Businesses Flexibly Adapt to Climate Change

9:10:39 AM | 9/22/2020

Businesses play an important role in socioeconomic development and have become important actors to cope with natural disasters and climate change.

Negative impact on businesses

Vietnam is among the 10 countries most vulnerable to climate change. Speaking at an workshop that published the Report “Adapting to Succeed - Assessing the Impact of Climate Change on Vietnamese Businesses” released by the Vietnam Chamber of Commerce and Industry (VCCI) in cooperation with the Asia Foundation and the support of the UPS Foundation affiliated to UPS, an American multinational package delivery and supply chain management company, Dr. Vu Tien Loc, President of VCCI, affirmed that disaster risks and climate change are global challenges which affect every aspect of social life, from the health of each individual to the health of the world economy.

Climate change causes increasingly adverse multifaceted impacts on business operations such as manufacturing disruptions, decreased labor productivity, declined revenue, disrupted transport channel, increased production costs, stagnated distribution network, and product and facility damage, manpower shortage, and input shortage. According to Dr. Loc, businesses in the Central Coast and the Mekong River Delta are more affected by natural disasters and climate change than the rest of the region. Agriculture, forestry and fisheries are the most affected sectors. Newly launched businesses are also affected more than the rest of the business community.

The share of companies being affected relatively/very much in business disruptions is highest (54%). The runners-up are: declined productivity as a result of adverse weather, and declining revenue (both at 51%). The shares of respondents reported transportation channel interruptions (46%) and production cost increases (44%). Next are the shares of companies reporting a relatively much/very much impact: slowed distribution network (38%), reduced product and service quality (37%), damaged facilities (34%) and manpower shortage. Even 33% of respondents are affected relatively much/very much by the lack of production input supplies.

Adapting to succeed

According to VCCI President Vu Tien Loc, damage caused by climate change highlights the importance and urgency of environmental actions. Together with many countries around the world, Vietnam has been strictly abiding by the United Nations Framework Convention, the Kyoto Protocol and the Paris Agreement on climate change. In recent years, the Government of Vietnam has actively improved the domestic legal system on environmental protection and prioritized resources for the implementation of disaster risk response and climate change programs.

In those efforts, businesses are an important actor to cope with natural disasters and climate change risks. Many are aware of the need to respond to natural disasters and climate change risks with various solutions, from simple to complicated. The most are reinforcement and repair of existing factories and workplaces (53%), working hours (30%), staff training to respond to natural disasters and climate change risks (28%) or rescue and relief after a disaster (28%).

Furthermore, many companies supported, responded, rescued and addressed consequences of natural disasters. Most are willing to deliver relief and remediation if natural disasters occur.

The report also explored their willingness to invest to improve their environmental compliance. Accordingly, a typical business is willing to pay up to 7.32% of operating costs for being more environmentally friendly.

VCCI President Vu Tien Loc said the business community needs to link, cooperate and raise its voice on environmental and sustainable development issues. They need to give up the thinking that it is not the time to take action on climate change.  Taking action to protect the environment needs to start with the smallest activities.

By Ha Linh, Vietnam Business Forum