10/10/2016
However, a number of countries have been unable to put those criteria to use because local companies have been unwilling to provide reports on their production and Government agencies lack equipment and resources to perform well.
The two coastal provinces of Việt Nam (Bình Dương and Bình Định provinces) have evaluated local enterprises based on three groups of quantitative criteria for green enterprises, which are firms’ compliance with the Law on Environmental Protection; compliance with environmental regulations and standards; and compliance with environmental protection procedures and other relevant issues.
The assessment did not include factors such as applied technologies, energy saving and production of green outputs. However, in order to reflect the green growth activities of firms, the standards need to pay more attention to how advanced technologies are used in production, how firms use less natural resources to achieve higher production, and how firms transform to produce green outputs.
Within the study “The main solutions to promote green growth of local enterprises in Hà Nội by 2020, vision to 2030”, the Central Institute for Economic Management (CIEM) has developed an index that evaluates green growth activities in local enterprises, or the Green Enterprise Index (GEI). The GEI ensures that those activities are fair, public and transparent, and helps local enterprises transform their current production models to the green one when they become public on the media.
Development of GEI
GEI formula:
Of which:
GEI : Green Enterprise Index
i : group of indicators
qi : sum of scoring of indicators i
wi : weight of the indicators i
a, m: constant to adjust the index back to the scale of 100.
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| Raising awareness and actions on environmental protection for local enterprises is a criterion to evaluate the implemention green growth of business |
Set of CRITERIA
In order to calculate the GEI, the authors developed a set of criteria, including four major groups of 30 criteria. The criteria are consulted by 223 specialists from Ministries, sectors and local enterprises in Hà Nội, and evaluated on the scale of 5 points, of which, 0 is: unnecessary to be included in the assessment; 1 is: not important; 2 is: less important; 3 is: important; 4 is: very important; and 5 is: extremely important. The following are criteria used to calculate the GEI:
The first group of criteria: Enterprises’ awareness of environmental protection. This is the most important group because it reflects the awareness levels of enterprises in complying with the regulations on environmental protection. The group is made up of 11 component criteria, which are evaluated in two levels - “very important” and “extremely important”. The level of “very important” includes three criteria is that enterprises implement measurement and analysis of key environmental parameters and reach standards and technical regulations before emitting into the environment; How do enterprises have measurement results and classification of solid waste before storing or transporting it to the treatment area in accordance with the regulation? ; Whether enterprises declare, pay the environmental charges for wastewater and receive a wastewater discharge licence in accordance with the regulations.
The other eight criteria are evaluated on the level of “important”, including: How do enterprises co-operate with Government agencies and local authorities on environment protection?; Whether enterprises provide reports on their environmental protection activities at least twice a year; If enterprises are granted with their ISO14.000 certificates on environmental protection; How many enterprises plant trees that cover 10 percent of their total area?; Enterprises recognised for applying more environment-friendly production methods; Enterprises which participate in local community activities on climate change and environment protection; How many enterprises have their own divisions to deal with environmental issues?; How many enterprises have managers taking part in training courses and workshops on green growth?
The second group of criteria: Enterprises use innovative technologies to transform production model. This group reflects green growth activities such as using advanced technologies, producing more outputs from less natural resources and energy, disposing less waste and protecting the environment.
The criteria are: Enterprises with plans to invest in energy-saving technologies in order to reduce greenhouse gas emissions and protect the environment; Enterprises investment in new technologies to save input materials and energy and in technologies to process and reduce industrial waste and greenhouse gas emissions; Enterprises were able to increase the amount of outputs made from the same amount of input materials compared to the previous year; Total reduction in carbon per output unit in comparison to the previous year; Total amount of solid waste per output unit decreases in comparison to the previous year; Total amount of waste water per output unit decreases in comparison to the previous year; Total output produced from using 1m3 of water increasing in comparison to the previous year; Enterprises plan to change production technologies from those that consume a lot of energy and natural resources, generate greenhouse gas emissions and pollute the environment to those that consume less energy and natural resources and are friendly to the environment.
The third group: Efficient use of energy. This group of criteria assesses corporate activities, in which firms can manage and use energy in an efficient way. The criteria include: Enterprises conduct annual reports on energy and environment protection; Total amount of carbon generated from using a unit of energy (electricity, coal, gas, oil) decreases in comparison to the previous year; Total amount of outputs generated from using a unit of energy (electricity, coal, gas, oil) increases in comparison to the previous year; Enterprises receive the certificate ISO 50.001 on energy saving; Total amount of solid waste generated from using a unit of energy (electricity, coal, gas, oil) decreases in comparison to the previous year; Enterprises win prizes on energy saving.
The fourth group: Enterprises transforming their production model to friendly - environmentaly, energy-saving and green model. This group shows willingness of firms to transform their production and products as well as their efforts to achieve certificates for green products. The criteria are: Enterprises with plans to transform their production models and products into green ones, and commit to implementing their plans; Enterprises achieving national certificates for green products; Enterprises achieving international certificates for green products.
Weight of the criteria: Besides scoring each criterion, the four groups of criteria are scored as percentage point to be the GEI weight. The results showed that, the group of criteria on awareness and actions on environment protection by enterprises is the most important with the scoring of 30.9 percentage points; the second one is the group of criteria on technology improvement with the scoring of 26.6 percentage points; the group of energy consumption is the third important one with the scoring of 23.1 percentage points; and the group of criteria on product transformation received the scoring of 19.4 percentage points.
Scoring result: The GEI is scored on the scale of 100 points, and divided into five different levels: Very Good level for the range of 90 points to 100 points, proving that most of enterprises are trying to achieve green growth; Good level for the range of 80 points to 89 points, proving that enterprises have done a lot of green growth activities; Average level for the range of 70 points to 79 points, proving that enterprises have done several of green growth activities but those are not sufficient; Bad level for the range of 50 points to 69 points, proving that enterprises have done few of green growth activities; and Very Bad level for the range of below 50 points, proving that enterprises have done no or very few green growth activities.
Besides giving a general score to each enterprise, GEI also displays the scoring of all four groups of criteria, which reflect fully the actions by enterprises to achieve green growth development. The GEI provides information to the community, consumers and Government agencies in the shortest, most memorable and most understandable way, thus putting pressure on the firms to change their production model to improve their images and ensure sustainable development.
The GEI also helps Ministries, sectors and local authorities to evaluate and classify all Việt Nam’s enterprises. The evaluation and classification depend on the capability of each Ministry, sector and local authority, and can be conducted every year or every two to three years.
MSc. Hồ Công Hòa
Central Institute for Economic Management
