PGI: From Environmental Perspective

A big change in the PCI 2022 Report is the first-time inclusion of the Provincial Green Index (PGI), an initiative developed by VCCI with support from the United States Agency for International Development (USAID) and private sector partners.

Tra Vinh, Lang Son and Bac Ninh respectively secure the top 3 places on the Provincial Green Index rankings

This index evaluates and ranks provinces’ environmental policy from the perspective of businesses to promote better business behavior and practices, including the application of new green technology by local businesses, the level of governance and behaviors toward the environment by businesses, the degree of concern and willingness of local government in environmental investment and many other important environmental issues.

According to the PGI 2022 Report, Tra Vinh, Lang Son and Bac Ninh respectively secured Top 3 places on the first PGI Index, followed by Quang Ninh, Da Nang, Hai Duong, Lao Cai, Bac Kan, Bac Giang and Vinh Phuc.

Like the PCI, the PGI aggregates the perception of businesses into a common voice to communicate their views on environmental policy to national and local decision-makers. A province that performs well on the PGI is one that makes effort to combat pollution and private environmental accidents (subindex 1), designs and implements reasonable regulations that ensure compliance without creating overwhelming burdens (subindex 2), provides appropriate guidance to firms on green operations and operates environmentally friendly procurement (subindex 3), and incentivizes green operations through targeted incentives and subsidy programs (subindex 4). The goal of the PGI is to provide actionable policy advice to national and subnational officials about the appropriate policy goals to reduce the impact of climate change and pollution on business performance and longevity. The PGI is an input-based ranking that is constructed with indicators capturing policy inputs (measures of provincial actions) that could be potentially correlated with climate and pollution outcomes that Vietnam cares about.

The PGI 2022 survey unveiled some remarkable findings: Local environmental quality needs to be improved. Just over half of enterprises nationwide (51.2%) rate local environmental quality as good or very good. In the median province, only 30% reported low or no pollution with scores ranging from a low of 12% to a high of 58%. Scores were surprisingly low with only 37% of firms in the median provinces reporting no issue with pollution.

Companies hoped that local authorities would carry out stronger and more effective actions to guide and disseminate environmental regulations and environmental protection measures to them. According to the survey result, a relatively high percentage of respondents (43.2%) said they had been guided by local authorities on environmental regulations. Less than 10% of the respondents state that they have received guidance from local authorities on investments to manage firms’ solid waste (5.1%), on renewable energy production (5.4%), on reforestation (6%), and on the use of renewable energy (8.6%). Slightly stronger efforts by the provincial government to assist local businesses in adopting more environmentally friendly practices were reported in the areas of plastics use reduction (10.4%), energy conservation (12.5%) and air pollution mitigation (13.4%). Across all provinces, local governments seem to have invested the most effort in providing guidance on activities to reduce water consumption (17.2%) and water pollution (16.5%), respectively.

Notably, businesses' access to green practice encouragement and support programs is still quite limited in most localities. Calculated on a 4-point scale (from 0 - Completely unfavorable to 4 - Completely favorable), except for the energy-efficient and economical use support program (scoring 1.03), other programs have low scores of ease of participation procedures, all below 1 point, showing that a very small percentage of companies have approached and benefited from incentive and support policies.

According to Madam Aler Grubbs, Country Director of the United States Agency for International Development (USAID), Vietnam has made great efforts to maintain economic growth in the past year despite many external economic shocks. Although its growth slows down, Vietnam is still a high-growth country.

"The world is changing a lot and Vietnam is the first country to have a provincial green index, which demonstrates Vietnam's strong commitments to green growth and green development,” she said.

Accessing green growth resources brings many positive impacts to businesses and the economy, she added. This is a driving force for Vietnam to achieve sustainable development and realize its committed goals. Vietnam pledged to reach net zero emissions by 2050 and to be a middle-income country by 2050. To do so requires the cooperation of agencies, organizations and businesses, and the Provincial Green Index (PGI) is an important tool to assess the performance of public authorities on environmental protection. The index will help accelerate Vietnam's sustainable economic development and boost Vietnam's efforts to achieve its commitments made at COP26.

Anh Mai (Vietnam Business Forum)