Green policy has a strong impact on investment attraction trends

Many countries around the world have recognized the need to enact green policies, integrating environmental goals into economic policy making.

Green trade, green investment

The globalization process has been profound with countries actively removing trade barriers, promoting trade and investment facilitation, causing international trade flows and international investment to increase strongly over the past decades.

Trade and investment growth has become a driving force for economic growth but has also caused environmental degradation, air, land and water pollution, and loss of biodiversity.

According to the World Trade Organization (WTO), the production and transportation of imported and exported goods emits about 20-30% of global carbon emissions, leading to climate change.

Faced with these issues, many countries have recognized the need to enact green policies, integrating environmental goals into economic policymaking. European Union (EU) countries are working to align trade policies with environmental ambitions. The US administration has committed to rejoining the WTO and reestablishing the role of multilateral environmental diplomacy .

In addition to the advantages of reduced labor and production costs brought by globalization, some developed countries have actively shifted their supply chains abroad to reduce carbon emissions. Meanwhile, developing countries are passive in green policies because they are accustomed to looser environmental regulations and do not have enough resources to go green.

The annual conference series on International Economic Cooperation and Integration (CIECI) was initiated in 2013. Following the success of previous years, The 12th Conference (CIECI 2024) with the theme: "Green Policy and Practice: Catalyst or Pressure for Trade and Investment" was held at the University of Economics, Vietnam National University, Hanoi with the aim of enhancing academic and practical exchanges, providing a forum for scholars, experts, domestic and international enterprises to discuss and share experiences, new ideas and research results on green trade and green investment implementation experiences.

Sharing at the event, economic experts said that the policy of greening the economy is taking place globally, which has, is and will strongly affect the flow of trade and investment in the world, including Vietnam.

According to Associate Professor Dr. Le Trung Thanh, Principal of the University of Economics - Vietnam National University, Hanoi, many countries in the world recognize the need to issue green policies, integrating environmental goals in economic policy making.

Associate Professor, Dr. Le Trung Thanh, Principal of the University of Economics (Vietnam National University, Hanoi) said: According to information from the World Trade Organization (WTO), production and transportation of import and export goods emit about 20-30% of global carbon emissions, leading to climate change.

Faced with these issues, many countries around the world have recognized the need to enact green policies and integrate environmental goals into economic policymaking. In particular, countries in the European Union (EU) are working to align their trade policies with environmental ambitions. The US administration has committed to rejoining the WTO and reestablishing its role in multilateral environmental diplomacy. In addition to the advantages of reducing labor and production costs brought by globalization, some developed countries have actively shifted their supply chains abroad to reduce carbon emissions.

Meanwhile, developing countries are passive in green policies because they are used to looser environmental regulations and do not have enough resources to go green.

Meanwhile, Professor Anuj Kumar, Head of Research, Rushford Business School (Switzerland), said: India is attracting FDI inflows into the solar, wind and green hydrogen sectors. This increased focus on sustainability not only supports India’s energy security but is also in line with global climate goals, bringing long-term economic benefits.

The EU's introduction of the Carbon Border Adjustment Mechanism could have a significant impact on Vietnam's exports.

Challenge competitiveness

Associate Professor, Dr. Vu Thanh Huong, Deputy Dean of the Faculty of Economics and International Business (University of Economics), Vietnam National University, Hanoi, affirmed: The EU's introduction of the Carbon Border Adjustment Mechanism (CBAM) could have a significant impact on Vietnam's exports, especially in carbon-intensive industries such as textiles, footwear and steel.

This new trade barrier may encourage Vietnamese industries to invest in sustainable practices, but it may also challenge competitiveness, especially for small and medium-sized enterprises that lack the resources for the green transition.

According to Professor Yovogan Marcellin, Sofia University (Bulgaria): Implementing green finance and ESG requirements can improve the financial performance of fintech companies by attracting socially conscious investors and expanding access to green funding opportunities. He also noted that the associated compliance costs and the need to integrate sustainability practices into initial operations can affect profitability, especially for small fintech companies.

Economists also say that as climate change and environmental sustainability become central to both public and private agendas, countries and companies are increasingly adopting green policies aimed at reducing carbon emissions, promoting renewable energy and fostering a circular economy.

International agreements and greening regulations in free trade agreements (FTAs) are playing a role in shaping countries’ green policies. By moving towards green investment and trade, countries will expand international trade opportunities, and FDI capital flows will focus more on developing sustainable industries.

However, countries will face many barriers, especially in terms of costs and high levels of risk. Therefore, the authors will provide policy implications to help governments and businesses overcome the challenges that arise in the process of moving towards greening trade and investment activities.

Source: https://baolangson.vn/chinh-sach-xanh-tac-dong-manh-me-den-xu-huong-thu-hut-dau-tu-5029417.html