Provincial Green Index: For Environment-Friendly Business Ecosystem

Part of the pressure also comes from global trends where Vietnam has made strong commitments to reduce emissions. Besides, social awareness and concern about environmental pollution, climate change and deforestation are also increasing. In this context, Vietnamese leaders have started to emphasize the urgent need to transition to a new development model.

Workshop "Developing the Provincial Green Index"

To help realize this critical direction, VCCI has sought a new approach, based on the achievements of the Provincial Competitiveness Index (PCI), to support and promote provincial and municipal governments to pay more attention to the goal of creating green business ecosystems. Therefore, the upcoming PCI 2022 survey will integrate a new set of questions designed to assess how businesses feel about the efforts of the provincial government in encouraging sustainable business and manufacturing development and fostering green investment and high-quality innovations.

At the Workshop on Developing the Provincial Green Index recently held in Hanoi by the Vietnam Chamber of Commerce and Industry (VCCI), Mr. Pham Ngoc Thach, Deputy Director of VCCI Legal Department, said VCCI aims to design a new provincial ranking system, called the Provincial Green Index (PGI), to encourage and promote efforts of provincial governments toward private sector development in line with the National Green Growth Strategy and National Strategy for Climate Change Response. In this methodology section, VCCI provides an overview of the main PGI contents and forecasts challenges for PGI construction and development.

Mr. Dau Anh Tuan, Deputy Secretary General of VCCI and Director of VCCI Legal Department.

“This index assesses and ranks the local green business environment from the perspective of business practices: adaptability to climate change; compliance with environmental laws; application of environmentally friendly technologies by local businesses; governance level and environmental behaviors of businesses; concerns and incentive policies on environmentally friendly investment by the local government and many other important environmental issues," said Mr. Dau Anh Tuan, Deputy Secretary General of VCCI and Director of VCCI Legal Department.

Like PCI, PGI needs to have a clear connection with local policies and thus boosting policy improvement and green development policy enforcement at the provincial level. Basically, VCCI's approach to private sector green development is a market-based approach in which competitive factors are reshaped. In particular, raising minimum environmental standards is required to enter and compete in the market and strengthening incentives and support for business practices actually provides net environmental benefits. Consistent with PCI core principles, the provincial government will play a central role in establishing and maintaining the rules of this ecosystem and, in order to achieve desired goals, a policy approach is required to ensure principles of transparency, equity, and legitimacy.

According to Dr. Markus Taussig, an expert of the Asia Foundation in Vietnam, in order to measure the policy on the development of an environmentally friendly business ecosystem at the provincial level in Vietnam, it is expected that four groups of PGI contents will be launched: Minimizing harmful effects of natural disasters and climate change on production and business activities through effective delivery of infrastructure and public services by the provincial government; reducing environmental harms caused by businesses through enhanced enforcement of minimum environmental standards; maximizing environmental benefits from important local government activities, including investment and business activities of provincial SOEs and other public spending and investment activities; and maximizing environmental benefits from businesses through preferential policies and effective support services of the provincial government.

While the above four groups of content will be aggregated into PGI, it is also very important to regularly collect data on the attitudes and behaviors of businesses as well as their innovative initiatives on environmental protection. Although those data will not be included in the provincial environmental governance quality score, such sub-national meta-analyses will still be a valuable input for local leaders, national policymakers and researchers.

“By launching this PGI, we want to encourage and inspire provinces and cities in Vietnam to pay more attention to economic development as well as environmental protection, provide timely information for provincial and city governments to shape policies on investment and environment, select environmentally friendly investment projects; accelerate the construction of an environmentally friendly business ecosystem; direct environment-conscious investors; and foster more green, environmentally friendly projects,” added Tuan.

The Provincial Green Index is expected to make a remarkable contribution to the sustainable economic development of all provinces and cities in Vietnam.