Remember when H&M (among others) asked Vietnam to reconsider its green energy efforts?

In late 2020, a consortium of nearly 30 brands urged Vietnam’s former Prime Minister Nguyen Xuan Phuc to reevaluate the benefits that direct power purchase agreements (DPPAs) between private brands (not unlike the Swedish retailer) and renewable energy sellers (think solar panels and wind turbines). The crux of the concept was those who profit off Vietnam’s resources should invest some of those profits back into the country.

On Tuesday, H&M Vietnam signed a memorandum of understanding (MoU) with the Power Engineering Consulting Joint Stock Company 2 (PECC2) on the cooperation under the government’s recently passed DPPA mechanism scheme.

Issued over the summer, policy Decree 80/2024/ND-CP mandates that those who profit must pitch in, highlighting the industry’s (sometimes apprehensive) embrace of extended producer responsibility (EPR) schemes. Businesses in Vietnam that generate waste through their products (e.g., plastic packaging, electronics) are held accountable and required to either set up their own recycling systems or contribute financially to national recycling and waste management programs. This pay-to-play system for environmental responsibility has been seven years in the making.

H&M earns the title of being first at-bat on an effort of the kind while enjoying clean energy at competitive rates. Vietnam gets green kudos while compounding the competition in its retail electricity market.

“This event marks a new beginning for PECC2,” the Vietnamese electric company said in a statement. “It is the first DPPA cooperation agreement signed with a major global fashion brand, helping H&M access clean energy at reasonable costs.”

The signing ceremony was held at PECC2’s Ho Chi Minh City innovation hub. H&M Group’s regional county manager of production, Jessica Wilhelmsson, and PEEC2’s chief operating officer, Nguyen Hai Phu, as well as representatives from both parties, participated. The ceremony included a tour of the facility as well. The Conscious Choice company visited its battery energy storage system (BESS) to observe how technology is used in remote power plant operations, hitting the operations control center (PECC2-OCC) and the digital capability center (PECC2-DCC) as well.

“To be able to reduce enough GHG emissions to support our 56 percent reduction goal by 2030, we constantly work together with our stakeholders to contribute to systems and policy solutions that enable the industry to move quicker towards decarbonization,” a spokesperson for H&M told Sourcing Journal.

The chief challenge in doing so, however, is in safeguarding the reliability of said system or policy solution.

For H&M, that means ensuring access to renewable electricity across all production markets, which involves both the capacity of the grids to supply sufficient green power and the stability of those grids to handle what those production plants need. Thus, the signature of the MoU is an “exciting first step,” per the spokesperson, in powering up the power purchase agreement (PPA) processes that will connect suppliers to green electricity.

PECC2 did not respond to Sourcing Journal’s request for comment.

Tangentially, the green energy agreement comes a month after the Green Economy Forum and Exhibition (GEFE 2024). The mid-October show in Ho Chi Minh City saw the Embassy and Trade Office of Sweden in Vietnam open a green exhibition and launch the “Sweden-Vietnam Business Footprint,” a move that some Vietnamese media organizations have said “affirms Sweden’s commitment to promoting bilateral cooperation for a green future.”