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Last updated: Monday, December 11, 2017

 

Corporate Sustainability Index (CSI): New Approach to Corporate Governance

Posted: Monday, October 09, 2017


The Asia Sustainability Reporting Summit took place in Singapore from September 17 to 19, 2017. This was an opportunity to share good practices on sustainable development. Mr Nguyen Quang Vinh, Deputy General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) and Vice Chairman and General Secretary of the Vietnam Business Council for Sustainable Development (VBCSD), has given an exclusive interview to our reporters with regard to this issue. Quoc Anh reports.

There has been a global trend of integrating 17 sustainable development goals (SDGs) into corporate business and investment since 2015, he said. To date, applying sustainable development standards to business and investment operations of companies in the region in general and in Vietnam in particular has become an urgent requirement.

You reportedly hosted an experience sharing session at the Summit on the current CSI application of Vietnamese enterprises to develop sustainability reporting. Could you please tell us how this issue plays a role in business development?

Nowadays, we are talking a lot about benefits of applying Corporate Sustainability Index (CSI) to sustainability reporting. This is an online, transparent communication tool for enterprises and shareholders. For example, how effectively do enterprises tap and use capital sources such as financial capital, social capital and natural capital? More transparent governance will make companies more attractive and competitive in the eyes of investors and customers.

In addition, when enterprises integrate and use their capital sources to a maximum to arrange into a sustainability report, this will be a very effective risk management tool for them. In the meantime, shareholders and society will thoroughly understand them.

Besides, many of their operations are involved in environment, energy, climate change and labour, not just the matter of capital and finance. When they integrate such contents into sustainability reports, the picture of their business operations becomes more transparent and closer. Then, their values to shareholders and society are not only dividends but also employment, environmental protection and continuation of natural capital - invaluable resources for them.

Can you give some concrete evidence regarding CSI adoption in Vietnam? Can you compare it with that of other places in Asia?

Many companies in Vietnam are using CSI very well, like Heineken, Bao Viet Holdings, Traphaco, Vinamilk, TBS Group and so on. Their profiles partially prove their success in applying CSI to sustainability reporting. Last year, at the Asian Sustainability Reporting Awards 2016 held in Singapore, some Vietnamese companies joined and competed, and Bao Viet Holdings won the first prize. The attendance of only a few Vietnamese companies to this competition proved that Vietnamese companies were slower at applying sustainability reporting than others in the region.

However, that perception has been improving since the Vietnam Business Council for Sustainable Development released the Corporate Sustainability Index (CSI) with 134 indicators that measure corporate sustainability in financial, economic, social and environmental aspects. Especially, in 2016, VCCI and other ministries and agencies organised for the first time the Programme on Benchmarking and Ranking Sustainable Companies in Vietnam (hereinafter referred to as “the Programme” for short). This was a significant sustainability event of the business community. 100 sustainability-certified companies are examples which shared good sustainable development practices with the business community, especially SMEs, enabling them to learn from good practices and know-how.
Remarkably, the response from the business community to the launch of the Programme in 2017 is much greater across the country than in 2016. This shows that the awareness of enterprises has changed. Currently, the Programme is still open for entries until the final deadline for application submission on 20 October 2017 and the ceremony of announcing the 100 sustainable companies will be held on December 09, 2017, in Hanoi.

As you said above, many enterprises are still not fully aware of CSI application. So, what will VBCSD do to improve the awareness of enterprises in this issue?

I want to say that the perception of this issue is not high around the world either, but things have changed only in a short time. For example, in 2015, when 17 sustainable development goals (SDGs) were adopted, the United Nations held a conference on business roles in sustainable development, attended by just 200 companies or so. But just two years later, in July 2017, the UN hosted the same meeting in New York and attendants amounted to 1,500 enterprises. Thus, companies involved in carrying out these global goals are beyond imagination.

In Vietnam, VCCI and VBCSD, together with relevant agencies, have worked with domestic and foreign specialists to develop CSI for Vietnamese companies in the past four years. Companies will use this index to measure their own sustainability. As soon as they are sustainable, they will be more profitable. Currently, the VBCSD is working with business associations and partners in Vietnam to organise CSI training courses to raise awareness and build capacity for Vietnamese enterprises.

It is noted that business opportunities and investment opportunities from sustainability are enormous. According to a report sent to the World Economic Forum (WEF) 2016 by Business & Sustainable Development Commission (BDC), these opportunities are worth at least US$12 trillion, of which the circular economy is worth US$4.5 trillion. It also pointed out that companies which do not adopt sustainable development will pay much more than the needed investment on sustainable development. Despite the rising awareness of sustainability, the progress of achieving sustainability goals of the business community is still slow, and one of reasons is many companies are not fully aware of opportunities/challenges that sustainable development entails. Hence, they do not invest appropriate resources for sustainable development. The financial sector (e.g. financial institutions and banks) has not deeply involved, leading to impediments to green finance and green credit. These need to be fixed in the coming period.








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