With Vietnam’s rapid economic development, green procurement has become an indispensable part of the sustainable development strategy of enterprises. As environmental issues become increasingly prominent, the Vietnamese government and all sectors of society are actively promoting the transformation of the green economy, and green procurement is a key link in this transformation process. For companies operating in Vietnam, implementing green procurement is not only a manifestation of fulfilling social responsibility, but also an important means to enhance competitiveness. By purchasing environmentally friendly raw materials and products, companies can effectively reduce the negative impact on the environment, while also meeting increasingly stringent environmental regulations.
Vietnam’s green economy is developing rapidly. The government has formulated a series of policies and plans to promote the green transformation of the economy. For example, the National Green Growth Strategy 2021-2030 explicitly proposes to develop a circular economy and improve resource utilization efficiency. Against this backdrop, Vietnam’s green product market is expanding rapidly, and consumers are increasingly demanding green products, from organic food to energy-saving appliances. At the same time, Vietnam is also actively participating in international environmental cooperation, such as joining the Global Sustainable Procurement Network, which provides local companies with more opportunities to access international green standards and practices.
For enterprises, the benefits of implementing green procurement are multifaceted. First, it can help enterprises reduce environmental risks and avoid reputational losses and legal disputes caused by environmental problems. Second, green procurement can optimize the supply chain, improve resource utilization efficiency, and help reduce production costs in the long run. For example, purchasing energy-saving equipment can significantly reduce energy expenditures. In addition, green procurement can enhance brand image and attract more and more consumers and investors who pay attention to environmental protection. In the international market, Vietnamese enterprises with green procurement practices are more likely to obtain orders from multinational companies and improve the international competitiveness of their products.
However, implementing green procurement also faces many challenges. Many Vietnamese companies, especially small and medium-sized enterprises, may lack relevant knowledge and experience and do not know how to start or how to develop an effective green procurement strategy. In addition, the initial cost of green products may be high, and how to balance environmental benefits and economic benefits is also an issue that companies need to consider carefully. This guide aims to provide Vietnamese companies with comprehensive green procurement guidance to help them overcome these challenges and make full use of the opportunities brought by green procurement.
By systematically implementing green procurement, Vietnamese companies can not only contribute to the country’s sustainable development, but also gain a competitive advantage in a global market that increasingly values environmental protection. In the following chapters, we will explore various aspects of green procurement in detail, from the policy environment to specific implementation strategies, and provide companies with practical suggestions and tools. Let us work together to contribute to building a greener and more sustainable Vietnamese manufacturing industry.
Vietnam’s green procurement policy environment
Vietnam has made significant progress in green procurement policies in recent years. The government recognizes the importance of sustainable development and is actively promoting the transformation of the green economy. The Environmental Protection Law, revised in 2020, lays the legal foundation for green procurement. Article 43 of the law clearly stipulates the state’s position on encouraging and promoting green procurement, requiring government agencies at all levels to give priority to environmentally friendly products in procurement. In addition, Decree No. 08/2022/ND-CP promulgated in 2022 further refines the green growth strategy, which contains specific measures to promote green production and consumption. These regulations provide clear policy guidance for enterprises to implement green procurement.
The Vietnamese government has introduced a series of incentives to encourage companies to adopt green procurement practices. First, the Ministry of Finance issued guidance on giving priority to environmentally friendly products in government procurement, providing a green channel for companies to participate in government bidding. Second, the Ministry of Environment launched a green credit program to provide low-interest loan support to companies that implement green procurement. It is worth noting that starting from 2023, the Vietnamese government plans to gradually implement a carbon tax system, which will further incentivize companies to choose low-carbon products and services. In addition, some local governments such as Ho Chi Minh City and Hanoi have also launched green enterprise certification programs, and certified companies will enjoy priority in government procurement.
The application of international green procurement standards in Vietnam is gradually expanding. As an important part of the global supply chain, Vietnamese companies are increasingly subject to international standards. The ISO 20400 sustainable procurement guide has been widely adopted by large Vietnamese companies, especially in export-oriented industries such as textiles and electronics. In addition, the EU’s REACH regulation (Registration, Evaluation, Authorization and Restriction of Chemicals) has had a profound impact on Vietnamese chemical and manufacturing exporters, prompting them to pay more attention to environmental protection requirements in the procurement of raw materials. The US Energy Star certification is also valued by Vietnamese electronic product manufacturers and has become an important reference for them to choose suppliers.
It is worth mentioning that Vietnam is working hard to localize international standards. The Vietnam Institute of Standards and Quality (STAMEQ) is developing green product standards that are in line with national conditions and are expected to be fully implemented in 2024. This set of standards will cover energy efficiency, water resource utilization, hazardous substance content and other aspects, providing more localized guidance for corporate green procurement.
However, Vietnam still faces some challenges in implementing green procurement policies. First, the enforcement of some regulations is insufficient, especially in small and medium-sized enterprises. Second, the certification and standard system for green products is not yet perfect, resulting in some “greenwashing” in the market. In addition, companies generally reflect that the cost of green procurement is high, which may affect competitiveness in the short term.
In the face of these challenges, the Vietnamese government is taking positive measures. For example, it plans to establish a unified green product database by 2025 to facilitate corporate inquiries and selections. At the same time, the government is also strengthening cooperation with international organizations and introducing advanced green procurement management experience. For foreign companies interested in doing business in Vietnam, paying close attention to these policy changes and actively participating in the construction of local green supply chains will become one of the key factors for success in the Vietnamese market.
In general, Vietnam’s green procurement policy environment is rapidly improving, providing companies with a clear direction for development and strong policy support. Companies should seize this trend and proactively adjust their procurement strategies, not only to comply with regulatory requirements, but also to gain a competitive advantage in a market that increasingly values sustainable development.
Green Procurement Strategy Formulation
Developing an effective green procurement strategy is a key step for companies to achieve sustainable development. This involves not only setting clear goals, but also developing comprehensive policies and evaluation methods. In Vietnam, with the improvement of environmental awareness and the improvement of regulations, more and more companies are beginning to pay attention to green procurement, taking it as an important means to enhance competitiveness and fulfill social responsibility.
First, the setting of green procurement goals for enterprises needs to consider multiple factors. These goals should be specific, measurable, achievable, relevant and time-bound (SMART principle). For example, a manufacturing company may set a goal like this: “In the next three years, 80% of raw material procurement will be shifted to suppliers with environmental certification.” Goal setting should be based on the company’s current procurement practices, industry standards, regulatory requirements, and the company’s long-term sustainable development strategy. At the same time, market trends and customer expectations should also be considered. It is worth noting that in Vietnam, the government is promoting the development of a green economy, so it is also very important to take government policy orientation into consideration.
Secondly, green procurement policy formulation is a systematic process, which usually includes the following steps: 1) Establish a cross-departmental team to ensure the participation of relevant departments such as procurement, production, and finance; 2) Conduct a status quo analysis to assess the environmental impact of current procurement practices; 3) Identify priority areas, such as high-energy consumption or high-pollution raw materials; 4) Develop specific procurement standards, including environmental, social and economic considerations; 5) Design implementation processes, including supplier screening, contract management, etc.; 6) Establish a monitoring and reporting mechanism to regularly evaluate the effectiveness of policy implementation; 7) Develop a continuous improvement plan. In Vietnam, companies also need to pay special attention to combining local environmental regulations with international standards to ensure the applicability and foresight of policies.
Finally, supply chain sustainability assessment is an important part of green procurement strategy. This involves a comprehensive assessment of the environmental and social impact of the entire supply chain. Common methods include: 1) supplier questionnaire surveys to understand the supplier’s environmental management system, energy use, waste disposal, etc.; 2) on-site audits to directly evaluate the supplier’s environmental performance; 3) life cycle assessment (LCA) to analyze the environmental impact of the product from raw material extraction to final disposal; 4) carbon footprint analysis to calculate greenhouse gas emissions at all links in the supply chain. In Vietnam, due to the complexity of the supply chain and the challenges of data collection, companies can consider implementing assessments in stages, starting with key suppliers or high-risk areas. At the same time, the use of digital technologies such as blockchain and the Internet of Things can improve supply chain transparency and data reliability.
Implementing green procurement strategies may face some challenges, such as increased costs and low supplier cooperation. However, in the long run, this will bring many benefits to companies, including reducing environmental risks, enhancing brand image, and meeting customer needs. In Vietnam, with increasingly stringent environmental regulations and increased consumer awareness, early formulation and implementation of green procurement strategies will become the key for companies to maintain their competitiveness. Companies should view green procurement as a process of continuous improvement, and regularly review and update strategies to adapt to the changing market and regulatory environment.
By setting clear goals, comprehensive policies and effective evaluation methods, Vietnamese companies can make substantial progress in the field of green procurement, not only creating value for themselves, but also contributing to Vietnam’s sustainable development. In this process, the support of corporate leadership and the participation of all employees are crucial. Only by deeply integrating the concept of green procurement into corporate culture can the long-term successful implementation of the strategy be ensured.
Environmental standards for common raw materials
When implementing green procurement in Vietnam, it is crucial to understand the environmental standards of common raw materials. This will not only help companies choose more environmentally friendly materials, but also help them meet Vietnam’s increasingly stringent environmental requirements. This section will introduce the environmental standards of five major raw materials in detail.
Textile raw materials are an important part of Vietnam’s manufacturing industry. For cotton, organic cotton or cotton certified by the Better Cotton Initiative (BCI) is preferred. The planting process of these cottons reduces the use of pesticides and fertilizers and is more environmentally friendly. For polyester fibers, more and more companies are starting to use recycled polyester (rPET). According to the recommendations of the Vietnam Textile Association (VITAS), companies should choose polyester fibers containing at least 30% recycled content. In addition, textiles should also comply with international standards such as OEKO-TEX Standard 100 to ensure that the products do not contain harmful substances.
The procurement of wood and pulp is crucial to forest conservation in Vietnam. Companies should give priority to wood and pulp certified by the Forest Stewardship Council (FSC) or the Programme for the Endorsement of Forest Certification (PEFC). These certifications ensure that the wood comes from sustainably managed forests. The Vietnamese government has also introduced local sustainable forest management certification in recent years, and companies can give priority to products with Vietnam Forest Certification System (VFCS) certification.
Metal materials, especially steel and aluminum, are widely used in the manufacturing industry. For steel, companies should choose steel produced using the electric furnace method (EAF) because this method can significantly reduce carbon emissions. For aluminum, priority should be given to the use of recycled aluminum because the energy consumption of producing recycled aluminum is only about 5% of that of primary aluminum. In addition, the Vietnam Steel Association (VSA) recommends that companies choose suppliers that meet the ISO 14001 environmental management system certification.
Environmental standards for plastics and rubber focus on recyclability and biodegradability. For plastics, companies should give priority to recyclable plastics or bio-based plastics. The Vietnam Plastics Association (VPA) recommends the use of plastic products containing at least 30% recycled content. For rubber, products that meet the International Sustainable Natural Rubber Standard (GPSNR) should be selected. At the same time, Vietnam is promoting the use of biodegradable plastics, especially in the packaging field.
Environmental standards for chemicals and coatings focus mainly on the control of hazardous substances. Companies should choose products that comply with the Globally Harmonized System of Classification and Labelling of Chemicals (GHS). For coatings, give priority to products with low VOC (volatile organic compound) content. The Vietnam Chemicals Association (VCPA) recommends that companies choose suppliers that are ISO 14001 certified and give priority to more environmentally friendly alternatives such as water-based coatings.
In general, when selecting raw materials, Vietnamese companies should consider factors such as the environmental impact, recyclability, energy efficiency, and harmful substance content of the materials. At the same time, they should also pay attention to Vietnam’s local environmental certifications and standards, such as the Vietnam Green Label Scheme. By selecting raw materials that meet these environmental standards, companies can not only reduce their environmental footprint, but also improve product quality and brand image, and gain a competitive advantage in the Vietnamese market, which increasingly values sustainable development.
Product Environmental Standards
In Vietnam, with the improvement of environmental awareness and the improvement of regulations, environmental standards for various products are becoming increasingly stringent. When companies conduct green procurement, they need to fully understand and comply with these standards to ensure that the purchased products meet environmental requirements. The following is an overview of the environmental standards for several common products:
Electronic products occupy an important position in the Vietnamese market, and their environmental standards mainly involve energy efficiency, hazardous substance restrictions and recycling design. The Vietnamese government has adopted standards similar to the EU RoHS directive to restrict the use of hazardous substances such as lead, mercury and cadmium in electronic products. Energy Star certification is also widely recognized in Vietnam, and products with such certification should be given priority when purchasing. In addition, Vietnam is promoting an electronic waste recycling program to encourage the purchase of electronic products that are easy to disassemble and recycle.
Environmental standards for furniture products focus on the sustainability of raw materials and the chemical safety of products. For wooden furniture, Vietnam encourages the use of sustainable wood certified by FSC (Forest Stewardship Council) or PEFC (Program for the Endorsement of Forest Certification). In addition, Vietnam also has strict standards for formaldehyde emissions in furniture, and suppliers should be required to provide relevant test reports when purchasing. Some international certifications such as GREENGUARD are also becoming more and more important in Vietnam’s high-end market.
Environmental standards for packaging materials focus on recyclability and biodegradability. Vietnam is gradually restricting the use of disposable plastic packaging and encouraging the use of recyclable, reusable or compostable packaging materials. For example, Vietnam has introduced policies to completely ban the use of non-degradable plastic bags by 2025. When purchasing packaging materials, companies should give priority to products made from recycled materials or choose materials with biodegradable certification.
Environmental standards in the food and beverage industry not only focus on the product itself, but also involve the sustainability of the entire supply chain. Vietnam is promoting the organic certification system. Purchasing organically certified food ingredients can ensure that their production process has minimal impact on the environment. For packaged foods, Vietnam is also gradually raising environmental requirements for packaging and encouraging the use of recyclable or biodegradable packaging materials. In addition, water resource management is also an important environmental standard in the food and beverage industry. Companies should give priority to suppliers who implement strict water resource management during the production process.
Environmental standards for building materials are developing rapidly in Vietnam, focusing on energy efficiency, carbon emissions and indoor air quality. The Vietnamese construction sector has developed a green building standard, LOTUS, similar to the international LEED certification. When purchasing building materials, priority should be given to products with low volatile organic compound (VOC) content to ensure good indoor air quality. In addition, Vietnam also encourages the use of recycled building materials and building products with high energy efficiency, such as high-performance insulation materials and energy-saving glass.
When implementing green procurement, companies need to fully consider these product environmental standards and develop appropriate procurement strategies based on their own circumstances and industry characteristics. At the same time, as Vietnam’s environmental standards are still being improved, companies should also pay close attention to policy changes and adjust procurement standards in a timely manner to ensure long-term compliance and sustainable development.
Vietnam’s local green certification and labeling
The Vietnam Green Label Program is an important initiative implemented by the Vietnamese government to promote sustainable development. The program was officially launched in 2009 by the Ministry of Natural Resources and Environment (MONRE) of Vietnam to encourage the production and consumption of environmentally friendly products. The Vietnam Green Label is a voluntary certification that companies can apply to affix to products that meet specific environmental standards. This label not only helps consumers identify environmentally friendly products, but also provides a platform for companies to demonstrate environmental responsibility. The application process includes product evaluation, on-site audits and regular reviews, covering the entire life cycle assessment from raw material selection to the production process, packaging and use stages. At present, the program has established specific standards for multiple product categories, including building materials, electronic products, textiles, etc.
In terms of industry-specific certification, Vietnam has established some green certification systems for specific industries. For example, in the construction sector, the Vietnam Green Building Council (VGBC) has launched the LOTUS certification system, a green building assessment tool designed specifically for Vietnam’s climate and building environment. In the agricultural sector, the Vietnam Organic Agriculture Association (VOAA) is responsible for the certification of organic agricultural products, while the VietGAP (Vietnam Good Agricultural Practices) certification is an important standard to ensure the safety and sustainable production of agricultural products. For the manufacturing industry, the Vietnam Clean Production Center (VNCPC) provides clean production certification to encourage enterprises to adopt more environmentally friendly production processes and technologies. These industry-specific certifications not only improve the market competitiveness of products, but also pave the way for enterprises to enter the international market.
International certifications are gaining acceptance in Vietnam. As Vietnam becomes more integrated into the global economy, international standards are playing an increasingly important role in the Vietnamese market. ISO 14001 environmental management system certification is widely recognized in Vietnam, and many export-oriented companies require it as a must-have certification. In addition, Forest Stewardship Council (FSC) certification is highly valued in the wood and paper products industries, while Global Organic Textile Standard (GOTS) is widely used in the textile industry. For electronic products, Energy Star certification is also gaining recognition among Vietnamese consumers. It is worth noting that the Vietnamese government is working hard to align international standards with local standards to improve the international competitiveness of Vietnamese products. For example, the Vietnam Standards and Quality Institute (VSQI) is promoting the harmonization of national standards with ISO standards.
However, enterprises still face some challenges when choosing green certification. The first is the cost issue. Especially for small and medium-sized enterprises, the application and maintenance fees of international certification may constitute a significant burden. The second is the complexity of the certification process, which requires enterprises to invest a lot of time and resources. In addition, consumers’ awareness and understanding of different certifications vary, which may affect the market value of certifications. Therefore, when formulating green certification strategies, enterprises need to weigh costs, market demand and long-term development goals.
Looking ahead, with Vietnam’s increasing environmental awareness and support from government policies, green certification will play a more important role in the Vietnamese market. Enterprises should actively pay attention to the development trend of certification standards and use green certification as an important tool to enhance product value and corporate competitiveness. At the same time, the government also needs to strengthen the promotion of local certification systems and international mutual recognition to create a more favorable environment for the green development of Vietnamese enterprises.
Supplier Screening and Evaluation
In the process of implementing green procurement strategies in Vietnam, supplier screening and evaluation is a crucial link. With the continuous improvement of Vietnam’s environmental protection laws and regulations and the improvement of corporate environmental awareness, it is particularly important to establish a scientific and comprehensive green supplier evaluation system. This section will introduce in detail the green supplier screening criteria, environmental performance evaluation methods and requirements for supplier environmental management systems.
First, when formulating green supplier screening criteria, companies need to consider multiple dimensions. The most basic requirement is that suppliers must comply with Vietnam’s environmental regulations, such as holding a valid environmental impact assessment (EIA) approval and environmental protection commitments. In addition, whether the supplier has obtained ISO 14001 environmental management system certification is also an important reference indicator. Going further, companies can consider whether the supplier adopts clean production technology, uses renewable energy, and whether its products have obtained Vietnam Green Label or other internationally recognized environmental certifications. During the screening process, the supplier’s innovation capabilities should also be examined, such as their performance in developing environmentally friendly materials or optimizing production processes.
Secondly, the evaluation methods for suppliers’ environmental performance should be diversified and dynamic. One effective method is to establish a supplier environmental performance scorecard, including key indicators such as energy efficiency, water resource management, waste disposal, and carbon emission intensity. Companies can require suppliers to provide these data regularly and conduct trend analysis. Another method is to conduct on-site audits to directly evaluate suppliers’ environmental management practices. In Vietnam, considering the actual situation of small and medium-sized enterprises, a hierarchical evaluation system can be adopted to formulate differentiated evaluation standards for suppliers of different sizes and industries. In addition, introducing a third-party environmental audit agency is also an effective means to objectively evaluate suppliers’ environmental performance.
Finally, the requirements for suppliers’ environmental management systems should be consistent with the company’s own environmental goals. Basic requirements include that suppliers should have clear environmental policies, quantifiable environmental goals, and regular environmental risk assessment mechanisms. Suppliers should also establish a comprehensive environmental incident emergency plan and conduct regular drills. In Vietnam, taking into account local characteristics, companies can require suppliers to pay special attention to climate-related environmental risks such as water management in the dry season and flood prevention in the rainy season. In addition, suppliers should have a dedicated environmental management team and provide regular environmental training for employees. For larger suppliers, they can be required to establish an environmental management information system to achieve real-time monitoring and analysis of environmental data.
It is worth noting that in the Vietnamese market, many small and medium-sized suppliers may lack a sound environmental management system. In this case, purchasing companies can adopt a cooperative attitude and help suppliers improve their environmental management capabilities through technical support, training, etc. This will not only help ensure the sustainability of the supply chain, but also enhance long-term cooperation with suppliers.
In general, implementing green supplier screening and evaluation in Vietnam is a gradual process. Enterprises need to develop practical standards and methods based on their own conditions and market realities. Through continuous evaluation and improvement, enterprises can gradually improve the environmental performance of the entire supply chain and contribute to the sustainable development of Vietnam. At the same time, this will also become an important way for enterprises to establish competitive advantages in the Vietnamese market.
Green Procurement Implementation Process
The successful implementation of green procurement requires a systematic process. This process mainly includes three key stages: demand analysis and planning, bidding and contract management, and performance monitoring and continuous improvement. Each stage is crucial and together constitutes a complete green procurement cycle.
First, demand analysis and planning are the foundation of green procurement. At this stage, companies need to carefully evaluate their procurement needs and combine them with environmental goals. This includes identifying which products or services can adopt more environmentally friendly alternatives, evaluating potential environmental impacts, and setting specific green procurement goals. For example, a Vietnamese textile company may decide to replace 30% of conventional cotton with organic cotton at this stage. At the same time, companies also need to conduct market research to understand the available green products and suppliers. Developing a detailed procurement plan, including budget, timetable, and required resources, is also an important task at this stage.
Secondly, bidding and contract management are key links in achieving green procurement goals. During the bidding process, companies need to clearly communicate their environmental requirements and expectations. This may include requiring suppliers to provide environmental certifications for products, or detailing their environmental management practices in the bidding documents. When evaluating bids, environmental performance should be considered in addition to traditional price and quality factors. For example, a weighted scoring system can be used, in which environmental factors account for a certain proportion. Contract management is equally important, and environmental requirements should be clearly stated in the contract, including specific green indicators, monitoring methods, and consequences of non-compliance. It is worth noting that in Vietnam, establishing long-term partnerships with suppliers is particularly important for promoting green procurement, as this can encourage suppliers to make necessary environmental investments.
Finally, performance monitoring and continuous improvement are key to ensuring that green procurement is effective in the long term. Companies need to establish a system to regularly monitor and evaluate the environmental performance of suppliers. This may include on-site audits, regular report reviews, or third-party verification. It is important to establish clear performance indicators, such as carbon emissions, water efficiency, or waste recycling rates. Based on these monitoring results, companies can work with suppliers to develop improvement plans. At the same time, companies should also regularly evaluate their own green procurement strategies and adjust them according to market changes and new environmental technologies. For example, if it is found that the performance of certain green products is not as expected, it may be necessary to find new alternatives or work with suppliers to improve the products.
In Vietnam, implementing green procurement processes may face some special challenges, such as a limited number of green suppliers and an imperfect environmental certification system. Therefore, companies may need to invest more in supplier development and help local suppliers improve their environmental management capabilities. At the same time, working with government departments, industry associations and international organizations to promote the development of Vietnam’s green supply chain is also a long-term strategy that companies can consider.
By systematically implementing this process, Vietnamese companies can not only achieve their own green procurement goals, but also drive the entire supply chain towards a more sustainable direction. This is not only beneficial to the long-term competitiveness of enterprises, but also makes an important contribution to Vietnam’s green economic transformation.
Green Procurement Cost Management
Cost management is a key challenge for companies when implementing green procurement strategies in Vietnam. Many companies are concerned that the high initial cost of green products and services will affect their competitiveness. However, through comprehensive cost analysis and management, green procurement can not only bring environmental benefits to companies, but also achieve long-term economic gains. This section will explore the cost management strategy of green procurement in depth.
Life Cycle Cost Analysis (LCCA) is a core tool for green procurement cost management. LCCA considers the cost of the entire process of a product or service from raw material acquisition, production, use to final disposal. In Vietnam, this analysis method is particularly important because it helps companies see the energy-saving and water-saving advantages of green products in long-term use. For example, when a Vietnamese textile factory purchases new dyeing equipment, it must not only consider the initial purchase cost of the equipment, but also calculate its energy consumption, water use, maintenance costs, and final disposal costs during its service life. Through LCCA, companies may find that although the initial cost of environmentally friendly dyeing equipment is higher, it is actually more economical over the entire use cycle due to its high efficiency and energy-saving characteristics.
The economic benefit assessment of green procurement is key to convincing management and stakeholders to support green procurement initiatives. In Vietnam, such an assessment should include direct and indirect benefits. Direct benefits include cost reductions due to energy and resource conservation, reduced waste disposal costs, etc. Indirect benefits may include enhanced brand image, increased market share, and increased employee productivity. For example, an electronics manufacturer operating in Vietnam not only reduced energy costs by purchasing more energy-efficient production equipment, but also attracted more international buyers due to its environmental image, thereby increasing export orders. When evaluating, companies should establish a clear indicator system, such as the percentage of energy use reduction, carbon emissions reduction, and green product sales growth rate, to quantify the economic benefits of green procurement.
Cost optimization strategies are key to ensuring the sustainable development of green procurement in the Vietnamese market. First, companies can reduce the unit cost of green products through large-scale procurement. For example, multiple companies in the same industry can jointly purchase to increase bargaining power. Secondly, establish long-term partnerships with suppliers and jointly invest in the development of more economical green solutions. Furthermore, taking advantage of the tax incentives and subsidy policies provided by the Vietnamese government, such as tax exemptions for companies using clean energy, can effectively reduce the cost of green procurement. In addition, companies can also optimize costs through internal innovation, such as improving process flows to reduce resource waste, or developing recycling systems to reduce raw material costs.
Implementing green procurement cost management requires companies to take a comprehensive and long-term perspective. In Vietnam, with increasingly stringent environmental regulations and consumers’ growing environmental awareness, companies that implement green procurement strategies early will have an advantage in future market competition. Although there may be cost pressures in the short term, through scientific cost analysis and management, green procurement can not only achieve environmental protection goals, but also bring substantial economic benefits to companies. Business leaders need to cultivate this long-term thinking and view green procurement as a strategic investment, not just a cost center.
Finally, it is worth noting that in the Vietnamese market, successful green procurement cost management also needs to take local factors into account. This includes understanding the characteristics of the local supply chain, making rational use of local resources and technologies, and adapting to Vietnam’s unique business environment and culture. By combining global best practices with local realities, companies can develop procurement strategies that are both environmentally friendly and economical, and take a leading position in Vietnam’s green economic transformation.
Application of Technological Innovation in Green Procurement
In Vietnam, as the concept of green procurement continues to deepen, advanced technologies are providing companies with more efficient and transparent procurement solutions. These innovative technologies not only improve the efficiency of green procurement, but also bring significant competitive advantages to companies. This section will explore the application of three key technologies in green procurement: blockchain, artificial intelligence, and big data analysis.
The application of blockchain technology in supply chain traceability is gradually emerging in Vietnam’s manufacturing industry. This technology provides unprecedented transparency to the entire supply chain by creating an immutable distributed ledger. For example, in the textile industry, every link from cotton planting to garment production can be recorded on the blockchain. This allows companies to easily verify the source of raw materials and ensure that they meet environmental standards. At the same time, consumers can also learn about the complete environmental history of the product by scanning the QR code on the product. This not only improves the credibility of the supply chain, but also enhances the brand’s environmental image. Some of Vietnam’s leading coffee exporters have begun using blockchain technology to prove the sustainable planting process of their coffee beans, which has gained high recognition in the international market.
Artificial intelligence (AI) has shown great potential in assisting supplier evaluation. Vietnamese companies are using AI algorithms to analyze large amounts of supplier data, including environmental compliance records, carbon emissions data, energy efficiency, etc. AI systems can quickly process these complex data and provide objective and accurate suggestions for procurement decisions. For example, a large Vietnamese electronics manufacturer has developed an AI system that monitors suppliers’ environmental performance in real time and automatically rates them according to preset green standards. This not only greatly reduces the workload of manual evaluation, but also improves the accuracy and consistency of the evaluation. In addition, AI can also predict suppliers’ future environmental performance, helping companies make more forward-looking procurement decisions.
Big data analysis is revolutionizing the procurement decision-making process of Vietnamese companies. By collecting and analyzing large amounts of market data, supplier information, and environmental indicators, companies are able to more accurately identify the best green procurement opportunities. For example, a leading furniture manufacturer in Vietnam uses big data analysis to optimize its wood procurement. The system analyzes the price trends, supply conditions, and environmental certifications of different suppliers in the global wood market, helping companies find the most cost-effective procurement solutions while ensuring environmental protection requirements. Big data analysis can also help companies predict raw material price fluctuations and identify potential supply chain risks, thereby developing more flexible and sustainable procurement strategies.
However, there are also some challenges in applying these technological innovations in Vietnam. The first is the cost of technology, especially for small and medium-sized enterprises, investing in large IT systems may cause financial pressure. The second is data security and privacy issues. Enterprises need to ensure that sensitive supply chain information is adequately protected. In addition, the shortage of technical talents is also a common problem. Vietnamese enterprises need to increase the training and introduction of relevant talents.
Despite the challenges, technological innovation is undoubtedly a key force driving the development of green procurement in Vietnam. More and more Vietnamese companies are realizing that embracing these innovative technologies can not only improve procurement efficiency, but also enhance their environmental responsibility and market competitiveness. As the technology continues to mature and costs decrease, we have reason to believe that these innovations will be more widely used in Vietnam’s green procurement practices in the next few years.
Staff training and awareness raising
Employee training and awareness raising are crucial to promoting green procurement in Vietnamese enterprises. Without the understanding and support of employees, even the most perfect green procurement policy will be difficult to implement effectively. Therefore, enterprises need to formulate systematic training plans to cultivate employees’ environmental awareness and enhance their green procurement capabilities.
First, the design of the green procurement training program should be comprehensive and targeted. For employees in the procurement department, the training content should include professional knowledge such as the basic concepts of green procurement, relevant laws and regulations, interpretation of environmental standards, and supplier evaluation methods. Industry experts can be invited to give special lectures, organize case seminars, and even arrange visits to excellent suppliers’ factories to allow employees to deeply understand the actual operation of green procurement. For employees in other departments, the training can focus on the importance of green procurement, the company’s environmental protection goals, and how to support green procurement in daily work. The training format can be diversified, such as online courses, workshops, knowledge competitions, etc., to increase employee participation.
Secondly, promoting cross-departmental cooperation is the key to promoting green procurement. Green procurement is not just the responsibility of the procurement department. It requires the coordination and cooperation of multiple departments such as R&D, production, finance, and marketing. For example, the R&D department needs to consider the use of environmentally friendly materials during the product design stage, the production department needs to optimize the process to reduce waste, the finance department needs to support possible initial investment, and the marketing department needs to convey the company’s green concept to customers. Enterprises can set up a cross-departmental green procurement working group, hold regular meetings to discuss progress and challenges, and jointly develop solutions. An internal communication platform for green procurement can also be established to encourage departments to share experiences and ideas.
Finally, creating a green procurement culture is the foundation for long-term success. This needs to start from the top management of the company, establish a clear green procurement vision, and integrate it into the company’s core values. A “Green Procurement Ambassador” program can be established to select employees who are passionate about environmental protection to serve as promoters and promoters of green procurement. Companies can also hold a “Green Innovation Week” to encourage employees to come up with ideas to improve green procurement and reward excellent suggestions. In the office environment, the company’s green procurement results can be displayed through posters, electronic screens, etc., so that employees can feel that their efforts are having a positive impact.
In addition, incorporating green procurement performance into employee performance appraisal is also an effective method. This can not only motivate employees to pay more attention to green procurement, but also deepen the concept of environmental protection into everyone’s daily work. For example, the KPI of procurement personnel can include the number of green suppliers developed, and employees in other departments can have indicators for participating in green projects or making environmental protection suggestions.
In general, employee training and awareness raising is an ongoing process. With the continuous improvement of Vietnam’s environmental protection laws and regulations and the increasing market demand for green products, companies need to regularly update training content to keep employees’ knowledge up to date. Through systematic training, cross-departmental cooperation and cultural construction, Vietnamese companies can truly integrate green procurement into daily operations, which will not only improve environmental performance, but also enhance corporate competitiveness and contribute to Vietnam’s sustainable development.
Case Study
Vietnamese local companies have made remarkable achievements in the field of green procurement. Take the Vietnamese dairy giant Vinamilk as an example. In recent years, the company has vigorously promoted green procurement strategies, focusing on the sustainability of dairy cow feed. Vinamilk has cooperated with local farmers to establish an organic feed supply chain, which not only ensures the quality of dairy products, but also significantly reduces carbon emissions.
The company has also invested in a solar-powered dairy farm to further reduce the environmental impact of the production process. These initiatives have not only enhanced Vinamilk’s brand image, but also helped the company gain a competitive edge in the international market. Another successful case is Scansia Pacific, a Vietnamese furniture manufacturer. The company has implemented a strict wood procurement policy to ensure that all raw materials come from sustainable forests certified by FSC. This has not only helped Scansia Pacific meet the stringent requirements of the European and American markets, but also made the company a benchmark for green manufacturing in Vietnam.
The green procurement practices of multinational companies in Vietnam set an example for local companies. Take Samsung Electronics Vietnam as an example. The company has implemented a comprehensive green supply chain management system. Samsung requires all its suppliers in Vietnam to pass the environmental management system certification and conduct regular audits. The company has also launched the “Eco-Partner” program to provide technical support and training to local suppliers to help them improve their environmental performance. This has not only improved the overall environmental footprint of Samsung products, but also led to the green transformation of the supply chain in Vietnam’s electronics industry. Another case worth noting is Unilever Vietnam. The company has implemented a “Sustainable Living Plan”, of which green procurement is a key component. Unilever works with Vietnamese farmers to promote sustainable agricultural practices, such as reducing the use of fertilizers and adopting water-saving irrigation technologies. This not only ensures a sustainable supply of raw materials, but also helps improve the income and quality of life of local farmers.
Small and medium-sized enterprises have also demonstrated impressive innovation capabilities in green procurement. Phuong Dong Textile, a medium-sized textile company in Hanoi, has solved the environmental problem of dye procurement in an innovative way. The company has worked with local universities to develop a natural dye made from waste coffee grounds. This not only reduces the use of chemical dyes, but also finds new uses for coffee industry waste, achieving a win-win situation. Another innovative case comes from Green Foods Vietnam, a small food processing company in Ho Chi Minh City. The company has established an innovative “urban farm network” and cooperates with urban rooftop farms to directly purchase fresh organic vegetables. This not only ensures the quality and sustainability of the raw materials, but also greatly reduces carbon emissions during transportation, while supporting urban greening.
These cases fully demonstrate the innovative spirit and practical ability of Vietnamese enterprises in the field of green procurement. Both large multinational companies and local small and medium-sized enterprises have explored green procurement models that suit their own characteristics in their respective fields. These successful experiences not only provide valuable references for other companies, but also prove that green procurement is feasible and beneficial in Vietnam. By learning and drawing on these cases, Vietnamese companies can find a green procurement path that suits them, while improving their environmental performance, enhancing their market competitiveness and achieving sustainable development.
Green Procurement and Corporate Social Responsibility
Green procurement has become an integral part of corporate social responsibility (CSR) strategies, especially in a rapidly developing market like Vietnam. Implementing green procurement can not only reduce a company’s environmental footprint, but also significantly enhance its brand image and win the trust of consumers and investors. In Vietnam, as environmental awareness continues to increase, more and more consumers are beginning to pay attention to the environmental performance of companies. By adopting a green procurement strategy, companies can send a strong message to the market: we not only focus on economic benefits, but also attach importance to environmental protection and social responsibility. This positive brand image can help companies stand out in the fiercely competitive Vietnamese market and attract more customers and business partners.
However, it is not enough to just implement green procurement. Effective communication with stakeholders is equally important. In Vietnam, these stakeholders include employees, consumers, suppliers, government departments and local communities. It is essential to develop a comprehensive communication strategy. First, companies should clearly communicate the concept and policy of green procurement to employees and encourage their active participation. Second, through channels such as social media, corporate websites and sustainability reports, companies’ green procurement achievements should be displayed to consumers and the public. For suppliers, regular training and exchange meetings should be held to help them understand and meet green standards. Maintaining good communication with government departments and industry associations can help companies keep abreast of policy changes and even participate in policy making. Finally, by participating in community environmental protection activities, companies can directly demonstrate their environmental commitment to local residents.
Writing a green procurement report is an important way to demonstrate a company’s environmental performance to stakeholders. In Vietnam, although there is currently no mandatory green procurement reporting requirement, proactive disclosure of relevant information has become a common practice for leading companies. A good green procurement report should include the following key parts: First, the company’s green procurement policy and goals, clearly stating the company’s environmental commitment. Second, specific green procurement practices and results, including quantitative indicators such as the proportion of green products purchased and supplier environmental performance assessment results. Third, the report should honestly disclose the challenges and countermeasures encountered during implementation, demonstrating the company’s determination to continuously improve. In addition, link green procurement with the company’s overall sustainable development strategy to explain its contribution to achieving the company’s environmental goals. Finally, inviting a third-party agency to review the report can increase the credibility of the report.
In Vietnam, the preparation of green procurement reports should also pay attention to several localization points. First, it should be presented in both Vietnamese and English to reach a wider readership. Second, it should refer to the environmental protection goals and relevant policies of the Vietnamese government to show how companies support the country’s sustainable development strategy through green procurement. Third, highlighting the company’s efforts in supporting local green suppliers is not only in line with the Vietnamese government’s policy of encouraging the development of local enterprises, but also can win the public’s favor.
Finally, given the popularity of social media in Vietnam, a simplified version of the report could be produced, suitable for dissemination on platforms such as Facebook or Zalo.
In short, in the Vietnamese market, closely combining green procurement with corporate social responsibility is not only a moral choice, but also a wise business decision. Through effective communication and transparent reporting, companies can turn green procurement into a competitive advantage, while achieving sustainable development and contributing to Vietnam’s green economic transformation. As Vietnamese consumers’ environmental awareness continues to increase, those companies that take the lead will undoubtedly occupy a favorable position in future market competition.
Challenges and Countermeasures of Green Procurement in Vietnam
Although promoting green procurement in Vietnam has broad prospects, enterprises still face many challenges in the implementation process. This section will explore three major challenges and their possible solutions, and provide practical suggestions for enterprises.
Supply chain transparency is the primary challenge faced by Vietnamese companies when implementing green procurement. As Vietnam’s supply chain system is not yet fully mature, many suppliers lack a complete environmental management system and relevant certifications. This makes it difficult for purchasers to obtain suppliers’ environmental performance data and to fully evaluate their sustainability. To address this issue, companies can adopt the following strategies: First, establish a supplier environmental performance evaluation system and require suppliers to provide environmental data reports on a regular basis. Second, use emerging technologies such as blockchain to improve supply chain transparency and achieve traceability of raw material sources. Finally, establish long-term cooperative relationships with suppliers and help them improve their environmental management capabilities through training and technical support.
The insufficient supply of green products is another prominent challenge. The raw materials and products that meet high environmental standards in the Vietnamese market are relatively limited, which to some extent limits the green procurement options of enterprises. In the face of this challenge, enterprises can consider the following solutions: First, increase the cultivation of local green suppliers and encourage suppliers to develop more environmentally friendly products through long-term cooperation agreements. Second, explore alternative materials and innovative technologies, such as using recycled materials or bio-based materials instead of traditional raw materials. Third, cooperate with other enterprises to form a green procurement alliance to attract more suppliers to enter the green product market through economies of scale. In addition, enterprises can also consider participating in the green design process of products to reduce dependence on scarce green materials from the source.
The environmental compliance challenge of cross-border procurement is a complex issue faced by Vietnamese companies, especially export-oriented companies. Environmental standards and requirements vary from country to country, which brings additional complexity to cross-border green procurement. To meet this challenge, companies can take the following measures: First, establish a sound international environmental regulations monitoring mechanism to keep abreast of the latest environmental requirements of the target market. Second, develop flexible procurement strategies that can quickly adapt to environmental standards in different markets. Third, cooperate with international certification bodies to ensure that purchased products meet globally recognized environmental standards. Finally, strengthen communication with overseas customers and suppliers to jointly develop green procurement standards that meet the needs of multiple parties.
Although these challenges may seem daunting, they also present opportunities for Vietnamese companies to innovate and differentiate. By actively addressing these challenges, companies can not only improve their environmental performance, but also establish a competitive advantage in the international market. As the Vietnamese government continues to pay more attention to environmental protection and consumers become more environmentally conscious, companies that can effectively implement green procurement will be in a favorable position in future market competition.
Companies should realize that overcoming these challenges is a gradual process that requires long-term investment and continuous improvement. By developing clear green procurement strategies, cultivating professional procurement teams, and working closely with supply chain partners, Vietnamese companies are fully capable of making significant progress in the field of green procurement and making important contributions to the country’s sustainable development.
Outlook for future trends
The concept of circular economy is profoundly changing the procurement model of Vietnamese companies. In the traditional linear economic model, the products purchased by companies are often discarded after use. In the circular economy model, procurement decisions will take into account the entire life cycle of the product. Vietnamese companies are increasingly looking for raw materials and products that are recyclable, remanufacturable or biodegradable. For example, the Vietnamese textile industry is exploring the use of recyclable polyester fibers, and furniture manufacturers prefer to use sustainable wood certified by FSC. In the future, we may see more companies adopting the “product as a service” model, such as leasing rather than buying equipment, which can not only reduce initial costs, but also ensure that the product is properly recycled after its service life. In addition, industrial symbiosis between companies will become more common, and the waste of one company may become the raw materials of another company, thus forming a closed-loop supply chain.
Carbon neutrality goals are becoming a key factor influencing procurement decisions of Vietnamese companies. With the Vietnamese government’s commitment to achieve carbon neutrality by 2050, companies are under pressure to reduce carbon emissions. This directly affects procurement strategies, prompting companies to pay more attention to the carbon footprint of suppliers. In the future, Vietnamese companies may give priority to suppliers who can provide low-carbon or carbon-neutral products. We may see more companies require suppliers to disclose carbon emission data and incorporate this data into the supplier evaluation system. At the same time, procurement decisions will consider transportation distance and mode more to reduce carbon emissions in the logistics link. For example, manufacturers in northern Vietnam may prefer to source raw materials from the same region rather than importing from long distances. In addition, renewable energy procurement will also become an important trend. Vietnamese companies may consider purchasing green electricity or investing in renewable energy projects more to offset the carbon emissions in their operations.
Emerging green technologies and materials are opening up new possibilities for green procurement for Vietnamese companies. Bio-based materials are being used in multiple industries, such as degradable packaging materials made from bagasse, which are becoming increasingly popular in Vietnam’s food industry. The application of nanotechnology enables companies to purchase products with better performance and lower environmental impact, such as nano-coatings that can extend product life and reduce replacement frequency.
Artificial intelligence and big data analysis technologies are being used to optimize supply chains and help companies make more environmentally friendly purchasing decisions. For example, some large Vietnamese manufacturers have begun using AI systems to predict demand and reduce over-purchasing and inventory waste. In addition, the application of blockchain technology is expected to increase transparency in the supply chain, enabling companies to better track the source and production process of raw materials and ensure their sustainability. In the energy sector, as the Vietnamese government strongly supports the development of renewable energy, we may see more companies procure clean energy such as green hydrogen as raw materials or fuels.
In the face of these trends, Vietnamese companies need to maintain keen insight and adaptability. It is recommended that companies actively invest in employee training to improve the understanding and application of new green technologies and materials. At the same time, companies should establish flexible procurement strategies that can quickly respond to changing environmental regulations and market demands. It is also crucial to establish long-term and in-depth partnerships with suppliers, which will help to jointly develop and apply innovative green solutions. Finally, companies should actively participate in industry dialogues and policy-making processes to contribute to shaping a more sustainable Vietnamese manufacturing ecosystem.
By actively embracing these green procurement trends, Vietnamese companies can not only improve their own sustainability and competitiveness, but also make important contributions to the country’s green economic transformation. As Vietnam’s position in the global supply chain continues to rise, adopting these advanced green procurement practices will help Vietnamese companies better align with international standards and expand international market opportunities.
Action Plan for Implementing Green Procurement
Implementing green procurement is a gradual process that requires companies to develop clear goals and action plans. First, let’s look at how to set short-term, medium-term, and long-term goals. Short-term goals (1-2 years) should focus on building the foundation, such as developing a green procurement policy, training key personnel, and starting to collect supplier environmental data. For example, complete the development of a green procurement policy within the first year and train 100% of the employees in the procurement department. Medium-term goals (3-5 years) can focus on expanding the scope and depth of green procurement, such as incorporating green standards into 50% of procurement decisions and establishing a supplier environmental performance evaluation system. Long-term goals (more than 5 years) should be more strategic and forward-looking, such as achieving 90% of procurement from green certified suppliers, or promoting a circular economy model throughout the supply chain.
Next, let’s explore the recommendations for step-by-step implementation. The first step is to conduct a status assessment to understand the company’s current procurement practices and supply chain environmental impacts. The second step is to obtain senior-level support to ensure that green procurement is part of the company’s strategy. The third step is to develop a green procurement policy and standards to clearly define what is a “green” product or supplier. The fourth step is to train employees to ensure that all relevant personnel understand and can implement the green procurement policy. The fifth step is to start with a small-scale pilot project, such as selecting a product category or department to implement green procurement and accumulate experience. The sixth step is to establish a monitoring and reporting system to track the progress and impact of green procurement. The seventh step is continuous improvement, and continuously optimize policies and practices based on feedback during implementation. Finally, gradually expand the scope of green procurement until it covers the entire supply chain.
The green procurement maturity assessment model is an important tool for companies to measure their green procurement practice level. This model usually includes five levels: initial level, development level, standardization level, management level and leading level. The initial level is characterized by the lack of formal green procurement policies, and procurement decisions are mainly based on price and quality. The development level begins to pay attention to environmental factors, but has not yet been systematized. The standardization level has established formal green procurement policies and processes and has begun to consider environmental standards in some procurement decisions. The management level not only considers environmental factors in most procurement decisions, but also actively cooperates with suppliers to improve environmental performance. The leading level fully integrates green procurement into corporate strategy and promotes sustainable development innovation throughout the value chain. Companies can use this model to regularly evaluate their green procurement level, identify room for improvement, and develop corresponding improvement plans.
Implementing green procurement is an ongoing journey that requires long-term commitment and continuous efforts from enterprises. By setting clear goals, taking systematic implementation steps, and regularly evaluating maturity, Vietnamese enterprises can gradually establish an effective green procurement system that not only reduces environmental impact, but also improves competitiveness and lays a solid foundation for the sustainable development of enterprises. Remember, every small step is an important step towards a greener and more sustainable future.
