With that, Vietnam’s key commodity export markets have been preparing for specific regulations on sustainable production associated with environmental protection. The country must participate with commitment and effort equal to the government’s strong pledges made in the last few years.

Therefore, Vietnam is building a comprehensive national green transition strategy led by the government, with close coordination between ministries, sectors, local authorities, and both public and private sectors.

Specifically, the carbon market development roadmap in Vietnam has been prepared since 2021, will be established and piloted operation of carbon credit exchange in 2025, and will officially operate in 2028.

Pham Thi Ngoc Thuy, director, Private Sector Development Committee Office

Meanwhile, customers are increasingly mindful of the environmental impacts of their consumption behaviours. Studies in recent years said they are willing to spend more on sustainable goods; and Google searches related to sustainable goods such as energy-efficient appliances and building materials have increased on a massive scale in the past decade.

The green transition and net-zero are the new investment trends now. The World Bank estimates about $368 billion of additional investment is required by Vietnam by 2040 to pursue a development pathway that combines resilience and net-zero emissions. In addition, the green economy will reach $300 billion in total national GDP by 2050 under the National Strategy on Green Growth; and total investment capital for developing power generation and transmission grids in 2021-2030 will be $134.7 billion.

Our survey on business readiness for decarbonisation and the green transition released in October, conducted on nearly 2,750 businesses, has revealed the readiness of Vietnamese companies.

Some 64 per cent of businesses surveyed have not yet prepared for emissions reduction or the green transition, and only 5.5 per cent have actively reduced emissions in critical activities. Just 3.8 per cent have been tracking and publicly reporting their annual emissions reductions.

Pressures or drivers for decarbonisation and green transition often come from optimised business performance (52 per cent of respondents), partners or customers in international or national production chains (37 per cent), national regulations (34 per cent), and regulations of export markets (33 per cent).

Sustainability is embedded in strategy, goals, and business models across the entire business. Climate and environmental, social, and governance (ESG) risks and opportunities are seen as drivers of business transformation and value creation. There should be a chief ESG officer for the business, sustainable development managed by the board of directors, and remuneration linked to sustainability performance.

For research and development, sustainability factors are taken into consideration in the product development process. Businesses open cooperation with strategic partners across industries, while pioneering businesses with high ESG ratings contribute to future development and innovation across the industry.

Some initial solutions have been proposed, such as compliance with national and global regulations on green transition, and enhanced cooperation with organisations or consulting firms on engineering, tech, and transformation. Initiatives for the green transition in businesses are being promoted such as energy transition, optimisation of production and operation, and the circular economy.

First mover advantage includes enhancing green branding; risk management related to fluctuations in supply, demand, and policy shifts; and cost optimisation (save energy, cut operating costs, reduce water waste, save input materials, optimise supply chains, and identify potential areas for designing eco-product categories).

To accelerate the green transition in Vietnam, the committee has raised some policy recommendations and related issues. The regulatory framework should be reviewed to remove barriers to the transition process. Vietnam should early issue new legal frameworks as a foundation for green transition like green credits, mandatory and voluntary carbon markets, and green taxonomy.

The carbon credit market needs to be operational soon. In addition to legal and infrastructure preparation, it is necessary to focus on the readiness level of the market participants.

Capacity building for businesses and stakeholders should be strengthened by periodically implementing programmes to disseminate policies to businesses, and localities and build capacity, especially pioneering businesses in key industries and sectors.

Finally, supporting businesses are needed in reducing the cost of implementing a green transition through initial tax and credit incentives or forms of support for market links, technology transfer, and models.