Export enterprises are willing to spend more on "green practices" for responding to the market

Responding to the market, export enterprises are willing to spend more on "green practices"

Source: PCI and PGI 2023 report

According to survey results of domestic private enterprises and foreign-invested enterprises in the 2023 Provincial Green Index (PGI) report recently announced by the Vietnam Confederation of Commerce and Industry (VCCI), the level of investment spending to "greening" of an enterprise is expressed through the percentage of costs to carry out these activities out of the total operating costs. The larger the spending level, the more important the enterprise is interested in environmental protection compared to its other activities.

But according to the report, currently, the cost of greening investment is quite low. On average, a company spends about 1% of its total operating costs on green transformation.

Among them, the group that has spent the most to invest in greening activities is export enterprises whose target markets are developed countries, where environmental standards are higher and consumers are more aware about environmental issues.

On average, export enterprises spend 1.4% of total operating costs implementing green practices compared to 1% or less for non-exporting ones.

In addition, according to the PGI 2023 report, 61% of enterprises said that they had received support from local state agencies to guide them in applying local green practices. Quang Ninh was the province with the highest score with 86% of enterprises receiving support, while Ho Chi Minh City was only 34% - the place with the lowest survey data in this indicator.

Source: PCI and PGI 2023 report

In addition, the report also said that the national average budget expenditure was 0.7% of the total budget of each province, showing that environmental protection in localities had not been prioritized compared to 5% of budget expenditures for medical. But considering each locality, Da Nang was the city with the highest percentage of budget spending on environmental protection with 4.1% of the total local budget.

GS. Edmund Malesky, Research Director of the PGI Index Initiative Project, emphasized that greening the economy was a new content; Promoting the development of environmentally friendly industries and fields in each province was a new roadmap. Therefore, provinces still had to do much work and need support to transition to a green economy.

GS. Edmund Malesky suggested that the Government and international organizations should provide financial and technical support to provincial governments during the green transition process to overcome resource limitations. In addition, there needs to be market-based motivation and incentive mechanisms for enterprises to change their production and business models; Further promote guidance on the implementation of legal documents on environmental standards.

In addition, the PGI 2023 report recommended that enterprises would only have motivation to change their behaviour (making large investments to convert to green production and business processes) if that behaviour is highly appreciated and accepted by the market. Therefore, propaganda and communication programs to raise awareness of Vietnamese consumers about the importance of environmentally friendly production and business activities and encourage them to pay higher prices for products, services of green enterprises, force polluting enterprises to take responsibility for their actions would contribute to actively reducing pollution and environmental degradation.