From trash to treasure: circular economy brings hope in Vietnam

HANOI — Trần Thị Bình, 60, who lives in Hà Nội, has no idea about the circular economy but now brings her canvas bag shopping instead of taking plastic bags from the supermarket.

Vũ Lan Anh, 35, from HCM City, likes to use glass juice bottles as flower vases. She is also willing to pay a slightly higher price for a recycled product to protect the environment.

Consciously or unconsciously, these examples show that the application of circular principles and their behaviours present golden opportunities for businesses.

The circular economy, or simply circularity, is a global trend, driven by scarcity of resources. It is an economic system of closed loops in which raw materials, components and products are put in use for longer, thus improving the productivity of resources.

In this concept, all ‘waste’ should become ‘food’ for another production process which is in contrast to the traditional linear production model of ‘take, make, dispose’.

It’s clear that as the global population grows, urban societies will consume more resources per capita, putting more pressure on the planet.

The circular model can stop unnecessary exploitation of resources and this concept is appealing as it not only makes our current way of life more sustainable but also presents opportunities for businesses.

Experts are talking about a US$4.5 trillion opportunity by 2030 and $25 trillion by 2050 that the circular economy can offer (Waste to Wealth by The Accenture Strategy research in 2015).

The world is moving towards a circular economy.

Many companies, in one way or another, are introducing zero-waste goals and are building business strategies to transition to circularity.

Last year, a platform for accelerating the circular economy (PACE) was launched at the World Economic Forum 2018 with the participation of more than 50 government and business leaders. This is a private-public collaboration mechanism which seeks to scale up circular economy innovations. PACE members include global corporations like Coca-Cola, Ikea, Unilver, Philips, Alphabet Inc and HP.

In Việt Nam, the circular economy is a rather new concept. The first movers are big or foreign-invested companies.

According to Patrick Chung, general director of Lee & Man Vietnam, sustainable development is a policy encouraged by the Government but is not mandatory. The implementation depends only on the ability and orientation of the company and dedication of the management board.

“However, it is also difficult for companies to pursue this goal,” Chung told Việt Nam News.

He said to do this, companies must consider many aspects such as finance, resources and vision, and they must invest time, effort and resources into non-financial goals related to environment and society.

“This obviously partly reduces the company’s profit. Without trade-offs, companies cannot pursue a true sustainable development goal.”

There is a fact that it is cheaper to make products using recycled materials.

At Lee & Man – an FDI paper manufacturer – more than 95 per cent of inputs are from recycled materials. Chung said on average, paper can be recycled up to six times before becoming unusable. Therefore, not taking advantage of this ‘resource’ is wasteful and puts more pressure on the environment.

In the paper industry, solid waste such as metal and plastic are processed while recycling paper can be re-supplied to other manufacturing industries, Chung said, giving an example of non-reusable waste that will be incinerated at the factory, the ashes will be purchased by cement companies to produce cement or other companies to produce unburnt bricks.

To follow this model, the company has invested millions of dollars in waste treatment.

Could Vietnamese companies, most of which are micro, small and medium-sized enterprises (MSMEs), afford circularity?

“It’s not necessary to be cost-intensive. The circular economy can be a smart business model,” Constant Van Aerschot, Director Asia Pacific at the World Business Council for Sustainable Development told Việt Nam News.

On the sidelines of the national conference on sustainable development in Hà Nội last week, Aerschot said SMEs can become suppliers to big companies. If SMEs can find a solution that helps big companies become more circular, the circular economy is also an opportunity for them.

“Any circular model that helps big companies is also good for small ones,” he said, noting that leasing or taking back products for reproduction are models that are not very costly and small companies can take advantage of.

Bùi Thị Loan, Sustainability Manager at Heineken Brewery Vietnam, said Heineken had stopped most printing and now lease external printing services.

Loan suggested companies can re-assess the life cycle of their products to find points that can be improved to bring the most value. But this process needs a roadmap and specific goals “because it’s impossible to do all things at the same time”.

Now, most companies are in the early stages of understanding what the circular economy means and thinking about reducing waste or making sure that products are recycled.

Sustainable development has moved to the ideology that is targeted at designing material cycles that can continue running for a very long time and products are designed in such a way that they can be recycled or are made of recycled materials.

Many businesses in Việt Nam have launched campaigns to reduce waste and encourage a green lifestyle. But as a representative of Unilever Vietnam said, they are actions of responsible companies and there should be a private-public partnership mechanism to do it on a larger scale and the Government should take a role here.

Consumers, as well as Vietnamese customers, today pay more attention to the environment. They are even willing to pay more for a product with a positive impact on the environment. This is an opportunity but also a challenge for companies to take action towards sustainable development.

Companies thus have to rapidly find their role in the transition to the circular economy. Don’t let the opportunity go to waste.