US Withdrawal from Paris Agreement and Its Impacts on Vietnamese Businesses

The US has announced its withdrawal from the Paris Agreement on climate change twice. This decision is not merely symbolic; it has profound implications for the global economy, especially in the context of the green transition. The first time, under President Donald Trump, the US pulled out to protect jobs in traditional industries like coal, oil, and gas. For his 2024 campaign, Trump has again committed to withdrawing the US from the agreement if re-elected. This not only weakens America's leadership on climate issues but also fundamentally alters the structure of global emissions responsibility.

With the US government stepping back, the private sector has become the primary force for emissions reduction. US companies, particularly multinational corporations, are forced to take action on their own to meet their environmental, social, and governance (ESG) goals. Without government support, such as incentives for renewable energy or carbon tax mechanisms, they are shifting the burden of emissions onto their global supply chains, where the cost of emissions is lower.

As a key part of the global supply chain, Vietnam faces increasing pressure from US businesses. International standards for emissions inventories, carbon footprint calculations, and ESG reporting are becoming contractual requirements. Industries like textiles, footwear, seafood, and electronics are seeing a rise in customer demands for carbon emissions disclosure. If Vietnamese businesses fail to meet these requirements, they risk having their production cut or being dropped from the list of suppliers.

A major concern is that many small and medium-sized enterprises (SMEs) in Vietnam lack the capacity to meet these strict demands. A shortage of skills, data systems, and measurement tools can make them the weakest link in the supply chain. Therefore, to survive and thrive, Vietnamese businesses need to proactively shift their mindset from passive compliance to active adaptation. They must build the capacity to conduct greenhouse gas inventories, invest in energy-saving technologies, and adopt circular production models.

Participating in voluntary carbon markets or developing carbon credit projects is also a smart strategy to turn emissions reduction into a financial asset. Investing in internal ESG training and digitizing production systems will help Vietnamese businesses prepare for emissions audits from international organizations.

Despite the US government's withdrawal from the Paris Agreement, pressure from financial markets and other stakeholders continues to grow. Therefore, tightening supply chain requirements is not just a protective strategy for US corporations but also a major challenge for Vietnamese businesses. Without timely action, Vietnam could miss the opportunity to participate in the global arena as a reliable, sustainable, and low-emissions supplier.