they also want their suppliers to become "green." The Chairman of Thagaco believes that greening has not had a significant impact on Vietnamese export businesses in 2023, but it will become a prerequisite for Vietnamese goods to export to developed markets worldwide.

Dr. Vo Tri Thanh, Director of the Brand and Competition Strategy Research Institute, stated that "greening" is an inevitable global trend that requires Vietnamese businesses to adapt. Recently, the global textile industry has demanded that if excess fabric or defective products are produced during the manufacturing process, they should not be allowed to be discarded but must be recycled.

The Vietnamese textile industry has lost orders to Bangladesh and may lose its position as the world's second-largest textile exporter in 2023, partly due to slow green conversion. This is a lesson for the textile industry and many others, as the green economy has never been emphasized as much as it is now.

"Green conversion" is not just a slogan; it has become a market imperative, requiring businesses to take stronger actions for good growth opportunities and contribute to realizing the Net Zero target by 2050.

Author: Hai Minh

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