How to Invest for the Future?

Nowadays, sustainable development is not confined to the scope of country or a big corporation. This concern has spread all over the world and this is also the concern of Vietnamese companies in general and Vietnamese businesspeople in particular. Especially, in the context of global competition, sustainable development is seen as an investment for the future of a company.

Mr Tran Phu Son, Deputy General Manager of Ernst & Young Vietnam, said sustainable development and corporate social responsibility (CSR) are two integral activities and they are mutually complemented. Simply looking, when a company operates only for profit and compensates social expenses by means of tax payment and disregard CSR in each activity, it is certain that social expenses in consideration of environmental pollution it causes are much greater than interests it generates. As consumers increasingly understand impacts [of its operations] on environment and public health, the successful implementation of CSR will bring in benefit of growth and sustainable development for that company.

Apparent aftermath

Companies that violate corporate ethics, pollute the environment and harm human health are boycotted by consumers, Mr Son said, citing Vedan Company for contaminating the Thi Vai River and a Chinese company for selling melamine-tainted milk as examples. Their business operations will be immediately affected, even brought to the verge of bankruptcy. “Their reputation is tainted and it will take a very long time to restore," he added.

Local mass media have recently unearthed many environment-poisoning cases like Xuan Hoa Company (Vinh Phuc province), Miwon Co. , Ltd (Phu Tho province), and Tung Kuang Industrial Joint Stock Company (Hai Duong province). In reality, the number of unnamed and unknown environmental polluters is much more than that. Many companies only care about profits and leave harm to the society and the environment.

Benefits from sustainable development

Both domestic and foreign companies have proved that investment for sustainable development generates long-term economic benefits not only for companies but also for the community. Many said that investment for sustainable development and good performance of CSR has made them world-leading concerns. Holcim () Ltd is a typical example. Basing on the viewpoint that sustainable development needs a balance in corporate profit and CSR, Holcim (Vietnam) Ltd has been actively developing and promoting sustainable development solutions for stakeholders, effectively using non-renewable natural resources for cement production, limiting CO2 emissions, contributing directly to the conservation and development of biodiversity in wetlands and limestone areas. Its activities are highly appreciated by the community.

Another case is Tata Steel Group, a leading Indian steelmaker. Since 1912, Tata has implemented its 8-hour-a-day initiative, free healthcare, paid leave, maternal allowances, profit sharing, trade union establishment, and compensation for workers. Mr Indronil Sengupta, Director of Tata Steel Southeast Asia, and Vice Chairman of Vietnam Business Council for Sustainable Development (VBCSD), said: “It seems to be a conflict between corporate interests and sustainable development while it has to pay so much for new technologies and public interest development but this is just a short-sighted perspective. It is certain that objectives for the sake of community interests will be rewarded in the long term.

The new pro-community and business model or pro-poor business model is being implemented very successfully by some companies. Typical models include tea planting project in the north, sugarcane planting in Thanh Hoa province, cassava growing project in central region, milk cow raising project in the Mekong Delta. These are not philanthropic activities of investing companies but these are their new creative and sustainable business strategies. In fact, low-income earners account for 80 - 85 percent of the population. They are input suppliers, factory workers, product distributors for remote areas, and consumers. While the market for high-income earners has almost reached the saturation point, the market for the poor remains largely untapped. Thus, economists recommended companies to add market segments for low-income earners to their business strategies.

For conclusion

According to experts, one of the decisive factors for the implementation of CSR is the awareness of business leaders. This factor requires business leaders to have a very long term vision on sustainable development. In fact, CSR is not merely charitable activities and the like but it also includes the responsibility to ensure effective economic growth, law compliance, corporate ethics, and difficulty sharing with the community.

In reality, as high costs for CSR implementation will increase production costs and eat into corporate earnings, many companies deliberately exclude it from their general business strategies. Their choice is unfriendly to the society.

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