"Going green" has become an essential requirement and a new rule of the game in both domestic and international markets. The "green passport" has helped businesses overcome barriers and has been an advantage for them to expand their market share.
Mandatory direction
Nguyen Ngoc Hoa, Chairman of the HCM City Union of Business Association (HUBA), stated that in the domestic market, the demand for green products, a safe living environment, and nature conservation was receiving increasing attention from society. Furthermore, in an export-oriented economy like Vietnam, the green transformation of businesses is considered essential for their survival. Most recently, the European Union (EU) announced that starting from October 1, 2023, the EU would implement the Carbon Border Adjustment Mechanism (CBAM) during the transition period. This is a policy tool of the EU designed to tax carbon on all goods imported into the EU market based on greenhouse gas emission intensity in the export country's production process.
According to Hoa, while most businesses are experiencing a significant decline in orders or no orders due to common difficulties, a survey by the HUBA showed that businesses implementing good environmental protection and green production practices had abundant orders. Some businesses cannot accept additional orders because they already operate at maximum capacity. This demonstrates that the "green passport" helps businesses overcome barriers and is an advantage for them to expand their export market share while enhancing their ability to supply products and goods to the domestic market.
For example, Trung Quy Garment Company invested over VND270 billion in a 10,000-square-meter factory in Duc Hoa district, Long An province. This allowed them to move towards green production quickly. In the dyeing and weaving stage, the company can save 60-70% of water compared to the old technology, ensuring a closed production process and supplying quality, internationally standard fabric to domestic apparel businesses, with an annual capacity of two million meters of fabric.
Tran Van Quy, CEO of Trung Quy Garment Company, said they recently exported two containers of organic fiber-originated fabric to their US partner. This is the first shipment after the company took advantage of the opportunity to invest in a new factory with machinery and equipment based on German and Italian technology five years ago and transitioned to green production in late 2022. As a result, all machinery and equipment at Trung Quy are labelled "green."
Similarly, Tran Hiep Thanh Textile JSC is committed to reducing CO2 emissions as part of its green transformation. To achieve this, the company identified emission sources such as boilers, gas, and electrical equipment, then reduced coal usage, replacing it with tree bark while controlling energy consumption. The CO2 reduction roadmap required the company to invest in changing machinery and equipment and finding more natural raw materials. However, due to cost control mechanisms, this also enabled the company to use 80% green fuel and 30-35% recycled materials.
According to Nguyen Dang Hien, CEO of Bidrico Manufacturing and Trading Company and vice Chairman of the HCM City Food Association, consumers are increasingly emphasizing personal health and environmental sustainability when choosing food, such as products from plants and organic products. Therefore, food companies need to focus on sustainability, especially by making changes to meet requirements for waste and energy.
"In 2022, thanks to the green production process, Bibrico's export revenue increased by more than 60% compared to the plan. This year, the 'green' factor has become a significant advantage for the company in successfully negotiating outsourcing contracts," said Hien.
Many challenges to overcome
Hoa believed it is not easy to choose a green development direction suitable for Vietnam's internal strength and meets the green standards applied by international markets. Each business will face significant pressures in terms of finance, technology, and market when transitioning to green practices.
A survey conducted by the HUBA with its member companies showed that businesses that could not meet the green barriers struggle to access orders. Conversely, those units that excel in environmental protection often could not accept additional orders due to being already at full production capacity. This paradox is causing difficulties for many domestic businesses.
Mac Van Hoang, Director of Song King Garment JSC, stated that green raw materials typically cost over 300% more than traditional materials. Consequently, the products they bring to the market face significant price competition, which poses challenges for Vietnamese businesses. Additionally, for some companies that haven't made prior preparations, transitioning to green practices from the start in the current stage can be very challenging. Green certification is not just about the environment; it depends on 50 other criteria, such as human resources and management systems.
Therefore, a circular economy model plays a crucial role in the sustainable green development of businesses. This model needs to be considered throughout the value chain, from production and sourcing materials to consumption, and it needs to be reinforced, especially as the export situation for the last six months of the year is very unpredictable.
As part of the 4th HCM City Economic Forum in 2023, scheduled for September 15, 2023, the People's Committee of HCM City will honor and award the title "Green Business of Ho Chi Minh City in 2023" to support businesses in approaching global green standards. This initiative encourages proactive and positive green transformations, creating widespread effects within the business community for sustainable development and successful international integration.
Source: VCN
Keywords: green, production, exports, stock market, greening
