Sustainable Corporate Governance in Changing Society

2:21:40 PM | 10/1/2020

The solution for sustainable corporate governance is to raise awareness of the business community, helping them access and learn from good governance practices and models.

Flexible in response to changes

Enhancing corporate governance capacity in the private sector to promote efficient economic growth, creating a solid foundation for rapid and sustainable socio-economic development is an important direction that has been stipulated by the Government in Decision 1362/QD-TTg dated October 11, 2019. A sustainable economy is based on a sustainable business community. The foundation for a sustainable business is corporate governance.

Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said that never in human history had we seen the world changing as much and quickly as today. The society is constantly changing, requiring every government, every economy, and every enterprise to constantly mobilize and innovate to catch the speed of change. In that cycle, there is only one form of development that is globally accepted, that is, sustainable development. For sustainable development, the contribution of businesses is indispensable. And vice versa, businesses need sustainable development to ensure their own future.

Participating in many FTAs ​​not only opens up many opportunities for businesses, but also has great significance for national economic security because FTAs help Vietnam diversify markets, reducing dependence on one market. Opportunities always come with challenges. The most obvious challenge here is how hundreds of thousands of Vietnamese businesses can enhance their competitiveness, elevate themselves to participate more deeply in the supply chain of high value international corporations, thereby helping capture and exploit most effectively and thoroughly the FTAs ​​to which Vietnam is a member.

There are many solutions to that question, but the most important is that businesses need sustainable development and for sustainable development, businesses need a professional management foundation. The better corporate governance capacity becomes, the higher the ability of businesses to respond, to cope with and to recover in crisis, as well as to rise to seize business opportunities and enhance their competitiveness,” emphasized Dr. Vu Tien Loc.

Two effective support solutions

From VCCI's side, the Vietnam Business Council for Sustainable Development (VBCSD) has coordinated with organizations and agencies to concretize efforts to promote sustainable corporate governance through the development of a Corporate Sustainability Index (CSI) and a handbook on response - recovery – development for businesses during and after the crisis.

According to Mr. Nguyen Quang Vinh, General Secretary of VCCI and Vice Chair of VBCSD, CSI is an advanced corporate governance tool that brings together essential indicators in the economic, social and environmental fields that every business needs to capture and implement. With more than 90% of Vietnamese enterprises being SMEs, CSI is a powerful instrument for Vietnamese businesses to look into and assess the advantages and disadvantages of their production and business activities to make timely adjustments. After five years of implementing CSI, many enterprises have known, studied and applied this index.

The Vietnamese businesses, especially small and medium enterprises, need to study CSI, and then flexibly apply the criteria of this set of indicators in planning, management and operation activities, thereby improving corporate governance capacity, adapting to the volatile international integration context. The sustainable development business community will contribute to the successful implementation of the sustainable development goals, said Mr. Nguyen Quang Vinh.

Together with CSI, VCCI has collaborated with Deloitte Vietnam to develop the handbook on response - recovery – development. This handbook is expected to contribute to helping businesses access advanced and effective governance principles and methods so that they can actively withstand the impacts of not only COVID-19 but also of other challenges in the future, aiming at sustainable development.

The handbook provides useful content for businesses: Focusing on assessing the business situation in crisis, highlighting common impacts on businesses when a crisis occurs; setting out the basic principles that businesses need to comply with in a crisis; providing guidelines to apply specific principles of choosing strategies that are appropriate for the risks and opportunities posed by the business.

Ms. Ha Thi Thu Thanh - Chairwoman of Deloitte Vietnam

The two waves of the COVID-19 pandemic coming in a rush in the first eight months of 2020 have made many businesses flutter. The situation forces Vietnamese businesses to self-recognize and reassess their core values, competencies, strategies and business models to adapt to the context. When we are faced with a crisis, we know what is sustainable and what is not. For many years, it was mistakenly believed that continued growth was sustainable development. It is partly true, but not enough. Sustainable development is not only about economic growth, but also includes the business' interaction with the natural and social environments. It is these interactions that create the credibility of stakeholders for a business. Credibility is the foundation for businesses to respond, recover and develop effectively during and after the crisis.

Regarding the handbook on response - recovery - development during and after the crisis, Deloitte wishes to accompany VCCI to help businesses assess the situation, recognize the impacts when a crisis occurs, guide the application of principles when choosing a development strategy in accordance with the challenges and opportunities, maintaining the core qualities of the leadership team, and strengthening the trust of stakeholders with the business. This is summarized by Deloitte after 175 years of accompanying customers through many crises, wars or great recessions on a global and regional scale. We want businesses to maintain the core qualities of leadership through key actions in three phases: response, recovery, development; and continuously reinforce the trust of related parties in businesses.

Mr. Binu Jacob - General Director of Nestle Vietnam

The first factor that helps businesses overcome the crisis is a clear and suitable governance structure to ensure stability. Besides, in difficult times, the human factor must be considered more and more important. Focusing on the human factor helps businesses maintain a team of talent, maintain their organization and maintain social impact. These are the key factors that help businesses flourish.

In the recent COVID-19 crisis, Nestlé Vietnam prioritized three aspects of crisis management in the two waves of the pandemic. First of all is to protect employees, to ensure the staff can be safe and healthy. The second priority is to maintain production and business activities, to avoid supply breakdown during an outbreak.

Nestlé Vietnam has not cut staff or reduced wages, but increased wages for its employees. With 22,000 partners being small stores, canteens and cafes affected by COVID-19, Nestlé Vietnam supports replacing nearly expired products with new products at preferential prices. Nestlé Vietnam also has its own sustainability committee to meet weekly long before COVID-19 happened.

The most remarkable thing in the crisis management of Nestlé Vietnam is to uphold the role of the community towards community support. If we focus on making a difference in people's lives in the right way, we will create the business by ourselves. Nestlé has donated VND39 billion worth of products and cash to deal with the COVID-19 pandemic.

Ms. Cao Thi Ngoc Dung - Chairwoman of PNJ

When COVID-19 happened, many people saw only risks and challenges, but I saw more opportunities. It is an opportunity to look at ourselves, restructure the business, improve corporate governance capacity and train the resilience of the leadership team to go through the storm in particular and external changes in general. Therefore, through the recent crisis, businesses are more aware than ever of sustainable development.

Until now, most businesses only pay attention to economic indicators. In fact, the leadership team's perseverance and maintaining corporate culture are extremely important. We care about people first. That factor leads to other values ​​and benefits.

The application of criteria in the CSI indicator set is quite similar to the culture of our company, which was built from the early days. All indicators aim to achieve the ultimate goal of sustainable development. The State should include this set of CSI indicators in enterprise evaluation. In order to increase the publicity and transparency of information, businesses must announce the implementation of sustainable development targets. In order to have a country with sustainable development, enterprises must have a sustainable development.

Ms. Dao Thuy Ha - Marketing Director of Traphaco JSC

Traphaco always aims to develop a green economy with three goals: High economic efficiency associated with social responsibility and environmental protection. These three pillars are realized by the Green Value Chain: from international standard input materials - smart pharmaceutical production technology - extensive distribution system - to good quality, effective and safe products.

When the pandemic occurs, it is the green value chain and the power of digital transformation that has helped Traphaco firmly overcome.

Vietnam has many advantages to develop medicinal plants. In order to promote the strengths and potential of each region in the country and ensure the quality of raw materials for production, over the past years, we have built connections with farmers. This linkage ensures the output for farmers' products and the quality of input materials for producers. This linkage also helps develop medicinal plant growing areas with large scale, reduce the situation of fragmentation, and helps farmers to have representatives to sign contracts, and negotiate prices and other terms to ensure benefits for medicinal plant growers.

Huong Ly (Vietnam Business Forum)