GBA x Vietnam Investment Review: The Move Towards Effectively Implementing EPR in Vietnam

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Members of the German Business Association are strongly driven by sustainability. Since we have many manufacturing companies and related supply and service providers in our members, extended producer responsibility (EPR) is now a core topic for most of them to adapt to in their strategies and execution.

In particular, foreign-invested enterprises and direct local suppliers have to implement measures EPR programmes, since new legislations in Europe and for listed companies globally need to comply with new sustainability targets. Germany was one of the earliest adapters of EPR during the 1990s, a legacy many German companies include in their Vietnam operations. We already have many successful projects – not just in discussions but already in implementation.

In Vietnam, our members are focused around extended waste management, sustainable packaging, and energy efficiency. The basis for these projects are internal guidelines for foreign-led groups to implement globally, including Vietnam, and standards that manufacturers need to fulfill to export to global customers and markets.

Furthermore, consumers globally are now more aware of their shopping behaviours towards the environment and add these in their purchasing decisions. A few examples in our community include changes towards sustainable packaging materials such as from styrofoam to recycled pulp tree; the implementation of internal recycling procedures; changing the energy mix in production by implementing solar photovoltaic on-site to reduce dependency on fossil energy; or switching transportation fleets to electric vehicles.

Vietnam is still facing key challenges based on internal and external capabilities. Numerous local managers have only just started the process to upgrade their knowledge base around EPR and need to learn how to prioritise these programmes within their operations, profits, and losses. Therefore, headquarters and leadership teams need to empower their managers to understand the strategic needs and effective implementation for EPR.

Furthermore, partners and legislative standards are still in an early stage and require a more profound understanding by local decision makers to drive sustainability in manufacturing in organisations. Therefore, we are teaming up with our community but also the European Chamber of Commerce in Vietnam to advocate experience from our members and from Germany.

By sharing best practices, we support governments to understand the positive impact of EPR. We support initiatives leading to higher standards among product quality, waste reduction, and other key measures which are currently still at an early stage. We regularly recommend to authorities to increase product quality and production standards as product certification shall reflect manufacturing procedures and existing international regulations.

In markets such as Europe, the United States, and Japan, EPR has become the basic environmental policy in various industries. Many countries are implementing such policies effectively, helping to reduce waste and environmental pollution. In most industrialised countries, these policies are now mandatory and lead to very positive impacts on the sustainability footprint of companies. Now these standards are increasingly required towards the international supply chain and therefore also suppliers and foreign companies in Vietnam will need to adapt quickly to stay competitive and attractive and sourcing and investment location.

Good practices are useful lessons for Vietnam to learn to successfully implement its EPR policy. It starts within the organisations by putting sustainability on top of the management attention. Leadership needs to advocate the role of EPR and environmental, social, and governance criteria in general among their teams and partners.

Furthermore, regulatory measures to support forward minded and sustainable acting companies have a strong positive network effect and would help Vietnam to upgrade its manufacturing landscape if locally implemented.

Therefore, the foreign community and our members support authorities to understand the positive impacts of such regulations for investment, local competitiveness, and the labour market, driving towards an upgrade in sustainability across the country.

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