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

VCN - Export businesses spend the most to invest in greening activities to target markets in developed countries, where environmental standards are higher and consumers are more aware of the environmental issue.
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Source: PCI and PGI 2023 report
Source: PCI and PGI 2023 report

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

But according to the report, currently, the cost of greening investment is quite low. On average, a business 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 businesses whose target markets are developed countries, where environmental standards are higher and consumers are more aware of environmental issues.

On average, exporting businesses spent 1.4% of total operating costs implementing green practices compared to 1% or less from non-exporting businesses.

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

Source: PCI and PGI 2023 report
Source: PCI and PGI 2023 report

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

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

Professor.Edmund Malesky suggested that the Government and international organizations 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 businesses 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 recommends that businesses will only be truly motivated to change their behavior (making large investments to convert to green production and business processes) if that behavior 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 businesses, forcing polluting businesses to take responsibility for their actions will contribute to actively reducing pollution and environmental degradation.

By Huong Diu/ Phuong Linh

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