Advancing Circular Economy for Sustainable Business Development

9:03:21 AM | 3/7/2022

The world is witnessing a shift from a traditional linear economy to a circular economy to achieve economic growth without harming the environment and society in the long run. The circular economy is not only a need but apparently an inevitable development trend for enterprises to enhance economic competitiveness and resilience. Businesses should see this as a true long-term investment source for sustainable development. This statement comes from Mr. Nguyen Quang Vinh, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI) and Executive Vice President of the Vietnam Business Council for Sustainable Development (VBCSD), at the Circular Economy Forum recently hosted by Foreign Trade University (FTU) in Hanoi. Thu Huyen reports.

How is the circular economy better than the traditional linear economy for exporters?

Exporters with the circular business model have many advantages. All 15 free trade agreements (FTAs) to which Vietnam is a signatory have chapters specifying sustainable development requirements. For example, the Vietnam - EU Free Trade Agreement (EVFTA) includes a chapter on Trade and Sustainability Development, which clearly states what businesses need to do. If they meet sustainable development requirements, they will have many advantages in exporting, promoting and servicing their products abroad. The Vietnam-UK Trade Agreement (UKVFTA) and the Regional Comprehensive Economic Partnership (RCEP) also set clear standards. I want to emphasize that sustainable development is no longer an option but an obligation if businesses want to advance development, sharpen competitiveness, and expand domestic and foreign market shares because these are also social needs. They need to adopt a better circular economy for better service for society and for a better world. This is a development megatrend for enterprises in the new context because of consumers’ needs. Therefore, sustainable development is considered a passport for companies. Without it, they will be left behind.

Vietnam has a new environmental law that directs businesses to work toward the circular economy. Do you think they need to follow this new law to bring the circular economy to business life?

The amended Law on Environmental Protection, which officially took effect on January 1, 2022, gives a certain foundation for circular economy development. The new ruling specifies what roles manufacturers play and how they pay environmental tax and treat waste for their products. How to enforce this new law is a matter of concern for businesses, especially producers and consumers of plastic packages and waste. Currently, the Ministry of Natural Resources and Environment is also eager to instruct businesses to implement this new law. The latter are also wondering how to apply the circular economy more conveniently.

What is specified in the law matches world trends, but the law needs to be further materialized for application because the circular economy is linked to science and technology, investment and business model. Therefore, it is necessary to provide detailed guidelines and requirements for the implementation of the circular economy in each sector such as industry and agriculture. In addition, we need to have a clearer, more specific, more comprehensive legal framework for better support of the business community to bring this law to life.

For seven years (since 2016), the Vietnam Business Council for Sustainable Development (VBCSD) has coordinated with central agencies, and domestic and international organizations to launch some circular economy projects such as the Zero Waste to Nature Initiative and Secondary Marketplace in Vietnam. The circular economy has become one of the very important topics of VBCSD and it was specially included in the Document of the 13th National Party Congress, a move to scale up the circular economy in Vietnam.

However, that is not enough. Circular economy principles must be captured by enterprises and applied to their business models. For that reason, it will bring many benefits to the Vietnamese economy. More initiatives and innovations from companies are needed. The circular economy needs to be diffused. In the future, Vietnam will also need a law on circular economy. VCCI will cooperate with the Ministry of Natural Resources and Environment and bridge the business community and related agencies to make the circular economy more innovative.

To adopt the circular economy and carry out sustainable development activities, Vietnamese SMEs need a relatively huge financial source, which is a difficult matter for most of them. For you, how can they access resources to deploy this model?

Any circular economy model requires large investment resources. However, businesses need to understand that their investment in the circular economy will help them enhance their competitiveness and see it as a long-term business investment, not a cost.

To apply the circular economy, they need support from the Government. Vietnamese companies, especially small and medium-sized enterprises (SMEs) that are weak in technology, knowledge and financial resources, need specific support from the Government. Therefore, one of VBCSD’s recommendations is to bring the circular economy into law. We also need to learn from experienced countries such as Sweden, Finland, and the UK for deployment and support methods applicable to Vietnam.

In many countries, sustainable enterprises do periodical sustainability reporting. Vietnam has also gradually become familiar with this concept. Would you tell us about the necessity of sustainability reporting and how to do it?

Sustainability reporting aims to quantify their social, economic and environmental activities and measure fundamental financial, social and natural capital sources used by enterprises. This is a good practice that VBCSD supports and advocates for them to carry out this report. Although the reporting is not legally mandatory, some Vietnamese companies and multinational corporations always want to do better than the law because it is a communication tool for shareholders, the Government and customers. At the same time, sustainability reporting is also a significant risk management tool for them against unfavorable and inaccurate information about them.

Companies around the world are familiar with sustainability reporting. In Vietnam, Vinamilk and Baoviet Holdings are leaders in sustainability reporting. Baoviet Holdings won first prize in sustainability reporting at the CSR Work Asia Contest in which VBCSD/VCCI is also a member of the organizing committee.

In the past 10 years, VBCSD has cooperated with 69 sustainable development councils around the world to exchange on how to do sustainability reporting.

The Corporate Sustainability Index (CSI), launched by VBCSD/VCCI since 2015, is highly appreciated by the Government, ministries, the business community and international organizations. Displayed in Vietnamese language, this first sustainability index in Vietnam specifically tailored for the Vietnamese business community is applicable to all companies regardless of size, type and industry. In 2016, the Government assigned VBCSD/VCCI to launch the Program for Benchmarking and Ranking Sustainable Businesses in Vietnam for the first time and use CSI as a set of evaluation and ranking criteria. Since then, the CSI Index has been updated and adapted for more businesses of different sizes. Once again, we want to emphasize and convey the message that sustainable development is not a far-fetched, oversize thing that is just for big firms, but a very practical and visualized option. Sustainable development can be achieved at all levels of enterprises. In the coming time, VBCSD will try its best to support Vietnamese companies to apply and scale up this activity.

By Vietnam Business Forum