Three Recommendations for Sustainable Business in Medium and Long Terms

10:56:27 AM | 8/6/2020

The Vietnam Business Council for Sustainable Development (VBCSD) under the Vietnam Chamber of Commerce and Industry (VCCI) has recently conducted a quick business survey amidst the Covid-19 pandemic outbreak. VBCSD has also put forth recommendations to the Government and businesses on medium and long-term strategies for sustainable business development aligned with the National Action Plan for Implementation the 2030 Agenda for Sustainable Development and the Roadmap for Vietnam Sustainable Development Goals (VSDG) to 2030. Our reporter has an interview with Mr. Nguyen Quang Vinh, General Secretary of VCCI and Vice Chairman of VBCSD, on this content. Ha Linh reports.

Mr. Vinh said that Covid-19 has sharply decreased consumer demand and export markets and caused input shortages. As a result, most companies have seen a decline in revenue and paused their investment and business expansion plans. In this context, VCCI, as a national representative of the business community and employers, has actively put forth many recommendations and suggestions for short-term and urgent solutions to support businesses to overcome their difficulties, as in Official Letter 0210/PTM-PTDN dated February 25, 2020 and Official Letter 0453/PTM-KHTH dated April 6, 2020 sent to the Prime Minister.

How have companies changed their own business approaches in this difficult context?

We realize that companies have been very proactive in making appropriate business plans and strategies. Specifically, 31% of VBCSD member companies said they will focus more on the domestic market and reduce their dependence on foreign markets; and 25% said that they will reduce/expand business scale. In particular, up to 81% said that they will strengthen industry linkages and ensure no supply chain disruptions in the events like Covid-19 that may occur in the future. In addition, they said that they will boost e-commerce and online business development to reduce dependence on traditional markets and conventional business forms; reduce costs; and delay investment in non-essential items.

In spite of facing numerous difficulties caused by the Covid-19 pandemic, VBCSD member companies, being aware of their responsibility to the community, donated more than VND116 billion (in cash and in kind) to join hands with the Government and relevant agencies in the fight against the coronavirus.

Hard hit by the Covid-19 pandemic, do you think businesses need to reconsider sustainable factors?

Without doubt, sustainable development is no longer alien to businesses but will become their "flesh and blood" in the long term, a "life buoy" for them to improve resilience and recovery in all circumstances, especially in the current context of the Covid-19 pandemic. I think that the business community should deploy a number of solutions for medium and long terms:

Firstly, they need to focus on corporate restructuring and corporate governance towards sustainability. They should proactively change business thinking and adopt sustainability-integrated management in corporate governance. For example, they make sustainability reporting, identify Key Performance Indicators (KPIs) directly related to sustainability strategy, apply the Corporate Sustainability Index (CSI) in corporate governance. They should continuously improve employee capacity and sustainable financial management: ensure investment flows for innovations, sustain business operations in the long term, and adopt continuous business administration.

Second, they should boost supply chain management capacity. In the past decades, when setting up supply chains, most businesses have given priority to optimizing performance rather than consolidation, making supply chains very vulnerable to global shocks and the Covid-19 pandemic has proved it. To deal with this weakness, they need to proactively strengthen the capacity of supply chains by developing diverse end-to-end supply chains. In addition to diversifying suppliers with long-term contracts, they should actively build a network of short-term suppliers to avoid dependence on large suppliers. They need to work out risk management scenarios for supply chains and adopt flexible, streamlined production plans. They need to apply technology to supply management

Third, building long-term visions and strategies, they need to actively update the Government's economic development policies in the long term so that they can formulate/adjust their business production strategies to match with general national orientations, and at the same time, capture and anticipate support resources from the Government and potential business opportunities affected by government policies. They need to actively study world economic development trends (such as digital economy, artificial intelligence, etc.) to build future business models to have leapfrog development and respond well to market changes and new consumer trends. They need to perform a strong digital transformation in corporate governance and business operations.

Based on business practices, what will VBCSD advise the Government on medium and long-term sustainability?

We believe that the Government needs to promote institutional reforms, build a legal corridor to facilitate corporate sustainability, and issue long-term strategic policies coupled with medium-term activities, consistent with world development trends and national socioeconomic development orientations. Government policies also need to take into account risk management factors by developing scenarios to cope with potential adverse conditions in the future (such as pandemics and natural disasters caused by climate change).

Specifically, we are building and implementing the Project on Improving Sustainable Corporate Governance in the 2021-2025 period. Improving corporate governance capacity for the Vietnamese business community, especially small and medium-sized enterprises (SMEs), is vital to create a foundation for a sustainable business community, thereby strengthening economic competitiveness and resilience to unpredictable fluctuations in the future. We are building a strategy for developing the circular economy for some key economic sectors in the 2021-2030 period, with a vision to 2050. In the medium term, we need to work out and carry out a national program to support the business community to launch the circular economy in Vietnam in the 2021-2025 period.

Why do I insist on choosing the circular economy? Because this is an indispensable requirement to overcome limitations of the traditional growth model and integrate rapid, sustainable development, energy conservation and environmental protection. In the medium term, the Government can select some key economic sectors to pilot this economic model, such as plastics, paper, construction and food.

In addition, it is necessary to develop a scheme to promote green credit and support the business community to achieve sustainable development in the 2021-2025 period.

We also propose that the Government should soon develop, issue and implement the long-term national strategy on promoting sustainable participation of Vietnamese businesses in key economic sectors in global supply chains and value chains. In order to reduce supply chain disruptions, it is necessary to have a strategy to diversify supply chains, focusing on the domestic market. Given limited resources, it is very important to select some economic fields/industries of local strengths for development instead of making unfocused investment.

The strategy will also provide a basis for ministries, VCCI and other relevant agencies to support the business community to join all links in global supply chains instead of just low-valued links as today, thus improving business and economic competitiveness.

In addition, we propose that the Government should soon work out the Roadmap for sustainable development of supporting industries for key economic sectors in the 2021-2030 period, with a vision to 2050; the Development Strategy for New Economic Models in Vietnam in 2021-2030 and to 2045; the Vietnam Human Resource Development Strategy in 2021-2030; the Action Plan to Respond to Climate Change in 2021-2025 and to 2030; the Vietnam Renewable Energy Development Roadmap in 2021-2030; and the Sustainable Agriculture Development Strategy in 2021-2030.

Source: Vietnam Business Forum