“Why do manufacturers have to transition to green production?”

This was one of the first questions that representatives of many leading businesses discussed at the Vietnam Corporate Sustainability Forum 2023 on August 23.

The event was organised by the Vietnam Chamber of Commerce and Industry and the Vietnam Business Council for Sustainable Development.

Nguyen Trung Anh, director of Research and Sustainable Development at The Pan Group – a domestic agricultural company – said that the transfer to low-carbon production is driven by the need to meet stricter laws and regulations, and to respond to pressure from the market – especially in European countries.

“Vietnam has made a pledge to become carbon-neutral by 2050 and the corporate sector is being driven to join hands with the government in this regard. Agriculture accounts for 19 per cent of CO₂ emissions, and is second only to the energy sector. Thus, the transition is a compulsory requirement,” Trung Anh said.

“We export agricultural and fisheries products to 40 countries. The EU has strict carbon footprint regulations for production and also encourages thereduction of fishing quotas. For example, the supermarket chain Tesco in the UK has committed to disclosing the carbon footprint of all products on its shelves, including those that are imported."

"This adds pressure, but also motivation, for The Pan Group’s member companies such as Khang An and FMC, which specialises in exporting shrimp to the EU and is implementing a carbon footprint inventory,” he said.

The impact of green barriers also shows in the garment and textile industry. In recent months, Vietnam has lost orders to Bangladesh and may be stripped of the position of the second-largest exporter of apparel products in the world by the South Asian country due to its tardiness in the green transition.

Bangladesh has been quicker in greening its supply chains. Its requirements have been made clear, and this has improved its competitiveness and provided more opportunities to secure orders.

Although the green transition journey poses many challenges, businesses will gain significant benefits from this investment.

“When it comes to the low-carbon economy, we can save costs and emissions through the optimal use of water and materials. It enhances both branding and position when exporting to international markets,” Trung Anh said.

“We adopt a circular strategy, and are collecting about 7,500 tonnes of shrimp heads and skins from production. Instead of allowing this as a form of waste, we cooperate with other companies that can use our by-products for shrimp meal or animal feed. In this way, we generate more revenue and reduce waste,” he said.