How important is Vietnam’s commitment made at COP26?
|Dinh Thi Quynh Van, general director of PwC Vietnam |
Climate change has emerged as one of the most important political and business issues of our time. And that is why the commitments of the government at COP26 are ambitious yet fitting and much welcomed. With the target to reach net zero by 2050, Vietnam has set its sight on significantly reducing coal power.
The nation is committed to gradually phase out coal-fired power by 2040, while increasing the share of renewable energy to 20 per cent of the total primary supply by 2030 and reach 30 per cent by 2045.
Accordingly, this commitment will affect Vietnam’s draft Power Development Plan, specifically accelerating the roadmap to phase out fossil fuels.
This is a positive signal, showing that Vietnam is making concrete actions to move towards the goal of participating more in the net-zero race.
Furthermore, green credit is rising to become a potential development direction for many green businesses and projects to take advantage of loan incentives from banks.
According to Decision No. 1604/QD-NHNN from 2018, Vietnam will strive to have all banks carry out environmental and social risk assessment in credit granting activities; and 60 per cent of banks deploy loans for green credit projects by the end of 2025. The commitments made at COP26 will pave the way towards the realisation of the nation’s targets to combat climate change.
It is imperative to recognise that the net-zero journey requires active participation from both the government and businesses themselves to drive decarbonisation at the necessary pace and scale.
What approach is the most suitable?
Reaching this ambitious goal will require participation from many parties. The government will have to come up with an overall strategy and a specific roadmap for each phase. Policies related to net zero should include an awareness-raising component, speaking to government bodies, local authorities, the business community, and citizens.
Businesses will play an important role as key drivers. Based on our data of the top 20 publicly listed companies in Asia-Pacific, Vietnamese companies have yet to make aggressive steps in implementing policies relating to climate change.
However, there are signs that more and more businesses are interested in climate change and the environment. For instance, COP26 was the main topic of the Vietnam Institute of Directors’s annual meeting in early December 2021.
The institute promotes corporate governance standards and best practices in the domestic corporate sector. At the meeting, exchanges among board members were active, but it is not surprising that different people have different perspectives on what net zero means.
Vietnam must translate its commitments at COP26 into concrete actions with the support and help from different stakeholders, especially the business community. And the first step to do so requires a shift in perception.
So, how should the business community get started?
Every organisation will have their own starting point. Even with simple issues like wastewater treatment at textile and footwear businesses, one organisation might focus on providing a legal framework, while another on technology and other relevant factors.
There will be stakeholders who view climate change mitigation measures as additional costs.
There are also companies which are already implementing measures to mitigate the impacts of climate change, but it is difficult to quantify the results and determine the next plan.
For example, a current business goal could be to save 20 per cent of electricity consumption, but for how long and by what means?
Meanwhile, some other businesses are interested in zero waste principles by producing, consuming, reusing, and recovering packaging products and materials. That is necessary, but not enough to handle the impacts on the environment and climate change.
Many businesses still have little knowledge about COP26, as well as the government’s commitments to net-zero. Others are interested in climate change but have no action plan to limit the impact on their businesses. I think awareness is the most fundamental issue to enforce net-zero commitments. Vietnamese businesses are very dynamic, and they will take practical actions if they better understand net-zero.
This is a journey. Businesses should assess in detail the impact of climate change on their areas, find a suitable roadmap, and avoid seeing net zero as just a short-term movement.
Could company size relate to reasons why businesses are not aware of net-zero?
Most Vietnamese enterprises are small- and medium-sized ones (SME). Seen as an individual business, the impact of climate change on these enterprises might not be as direct and significant as that on large enterprises. But if you view this from an industry point of view, then both SMEs and larger companies will need to support implement relevant initiatives to collectively minimise the impact on their industry.
Awareness is the first step to changing perception. However, success lies in integrating the environment, social, and governance (ESG) principles in all dimensions of a business, including strategic decision-making, implementation of the new direction, and reporting of progress and outcomes.
PwC Vietnam is working with other stakeholders, such as the Vietnam Chamber of Commerce and Industry, to raise awareness on issues related to climate change and environment protection.
At the exchanges and training courses, we also invited our customers, who are successful in cognitive transformation, to impart their experiences to SMEs.
How will your company move towards net-zero?
Internally, our global PwC network has committed to reducing our carbon emissions by half from 2019 levels and eliminating the remainder of emissions to achieve net-zero by 2030. This commitment and more are set out in PwC’s Net Zero Programme.
In Vietnam, our journey started about three years ago through simple actions, such as saving energy or sorting waste.
Over the years, we have expanded the initiatives to drive sustainable growth.
This includes performing a comprehensive review of our operation activities to identify the largest sources of CO2 emissions of the company and establishing several internal task forces to action proposed recommendations.
We have also implemented an internal communication programme, designed to raise awareness and knowledge about net zero, with multiple workshops on effective virtual working arrangements to reduce commuting and transportation.