CSI - Instrument for Sustainable Corporate Governance

In 2020, the Program on Benchmarking and Announcing Sustainable Companies entered its fifth year with many new highlighted contents. Vietnam Business Forum has an interview with Mr. Nguyen Quang Vinh, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) and Vice Chair of the Vietnam Business Council for Sustainable Development (VBCSD), on this issue. Huong Ly reports.

Could you tell us about the new contents of the Program on Benchmarking and Announcing Sustainable Companies in Vietnam in 2020?

The Program on Benchmarking and Announcing Sustainable Companies in Vietnam, conducted by VCCI in collaboration with the Ministry of Labor, Invalids and Social Affairs, the Ministry of Natural Resources and Environment and the Vietnam General Confederation of Labor under the direction of the Government, has many new points this year. The first highlight I want to mention is the changes in the Corporate Sustainability Index (CSI). The annual update of this index requires a lot of effort and time from the Organizing Committee, but we always try to come up with the most up-to-date indicators in the country and in the world. Specifically, CSI 2020 has 127 indicators in four categories: Sustainability Index, Governance Index; Environment Index and Labor Index.

CSI 2020 has also been updated with many other new points to comply with requirements in important free trade agreements (FTAs) that Vietnam has recently signed (like CPTPP - Comprehensive and Progressive Agreement for Trans-Pacific Partnership and EVFTA - EU-Vietnam Free Trade Agreement), as well as important changes in labor and environmental management policies that have significant impact on business operations. In particular, matters related to the 17 Sustainable Development Goals (SDGs) and the National Action Plan for implementation of the 2030 Agenda for Sustainable Development have been simplified and integrated into the CSI 2020.

These updates help joining companies to adapt their business and production strategies to capture all opportunities from policy and market changes.

The second highlight is training for the business community and media agencies during the program. Many companies which have participated in the program more than once can declare indicators and apply them to corporate governance easily. However, many are just interested in the program and they may approach the CSI more slowly.

Therefore, VCCI, with VBCSD playing a key role, has planned to organize training courses in Hanoi and Ho Chi Minh City for trade associations and listed companies. We will also launch training courses on sustainable corporate governance in the post-pandemic context for the VBCSD Press Network in July. All these activities are organized together to raise awareness about corporate governance - the vital weakness of Vietnamese enterprises.

Would you tell us the requirements in the judging process in this program?

After the deadline for applications, August 15, the Organizing Committee will select qualified applications for judgment. The jury will be convened for the first meeting, agreeing on the ranking methodology and the working timeline. Jurists will give scores both in physical offices and online. Next, finalist documents will be sent to relevant authorities.

Based on the score, feedback from authorities and from additional records submitted by candidate companies, the Organizing Committee and the Jury will select and propose a list of sustainable companies in Vietnam in 2020 and companies meeting sustainable standards, and submit them to the Steering Committee for approval. The judgment of the Steering Committee will determine the winning companies in 2020.

Transparency, openness, and strictness in the scoring process make the value and effect of the program.

With 127 indicators in four categories, is CSI 2020 too hard for small and medium businesses?

A total of 127 CSI indicators are divided into two level groups: Basic and advanced. Even if only doing well on basic indicators, accounting for nearly 70% of the ranking weight, businesses have a solid foundation for sustainability. And, these basic indicators are not completely new to them as they cover compliance with labor, social and environmental policies. So, regardless of their size, large, medium, small, or even micro, they need to implement these indicators properly and adequately.

However, we will also study and update the index to make it more streamlined, simple, easy to understand and easy to apply. We are considering introducing a CSI version specifically designed for SMEs in the near future.

How does the CSI help businesses improve sustainable corporate governance and competitiveness?

Corporate governance and competitiveness of a company are two symbiotic factors. A well-governed company will be more competitive than its competitors and more attractive to investors. 98% of our businesses are SMEs, most of which lack resources to hire consulting firms specializing in corporate governance.

So, why do they not apply the CSI, a very well-designed management tool that helps them self-assess and measure their “health”? If more businesses apply the CSI, we will have a more professional and methodical corporate governance methodology for them to improve their competitiveness and enhance their resilience and recovery in all scenarios. We encourage all companies to place the CSI at the heart of their corporate governance strategies; apply the CSI to compile the sustainability reporting; regularly refer to the CSI to promptly detect and heal operational weaknesses and shortcomings, and at the same time grasp potential investment opportunities.

Source: Vietnam Business Forum