Vietnamese version published in Forbes Vietnam, July 2021 –
Interview with Tran Vu Ngan Giang (aka Giang Tran) – ASSIST (Asia Society for Social Improvement and Sustainable Transformation) by Forbes Reporter Ms. Linh Chi.
How do you see CSR activities in Vietnam today?
In recent years, the business community in Vietnam has been actively promoting CSR under various forms and names. However, both academic studies, as well as practices suggest that CSR is not fully comprehended and is quite often misunderstood as corporate giving, though philanthropic responsibility is only one of the four pillars of CSR (i.e. economic, legal, ethical, and philanthropic responsibilities).
CSR activities in Vietnam are therefore rather inconsistent depending on the size and scale of a company.
Following direction from headquarters and requirements from their home countries, some MNCs in Vietnam have delivered CSR through various models, such as Creating Shared Value, and Sustainability following an Environmental, Social, and Governance (ESG) framework. Their CSR activities therefore go beyond charitable giving or cleaning trash on the beach, and are embedded in the backbone of their business. Such activities are considered sustainable because they enable firms to operate towards the interests of their stakeholders as well as environment and nature, rather than only the mere interests of shareholders.
For Vietnamese companies, some of the large corporations pioneer their CSR through environmentally friendly products or sustainability reporting, and so on. However, such practices are rare: CSR is still widely delivered as a philanthropic action, considered as a marketing and branding tool, and is not thoroughly employed as a business culture.
Vietnamese SMEs, who engage in the supply chains for international clients, deliver CSR as a form of compliance with international standards. Other than those, most SMEs refer to CSR as an emergency and charitable support. It is also worth noting that many SMEs practice the four pillars of CSR but they do not consider such activities as CSR. CSR to them is charity.
What are the biggest barriers for companies when doing CSR activities in Vietnam?
External – institutional environment:
The legal system, mechanism, and infrastructure are not encouraging enough for CSR to emerge. Tax incentives on corporate giving are still complex for businesses to apply. Some companies are keen on recycling their waste, but the infrastructure is not available for them to do so.
The lack of law for nongovernmental organisations and the underestimation of NGOs’ roles is another big barrier for the cross-sector partnership between NGOs and businesses. NGOs are perceived as money-receivers delivering support to people in need rather than as a partner assisting companies delivering long-term impact and creating value for those companies.
Internal – inconsistent comprehension and lack of expertise:
There are very few companies that have a CSR function. CSR is usually assigned as an element of marketing or HR. Leaders at some big companies may understand CSR; however, their employees just do not get it. CSR is therefore not conducted as a core strategy and not treated as a corporate value.
What are the short- and long-term solutions for companies to work on sustainable development?
Vietnam has entered many bi- and multilateral free trade agreements with requirements for environmental standards and respect for human rights. Traditional thinking about the role of businesses – which is to create commercial value – is no longer relevant. CSR, CSV, ESG or Corporate Sustainability has proved to support long-term development of companies. It is therefore time for firms to upgrade their understanding about CSR and employ experts to drive CSR as a business DNA.
Working together with NGOs is a plus for companies as they can leverage extra resources, expertise and community engagement from the NGOs. At ASSIST, for instance, we bring in extra funding from development donors – which companies are not always aware of – to match with companies’ budget and scale up long-term impact through CSV programmes.
The middle class and millennial demographics within Vietnam are growing; they pay attention to eco-friendly and human-centric values. Educating consumers’ awareness about CSR values would also mean businesses could create and expand outreach to communities who share common values and interact with businesses for such values.
Companies could increase their dialogue with the government and join business associations to advocate for policies and legal improvements related to ESG. Business is an integral part of society, therefore a more transparent system and a better society will create a supportive environment for firms to function. For example, better developed climate change policies would encourage more services and infrastructure for recycling, therefore lifting the ecosystem that enables companies to effectively implement their CSR ideas.
More than 90% of Vietnamese enterprises are SMEs, how should they approach CSR?
First of all, SMEs need to comprehend CSR adequately. Looking at CSR as a tool enabling enterprises to capture business opportunities from developing solutions for environmental and social challenges, SMEs will find the relevant approach to their own companies’ nature. For instance, any company, despite its size, can apply non-discrimination recruitment strategies. By doing that, enterprises are embracing CSR values.
Companies of all sizes can also develop guidelines and corporate norms that encourage their employees to use energy efficiently. This does not create any extra cost for their companies but on the contrary, saves their cost as it contributes to reducing greenhouse effects and may reduce the impact of climate change.
What are the current trends in implementing and evaluating the effectiveness of CSR?
In recent years, businesses in Vietnam talk about CSR with newer and more progressive concepts, such as Corporate Citizenship, CSV, Corporate Sustainability, and ESG. ESG provides a specific framework that guides businesses and their CSR towards sustainable development. In addition, Global Reporting Initiative is another tool that helps firms to understand and communicate their impacts on climate change, human rights, and corruption. Although these mainstream tools can be more applicable for big corporations, SMEs can always learn from them and pick practices that are relevant to the SMEs’ characters.
The international community is working towards the Net Zero 2050 programme in order to realize the Paris Agreement’s goal of limiting global temperature increase to 1.5 degrees. As Vietnamese businesses enter deeper into the global economy, it is a huge opportunity for firms to optimise their CSR programmes in order to develop their competitive advantages, international partnerships and contribute to the sustainable development goals.