Kenan Foundation Asia · P a g e | i Overview As a component of the Global Compact Network Vietnam (GCNV), the Embedding Corporate Social Responsibility in Vietnam through Research,

Funder: UNDP National Implementing Partner: VCCI Project Consultant: Kenan Institute Asia

Global Compact Network Vietnam’s

Embedding CSR in Vietnam through Research,

Training and Curriculum Development Component

Implemented by the Kenan Institute Asia

P a g e | i

Overview

As a component of the Global Compact Network Vietnam (GCNV), the Embedding Corporate Social

Responsibility in Vietnam through Research, Training and Curriculum Development (“Embedding CSR”)

was launched by the Vietnam Chamber of Commerce and Industry (VCCI) with funding by United Nations

Development Programme (UNDP).1 Embedding CSR designed, developed and piloted responsible

management education, or corporate social responsibility (CSR) curriculum. Technical support was

provided by the Kenan Institute Asia (K.I.Asia), the component consultant, a leading regional not-for-profit

organization affiliated with the Kenan-Flagler Business School at the University of North Carolina at

Chapel Hill (UNC). The GCNV and K.I.Asia partnered with UNC, University of London, and four leading

Vietnamese universities on this initiative including the Foreign Trade University, Hanoi School of Business,

Vietnam National University, University of Economics Ho Chi Minh City, and Thai Nguyen University.

Strong CSR practices are critical to the future development of the country, but are considerably new, and

consequently, weak compared to international standards. The government recognizes that in order to create

sustainable development, incorporating CSR into business practices is essential. Although no explicit CSR

policy exists in Vietnam, the government has adopted several practices to raise awareness on CSR and

addresses CSR issues in the Vietnam Agenda 21 and through the GCNV. Good CSR practices have a number

of benefits; managing business processes in a way that produces an overall positive impact on society and

sustainable management of national resources. Adoption of CSR principles can provide a competitive

advantage. While many of Vietnam‘s business leaders receive their education in-country, embedding CSR

concepts and understanding into business degrees is important to creating sustainable development.

To ensure that the activities met the needs of key stakeholders, as well as the needs for developing CSR

and Global Compact knowledge in Vietnam, the Embedding CSR methodology focused on employing a

participatory process, developing Vietnam-relevant materials and building the capacities of the

Vietnamese counterparts through training of teachers (TOT). From October 2009 to December 2010, the

following outputs were completed: an assessment of CSR education in Vietnam, six CSR modules, two

CSR core courses, 10 case studies, four research studies, six training-of-teacher workshops, one project

launch, one stakeholder workshop, two seminars introducing materials and one roundtable discussion of

the responsible education network. In particular, the following key principles were adhered to:

Participatory – it was important that the Vietnamese universities buy-in to the program and take

ownership. The ―institutional Buy-in‖ for the activities took a number of meetings with business schools‘

management and professors to gain understanding and trust. The universities provided important input

through a process called ―co-production‖.

Global Compact plus – the programming adheres to the Global Compact but also the operational and strategic

implications of CSR including management, innovation, stakeholder engagement, human resource management,

branding and communications, and access to new markets (e.g. selling to the base of the pyramid).

International trends + local customization – the team‘s leading international experts brought in

knowledge of the latest trends and theories on CSR, and in partnership with K.I.Asia, Vietnamese experts

1 For more information please visit www.globalcompactvietnam.org

http://www.globalcompactvietnam.org/

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and the partner institutions adapted it to the local environment. This was done through developing four

research studies on CSR in Vietnam and ten case studies based on firms operating in Vietnam.

Contextualization was applied by the consultants to ensure the appropriate programming was developed.

This included applying practical experience and knowledge of training and working with the private

sector on CSR issues and programs, from the multinational level to small and medium enterprises

(SMEs). The programming also was designed to be relevant to firms in Vietnam, including SMEs, which

make up the majority of firms in Vietnam, and state–owned enterprises (SOEs), which are a major

employer and play a role in strategic industries. A standalone module on CSR in an SME context was

developed and a case study on a Vietnamese SOE was also researched and written.

Training of Teachers (TOT) – in order to ensure that the students at the core university partners receive

education on the key CSR topics, a training of trainers approach was used. This allowed the international and

local experts to transfer knowledge and best practices, while creating a critical mass of qualified teacher lecturers.

The K.I.Asia experts found that training on teaching methods was the most critical need of the lecturers. In

addition, CSR content and the materials developed were introduced to the lecturers at the TOT workshops.

Monitoring and Evaluation – to help guide the implementation and adaptation of materials, the consultants

monitored the roll out of the CSR modules in the classroom and incorporated input from the TOT to adjust the

materials. TOT workshops concluded with sharing and reflection time by all. In addition, evaluation surveys

were distributed at events to gauge the appropriateness of materials and the services provided.

The project partners found that engaging the key stakeholders, including the universities and the government

(Ministry of Education and Training (MOET) and Ministry of Labour, Invalids and Social Affairs

(MOLISA) in particular), is key for legitimizing and embedding the materials in the university curriculum.

The university faculty and students showed great enthusiasm in learning CSR concepts and piloting the CSR

modules in the classroom. However, due to the limited period of project implementation, a full piloting and

evaluation process was not possible. While the first phase of the component was implemented with the four

partner universities, the materials are meant for a broader group of Vietnamese universities and therefore the

materials were introduced to other universities and stakeholders.

In order to sustain the initiative, it is recommended that additional efforts are needed to truly embed CSR

into the curriculum in the Vietnamese universities. Recommended activities include stakeholders‘

briefings and engagement, provision of technical assistance to the universities, providing additional

training of teachers (TOT), monitoring and evaluating the curriculum and the teaching, updating the

materials and launching a Responsible Education Network.

The Kenan Institute Asia consulting team was led by Christine Davis, the international team leader, and

Richard Bernhard. K.I.Asia‘s CSR team contributing to this initiative included John DaSilva, Kamonphorn

Kanchana, Peeranun Panyavaranant, Stephanie Soderborg, Chaba Srisuno and Paul Wedel. For the Kenan-

Flagler Business School, University of North Carolina at Chapel Hill, Lisa Jones Christensen, Carol

Seagle, Jessica Thomas and David Lehr provided curriculum development and training of trainers expertise.

Stefano Harney led efforts from Queen Mary College, University of London, with support from Ishani

Chandrasekara and Peter Fleming. On the ground in Vietnam, Augustine Vinh was the senior Vietnamese

advisor and Pham Lam Thuy Quynh supported the component on a full-time basis.

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Table of Contents

Overview ....................................................................................................................................................... i

Table of Contents ......................................................................................................................................... iii

CSR Curriculum ........................................................................................................................................ 1

CSR Core Courses ................................................................................................................................ 2

CSR Modules ........................................................................................................................................ 4

CSR Case Studies ........................................................................................................................................ 5

Case studies overview ........................................................................................................................... 6

Coca-Cola ........................................................................................................................... 8

MDI ................................................................................................................................... 15

Amata Vietnam ................................................................................................................. 22

Vedan ................................................................................................................................ 28

LienVietBank .................................................................................................................... 39

Dragon Capital .................................................................................................................. 47

Tan Cuong Hoang Binh .................................................................................................... 54

Tan Hiep Phat Beverage Group ........................................................................................ 62

Goldsun Household ........................................................................................................... 69

Hue Central Hospital ........................................................................................................ 75

KTC mini-case .................................................................................................................. 81

CSR Research ............................................................................................................................................ 83

CSR research overview ....................................................................................................................... 84

Vietnamese University Students‘ Understanding of CSR:

the relationship between social responsibility and business for students ......................... 85

Consumer Behaviors and Attitudes towards Corporate Social Responsibility ................. 85

The State of CSR in Vietnam............................................................................................ 85

A Study of Corporate Community Involvement in Vietnam ............................................ 85


Part 1

Global Compact Network Vietnam‘s


Training and curriculum Development Component

CSR Curriculum

IN THIS SECTION:

CSR core courses 2

o Corporate Social Responsibility (CSR)

o Sustainable Enterprise Management

CSR modules 4

o Introduction to CSR

o CSR and corporate strategy: Driving value through

communication with stakeholders

o Corporate governance, finance and accountability

o Managing responsibly: health, safety, and labor rights

in the workplace

o CSR in small and medium-sized enterprise with

a focus on the Vietnamese context

o Managing for sustainability: The role of corporate innovation

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CSR Core Courses

The Embedding CSR component created two 60 hour core courses including the ―Corporate Social

Responsibility (CSR)‖ course at the undergraduate level and the ―Sustainable Enterprise Management‖

course for the graduate level. These courses were designed to be stand alone courses that utilize lectures,

group discussion, case studies, student presentations and videos.

The first course, called the “Corporate Social Responsibility (CSR)” course examines how CSR has

become increasingly important to businesses over the last few years, and has been recognized as a new

management tool to enhance reputation among stakeholder groups. The course focuses on the key

elements of CSR such as CSR definition, CSR and strategy, governance, finance and accountability,

managing responsibly and CSR in SMEs. The course will equip students to be future generators of

sustainable values for businesses and society through a thinking stimulation approach regarding issues of

sustainability, good governance, and social responsibility as found in the context of businesses in

Vietnam.

By the end of this course, students will be able to:

Explain commonly used definitions and terminology of CSR and its key concepts

Understand overall history and origin of CSR trends in Vietnam in the post Doi Moi era

Identify international standards and regulations in terms of corporate responsibility

Debate CSR pros and cons

Differentiate CSR and strategic CSR

Explain the basic concepts of stakeholder theory, stakeholder identification and engagement

Align CSR branding and communication practices with corporate strategy

Understand the responsibilities in health, safety, internal environment, and employee rights under

national and international laws and standards

Define corporate governance and corporate accountability

Have basic knowledge of CSR reporting of how to evaluate and measure corporate success and

communicate such information effectively

Explain the relations of CSR and employees by comparing MNCs to SMEs and the significance

of CSR for SMEs

Identify opportunities for SMEs to integrate CSR strategies into their operations

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The “Sustainable Enterprise Management” course provides a management perspective on what it takes

to create or manage a socially responsible, sustainable and profitable enterprise. This course introduces

the key management concepts behind sustainable enterprise management and encourages the use of

strategies and management tools that will help managers achieve positive results on the triple bottom line

of profits, planet and people. These tools cover a wide variety of management responsibilities, including

strategy development, branding, communication, governance, finance, process management, life-cycle

design, waste reduction, monitoring and evaluation. After taking this course, students should be able to

make well-informed strategic decisions about finding and maintaining competitive advantage for an

industry and firm.

By the end of this course, students will be able to:

Evaluate business activities and strategies using sustainability principles and frameworks; use

those same principles to formulate new sustainable business strategies; develop profitable and

socially beneficial strategies to address product and service demand at the base of the pyramid,

especially in developing countries such as Vietnam.

Understand multiple stakeholder perspectives of organizations and the natural environment—

know the identity and general assumptions of the ―other‖ players (governments, NGOs, others)

including how their approaches to CSR and sustainable enterprise vary.

Integrate activities on environment and society with product or service selling points to build an

attractive brand with a strong and positive reputation with key stakeholders, including customers,

regulators and employees; learn how to communicate key information to each type of stakeholder

for maximum impact.

Assess key financial risks and develop policies and activities to manage those risks, with

particular attention to corporate governance, internal controls and financial and risk reporting.

Assess key safety, environmental and reputational risks and use international environmental,

labor and safety standards to reduce and manage those risks in production processes; put

management, information, and audit systems in place to ensure compliance with health, safety,

labor and internal environmental protection standards; understand the value in moving beyond

compliance to quality of work life that provides a safe, attractive and sustainable workplace.

Understand the benefits of design for environment in creating innovative products and processes

that provide customer satisfaction and company profits with minimal environmental impact;

become capable of assessing innovations to reduce energy use.

Use a variety of monitoring and evaluation approaches for assessing company CSR activities – to

the company, to the environment and to the society.

Understand the roles that managers can play in leading their companies to sustainability and

acquiring the management tools to do so.

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CSR Modules

The CSR modules were developed in order to integrate responsible management content in existing

business courses, such as those focusing on strategy, management, accounting, and marketing. These

modules can be used in whole or lessons from the modules are integrated into existing courses. Six CSR

module topics were chosen based on the assessment conducted and direct input from stakeholders at a

workshop. They were then developed and piloted in the fall semester, 2010. Summaries of the modules‘

contents follow:

1. Module One, “Introduction to Corporate Social Responsibility‖, introduces the concept and

approaches of CSR from a global perspective, and examines the implications local CSR growth in

Vietnam. Beyond providing the major schools of thought and basic tools of CSR, the module also

considers the debates in, challenges to and the future of CSR.

2. The next module, “CSR and Corporate Strategy: Driving Value through Communication

with Stakeholders”, explores what it takes to create and manage a socially responsible and

sustainable enterprise. This includes identifying stakeholders, understanding their complementary

and competing incentives, and creating a CSR program that is strategic to the company while

benefiting stakeholders.

3. The ―Corporate Governance, Finance, and Accountability” module examines the history and

contemporary perspective on corporate governance and accountability, with emphasis on

accounting and accountability as a good governance strategy. It also looks at the role of boards

and institutional investors, internal control and risk management, responsible finance, and broader

corporate accountability.

4. Once a corporation is socially responsible, it must transform into a sustainable workplace. The

next module, “Managing Responsibly: Health, Safety, and Labor Rights in the Workplace”,

discusses the role of the line manager in promoting employee safety, employee health, sustainable

workplace environment, and employee rights, with emphasis on how improved quality of life for

employees becomes a source of company value.

5. Module five, “CSR in Small- and Medium-Sized Enterprises with a Focus on the

Vietnamese Context” examines how strategic CSR and consideration of the triple bottom line

can impart significant competitive advantage to SMEs. The module looks at global examples,

with a special emphasis on SMEs in developing economies and in Vietnam.

6. “Managing for Sustainability: The Role of Corporate Innovation”, the final module,

discusses the origins, evolution, and current schools of thought around managing for sustainable

development. Using contemporary examples, it highlights best practices in innovation and

sustainability management, examining how today‘s leaders are creating programs of

transformation for competition in the ―next‖ generation of industry and commerce.


Part 2




CSR Case Studies

IN THIS SECTION:

CSR case studies overview 6

o Coca-Cola 8

o International Market Development and Investment JSC (MDI) 15

o Amata 22

o Vedan Vietnam 28

o LienVietBank 39

o Dragon Capital 47

o Tan Cuong 54

o Tan Hiep Phat 62

o Goldsun Household 69

o Hue Central Hospital 75

o KTC mini-case 81

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Case studies overview

In order to highlight practical application of CSR, including best practices and costs of failure, K.I.Asia

created ten case studies and one mini-case. The cases represent a broad range of firms operating in

Vietnam including multinational corporations, joint stock companies, small and medium sized enterprises

and a state-owned enterprise. These case studies were designed to be used with the modules and core

course and some cases can be used with different lessons at both the undergraduate and graduate levels.

1. The Coca-Cola case study introduces the concept of incorporating CSR and sustainability as an

integral part of a company‘s business plan in order to help support business interests. Specifically,

it discusses Coca-Cola‘s community-based water replenishment projects in Vietnam, and their

role in promoting the company‘s brand image. As Coca-Cola is the world‘s leading beverage

company and perhaps the most recognized brand in the world, a positive brand image is critical.

2. International Market Development and Investment JSC (MDI) is a 100% Vietnamese-owned

private company specializing in equitable trading and consulting in the agriculture sector in

Vietnam. MDI works with local farmers to grow and process agricultural products that meet

domestic and international quality expectations. The aim of the MDI case study is to introduce the

concept of a social enterprise that operates a pro-poor business on a for-profit basis. The case

demonstrates how fair trade is used by companies to improve livelihoods, human rights, labor and

environmental conditions.

3. The Amata case study exemplifies how a company going above and beyond the minimum

governmental requirements in environmental protection and sustainability has been able to reap

significant competitive advantages. Amata builds industrial estates, incorporates environmental

protection from each estate‘s inception, and continually updates to meet the highest

environmental standards possible. This has helped Amata win the trust and good will from the

government and stakeholders.

4. The Vedan Vietnam case, on the other hand, highlights issues of focusing on short-term cost

savings or profit-making without considering the long-term impact operations have on society,

the environment and the company. Vedan‘s failure to appropriately address matters important to

the environment and to society ultimately hurt the company‘s long-term profitability and

reputation.

5. While the LienVietBank case also focuses on integrating CSR concepts into operations from

company inception, this time for a new, private Vietnamese bank, it also exemplifies the balance

between the responsibility to shareholders and a commitment to CSR. It demonstrates several

ways a company can strategically grow CSR to benefit both community members and

shareholders.

6. The Dragon Capital Group, an integrated investment group established in 1994, has grown

steadily to become one of the largest and best-known investment companies in Vietnam. The

Dragon Capital case focuses on three main points: corporate governance, stakeholder analysis, and

monitoring and evaluation. The emphasis on corporate governance is what sets Dragon Capital

apart, as the company has aligned its goals with the long term goals of Vietnam from the start.

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7. The Tan Cuong Hoang Binh Group (TCHB) case study explores the concept of using a

company philosophy focused on farmer and environmental protection to differentiate a product in

a crowded market. TCHB is a Vietnamese tea producer that promotes healthy working

conditions, environmental sustainability, and greater economic incentives for producers. These

CSR strategies give the company a competitive edge over other producers.

8. Tan Hiep Phat Beverage specializes in manufacturing beer and non-alcoholic beverages. It has

attained the designation of ―Vietnamese High-Quality product acclaimed by consumers‖. The

company is evolving from a firm with some CSR components led by their PR and marketing

teams to a company that wants to wholeheartedly embrace CSR in every aspect of their business.

This case examines their current CSR activities, and what their management is doing to create a

strategic, integrated CSR approach throughout the firm.

9. Goldsun is a Hanoi-based company that specializes in the manufacturing of household appliances

and the production of high-quality cardboard packaging for both the domestic and international

markets. Goldsun is focused on becoming one of the Vietnam‘s top exporting enterprises and

outside of Vietnam sells much of its production to Ikea (Sweden) and Landmann (Germany). The

case examines how over time, their CSR has moved well past basic compliance, motivated

primarily by three important drivers: investment, international markets, and employee

commitment.

10. Hue Central Hospital (HCH), established in 1894, is the first Western-style hospital in Vietnam.

In addition to their commitment to train the medical community and provide high-quality medical

services, Hue Central Hospital is also strongly focused on serving the poor. This case illustrates

an organizational mind-set shift from purely social assistance to more strategic CSR, and how this

benefits both the hospital and society.

11. The mini-case is on KTC, an auditing and consulting firm that incorporates Buddhist philosophy

into its operations. Buddhism is reflected through the company‘s physical office, which includes

a yoga room, employee volunteer initiatives, and refusal to violate regulations even if it would

result in happier clients. The case displays how these practices result in a highly responsible

company that takes care of its employees and maintains ethical business practices.

Coca-Cola

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Potable water for communities is a key element of a safe and healthy lifestyle. Access to potable water for

drinking, cooking and cleaning is a basic need for everyone, but in many parts of the world, safe water is

still a dream. Every day the situation worsens. In Vietnam, according to the Ministry of Natural Resources

and Environment, an estimated 40% of rural communities still lack access to clean water. Water-borne

illnesses, such as cholera and dysentery, are only one of the hazards of a poor drinking supply. In addition,

many people (mostly women) spend many hours a day collecting water, taking time away from other

activities such as work, caring for their families or for children, or spending time in school or on homework.

Although the government has an important role to play in providing clean water, the private sector –

especially those companies that rely on water for their business operations – also needs to contribute

expertise and resources to fulfill a basic human need in the communities where they operate.

“Lien Chieu is the district with most of population lives by agriculture. There’s

approximately 40 percent of the 130,000 population and all schools lack access to clean

water. We are eager to improve clean water accessibility for communities and schools but

there’s not enough state budget. We are pleased to be in a paernership with Coca-Cola to

provide sustainable water solutions to these ones. Said Dam Quang Hung, Vice-

Chairman of Lien Chieu People’s Committee.

This case will demonstrate how community-based projects can be strongly linked to a company‘s

business model and commercial success, as well as help ensure reputational risk.

Company introduction

The Coca-Cola Company is the world‘s leading beverage company and

perhaps the most recognized brand name in the world. Operating in 200

counties with a diverse product range consisting of an astounding 500 brands

and 3,300+ beverages, the company considers the ―Coca- Cola‖ name itself

worth billions of dollars. Protecting its brand image and reputation, therefore,

is a key priority for Coca-Cola management.

Coca-Cola‘s mission is stated simply as ―At the Coca-Cola Company, we

strive to refresh the world, inspire moments of optimism and happiness, create

value and make a difference‖. Coca-Cola vision states that it ―serves as the framework for our Roadmap

and guides every aspect of our business by describing what we need to accomplish in order to continue

achieving sustainable, quality growth.‖ 1

1. The Coca-Cola Company, Vision Statement (2010) Retrieved from http://www.thecoca-

colacompany.com/ourcompany/mission_vision_values.html

Coca-Cola

Branding and CSR: How Coca-Cola Company protects its multi-billion dollar

brand image through community-based water projects.

Coca-Cola

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It goes on to list key areas of concern for the organization, which include triple-bottom line (people,

planet, profit). I full, it states:

People: Be a great place to work where people are inspired to be the best they can be.

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and

satisfy people's desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we create

mutual, enduring value.

Planet: Be a responsible citizen that makes a difference by helping build and support

sustainable communities.

Profit: Maximize long-term return to shareowners while being mindful of our overall

responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.‖2

Coca-Cola has been in business 124 years and according to its website has returned increasing dividends

to its stock holders for the past 48 years, clearly demonstrating its longevity and its effectiveness as a

profit-making company.

Coca-Cola, which left Vietnam in the final phase of the war in Vietnam, returned in 1994 and has

invested over US $200 million with bottling plants in Ha Tay (near Hanoi), Da Nang and Ho Chi Minh

City. It has also committed to investing an additional US $200 million by 2012. It conducts business in

Vietnam under the Coca-Cola brand name and a joint venture with its bottlers through Coca-Cola

Beverages Vietnam Ltd. Coca-Cola products in Vietnam include as Coca-Cola, Sprite, Fanta, Diet Coke,

Schweppes, Minute Maid Splash juice, Joy bottled drinking water and Samurai energy drink.

With this recognition, Coca-Cola has also come under attack for exploiting local communities, especially

with regard to its water usage. Such attacks often make headlines in the media, and Coca-Cola is very

sensitive to this topic. Coca-Cola‘s in Vietnam (as with all of its global operations) is sensitive to this

point and has developed community programming to engage stakeholders on this issue.

Case description

Coca-Cola‟s main challenge in Vietnam is finding the best way to localize its global corporate social

responsibility programming, while ensuring it protects its brand image.

Coca-Cola is an organization which has publicly committed to being a sustainable business, as stated

clearly in its vision statement. As a leading multinational company selling fast moving consumer

products in a highly competitive globalized environment, Coca-Cola has developed a comprehensive

corporate social responsibility (CSR) program, permeating every aspect of its business, and has a range of

community-based projects covering education, health care, and the environment. In 2008, Coca-Cola

Company provided over US $82 million globally to local communities for program activities and over

273,000 hours of volunteer service by its employees. However, no project or activity is more visible or

integral to Coca-Cola than its water programming.

2 Ibid.

Coca-Cola

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As Coca-Cola is a beverage company, it should

come as no surprise that its most important

ingredient and the most critical component of the

Coca-Cola manufacturing process (for cleaning and

cooling) is water. On average, it takes 2.43 liters of

water to produce just 1 liter of beverage. Use of

water on such a large scale has led to attacks on

Coca-Cola by environmental and community

activists for depleting water supplies (in some cases

destroying rural livelihoods as water tables are

lowered and crops cannot be watered) and

damaging the environment through wastewater

runoff from the manufacturing process.

Recognizing the dangers to its brand image and the communities where it operates, Coca-Cola has

responded to these concerns by initiating water saving and water replenishment projects. According to

the company publication Replenish Report, Coca-Cola‘s ―… motives for replenishing the water that we

use are simple. Clean water is a cornerstone for any sustainable community and sustainable communities

are THE foundation of our business. Our journey to attain and maintain water neutrality will help us and

others advance emerging conservation and social science, to better understand impacts and therefore

better plan and execute such projects. Further replenish is an integral part of our water stewardship

strategy involving plant performance, watershed protection, sustainable communities, and helping to raise

awareness. We fully acknowledge water neutrality is a continuous journey, not a destination, and we

strive to attain and maintain our Replenish goal.‖3

With the understanding that sustainable businesses require sustainable communities, Coca-Cola‘s goal is

to return to communities the amount of water that they use in beverage production or in other words to

become water neutral by 2020. Coca-Cola‘s water programming is based upon the 3 ―R‖s: Reduce,

Recycle, Replenish:

1) Reduce: working to reduce the amount of water to produce a beverage – you must clean the

container before adding the beverage. Coca-Cola is working with bottlers to produce products

more efficiently, with a goal of 2.17 liters of water to produce 1 liter of product by 2012 – down

from the current 2.43 liters.

2) Recycle: Coca-Cola is working toward ensuring 100% of its waste water is treated before

returning it back to the environment.

3) Replenish: working with local stakeholders (communities, governments and NGOs) to replenish

water to nature and communities. Projects include watershed protection; expanding community

drinking water and sanitation access; agricultural water use efficiency; and education and

awareness programs.4

3 The Coca-Cola Company, Replenish Report. (January 2010) Retrieved from http://www.thecoca-

colacompany.com/citizenship/pdf/replenish_2010.pdf 4 Ibid.

A villager demonstrates the water filtration system

donated by Coca-Cola Vietnam.

http://www.thecoca-colacompany.com/citizenship/pdf/replenish_2010.pdf

http://www.thecoca-colacompany.com/citizenship/pdf/replenish_2010.pdf

Coca-Cola

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To implement this vision, Coca-Cola currently has 250 water projects in more than 70 countries and

according to the Replenish Report, ―Estimates to date are that in 2009 we replenished 638 million liters

for communities and 28.8 billion liters to nature, representing approximately 22% of the water used in our

finished beverages.‖5

Coca-Cola Program in Vietnam

As a global company with a highly institutionalized CSR program, Coca-Cola realizes that it must operate

under the same core principles in Vietnam that have made it such a success globally. This includes

extending its community based programming to Vietnam and helping to build sustainable communities

where it operates.

Although major CSR policies, programming and funding are directed by headquarters, the activities in

Vietnam (as with other countries) must be relevant and meet pressing local community needs. Decisions

such as what to focus on (education, health, water), who to work with (local NGOs, local government)

and where to focus projects (critical watershed areas, local communities, factory sites) are all elements

better decided at a country level.

What to focus on

Coca-Cola is often viewed as a large consumer of water resources, which has left it open to criticism and

calls for consumer boycotts in the past in other markets, the Coca-Cola management in Vietnam decided

that water programming was critical to the sustainability of its Vietnam operations. As such, Coca-Cola

Vietnam began the Clean Water for Communities project in 2006. Expanded in 2010, the program provides

access to clean water and sanitation for communities and schools in Thu Duc District (Ho Chi Minh City),

Lien Chieu District (Danang City) and Thuong Tin District (Hanoi), directly benefiting more than 10,500

students and teachers and 1,000 poor families. The project focuses on access to water and sanitation, and

consists of the construction of wells and latrines, as well as communication events for school children and

communities to learn about clean drinking water and sanitation. With the Research Center for Family

Health & Community Development (CEFACOM) as the implementing partner for 2010, the project is an

investment by Coca-Cola of US $100,000, or about 25% of its overall CSR budget in Vietnam.

Who to work with

Coca-Cola has strong relationships with the World Wildlife Fund and several other international NGOs, as

well as with a host of local NGOs where they operate. In Vietnam, Coca-Cola thought it best to open up the

Clean Water for Communities project to competition for the next round of the project and requested four

NGOs to make proposals to Coca-Cola. To ensure fairness, the Coca-Cola selection committee was

comprised of employee representatives from CSR, finance, Public Affairs and Communications, PR and

marketing. After selection by the Vietnamese-based committee, the proposal had to be approved at the

regional office in Bangkok, and finally at global headquarters in Atlanta, Georgia, USA. At the end of this

process, CEFACOM was chosen to undertake the project. In interviews, CEFACOM officials pointed out

that the relationship with Coca-Cola is successful because it is based on trust; openness about difficulties,

5 Ibid.

Coca-Cola

P a g e | 12

mutual understanding – ―we are all working for the community‖; adaptability – willing to adjust to the

situation; working style of CEFACOM – professional, on time, within budget and following the process and

reporting the Coke requires; and, Coke‘s respect for CEFACOM.6

Where to focus projects

Although Coca-Cola has a preference for working in communities surrounding its manufacturing

facilities, it was far from certain that these communities would welcome such a project from Coca-Cola

Company; it was also unclear exactly what their needs were. For this round of project funding, Coca-

Cola relied on a needs assessment to gather critical information and rank the needs of surrounding

communities. CEFACOM developed a proposal to improve the quality of water and give related health

education to one community per year.

Sustainability

Coca-Cola is a for-profit company with many stakeholders. As such, it cannot support a few select

communities for an indefinite period of time, but neither can it introduce new technologies and benefits

and then abandon them, potentially leaving communities worse off than before the program. Coca-Cola

focus on sustainability also extends to its CSR programming. Key questions that must be addressed to

achieve sustainability include how will the program continue without after Coca-Cola support ends, who

will manage and run the program, and who will provide further support if needed. In other words, how

will the families and schools sustain the use of the equipment after the project, including funds for repairs

and maintenance? To help address sustainability, Coca-Cola has formed partnerships with local health

officials to teach them how to maintain and measure the safety of water systems. It has trained community

and school officials on maintenance of the water systems and educated them about water health. In this

way, the communities will continue to receive the benefits of clean water after Coca-Cola support comes

to an end so that it move on to assist other communities in need.

Community Engagement

In order for a community project to be successful, companies must engage with their communities.

In this regard, Coca-Cola has identified key stakeholders and is engaging them; such as working with the

Duyen Thai People‘s Committee and local government health officials. To provide support at the district

level, the project has an ad-hoc committee with representatives from Environment Department, Education

Department, Health Department and Rural Water Supply Center. The Vice Chairman of the district heads

the committee and regular meetings are held.

While Coca-Cola‘s representatives travel to the communities they serve, they could improve their

community relations by taking a more active role. Currently, the NGOs running the program on behalf of

Coca-Cola do most of the interaction with the communities. Coca-Cola in Vietnam also lacks an

employee volunteer component, something many consider an integral part of community relations. In

6 Interview Ms. Hong Thuy Lan, Director, CEFACOM, September 7, 2010.

Coca-Cola

P a g e | 13

addition, during project design, Coca-Cola utilized their NGOs to learn about their specific needs and

target assistance where it was most needed.

―Problems in water accessibility are commonly found in rural communities. Before Clean Water for

Communities program, all the schools in Duyen Thai Commune lack access to clean water and have little

or no hygiene facilities for the students. We are pleased to be in a partnership with Coca-Cola to provide

sustainable water solutions to these schools,‖ said Phung Van Bang, Chairman of Duyen Thai People‘s

Committee.

Monitoring and Evaluation

An often overlooked component of community-based projects is monitoring and evaluation. Coca-Cola

is a business and is investing resources in these communities, not out of charity or philanthropy, but as

part of its business model. Coca-Cola believes that successful communities translate to successful

businesses. In a letter to stakeholders in 2008, Muhtar Kent, president and chief executive officer of

Coca-Cola, said that ―The partnerships we have established with organizations such as the U.S. Agency

for International Development (USAID), World Wildlife Fund (WWF) and the United Nations

Development Programme (UNDP) enable us to support sustainable communities while sharing best

practices that allow us to improve the way we run our business.‖7 To support this claim, Coca-Cola has

invested heavily in monitoring and evaluating its projects. In addition to participating in the Global

Reporting Initiative, it issued a 2007/2008 Sustainability report in 2009 detailing its projects to

demonstrate the return on investment for its shareholders and other stakeholders. For example, it used to

take Coca-Cola 2.68 liters of water on average to make 1 liter of product. Under its water stewardship

program, Coco-Cola has improved its water usage ratio by 9 percent between 2004 and 2009, reducing

that number to 2.43 per liter of product.8

Project results

In Vietnam, the monitoring and evaluation efforts are primarily focused on the outputs of the

programming, such as the number of communities students served. Coca-Cola measures whether the

NGO partner meets the timeline, budget targets and amount spent per beneficiary reached. The specific

outputs include the number of schools, students and teachers reached and number of households and

household members reached.9 However, the final project results have not been measured yet, and until

such time, it is difficult to measure the actual impact of the project. Though the outputs are important, the

project cannot be deemed successful until such time as its impact on the community has been measured.

Since the project began, The Clean Water for Communities program provided more than 56,611 people

in rural communities with access to clean water. This includes 35,274 community members since 2004

and 21,337 students and teachers since 2007 in the districts of Thuong Tin (Hanoi), Thu Duc (HCMC)

and Lien Chieu (Danang)

7 Muhtar Kent, ―A Letter from our President and CEO,‖ The Coca-Cola Company 2007/2008 Sustainability

Review. Retrieved from http://www.thecoca-colacompany.com/citizenship/pdf/SR07_CEO_4_5.pdf 8 2008/2009 Sustainability Review, Pg. 31. Retrieved from http://www.thecoca-

colacompany.com/citizenship/reporting.html 9 Interview Ms. Bui Thi Ngoc Diem, CSR manager, Coca-Cola Vietnam, September 7, 2010.

Coca-Cola

P a g e | 14

For Coca-Cola, the results have been a more positive brand image, with positive press coverage as a result

of their programming. In September 2010 alone, one press event on the launch of the clean water project

in Lien Chieu District generated 13 positive press articles in local papers. However, no cost benefit

analysis was provide by Coca-Cola or conducted by this study, as the information could not be obtained.

What this means to local communities is that, ―Now with the clean water project of Coca-Cola, we benefit

from clean qualified water. It‘s very clean, purified, and smells good. We are so happy; we can use it

directly for cooking and drinking. There are two fountains, one for cooking and drinking and another one

for cleaning.‖10

10

Quote from a villager in Dao Xa Village, September 6, 2010.

MDI

P a g e | 15

Nguyen Tuyet Minh and Dominic Smith were long-time social development experts working in Vietnam.

After implementing projects for over 15 years, they were frustrated at the lack of sustainability in

development projects funded by large donors such as the Asian Development Bank. Since much of their

experience in local development was with ethnic farmers, they began to consider how they could leverage

their expertise and relationships to develop a sustainable business. In April 2007, they launched

International Market Development and Investment JSC (MDI), a for-profit firm that sources coffee, tea

and cashews from Vietnamese farmers, especially ethnic minorities. However, MDI is much more than a

middle man. Rather, it builds the technical capacity of its farmers, cuts out local middlemen, increases

revenue to farmers, and markets the products both in Vietnam and internationally. MDI focuses on

improving quality while using organic farming techniques and sourcing under fair trade and organic

certified processes. By 2010, MDI expanded to partner with over 1,000 families in nine Vietnamese

provinces. MDI is challenged to develop the farmers to a point where they can have more autonomy and

control over their production and operations while maintaining high quality so that MDI can focus on the

branding and marketing aspects.

“While MDI aims to help poor farmers, it is not a charity, rather MDI acts as a

business partner with the farmer groups.” Dominic Smith

This case will demonstrate how a small Vietnamese business uses a CSR model of social entrepreneurship to

improve the lives of farmers while at the same time operates as a sustainable for-profit firm.

Company introduction

International Market Development and Investment JSC (MDI) is a 100% Vietnamese-owned private

company specializing in equitable trading and consulting in the agriculture sector in Vietnam. MDI works

with local farmers to grow and process agricultural products that meet domestic and international quality

expectations. The firm then purchases the products from the farmers and markets them through both

domestic and international sales channels. MDI arranges for technical and financial assistance,

certification, distribution, processing and packaging. The products presently being sourced include tea,

coffee and cashews.

Vietnamese tea has a strong reputation for quality. Building on this foundation, MDI works closely with

the farmers to grow, pick and produce high quality green or black tea. The tea is sold as bulk, lose leaf or

as tea bags. On the other hand, Vietnamese coffee has a poor international reputation, as only 4% of all

Vietnamese coffee is the higher quality Arabica type, while most of the coffee is sold in bulk and some

even sold for its caffeine. For coffee, MDI purchases the green beans and roasts them. Most is sold in

bulk, while a small volume is packaged and sold in retail stores. The cashew crops grown in southern

Vietnam are considered to be of a high quality and sold in both bulk and packaged forms.

MDI

A Vietnamese SME linking business and development

MDI

P a g e | 16

MDI is a true small and medium-sized enterprise (SME), with

only 20 full-time staff working in Hanoi and nine others

located in various Vietnamese provinces. In addition, MDI

contracts out agricultural experts from universities such as

Thai Nguyen University, other farmers and Ministry of

Agriculture officials. Seasonal workers are also hired to help

process crops. MDI‘s operations include headquarters and a

retail shop in Hanoi, and two black tea and one green tea

processing facilities.

The black tea processing facilities are small operations

(approximately 250 square meter buildings) that include

simple equipment to roll, ferment, dry and sort the tea. Four to

five contract workers are hired on a seasonal basis to process

the tea. MDI rents 200 square meters from a Vietnamese state-

owned enterprise to process coffee and contracts existing

facilities for processing and packaging cashews.

MDI’s Production

In total, MDI is working with approximately 1,000 households through nine cooperatives, clubs or groups

(to be collectively referred to as ‗groups‘ in this case). The farmers working with MDI belong to groups

with as few as 20 members to as many as 250. Tea picking tends to be done by women, cashew

harvesting by men, and coffee bean picking by both women and men. In 2007, a total of 24 tons of tea

and coffee products were sold by sourcing from 125 families. In 2008, cashews were added and MDI

sourced crops from 500 families, resulting in a five-fold increase in 2008 to 130 tons. By 2009, products

were being sourced from 1,000 families and a total of over 300 tons were sold, an increase of over 200%

from 2008. Of this total, 155 tons of tea and cashews qualified as fair trade products and 150 tons of tea

was produced organically.

MDI’s Markets

The products are sold in bulk, under the brand name of “betterday’ and packaged with branding for other

firms. The betterday brand was launched in December, 2007. Approximately, two-thirds of all MDI

products are exported out of Vietnam. The majority of products are sold in bulk to international markets

including Denmark, Germany, the Netherlands, United Kingdom, Hong Kong, Japan and the United

States. MDI also sells packaged products to retail outlets including supermarkets, restaurants, and catering

companies in Vietnam and to a lesser extent into Asian markets through retail outlets such as the

PARKnSHOP supermarket in Hong Kong. MDI also has its own retail shop in Hanoi called the

―Betterday Fairtrade and Organic Shop‖.

MDI‘s founders used their existing and newly developed network and relationships to develop local and

international markets for betterday products. Initially, MDI made a number of trips to Asia, Europe and

the United States to join trade fairs and meet with buyers. International NGOs, including Oxfam and

SNV, the Dutch development agency, helped to make introductions. In addition, buyers of fair trade and

A farmer exhibits

a recently picked tea leaf.

MDI

P a g e | 17

organic produce often come to see their operations in Vietnam. Public relations activities are relatively

new for MDI, but they are looking to forums such as the Global Compact Vietnam to increase awareness

and build more networks.

There is relatively little sourcing of fair trade or organic tea, coffee or cashews from Vietnam. One

company sources organic tea from one farmers‘ group and sells in the Netherlands. Rather, most of the

competition is made up of firms sourcing high quality crops. For coffee, a number of brand names such as

Trung Nuyen and Highlands source and retail Arabica coffee beans in Vietnam. The competition in the

tea market is even more wide-spread as numerous firms such as Tan Cuong work with farmers and source

from the same provinces as MDI.

Social Entrepreneurship

MDI is a social entrepreneurial business and its goal is twofold: to assist on development through

improving the lives of farmers and to operate a pro-poor business on a for-profit basis. Social

entrepreneurship is a form of corporate social responsibility (CSR). As the name indicates, both social

and business objectives are integral to the enterprise. As a social entrepreneurial business, MDI addresses

a social problem, poverty, through entrepreneurial approaches to develop and manage a for-profit

enterprise. MDI measures both typical business performance indicators such as revenue and profit as well

as indicators of the creation of social capital including income to the farmers.

As development professional, Nguyen Tuyet Minh, the director and founder of MDI, has more than ten

years of management experience in marketing, and another five years of high-level positions with NGOs.

Dominic Smith has 17 years of experience across Asia, including eight in Vietnam, working for the Asian

Development Bank among others. However, the transition to running a private firm has not been without

difficulties. At the start, the founders understood what it takes to bring sustainable development to rural

farmers, but they lacked the practical experience of implementing other business activities such as how to

grow tea, source materials, develop packaging and meet all of the government business regulations.

Gaining knowledge on these aspects and learning how to meet the business‘ needs in these regards was a

source of frustration for the founders that took time and effort to master.

MDI’s approach to sustainability

MDI‘s goal is to sell high quality products that can earn premium prices while contributing to social

development. The market segment that MDI is focused on is the middle and upper classes, which are

more apt to care about quality and are less concerned with price. These consumers are also more likely to

care that their products are produced and sold in a manner that is fair to the famers, while the production

has limited impact on the environment. To meet the interest of customers, much of MDI products meet

fair trade and organic growing standards.

While fair-trade and organic certifications provide market opportunities, maintaining quality is the crux of

MDI‘s strategy. betterday's jasmine tea, for instance, comes from the spring harvest, with the freshly

picked night-opened white flowers added for a peaceful scent. MDI started with green, loose tea, and now

make tea bags of green and black. In 2010, betterday tea products included traditional Vietnamese green

teas, highland green teas, jasmine tea, highland black teas, ancient tree green teas, wild tree green and

MDI

P a g e | 18

jasmine teas, earl grey tea, Christmas tea and Masala Chai.1 betterday's coffee is all high-quality Arabica

from the mountains near the Laos border. Only 3% of all coffee production in Vietnam is the higher

quality Arabica type according to Dominic. Coffee cherries must be picked when they are a deep red, and

a lot of time and hands are needed to separate out the unripe and overripe ones.

Fair Trade Products

MDI is licensed by the Fairtrade Labeling Organizations International (FLO) to process, develop and sell

Fairtrade labeled products. MDI is the first company from a developing country to receive this distinction.

Previously, all Fairtrade products have been branded for retail sales in developed countries by wholesalers

and retailers from developed countries. The FLO requires that the farmers be small producers that adhere

to equal distribution of profits and equal participation in their groups, safe working conditions, eco-

friendly farming and no child labor principles. The farmers‘ groups that MDI works with also must be

certified to meet fair trade principles. The key objectives of the standards are to:

ensure that producers receive prices that cover their average costs of sustainable production;

provide an additional Fairtrade Premium which can be invested in projects that enhance social,

economic and environmental development;

enable pre-financing for producers who require it;

facilitate long-term trading partnerships and enable greater producer control over the trading

process; and,

set clear minimum and progressive criteria to ensure that the conditions of production and trade of

all Fairtrade certified products are socially, economically fair and environmentally responsible. 2

In the first year, one tea farmers‘ groups met fair trade requirements. In 2010, two groups were certified, but

the number of families participating has grown from 100 to 600. The FLO fees in 2010 were 3,500 Euros to

certify MDI for one year and 1,200 Euros for groups with less than 50 members and 1,700 Euros for groups

with more than 50 farmers. For the yearly certification fees for the FLO, MDI pays for the first year, and then

for the second and third year MDI pays for the farmers, who reimburse MDI through a small levy charged on

product sales. After that, the farmers are responsible for paying the whole amount. In 2009, all 150 tons of tea

sourced was certified under FLO.

Most of the tea farmers MDI works with are ethnic

minorities living in mountainous regions with incomes

below the international poverty line of US $1 day. For

tea, the farmers are from the Flower Mong, Black Mong,

Zhao, White Zhao and Kinh ethnic groups in Yen Bai,

Lao Cai, Lai Chau, Ha Giang, and Thai Nguyen

provinces. In addition to tea farming, half of the cashew

farmers‘ production (80 tons in 2009) qualified as fair

trade products under the FLO. The cashew farmers are

ethnic Vietnamese (Kinh) in southern Vietnam. The

1 International Market Development and Investment JSC (MDI). Retrieved from www.mdivietnam.com

2 Fairtrade Labelling Organizations International (FLO). Retrieved from www.fairtrade.net

An agricultural expert shows

how to pick coffee.

http://www.mdivietnam.com/

http://www.fairtrade.net/

MDI

P a g e | 19

coffee farmers are from the Black Tai ethnic group in the central province of Van Kieu.

Every year, the FLO sets global rates for purchasing fair trade crops based on a formula that allows

farmers to receive greater benefits, while providing for enough revenues for the businesses to succeed.

For quality tea produce, MDI pays approximately double the market price to the farmer groups. These

percentages can vary significantly depending on the international market prices. In 2010, the cashews rate

is approximately 25% higher than the market, and the market price is relatively steady. While the coffee

is not being certified under the FLO, the premiums are about 30% higher than market price for high

quality beans. Nonetheless, MDI is UTZ CERTIFIED for coffee. UTZ CERTIFIED is an internationally

recognized coffee certification program launched in 2002 that has a set of criteria for professional coffee

growing, which includes socially and environmentally appropriate coffee growing practices, and efficient

farm management.3 However, MDI has only source 2 tons of coffee under UTZ as the benefits from such

sales of coffee are negligible in Vietnam.

Of the revenue paid to the farmers‘ groups, approximately roughly 25% of the money for Fairtrade

Certified tea is social premium. About 10 to 20% of that premium is needed for the costs of the group.

―For all products Fairtrade Standards require the buyers to pay a Fairtrade Minimum Price and/or a

Fairtrade Premium to the producers. The Fairtrade Minimum Price aims to help producers cover the costs

of sustainable production. The Fairtrade Premium is money for the producers or for the workers on a

plantation to invest in improving the quality of their lives. Premium money in this sense is meant to

improve the situation of workers, farmers and local communities in health, education, environment,

economy etc. The farmers or workers decide the most important priorities for themselves and manage the

use of the Fairtrade Premium.‖4 Funding from this account is used to cover social expenses of the farmers

such as expenses for illnesses, purchasing school supplies for children, and contributing to families that

have had some problems or difficulties. It is managed by the group itself. Furthermore, Fairtrade

Standards require buyers to give a financial advance on contracts, called pre-financing, if producers ask

for it. MDI provides micro loans to farmer of farming inputs (such as seeds, fertilizers machinery, etc.).

The loans are paid back once the crops are sold.

“I believe… I can have a more stable income in the future… The social premium can

improve our lives!” said Giang A Nu, a Hmong minority aged 27, a tea farmer joining

the Betterday project.5

Organic Produce

MDI is also moving more towards organic products, beginning with tea, as consumers become increasingly

concerned over their health. Tea traditionally uses a large amount of pesticides with up to 25 sprays per

growing season. On the other hand, betterday tea is all organic, with no chemical pesticides or insecticides

used. Rather, alternative methods are used including spreading a mixture of ginger, chili, garlic and water.

In 2009, 50% or 75 tons of the tea sourced, met European Union organic standards, EU Regulation

834/2007. MDI often works with farmers in new planting areas to avoid the problem of planting on

3 UTZ Certified. Retrieved from www.utzcertified.org

4 Fairtrade Labelling Organizations International (FLO). Retrieved from www.fairtrade.net

5 Charlotte Wan, ―Going Fair Trade – A Better Day for Tea Farmers.‖

http://www.utzcertified.org/

http://www.fairtrade.net/

MDI

P a g e | 20

insecticide contaminated soil that does not allow for producing organic crops that meet EU standards.

Europe is the primary market to date for organic products. MDI sees that the current selling point and

potential for organic products is greater than for fair trade products. The technical aspects of organic

farming is less difficult for farmers to meet than the management systems and record keeping required by

the EU standards, particularly since some ethnic farmers have limited Vietnamese speaking and writing

capabilities. At times, their children, who are attending Vietnamese schools, help translate for their parents.

Stakeholders

The key to sourcing high quality products while providing social benefits is to build strong relationships

with the farmers. The challenges of improving quality include inadequate technical capabilities and

business knowledge to run operations, and insufficient incentives for the supplier. MDI must develop

strong relationships with the farmers in order to secure a steady supply of products. MDI‘s selection

criteria for farmers include that the product sales are a substantial part of their income and the participants

enthusiastic and determined to succeed. The communities that MDI began to work with were either

known to the founders or introduced by others such as the SNV. To launch the fair trade initiatives, a

Vietnamese Fair Trade representative assisted on introducing the concept. The representative is

responsible for supporting and promoting the standards, while the certification system is run out of the

EU. However, it takes approximately one and one-half years to build a relationship and bring the quality

of the crop up to the desired standards. The process includes:

MDI must first introduce the concept to the farmer groups

Receive buy-in from the local authorities including the peoples‘ committees

Establish agreements with the farmer groups on purchase prices, quality, quantities, etc.

Provide technical assistance to the farmers to improve their techniques and production

Work with farmer groups to strengthen their management

Provide financing to farmers to invest in materials

In addition to the farmers groups, the other main stakeholders are the provincial and district officials and

peoples committees. MDI‘s efforts have largely been supported by these stakeholders as one of the

primary goals of these organizations is to reduce poverty in the remote ethnic minority areas. There are

also business incentives, such as decreased tax obligations and rebates on equipment, for investments in

remote rural areas.

Another important stakeholder group is MDI‘s

employees. Led by the development-oriented Minh

and Dominic, the staff is treated as family which is

quite normal in small Vietnamese firms. ―I work in a

very friendly and joyful environment; there is no

difference between the boss and the employees.

MDI also hires handicapped people, I really feel

proud of it,‖ said Ms. Nguyen Thi Thu Luong, an

employee since 2007. ―We are working in a fair,

comfortable and encouraging atmosphere. I‘m very

proud because MDI works for the community, and I Cashews are sorted by quality.

MDI

P a g e | 21

really want the company to develop it further and better.‖6

Mr. Nguyen Duy Nam, a graduate of the University of Agriculture explained that he joined MDI to use

the knowledge he received from the University, while fair trade interested him. ―I think this fair trade

concept should be developed more in the future since it can benefit the consumers a lot‖, said Mr. Nam.

―Fair trade also benefits the farmers. We teach them new technologies for growing plants and for using

better techniques. That‘s how they can earn more selling good raw material products.‖7

MDI’s Business Challenges

MDI‘s main challenges to their business development and growth include: 1) how to ensure that the quality

of betterday products are maintained in order to provide significant returns to the farmers and the firm

while developing the farmers to be more autonomous; and, 2) how to meet the triple bottom line objectives

of adding measureable value to the firm, society and the environment.

MDI would like the farmers to take more responsibility in processing their crops. By adding more value,

the farmers would receive higher revenues. This would also free MDI to spend more time on marketing

and sales. The cashew farmers in the South, who are relatively more sophisticated business persons and

have larger operations, are moving up the value chain as they are more engaged in the processing end of

the value chain. Therefore, MDI needs to spend relatively little time with the farmers while focusing on

the marketing and sales of the cashews.

For tea, the farmers may graduate to process green tea and the higher value-added jasmine tea. Processing

black tea takes more sophistication than the tea farmers are presently capable of. The obstacles to this

shift in responsibilities include the lack of capacities of farmers and the farmer groups to take on more

complex business operations. These barriers include language, technical and business skills, and market

knowledge. ―In Vietnam, fair trade is still a very new concept. A new business model cannot avoid

mistakes, we learn from doing. Moreover, the farmers education background are still very limited, they

have lot of difficulties on learning new things, new technologies. And it becomes one of our challenging

on managing it‖, said Mr. Nam.

To solidify MDI‘s social entrepreneurship model, the founders would like to improve the ways it

measures the success of its social and environmental impact, or, in other words, how to measure its triple

bottom line (profits, society and environment). While the profits of the firm are easy to measure,

identifying and collecting data on how the firm‘s operations are impacting society and the environment

are more difficult. While confident that it is making positive social contributions, MDI would like to

quantify to what degree the business is improving the livelihoods of the farmers.

In addition, MDI would like to measure the impact or the reduction in impact that its business practices

have on the environment. For example, how does growing crops organically compared to using chemical

fertilizers lessen the impact on the environment? Another challenge is to understand the social and

environmental impacts of MDIs inputs sourced in the supply chain. In particular, MDI is unclear if the

materials and business practices of the packaging materials suppliers meet the social and environmental

standards that MDI sets for its direct supplies.

6 Interview Ms. Nguyen Thi Thu Luong, MDI staff, October 21, 2010.

7 Interview Mr. Nguyen Duy Nam, MDI staff, October 21, 2010.

Amata

P a g e | 22

Amata Vietnam

Dong Nai Province, near Ho Chi Minh City, has a population

of over two million people. It has rapidly industrialized over

the past 20 years, with more than 787 foreign direct investment

(FDI) projects from 31 countries and territories by the end of

September 2010. FDI projects take place in 29 industrial

estates, or zoned areas for industrial development, on more

than 9,000 hectares of land with investment capital of US $8.4

billion, ranking third after Ho Chi Minh City and Hanoi.1

One of the leading industrial estates is Amata Industrial Park

in Bien Hoa City. Amata in Vietnam is a joint stock

company that evolved from a joint venture led by Amata

Corporation Public Co., Ltd. of Thailand. It pursues a long-

term strategy built around corporate social responsibility

(CSR) and the concept of the ―perfect city,‖ which provides

a full package of facilities and services that allows investors to focus on their core business while Amata

deals with all other issues. Amata‘s primary CSR focus has been on environmental protection, and the

company has used its superior environmental services as a key part of its marketing strategy as well as an

important factor in winning the trust of the local and national governments. This trust has given Amata an

advantage in servicing existing clients and in winning new projects that require government approval.

This case study shows how Amata has been able to translate its high-level CSR concepts and good

intentions into significant competitive advantages.

Company Introduction

Amata operations in both Thailand and Vietnam developed from the insight of a Thai entrepreneur,

Vikrom Kromadit. Vikrom saw that most investors in developing Asia want to focus on their core

business competencies rather than the difficulties of improving infrastructure, dealing with government

permits, finding workers and meeting environmental standards. He also saw that company location

decisions were not driven simply by cheap land prices, but by complex needs for access to transportation,

availability of appropriately skilled workers, provision of water and electricity, ability to handle solid and

liquid waste, and proximity to executive housing, recreation, clients, services and markets. Vikrom

addressed these needs through what he called the ―perfect city‖, which provides clients with a high-

quality, full-service industrial estate, including infrastructure, such as roads capable of enduring heavy

industrial trucks and ready-built factories, water, waste water treatment facilities, phone lines, broadband

internet, vehicle leasing, power, housing, shopping, a health clinic, schools and restaurants. In other

1 Dong Nai Industrial Zones Authority, General Information about Dong Nai Province. Retrieved from

http://www.diza.vn/en/zone.php

AMATA

The Perfect City

http://www.diza.vn/en/zone.php

Amata

P a g e | 23

words, the perfect city is an ―industrial estate that functions as a complete town, where people can both

earn a living and live well."2 This comprehensive approach has meant land costs may be slightly higher

than competitors, but it attracts top quality clients that appreciate the long term benefits. Two large

industrial estates were developed in Thailand on this concept and it was extended to Vietnam to respond

to the demand for industrial facilities there. A successful writer and broadcaster, Vikrom has promoted

the idea of the perfect city in his books, radio broadcasts and television programs.

Amata (Vietnam) Joint Stock Company,

established in December 1994, began as a joint

venture between Amata Corporation Public Co.,

Ltd. of Thailand and SONADEZI, the state-

owned industrial zone authority of Vietnam.

Amata Corporation was established in 1989 and

listed on the Stock Exchange of Thailand in

1997. The initial project in Vietnam was the

development of the 700 hectare Amata Industrial

Park in Bien Hoa City, Dong Nai province. The

joint venture was converted into a joint stock

company in 2009. Vikrom called on a well-

respected Vietnamese professor, Dr. Huynh

Ngoc Phien to help implement the joint venture.

Dr. Phien, a former professor at the Asian

Institute of Technology in Bangkok, is now

president of Amata (Vietnam).

By 2010 the industrial park housed 110 companies3, almost all leading international companies, including

51 from Japan, 18 from Taiwan, 11 from the United States, nine from Korea and four from Singapore, with

a workforce of more than 25,000 workers. Total investment is well over US $1.5 billion.4

Amata’s approach to CSR

Vikrom and Dr. Phien realized that, as in Thailand, most foreign companies planning to manufacture in

Vietnam would face difficulties relating to infrastructure, environmental management, electricity,

transport, administrative procedures and tax policies. Amata‘s provision of full services and infrastructure

under the ―Perfect City‖ concept was well suited to relieving investors of those difficulties. According to

Dr. Phien, the environmental aspect of the concept was a critical part of the discussion between Vikrom

and then Vietnamese Prime Minister Vo Van Kiet when Amata was seeking government approval to

acquire land for the estate.5

2 Amata, History: About Amata full-service industrial estates that save you money and time. Retrieved from

http://www.amata.com/eng/corporate_history.html 3 Amata Vietnam, About Amata. Retrieved from http://www.amata.com.vn/?option=com_contentlist&cat=1

4 Duy Khang, ―Amata development projects booming in Vietnam,‖ Vietnam Business Forum Retrieved July

14, 2010 from http://www.vccinews.com/news_detail.asp?news_id=20885 5 Interview Dr. Huynh Ngoc Phien, President of Amata Vietnam, September 14, 2010.

Amata‘s emphasis on quality and environmental care

has created a ―clean and green‖ image attractive

to high-end companies

http://www.amata.com/eng/corporate_history.html

http://www.amata.com.vn/?option=com_contentlist&cat=1

http://www.vccinews.com/news_detail.asp?news_id=20885

Amata

P a g e | 24

―So, environmental protection was the key from the start,‖

Dr. Phien said in an interview. ―At the time there were few

requirements, but we decided to build the wastewater

treatment plant to the highest specifications. We wanted to

develop industry without harm to the natural environment –

to be in harmony with nature and society.‖6

The company‘s approach to social responsibility was tested

when squatters were occupying the land being sold to

Amata for an upcoming project. The company decided

against forcible resettlement of the squatters, instead

providing them with incentives to move. Dr. Phien said that

it took three rounds of negotiations with the squatters to

convince them to move in a process that took two and one-

half years. ―In other provinces, land-owners just call in the

police, but we wanted to be more understanding.‖ This

slowed development of the site, he said, but earned good

will from both the squatters and the local government.

―We have learned that, in the long run, the industrial

estates that provide benefits to the community end up

being more stable and profitable,‖ Dr. Phien said.

Dr. Phien explained that Amata‘s vision is not just

building more factory sites and selling more industrial

land. ―We plan for our industrial estates to become

complete and balanced communities, where business,

people and nature can thrive together.‖ This, he noted,

was Vikrom‘s idea of the “Perfect City,” providing

business with high-quality services and facilities in prime

locations, giving the people working in the estates‘

restaurants, shopping, recreation, housing and schools

and even a world-class golf course and club. For nature,

he said, ―it means sound environmental practices – ISO

14001 certification and zero-discharge waste

management.‖

Dr. Phien said that Amata was determined to go beyond compliance with environmental law to provide

the best possible environmental protection. This was why Amata upgraded its waste water treatment plant

in 2005 from the level required by the Vietnamese government standards to a level exceeding those

standards. In 2008, when environmental problems arose at other industrial estates in Dong Nai, Amata

upgraded analysis of its treated waste water from the normal 10-15 parameters to 33 parameters. Dr.

Phien said that the upgrades in standards and analysis increased costs to the point that the estate lost

6 Ibid.

Amata‘s approach to service and CSR

designed to provide customer benefits that

attract new business

Amata Vietnam President,

Dr. Huynh Ngoc Phien at the waste water

treatment plant

Amata

P a g e | 25

money on its treatment. However, he said that estate factories had willingly contributed to the added costs

and that he felt that the expense was justified by the good will generated with the authorities, the clients

and the community.

Showing off the waste water treatment plant to a visitor, Dr. Phien said that the treated water was as clean

as tap water and was used for watering plants in the estate. He pointed to the large number of fish living

in the final pond of the treatment plant.7

In Thailand, the ―Perfect City‖ concept has led to the development of the full mix of industrial,

commercial, educational, housing and recreational facilities. In Vietnam so far, the focus of the ―Perfect

City‖ concept has been on quality infrastructure and effective waste management. Even though Amata

was set up in Vietnam well before environmental laws and enforcement were in place, Amata sought to

meet high standards of waste treatment. Of particular importance was the large volumes of waste water

generated by 117 companies in the estate and the need to maintain the water quality of the stream that

runs through the estate and empties into the Dong Nai River.

Every year, Amata issues its environmental policy to all staff, suppliers and contractors. It clarifies the

focus of the company in regards to good environmental practice, emphasizing the following points:

Strict implementation of environmental laws and regulations

Prevention of problems rather than solving problems

Recycling system according to the policy of zero-discharge

Efficient use of natural resources and energy

Maintenance of waste treatment plants and systems for maximum efficiency

―Green and Clean‖ mind and attitude among staff

More efficient traffic management to ensure road safety within the estate

Benefits to marketing

Amata‘s approach to CSR has become a major selling

point, Dr. Phien said, especially with high-end

customers. ―World class companies, especially the

Japanese, want quality and predictability,‖ Dr. Phien

said. ―They don‘t want surprises and they don‘t want to

be embarrassed by problems with regulators or the

community. They have learned that we can assure them

of no surprises and no embarrassments.‖8

Dr. Phien said new clients are often brought to them by

existing clients satisfied with the services provided by

Amata. ―We help our new customers with permits, with

construction, with power and water and even with

recruitment. We tell them – you select a good site and

7 Ibid.

8 Ibid.

Dr. Phien and Amata staff inspect the final

waste water pond

Amata

P a g e | 26

focus only on getting production started. Leave everything else to us,‖ Dr. Phien said. ―That way they can

concentrate on what they do best.‖ According to Dr. Phien, the Vietnamese government, both local and

national, also brings clients to Amata. ―The government now trusts us to fulfill our promises and cause

them no problems, so they prefer to see new investors locate here,‖ he said.

Amata‘s policy of providing services and infrastructure that are reliable and both socially and

environmentally responsible has given the estate a strong reputation. Christopher W. Runckel, the

principal and founder of a consulting company that assists American companies expand business

opportunities in Asia inspected several industrial estates in Vietnam. He wrote:

“Amata’s facility is known in Vietnam as being one of the top locations for placing a

factory and traveling throughout the industrial park, you immediately see why. Roads

and infrastructure are built to quality levels much higher than similar parks in

Vietnam and the close proximity of Bien Hoa City means ease in locating trained

workers and ensures proper housing and other support. Soil conditions are better than

in other parks that require extensive piling work. Further, well-cared for grounds and

reliable utilities are a hallmark of the facility9.‖

Dr. Phien said this reputation has enabled Amata Vietnam to make steadily increasing profits from 2001-

2010, except for 2009 when the company showed a lower profit level due to a change in accounting

methods. He said he expected all land in the estate to be sold within the next four years.

9 Business in Asia. Retrieved from www.business-in-asia.com

View of the Amata Commercial Complex

http://www.business-in-asia.com/

Amata

P a g e | 27

Benefit to new projects

Amata‘s strong and reliable CSR policies and its ―Perfect City‖ concept have paved the way for a new

project, the Amata Commercial Complex. This will take up 19.06 hectares and include a large shopping

center together with office buildings, villas, high-rise apartments and lifestyle facilities to meet the

growing demands of Bien Hoa City and the Amata estate. Development is already under way with

construction of a five-story office building, called the Amata Service Center. According to Dr. Phien, the

development will help complete the infrastructure of Amata Industrial Park, satisfy demand from Bien

Hoa City investors and citizens for additional services and facilities..

The new project also brings Amata Vietnam closer to the ―Perfect City‖ concept developed by Vikrom in

Thailand. At the ceremony announcing the project, Vikrom, said that by developing the new commercial

complex, ―we will have a new city quarter where infrastructure, utilities, facilities, amenities and living

environment in high quality standards will be fully provided.‖10

―With the development of Amata Commercial Complex, we will complete the development of an

industrial city, comprising mainly an industrial estate and a commercial complex. As the industrial

development progresses, we will move to the high tech industries,‖ Vikrom said.11

Amata‘s strong reputation and its relationship of trust with local government are leading to a much bigger

project to build a high tech city in Dong Nai‘s Long Thanh District. ―We hope to receive the land area for

the development of a new high tech industrial park in junction with a modern service city from Dong Nai

People‘s Committee in the coming time‖, Vikrom said. Vietnam‘s national government has already

approved in principle the development of this project over an area of 1,500 hectares, which was awaiting

approval from the local government in Dong Nai at the end of September 2010.

10

The Saigon Times Daily (December 15, 2009). 11

Ibid.

Master Plan for Amata Commercial Complex

Vedan

P a g e | 28

Dong Nai Province, east of Ho Chi Minh

City, has a population of over 2 million

people. It has rapidly industrialized over the

past 20 years, with significant foreign

investment in the shipping, food products and

manufacturing industries. By 2010, the

province had more than 678 foreign direct

investment projects from 30 countries. At

that time, 16 industrial zones were in

operation in the province, with a total area of

about 4,805 hectares. Because of this

investment and its proximity to Ho Chi Minh

City, Dong Nai has a relatively a well-

developed infrastructure of roads, electricity

and communication.

Farmers in Dong Nai‘s Long Thanh district were pleased when Vedan Vietnam, a producer of products

such as starch, glucose, monosodium glutamate and lysine (an essential amino acid), received permission

from the Vietnamese government to build a factory in the area. These products could be produced from

the locally available agricultural products. Vedan provided not only a new market for the local manioc

crop, but offered well-paid jobs to many people in the area. All in all, it was expected that Vedan would

have a positive economic and social impact on the area.

In 2008, however, the provincial Department of Natural Resources and Environment found that the

company‘s discharge of waste water into the Thi Vai River violated Vietnamese environmental laws. In

addition to the Vietnamese government taking legal action, farmers impacted by the polluted river filed

lawsuits against Vedan for compensation. Vedan has become a classic case in which failure to operate

with environmental responsibility has led to significant financial and reputational losses for an otherwise

successful company.

This case also illustrates the challenges facing companies trying to recover from an environmental problem

without the support of the community, local government, academic organizations and the news media.

The Thi Vai River in Dong Nai,

near the Vedan factory

Vedan

Vedan

P a g e | 29

Vedan Vietnam was established in 1991 as a Vietnamese subsidiary of Vedan International (Holdings)

Ltd, a Taiwanese-owned company listed on the Hong Kong stock exchange. The company dates its origin

back to 1954 in Shalu, Taiwan. As of 2010, Vedan International had four principal operating subsidiaries,

three of which are in China, and the fourth in Vietnam. Vedan has marketed its products in China,

Vietnam and other ASEAN countries since the 1970s. The company is Asia‘s leading producer of

fermentation-based amino acids, food additive products and cassava starch-based industrial products. To

accelerate market expansion, the holding company established Vietnam Vedan as its major production

base. By 2010 Vedan was the largest monosodium glutamate (MSG) producer in the Southeast Asian

region, and the largest supplier of lysine and cassava starch-based industrial products in Vietnam.1

Vedan describes its management style as based on ―modesty, responsibility, innovation‖ and part of a

―compassionate corporate culture.‖2 By 2010, the company had hired more than 1,800 Vietnamese

employees, some of whom have been promoted to managerial positions.

―Vedan helped raise living standards here,‖ said a farmer‘s representative in nearby Phuoc Thai

Commune. ―Before Vedan it was difficult to find a market for our manioc. ‖The farmer said the company

reached out to the community, providing charitable donations to the poor.

Social responsibility

Vedan has traditionally focused its CSR program on employee welfare, providing free 24-hour medical

service, meals and transportation to all employees; free housing for those who come from other districts;

and special financial bonuses on Labor Day and Vietnam‘s National Day. It also has provided staff

1 Vedan. Retrieved from www.vedaninternational.com

2 Ibid.

Gate to the Vedan Vietnam factory in Long Thanh,

Dong Nai Province

Part 1

Vedan

P a g e | 30

training on communication, production techniques, machinery maintenance, safety and hygiene,

environmental protection, fire fighting, emergency procedure, first aid, and ISO 9000 operational

standards. Externally, Vedan has collaborated with local universities and government agricultural

agencies to improve agricultural techniques and technologies in order to boost productivity. The company

also makes charitable donations, reporting over VND 10 billion3 as of 2010.

Recognition

Vedan has attained ISO 9001:2000 certification and has been recognized by the Vietnamese government.

Awards include the Trade Ministry Export Award in 2001 for outstanding export and contribution to

Vietnam‘s revenue, and recognition from the Minister of Agriculture and Rural Development in 2001 for

contributions to agriculture and rural development.

Operations in Long Thanh District

In Vietnam, the company manufactured a variety of products sourced from locally available agricultural

products, including starch, glucose, MSG and lysine. The company received a 50-year lease on a large

plot adjacent to the Thi Vai River, located about 70 kilometers southeast of Ho Chi Minh City, in Phuoc

Thai Village, Long Thanh District of Dong Nai Province. Proximity to the Thi Vai River was important

in site selection, as the company uses a large amount of water and discharges waste water as part of its

manufacturing processes.

Production began with two product lines. A waste water treatment system for those lines released treated water

into the Thi Vai River through a large underground pipe visible at the bank of the river. Because the company

experienced rapid increases in sales and production, new product lines were added and greater volumes were

produced. The company, however, failed to increase the capacity of its waste water treatment plant.

By 1996, villagers began to take note

of the pollution. Those who made

their living from fishing in the river

complained to the company that the

increasing effluent from the plant was

killing fish. Vedan responded by

donating VND 700,000 to VND 1

million to each affected fisherman to

help them find other livelihoods.

However, it made no facility changes,

and did not increase its water

treatment capacity; instead, it shifted

effluent into a second pipe to the

river. This pipe was built under the

original effluent pipe and, instead of

releasing water near the bank, it ran

3 Ibid.

Part of the Vedan production facility in Long Thanh

Vedan

P a g e | 31

under the river and released water in mid-stream far from the Vedan plant. This waste water had high

chemical oxygen demand (COD). Plant employees later told the university environmental experts that

only one Vietnamese employee was aware of the existence of the second pipe. The company has declined

to explain why this pipe was laid. With further increases in production and the addition of new products at

Vedan, the water quality of the Thi Vai River continued to deteriorate.

Operations at the Vedan plant in Dong Nai included six major facilities: the MSG plant, starch and

glucose syrup plant, modified starch plant, chlor-alkali plant, lysine plant, and co-generating power plant.

In addition, there were three advanced sewage treatment systems, a 60,000 m3 water reservoir, and the

Vedan Phuoc Thai port.

A particular problem for Vedan arose in the management of waste from a production process that used

molasses. According to environmental experts at Bach Khoa National University4, this waste was

originally intended to be spread as fertilizer in nearby rubber plantations. However, by 2002 the

plantations had absorbed as much of this type of fertilizer as possible without making the soil too acidic,

so farmers refused to take any more. Vedan could have processed and dried this waste, but the facilities to

do this would have been very expensive.

A revision of the 1994 Law on Environmental Protection (LEP) in 2005 increased Vedan‘s legal risks

concerning the pollution it was causing. The 2005 law required regional protection authorities to report

polluting establishments to the community. The community could also demand explanations for pollution

and assessments of its impact, with non-complying institutions penalized or charged environmental

protection fees. Most importantly, the revised law stipulated effective mechanisms for enforcement of

compliance with environmental standards through the creation of environmental police units.

In Dong Nai, however, it took significant time to appoint and train the local environmental police

personnel. In the meantime, environmental scientists at the Natural Resources and Environment Institute

at Bach Khoa University in Ho Chi Minh City were appointed to a committee charged with reporting to

the authorities on river pollution in the region. This committee provided annual reports on the state of the

river that documented the steadily increasing pollution. ―For a stretch of at least 11 kilometers of the

river, there was essentially zero dissolved oxygen in the water,‖ according to a member of the committee

reporting on pollution of the Thi Vai River. ―No fish could survive.‖

However, lacking the authority of the environmental police, the Natural Resource and Environment

Institute could not compel factories to allow inspections, and therefore could not pinpoint the source of

the pollution now obvious in the Thi Vai River. By 2008, there were a number of industries and industrial

zones located along the river. Fish farming was also believed to be adding pollution from unconsumed

fish food. Runoff, including fertilizer from agricultural land, was also suspected.

In addition, farmers‘ associations in the three jurisdictions along the Thi Vai River, Dong Nai Province,

Ho Chi Minh City and Ba Ria-Vung Tau Province, using their rights under the revised LEP, stepped up

their complaints to local government. Journalists began to write critical articles about the situation. The

local concerns appeared to be validated when the crew of a Japanese ship reported in 2008 that the nearly

4Interview at the Institute of Natural Resources and Environment, Bach Khoa National University in Ho Chi

Minh City, September 15, 2010

Vedan

P a g e | 32

black and foul-smelling water in the river was a corrosion threat to the metal hull of their ship. Finally, a

team of environmental police with the required authority was assigned to the task of finding out what was

killing the Thi Vai River.

―The environmental police team spent months noting the pattern of pollution releases and production at

the Vedan plant,‖ said Mr. Nguyen Van Hau, a lawyer assigned to the case by the Vietnamese Lawyers

Association. Mr. Hau and the association were responding to appeals for help from local farmers. He said

that environmental police enquiries finally led to the discovery of the second Vedan effluent pipe. ―The

police had to send down divers to find the location of the pipe which was far down river from the plant,‖

Mr. Hau said.

The Crisis Point

On September 8, 2008, the Environmental Police Agency and inspectors of the Ministry of Natural

Resources and the Environment officially determined that Vedan was discharging untreated waste water

into the Thi Vai River. Six days later, the Ministry of Natural Resources and Environment announced that

the manager of the Vedan Vietnam plant had been served with notice by the authorities that the plant was

in violation of the environment law as follows:

1. Discharge of wastewater 10 times higher than allowable levels at the starch factory;

2. Discharge of wastewater 10 times higher than allowable levels at the MSG and lysine factory;

3. Discharge of wastewater 10 times higher than allowable levels at the other factories;

4. Failure to provide full reports to agencies with relevant information and data on environmental

protection;

5. Failure to register environmental protection commitments for its pig breeding farm with the

environmental protection agency;

6. Developing and putting into operation a project for raising the capacity of the soda and acid

factory, without an environmental impact assessment;

7. Developing and putting into operation projects for raising the capacity of the plants, including those

for MSG, starch, high-grade spices, and lysine, without environmental impact assessment reports;

8. Discharging bad odors directly into the environment, without using equipment to minimize

pollution levels;

9. Failure to control harmful waste in accordance with environmental protection regulations; and,

10. Releasing wastewater into the water source at locations not specified in the license.5

The Minister of Natural Resources and Environment, Mr. Pham Khoi Nguyen, told the press that Vedan‘s

violations were ―very serious‖ and had been going on for many years. He said that the 1.5% of operating

costs the company was spending on waste treatment was far below average. Mr. Pham said that he had

personally inspected the Vedan plant and had expressed concerns about it, but the Environment Police

had been unable to find clear evidence of violations until now. ―Through this case, we want to deliver a

5Statement issued by the Ministry of Natural Resources and Environment on September 14, 2008.

Vedan

P a g e | 33

message that foreign firms can‘t bring waste into Vietnam,‖ Mr. Pham said. ―They can‘t avoid paying

environmental expenses and harm the health of Vietnamese people6.‖

Mr. Le Van Hop, a senior official of the Ministry of Natural Resources and Environment, said that the

ministry had revoked the company‘s license for discharging waste water into the Thi Vai River with

immediate effect. He said the company would also be charged with back pollution fees for past emissions

and hit with penalties for non-compliance. Mr. Hop called on Vedan to decide how to respond to appeals for

compensation by fish farmers affected by the river pollution.

Mr. Tran Van Cuong, deputy director of Ba Ria – Vung Tau Department of Agriculture and Rural

Development, said Vedan‘s untreated wastewater totaling 105 million liters from 1994 to 2008 adversely

affected aquaculture and riverside crops.

Key decisions that faced Vedan

At this point Vedan had not yet made any response to the charges. It was faced with a number of inter-related

issues and had to come up with a plan to deal with them. The issues were legal, technical, and financial in

nature and would have major impacts on the company and its relations with the Vietnamese people, the

government, the community, its workers and its customers. Key problems included the following:

1. Bringing the waste water treatment facility into compliance with the law;

2. Halting production until the facility was in compliance;

3. Responding to the government claims of past pollution fees and penalties;

4. Responding to threats of lawsuits for compensation by residents claiming damage;

5. Dealing with local farmers‘ associations;

6. Dealing with the news media;

7. Preserving Vedan‘s reputation and brand image;

8. Explaining the matter to shareholders and employees; and,

9. Determining the responsibility of Vedan executives for the problems.

6―Vedan in its own hot, dirty water,‖ Vietnam net Bridge. Retrieved September 18, 2008. from

http://english.vietnamnet.vn/social/2008/09/804302/

http://english.vietnamnet.vn/social/2008/09/804302/

Vedan

P a g e | 34

In September, 2008, Vedan Vietnam was faced with the significant challenges described in Part I of this

case study. The company had to plan and carry out a series of actions to protect what had been a highly

successful and profitable operation. It had to act on many fronts and it had to act quickly and effectively

in a coordinated way. It had to take actions to try to restore its reputation with the public, to explain the

problem to its employees, to take the technical actions to stop the pollution, to pay the fines and obey

orders from the government, and to respond to large-scale demands for compensation from people

affected by the pollution. The company also needed to assess the damage caused – both the direct

financial cost and the impact on its reputation and brand name. The following is a summary of the actions

taken, as shown in company reports and news reports.

Public Relations

Following notification of the charges against Vedan, company officials were slow to react. The company

had no statement ready for the Sept. 17, 2008 press conference by the Minister of Natural Resources and

Environment even though they had been officially notified of the charges at least three days earlier. They

almost certainly knew of the coming problem well before that due to inspection of the plant by the

Environment Policy Agency and the activity of Environment Police divers in the river near the plant. There

had also been years of complaints by local inhabitants, farmers‘ associations and local government. Annual

reports to the Ministry of Natural Resources and Environment that cited increasing pollution in the Thi Vai

River should have given the company ample warning to take action, or at least to prepare a public response.

However, this was not done. When the company did make a statement, it confined its promises to immediate

legal requirements – payment of environmental fees and fines, halt of production and improvements to its

waste water system. No senior official expressed the company‘s willingness to take action to repair the

damage to the river ecosystem or to compensate local people who were adversely affected by the river

pollution. Due to the delayed and limited response, the company‘s position was not favorably described in

news media reports. News coverage of the company was almost completely negative.

The 2008 Vedan Annual Report admitted ―operational negligence‖ and apologized to the Vietnamese

people for its actions, but gave no details on how this negligence was allowed to continue for 14 years. It

said the company immediately began to implement remedial measures including upgrading the

wastewater treatment facilities, installing additional recycling facilities, and setting up a dry fertilizer

plant use waste materials. It admitted that the company‘s poor environmental performance was ―the

primary factor affecting the operation and profitability of the Group for 2008 in addition to causing

material impacts on the production, sales, good will and capital standing of the Vietnam plant.‖ 7

7 Vedan, Annual Report 2008. Retrieved from www.vedan.com.

Part 2

Vedan

P a g e | 35

Employee actions

There is little indication that the company communicated its position to its local employees, but it is

possible that some communication effort was carried out quietly within the company. At the same time,

no senior managers were officially held responsible or punished for the failure to obey environmental

laws for a long period of time or for the resulting damage to the company. However, the two executives

apparently responsible for at least some of the problems, the chief engineer responsible for construction of

the hidden effluent pipe and the executive director in charge of the plant both retired in 2009.

Environmental actions

Vedan, quite intelligently, decided not to contest the government fines and environmental fees applied for

failing to meet environmental standards. The company paid a total of US $7.7 million without protest.

Vedan general director Yang Kun Hsiang said the firm also reacted quickly to avoid further damage to the

environment, closing some production lines and slashing its production at the remaining lines by up to 80%.

The company dismantled the illegal pipes, pumps and other equipment that discharged untreated waste

water into the Thi Vai River. The company also began work on building two new waste water treatment

systems with a capacity of 5,000 cubic meters per day to meet government requirements. To address the

problems with the liquid sugar waste treatment, the company built a facility to dry the waste so it could be

recycled as solid fertilizer. Vedan finally put in place a formal environmental management system, gaining

ISO14001 environmental management certification from the British and Standard Institution. The company

was also certified as achieving the OHSAS18001 standard for health and safety management.

Total investment in the various new environmental protection measures was estimated at US $31.3

million. In the company‘s 2009 annual report, the chairman reported that ―As the environmental issue

came to our attention in 2008, we sought to immediately remedy by improving related facilities and

systems. In addition to making improvements specified by the Vietnam government, we invested in

wastewater treatment facilities and a recycling solid fertilizer plant.‖ The company report promised

improvement in all aspect of its operation, including the hardware and software of the company‘s

management system as well as training of supervisors and staff. The report said that ―vouching for the

effectiveness of our labors over the past year, we have earned recognition from the Environmental

Protection Department in Vietnam.‖8

Compensation for environmental damage

Vedan, however, took a more legalistic approach to claims for compensation for the damage caused to the

river, possibly because the claims for compensation were higher than the fines and more difficult to

assess. Vedan was quick to point out that the company was not the only entity contributing to the

pollution of the river and, therefore, should not be held responsible for all of the damage claimed. The

compensation issue was complicated in that, unlike the charges for fines and fees, the demands were not

coming from a single source, but from different associations in three different provinces. The company,

therefore, sought to deny or reduce the claims for compensation. For two years the company‘s official

position was that it would not pay ―compensation‖ but would offer ―assistance‖ to affected farmers.

8 Vedan, Annual Report 2009. Retrieved from http://ggn.cc/ggn/832740141842448-3

http://ggn.cc/ggn/832740141842448-3

Vedan

P a g e | 36

Vedan also hired Dr. Lee Ken, a Taiwanese professor, to estimate the environmental damage caused by

the company. Dr. Ken reported that the industrial zones along the Thi Vai and its tributaries such as Go

Dau, Nhon Trach 2, Phu My 1 and My Xuan A were also responsible for the pollution. He said that

Vedan should only be blamed for 8.8 – 77% of pollution in the river, depending on the area. This

estimate, with its wide range of Vedan responsibility, was in sharp contrast to reports from the

Vietnamese environmental committee assigned to the task, which estimated that Vedan had caused nearly

90% of the damage to the river. The Taiwanese professor reported that Vedan‘s effluent had damaged

only 325 hectares of seafood farms in Ba Ria – Vung Tau province instead of the 2,400 hectares as

claimed by the province. The company, therefore, sought to reduce the claims in a series of meetings with

farmers‘ associations and local organizations that lasted until September 2010. One adverse effect of the

prolonged negotiations was that each meeting sparked additional news reports that publicized the issue,

further damaging Vedan‘s reputation and encouraging more claims for compensation.

In August 2010, Vedan, recognizing the damage done to its reputation by the continued controversy and

concerned that compensation, if left to a court decision, might be very high, offered an increase in

compensation for all farmers in the three provinces, upping its offer from a total of VND 25 billion

(US$1.3 million) to VND 130 billion (US $6.84 million). When this offer was not accepted, Vedan

quickly agreed to claims of compensation totaling VND 218.9 billion (US $11.5 million) as compensation

for damages as follows:

VND 119.6 billion to farmers in Dong Nai

VND 53.6 billion to farmers in Ba Ria-Vung Tau province

VND 45.7 billion to farmers in Ho Chi Minh City

It was agreed that the payments would begin immediately and be completed in January 2011.

Vedan Vietnam CEO Yang Kun Hsiang explained the company‘s actions: ―Negotiation took place over a

long period because we had to verify calculations of the Institute for Environment and Natural Resource,‖

Mr. Yang told the press. ―Prime Minister [Nguyen Tan Dung] instructed that the compensation must be

reasonable. At the meeting today, we agreed to pay the full compensation requested,‖ he said.

Financial impact

The financial impact on the company was significant, but manageable in view of the company‘s annual

profits of US $16-17 million per year. A boycott of Vedan products by customers and distributors in

which four major super market chains removed Vedan products from their shelves caused unspecified

losses. However, these were limited by the fact that most Vedan products in 2010 were not sold directly

to the public but to food production companies and the fact that Vedan sales were not focused on

Vietnam, but were global. Vedan was also fortunate in that the halt to production ordered by the

Vietnamese government coincided with a downturn in demand due to the global financial crisis. Still,

according to the company‘s 2009 annual report, the problems led to a 17% decline in the turnover of US

$289 million in 2008. The environmental fines and fees paid totaled only US $7.7 million and even the

final compensation agreement of US $11.5 million were not excessive, considering that they covered

violations and damage that continued for 14 years. The major financial cost was the required investment

in improved waste water treatment that totaled US $31.3 million; however, this not only brought waste

Vedan

P a g e | 37

treatment up to standard, but also

provided for the conversion of

molasses waste into dry fertilizer that

can be sold into the regional market.

In its interim financial report for 2010,

Vedan reported that its total

compensation payments would reach

about US $11.8 million. ―As the one-

time loss claim of US$11,807,000 has

been recognized in the expenditure in

the first half of 2010, the Group

recorded a net loss of US$6,959,000

during the period from a net profit of

US$4,848,000 (in the previous period),‖

the report said.9

Other costs are more difficult to quantify and may not be evident for some time. The company certainly

incurred legal and advisory costs. It hired a Hong Kong-based consulting company to advise on its

actions, along with Vietnamese legal assistance and a Taiwanese environmental expert. By agreeing to the

claims of compensation, the company avoided additional legal costs and the possibility of greater

compensation payments. The environmental controversy certainly proved a major distraction to company

executives and took up a considerable amount of their time. Due, at least in part, to the problems in Dong

Nai, a Vedan tapioca plant under construction in Ha Dinh province faced additional environmental costs,

as officials required the new plant to follow stricter environmental rules, including treating waste water to

higher standards and keeping it in sealed ponds. Permission to operate the plant was withheld until the

company could show that the environmental treatment system functioned perfectly in trial runs.

Despite the losses caused by the environmental problem, the downturn in sales and devaluation of the

Vietnamese currency, Vedan was able to book a net profit in 2009 of US $17.9 million, a 114% improvement

over 2008 profits, which were hurt by the payment of the US $7.7 million in fines and fees. The

compensation payments in 2010, however, led to a net loss of US $6.5 million.

Impact on reputation

Of possibly greater long-term concern to the company was the impact of the environmental problems on

Vedan‘s reputation and brand name. In two years of controversy, hundreds of negative news articles and

broadcast news programs on Vedan went out to the public, both in Vietnam and around the world. In

Vietnam, Vedan has become a catchword for environmental irresponsibility. In Hong Kong, the company

had to ask for a temporary halt to trading in its shares as the damage from the violations was assessed.

There are reports that employee morale has been hurt by the controversy and local residents say that

Vedan will have more difficulty competing for good workers, especially now that there are other

industrial employment opportunities in the area.

9 Vedan, Vedan Interim Report 2010. Retrieved from www.vedan.com

Vedan

P a g e | 38

Recovery of the river

By September 2010, the efforts to fix the problems at Vedan were already having visible results on the

Thi Vai River. The Ministry of Natural Resources and Environment said that other polluters, alarmed by

the measures taken against Vedan, have quietly improved their waste treatment systems and reduced their

pollution of the river. The Minister of Natural Resources and Environment, Mr. Pham Khoi Nguyen told

the press that environmental improvements by Vedan were helping to revive the Thi Vai River.

―Compared to my first trip on this river in 2005, the water quality is much better. At that time, the river

water was black and smelled terrible,‖ the minister said.

Fishermen report that since the improvements,

fish and shrimp have reappeared in the Thi Vai

River. Environmental experts said that the

river‘s recovery was accelerated by heavy rains

and floods in 2009 that helped flush polluted

water out to sea.

By September 2010, local fishermen were

again catching fish in the Thi Vai River near

the Vedan factory

LienVietBank

P a g e | 39

In 2007, Mr. Duong Cong Minh and seven close associates decided to start a private bank. With previous

experience working at the Vietnam Private Bank (VPBank) and the Vietnam Bank for Agriculture and

Rural Development (also referred to as Agribank), the founders had the technical know-how to run a

bank. Coming from modest backgrounds themselves, however, they wanted the new bank to be the

―business link to society‖. In 2008, the LienVietBank was opened as a joint stock company, with

corporate social responsibility (CSR) a key cornerstone of the bank. In one of the first board meetings, the

directors agreed to give back 7% of the bank‘s profits to society. Subsequently, LienVietBank has opened

a development corporation to help implement CSR programming and has launched corporate volunteering

activities. In the first full year of operations (2008), LienVietBank gave Vietnam Dong (VND) 48 billion

(or 11% of its profit) back to society, more than their stated commitment. As a new bank that is

expanding rapidly, the LienVietBank is struggling to make its CSR programming more strategic for the

firm, while continuing to give back to society.

“Our founding shareholders are successful businessmen who come from humble

backgrounds. They want to contribute to society while running a successful private

bank,” said Dr. Le Hong Phong, the bank’s CEO. 1

This case shows how a new, private Vietnamese company has made CSR a cornerstone of its business

and is working to integrate CSR concepts into its operations.

Company Overview

Lien Viet Joint Stock Commercial Bank (LienVietBank) is a private commercial bank that was granted its

banking license on 28 March 2008 by the Governor of the State Bank of Vietnam – becoming the first

newly established joint stock commercial bank in Vietnam since 1993. [Its full name in Vietnamese is:

Ngân hàng Thương mại Cổ phần Liên Việt and abbreviated as: Ngân Hàng Liên Việt].2 With initial

chartered capital of VND 3,300 billion, LienVietBank is ranked the fourth largest amongst 36 commercial

joint stock banks in Vietnam.3 In May 2008, LienVietBank commenced commercial operations at the Hau

Giang Transaction Center, and in June 2008, branches were opened in Hanoi and Ho Chi Minh City.

LienVietBank was launched by eight founding shareholders, most of whom had work experience at the

Vietnam Bank for Agriculture and Rural Development (Agribank). Led by Mr. Duong Cong Minh,

LienVietBank‘s Chairman, the founding shareholders were able to attract a number of large corporate

shareholders, including Him Lam Corporation (18% of shares), Saigon Trading Group (SATRA) (4.6%

of shares), and Southern Airports Service Company (SASCO) (2.4% of shares). In addition, a number of

key strategic partnerships have been forged with the Vietnam Bank for Agriculture and Rural

1 Interview Dr. Le Hong Phong, CEO of LienVietBank, 28 July 2010.

2 LienVietBank. Retrieved from http://lienvietbank.net

3 Ibid.

LienVietBank

Business Link to Society

http://www.linkedin.com/redirect?url=http%3A%2F%2Flienvietbank%2Enet&urlhash=gw2H

LienVietBank

P a g e | 40

Development, Wells Fargo Bank, N.A., Credit Suisse Bank (Switzerland), and Oracle Financial Services

Software Limited. ―With the founding shareholders coming from large corporations and having expertise

in financial markets, banking systems, and management, combined with sound financial backing from

Him Lam, SATRA, and SASCO, LienVietBank has a strong foundation for growth‖, explained Mr.

Duong Cong Minh. ―Besides, the founders have committed to be with LienVietBank for at least 10 years

and create no pressure on benefits [profits] at the first stage.‖ 4

In 2009, LienVietBank‘s first full year of operations, LienVietBank earned a post-tax profit of VND 540

billion, 16% greater than expected, as all LienVietBank branches earned a profit. By the end of 2009, the

bank had VND 17.8 billion in total assets, VND 5.9 billion in outstanding credit, one exchange bureau, 12

branches and 15 transaction offices. 5 On November 22, 2009 LienVietBank shareholders assigned the

bank‘s Management Board to apply for listing on the Ho Chi Minh City Stock Exchange. However, stock

exchange rules require companies to have operated for at least five years before listing.6

Headquartered in Hậu Giang Province in the Mekong Delta, LienVietBank has continuously expanded

since its inception, from 600 employees in 2008 to 1,200 in October 2010. The firm chose to have its

headquarter in Hậu Giang Province due to the founders success in conducting business in the South and

they chose an agricultural area to be close to the farmers. By the end of 2010, LienVietBank plans to

expand the number of branches to 70 and aims to have total assets worth 60 trillion VND (3.15 billion

USD) and pre-tax profits of 900 billion VND (US $47.3 million), as well as to raise its charter capital to

5,200 billion VND (US $271.5 million). LienVietBank is also planning to establish a securities company

and an asset management company, with the goal of becoming a financial corporation in 2010. 7

―LienVietBank‘s aim is that, after five years of operations, LienVietBank will be a top five retail bank in

Vietnam,‖ explained Mr. Phong, the LienVietBank CEO.8 ―In the next five years, LienVietBank will try

to be a top financial services group and bank in Vietnam. The Vietnam financial and banking market now

includes more than 50 commercial banks, and in the future, more foreign banks will surely arrive‖, said

Mr. Nguyen Duc Huong, Vice Chairman and General Director. 9

To achieve this vision of growth, a merger between LienVietBank and the Vietnam Post Savings Services

Company (VPSC), an affiliate of the state-owned Vietnam Post Corporation (VNPost), is being pursued.

―Then VNPost will own an 18% stake in LienVietBank,‖ said LienVietBank‘s Spokeswoman Ms. Tran

Thi Mai Anh. The merger will allow LienVietBank to utilize VPSC‘s network of more than 13,000 post

offices nationwide as bank transaction offices. In comparison, the state-owned Agribank presently boasts

the largest number of branches and transaction offices at 2,230. Mr. Nguyen Duc Huong, vice chair of

4 Ibid

5 ―LienVietBank performs fine,‖ Vietnam Business News. Retrieved from

http://vietnambusiness.asia/lienvietbank-performs-fine/ 6 ―Lien Viet to play with the big boys,‖ Intellasia News Online. Retrieved from

http://www.intellasia.net/news/articles/finance/111289293.shtml 7 ―LienVietBank performs fine,‖ Vietnam Business News. Retrieved from

http://vietnambusiness.asia/lienvietbank-performs-fine/ 8 Interview Dr. Le Hong Phong, CEO of LienVietBank, 28 July 2010.

9 LienVietBank. Retrieved from http://lienvietbank.net

http://vietnambusiness.asia/lienvietbank-performs-fine/

http://www.intellasia.net/news/articles/finance/111289293.shtml



LienVietBank

P a g e | 41

LienVietBank's board of directors, said the deal reflected LienVietBank's desire to become a leading retail

bank in Vietnam.10

LienVietBank approach to CSR

CSR and sustainable business practices are ingrained in the DNA of LienVietBank as it has striven to be

the ―businesses link to society‖ since its inception. The website states that ―We believe we have a

responsibility to support the community and that community involvement and sustainable business

practices go hand in hand.‖ LienVietBank is committed to contributing to the sustainable growth and

security of the banking system and whole economy of Vietnam, as well as creating sustainable economic

value for its shareholders and strategic alliances, added Mr. Nguyen Duc Huong.11

LienVietBank sees that

the benefits of CSR include building a strong brand image, developing strong relationships with the

Vietnamese people – their current and future clients, being seen as a strong development partner by

government agencies, and attracting and retaining talented employees. LienVietBank‘s CSR is

implemented in three ways: 1) internally to attract and retain human resources; 2) generous corporate

philanthropic giving programs for social causes; and, 3) sustainable business practices.

LienVietBank sees its main CSR stakeholders as follows:

1. Government agencies and the Communist Party at the national, provincial and local levels – good

relations are needed for a ―license to operate‖

2. Shareholders – the eight main founders as well as the 3,000 minor shareholders – strong participation

is required to take advantage of their leadership, and to gain their understanding

3. Employees – the staff contributes to the bank‘s CSR program, while the benefits include improving

staff recruitment and retention

4. Community and customers – the community is the beneficiary of LienVietBank‘s CSR community

involvement activities and community members are current and future bank customers

Internally, LienVietBank seeks to create a business culture that cares for its employees and upholds high

ethical standards. LienVietBank‘s core values include: creativity, connectivity, value sharing, sustainable

development, constantly improving practices, and acting ethically, with honesty and integrity.

LienVietBank strives to build up a professional working environment and stresses its policy of giving

back to society to attract and retain talent. LienVietBank aims to ―help our people to grow, enabling

individuals within LienVietBank to make a difference.‖ 12

LienVietBank‘s employee volunteering program aims to increase staff job satisfaction and to help the

community. LienVietBank offers opportunities for volunteering and philanthropy to help the handicapped

and poor, in which both the firm and the employees contribute funds. Alternatively, LienVietBank will

provide support to employees who give back to the community while they are on holidays. LienVietBank

also holds larger volunteer activities, such as a one-time bicycle rally that promoted the theme - ―Say No

to Smoking‖. The volunteer activities are coordinated through the branches, and trade unions help

10

―LienVietBank performs fine,‖ Vietnam Business News. Retrieved from

http://vietnambusiness.asia/lienvietbank-performs-fine/ 11

LienVietBank. Retrieved from http://lienvietbank.net 12

Ibid



LienVietBank

P a g e | 42

organize events. Seventy percent of employees have

participated in volunteering activities. 13

While

satisfaction has not been measured, informal

feedback from the employee unions has been

positive.

Some employees choose to work for LienVietBank

because it emphasizes CSR explained Ms. Dinh Thu

Huong, born in 1979, Vice Director of Payment

Department. ―Working for a company that

emphasizes CSR as LienVietBank was one of my

motivations. One of my criteria when I choose to

work here is not only that they were doing good

business but also they were having lot of activities

and programs for the community. I‘m really proud to see tha t LienVietBank has developed very good

activities on CSR and that I can also be a part of these projects. We established a fund for philanthropy and

we create a monthly CSR activity such as visiting poor villages, giving scholarship for poor students, and

visiting handicap children.‖14

Corporate philanthropy is the main thrust of

LienVietBank‘s current CSR programming.

Corporate philanthropy is the private giving of

funding and/or resources to a cause for the

betterment of society. Corporate philanthropy, often

referred to as charity, is often the first type of CSR a

firm follows. While corporate philanthropy benefits

business, the emphasis placed on helping society

rather than on garnering strategic advantages for the

firm. To the extent that the bank is managed by its

major shareholders, a philanthropic approach can be

justified. However, as shareholding becomes wider

(especially if listed on the stock exchange), it is

important that CSR becomes more strategic and

provides more benefits to the shareholders.

LienVietBank has a CSR team which is comprised of a CSR manager and representatives from the public

relations and corporate relations units. The team reports to the Vice CEO and assesses the needs within

LienVietBank‘s focus activities and geographic areas. Subsequently, the team drafts and submits proposals to

the management board, led by the CEO, for a decision. Finally, the approved programs are submitted to the

board of directors. The main focus of LienVietBank‘s current CSR programming is on poverty reduction, but

the activities vary, including education, infrastructure, and agricultural support.

13

Interview LienVietBank CSR team, September 7, 2010, Hanoi. 14

Interview Ms. Dinh Thu Huong, Vice Director of Payment Department, LienVietBank, October 14, 2010.

LienVietBank volunteers help with donating

supplies in Quang Nai.

A ―balloons and t-shirt‖ event sponsored by

LienVietBank at a local school.

LienVietBank

P a g e | 43

Geographically, LienVietBank‘s CSR community involvement programs are focused in Hau Giang,

where its head quarters are located, and in the remote Xín Mần district, Hà Giang province. In addition,

national level activities are also supported, such as providing televisions to the poor in remote areas so

that they receive more information. ―I highly appreciate the support of LienVietBank for the community;

LienVietBank becomes a good pattern for other enterprises and communities‘ campaigns…‖ said Vice

Prime Minister Nguyen Thien Nhan 15

At LienVietBank‘s inaugurating ceremony, LienVietBank announced a program called ―LienVietBank

shareholders act for the poor in Hau Giang‖. In total, LienVietBank offered VND 44 billion in support

from the firm and its leading shareholders to the province. LienVietBank developed action plans with Hau

Giang local authorities to help the poor. In the first six months of operation, LienVietBank focused on

activities in Hau Giang province such as providing donations to the poor, building schools and a guest

house, granting scholarships, and giving lifebuoy- schoolbags for pupils living near streams and the lake.

―Social activities are our long-term commitment. Along with our beneficial business activities, we are

also concerned about community and society,‖ said Chairman Minh.

In 2008, the government of Vietnam passed Decree 30a to accelerate poverty reduction in the country‘s

poorest 62 districts. The government is gathering support from development agencies, state-owned

enterprises and private firms to focus on development in these districts. The firms provide both financial

and technical support to help these districts. LienVietBank was chosen to focus on development in Xín

Mần district, Hà Giang province, a highly mountainous region where travel can be difficult. Traditionally,

the vast majority of its economic activity revolved around agriculture and forestry. Hà Giang‘s main crops

are green tea and rice. With a population of 50,307, Xín Mần is one of the country‘s poorest districts. 16

It

shares a border with Lao Cai province and China. There is no airport and to get there requires travelling on

mountainous roads. In 2008, the annual income per capita in Hà Giang was VND 5.7 million, and in Xín

Mần was considerably less. In comparison, Hanoi‘s income per capita was approximately VND 32 million. 17

To implement programming in this remote

district, LienVietBank established the Xín Mần

Development Company, a private joint stock firm

established specifically for the purpose of

implementing LienVietBank‘s philanthropy work

in the district with focus on reducing poverty. The

funding for the development company originates

from LienVietBank and Him Lam Co. The firms

have committed to contributing VND 70 billion.

With paid in capital of VND 20 billion, Xín Mần

has employed five full-time staff.18

15

Quote from Vice Prime Minister Nguyen Thien Nhan on September 3, 2009, in Ha Giang Province. 16

General Statistics Office of Vietnam. Retrieved from www.gso.gov.vn 17

Ibid 18

Interview Ngo Trung Son, CEO of Xin Man Development Company, October 14, 2010.

Villagers in Xin Man await the opening of a new bridge

supported by LienVietBank.

http://en.wikipedia.org/wiki/X%C3%ADn_M%E1%BA%A7n_District



http://en.wikipedia.org/wiki/Agriculture

http://en.wikipedia.org/wiki/Forestry






http://www.gso.gov.vn/

LienVietBank

P a g e | 44

LienVietBank established the development company to have an effective mechanism for implementing

and managing development work, which is not LienVietBank‘s core business. The main activities of the

development company include: 1) building infrastructure including bridges and roads; 2) education –

training teachers and providing scholarships; 3) increasing the productivity of crops such as maize and

rice; and, 4) health care – bringing in doctors and nurses to the area.

According to Ngo Trung Son, CEO of Xín Mần Development Company, there are a number of key

success factors to implementing programs with LienVietBank support in Xín Mần:

1. LienVietBank provides financial support and also created Xín Mần Development Company to

directly implement projects for the community.

2. LienVietBank‘s chairman and management are very responsible and really care for Xín Mần people.

They come to the commune to give direct instruction and implementation for sometimes. The

employees of LienVietBank also very enthusiastic, and they do come and help volunteer a lot.

3. Assistance provided from General Pham Van Tra, former Minister of Defense, who helps coordinate

between the company, local authorities and the local veterans‘ associations.

4. The local authorities are very responsible and helpful.19

LienVietBank‘s main purpose in helping Xín Mần‘s development is to meet its goal of supporting

society. Moreover, LienVietBank receives strong recognition for its support in the highest levels of the

government and the Communist Party. LienVietBank also believes that this programming can help build

its brand as the ―business link to society‖.

In addition to its philanthropic programs, LienVietBank is beginning to consider how it might leverage

the activities that aim to reduce poverty to also have a sustainable business application. For example,

LienVietBank is considering more innovative microfinance approaches to assist the poor as well as to

open a new avenue to reach future customers.

Another initiative launched in 2010 provides farmers

with low interest loans and technical assistance in

southern Vietnam. It is a three-year project that can

provide up to VND 3 trillion in low interest loans,

1% less than the market rate. With the support of

three branches in the South, the loans can range

from a few million VND to hundreds of millions of

VND. LienVietBank has partnered with an insurance

company, Thoi Son GMC, to share the risk of

loaning to farmers. Thoi Son GMC created a product

named ―Insurance package for farmers‖ for this

purpose. To identify and secure the loans,

LienVietBank works closely with the veterans

union to identify farmers suitable for such loans.

The union acts as a guarantor for the famers.

19


Southern rice traders benefit from the low interest

loans from LienVietBank.






LienVietBank

P a g e | 45

Although it is too early to tell, LienVietBank expects that jobs will be generated by the farmers if they

have additional financial resources to invest. From May until September 2010, a VND 1,077 billion in

loans was provided to 349 individual customers (VND 35.5 billion) and 20 enterprises (VND 1,041

billion).20

While LienVietBank does not make any profit on these loans at this time, LienVietBank

believes that these programs will build the brand of the bank with the farmers and the farmers‘

cooperatives, who are important stakeholders and future customers. In the near future, LienVietBank

plans to consider providing ―green loans‖ – loans to firms or projects that meet international standards for

protecting the environment. The standards and procedures have not been chosen yet.

Public relations (PR) include inviting press and media for event launches. In addition, there is an internal

website and forum for employees, where they can learn about LienVietBank‘s CSR activities and share

their volunteer experiences.

The results of CSR programming to date have been measured primarily in terms of quantitative outputs

such as the number of scholarships provided, bridges built, etc. From May 2008 through September 2010,

the CSR program outputs can be summarized as follows:21

Activities Unit 2008 2009 2010

Infrastructure: Number of

bridges, roads, schools,

etc. built

# of

structures

N/A N/A - 1 bridge (Na Lan, Coc Pai village, Xin Man

commune, Ha Giang Province)

- 4 conference ballrooms (for Banking

Institute of Hanoi, Economics University of

Hanoi, Foreign Trade University, Banking

University of HCMC)

- 40 Schools

- 1 local Clinique in Phu Tho

- 1 Library in Thanh Hoa

Education: 3 of

scholarships provided

# of

scholarships

N/A 118 116

Health education # of teachers,

nurses,

doctors

N/A N/A Trained 242 peoples, including 80 teachers,

38 doctors and 124 nurses.

Low interest loans # of loans N/A N/A VND 1,077 billion through Sept 2010 for

349 individual customers (VND 35.5

billion), 20 enterprises (VND 1041 billions)

LienVietBank employee

volunteers

# of

volunteers

500 730 1000.

Others (giving TVs,

donating to the poor, etc.)

# of people

served

N/A 2440 3477

20

Interview Mr. Khuong Viet Hung, PR‘s department officer, LienVietBank, October 14, 2010. 21


LienVietBank

P a g e | 46

LienVietBank has made an impressive start in CSR since 2008 when it made being the ―business link to

society‖ an integral part of the firm‘s image and strategy. Subsequently, it has established many innovative

mechanisms, such as stipulating that a certain percentage of its profits will be given back to society,

establishing a development corporation to implement CSR programming and launching its volunteering

programs. LienVietBank has had the benefit of strong leaders, who focused on CSR from the beginning. It

has also built upon the country‘s socialist approach to development that stresses assisting the poor.

Today, LienVietBank is looking to the Global Compact Network Vietnam to learn how to make its

investments more strategic. ―LienVietBank wants to build up an image of a young, dynamic and

responsible bank. We see CSR as one of our priority strategies. In the future, we would like to do CSR

more strategically, and maybe we will adopt international standards such as Global Compact or ISO,‖

said Mr. Khuong Viet Hung, PR‘s department officer.22

22

Interview Mr. Khuong Viet Hung, PR‘s department officer, LienVietBank, October 14, 2010.

Dragon Capital

P a g e | 47

LienVietBank

The Dragon Capital Group, an integrated investment group established in 1994, has grown steadily to

become one of the largest and best-known investment companies in Vietnam. The Dragon Capital

corporate mission is ―to be a top class intermediator of capital by providing attractive returns to investors,

value to companies, and a desirable workplace for employees. Our goal is to perform these with absolute

professionalism and integrity, driven by a long-term commitment to the sustainable development of the

environment, society and economy of Vietnam.‖1

In alignment with this vision, the company has developed a carefully thought-out approach to corporate

social responsibility (CSR) that is also well-integrated with the company strategy and its core values of

―integrity, long-term perspective, partnership, commitment and creativity.‖ It has placed particular

emphasis on good corporate governance because it has found that the best governed companies are often

the best and least risky investments. Dragon Capital has recognized that the development of good

governance is of special value in a country like Vietnam where business regulations are still being

developed and enforcement can be unreliable. The company has developed clear policies to implement

this integrated combination of mission, values, strategy and CSR and it has made both staff time and

company money available to undertaken actions in line with its CSR approach.

Dragon Capital, therefore, provides an excellent example of the development of a strategic CSR approach

with emphasis on good corporate governance that contributes significantly to both the bottom line of the

company and the interests of its key stakeholders, both internal and external.

Introducing Dragon Capital

The business activities of Dragon Capital are tightly focused on the emerging financial markets of

Vietnam. Set up in 1994 with an initial capital base of only US $16 million and a staff of eight, Dragon

Capital has grown to manage seven funds with more than US $1.5 billion in capital and now has more

than 110 employees. One of the largest investment companies in Vietnam, Dragon Capital is also the only

one with a domestic asset-management license. Dragon Capital's various closed-end funds and segregated

portfolios invest in more than 50 Vietnamese companies. It recently opened a regional environmental

fund that is expected to invest in eight countries in the region. In addition, Dragon is particularly well

regarded for its work in corporate governance.

The company has offices in Ho Chi Minh City, Hanoi, the United Kingdom, Bangkok and Hong Kong. Its

growth has been driven by investor interest in the development of the Vietnamese economy and the

expansion of the two Vietnamese stock markets. In the decade since its opening in 2000, more than 580

companies have listed on those exchanges, with a market value of more than US $30 billion.

1 Dragon Capital, Mission statement. Retrieved from http://www.dragoncapital.com/about-us/our-company

Dragon Capital

CSR and Corporate Governance

http://www.dragoncapital.com/about-us/our-company

Dragon Capital

P a g e | 48

Dragon Capital‘s Vietnamese and foreign professional financial analysts cover all important asset classes

(public and private equity, fixed income, resources, property and clean technology) and provide services

in economics, investment modeling, origination, legal, valuation and governance.

The company is owned by present and former management and staff, with additional investment held by

the World Bank's International Finance Corporation (IFC) and the French Government's development

finance entity, Proparco, both of which have a strong interest in good corporate governance.

Well before the first stock market opened in Vietnam, Dragon Capital‘s founders understood that the

company‘s future was tied to the development of the Vietnamese economy and the sophistication of its

financial system. Mr. Dominic Scriven, a co-founder and current CEO of the company, described the

convergence of company and national interests this way:

“We are committed to Vietnam for the long-term; therefore, the long-term interests of

the country are the same as ours. We must decide how to align our interests with those

of Vietnam. The goal is a positive future impact, not just in terms of money, but also in

terms of time and people.”2

Mr. Scriven moved to Vietnam in 1991, spending two years enrolled at Hanoi University, before, co-

founding the Dragon Capital Group in 1994. A Vietnamese speaker, Mr. Scriven sits on the boards of

numerous Vietnamese and non-Vietnamese companies that Dragon Capital has invested in, including five

companies listed on the Vietnam Stock Exchange. He has frequently emphasized that the company‘s

long-term interests are aligned with those of key stakeholders connected more broadly with the

development of the Vietnamese financial and economic systems.

Dragon Capital’s CSR

In 2008, the company went through a formal process of assessing and defining its CSR objectives,

policies and actions. Working with an outside CSR consultant, the company brought together key

executives and staff to reach a common understanding of key concepts such as sustainable development,

CSR and governance. The group studied CSR practices around the world and then looked at key issues

related to CSR in Vietnam: Agenda 21, Vietnamese business law, labor law, environmental law and

human rights. The group agreed that investors would be attracted to companies with good CSR and

reviewed key standards related to CSR including the UN Global Compact, IFC Performance Standards,

ISO26000, the Equator Principles, SA8000 and the UN Principles for Responsible Investment. The group

identified the key risks to businesses in Vietnam and saw CSR as a critical way to manage and reduce

risk, especially reputational risk. The process put emphasis on identifying key stakeholders, mapping their

concerns and coming up with activities to respond to those concerns and engage stakeholders in

partnership relations of mutual benefit.3

2 Corporate Philanthropy In Ho Chi Minh City: An Update on the Status of Corporate Giving in Vietnam

Based on Interviews with 44 Companies. Retrieved from

http://www.linvn.org/cms/upload/FCKFile/file/LIN%20-

%20Corporate%20Philanthropy%20in%20HCMC%20Dec2009_FINAL.pdf 3 Interview Pham Nguyen Vinh, director of business development, and Nguyen Phuong Mai, senior analyst,

and presentation ―CSR, Sustainability and ESG Essentials for Dragon Capital Vietnam,‖ by CSR Asia.

http://www.ifc.org/

http://www.proparco.fr/

http://www.linvn.org/cms/upload/FCKFile/file/LIN%20-%20Corporate%20Philanthropy%20in%20HCMC%20Dec2009_FINAL.pdf

http://www.linvn.org/cms/upload/FCKFile/file/LIN%20-%20Corporate%20Philanthropy%20in%20HCMC%20Dec2009_FINAL.pdf

Dragon Capital

P a g e | 49

The Dragon Capital executives believed that it was essential to integrate CSR into the company‘s overall

business strategy. Dragon Capital therefore focused on key issues that create financial and reputational

risk for the company and impact decisions to invest in the relatively new markets in Vietnam. The

company‘s integrated strategy was therefore designed to focus on the following issues:

Corporate governance: in a country where free enterprise has only recently re-emerged as the basis for

economic development, corporate governance is still developing and internal governance structures and

controls are not yet fully implemented in many companies. Personal relationships with company leaders

are still important in assessing the state of governance within a company. CEO Scriven has said: “We

have a hard-wired commitment to governance in our investment process. We get involved in advocacy

and national policy issues; we define templates for specific issues we see across companies that we invest

in; and finally individual problem solving and addressing of issues. So it (governance) is a good part of

what we do.”

To mobilize internal resources to focus on corporate governance issues, Dragon Capital established a

Corporate Governance Group within the organization. This group contributes to the general improvement

of corporate governance in Vietnam through the following activities:

Raising public awareness of corporate governance best practices

Legal advocacy and advisory services to the Vietnamese government

Development of good governance materials, guidelines and templates for investees

Directly participating in company governance through positions on boards of directors and

executive boards

Dragon Capital sees good corporate governance as one of the drivers of performance by its investee

companies. According to the Dragon Fund Limited 2009 Annual Report: ―We expect and support those

companies to demonstrate high standards of governance in the management of their business.‖ The report

states that well governed investee companies ―will need to manage effectively relationships with its

employees, suppliers and customers, to behave ethically and to have regard to the environment and

society as a whole.‖ In addition to emphasizing corporate governance in its investee companies, Dragon

Capital also recognizes the need for high standards in its own corporate governance.

The Dragon Board is specifically assigned the task of ensuring a high level of corporate governance and

complying with appropriate governance codes (see pages 6 and 7 below). The Board must approve the

company‘s corporate governance and risk control arrangements. The company pays for independent

professional advice if directors feel it is needed to assess management performance. Two independent

non-executive directors are selected for Board membership on the basis of their investment, business and

financial skills and experience. A key part of Dragon‘s internal governance are measures to ensure that

even small shareholders are given a complete understanding of the Company‘s performance. The

company provides two formal reports to shareholders each year, supplemented by monthly reports. The

directors are required to answer shareholder questions.

Dragon Capital

P a g e | 50

This emphasis on governance has had a number of positive results for Dragon Capital. The Dragon

Fund‘s 2009 annual report notes:

“We have become a leading governance proponent, are a trusted Government partner

in capital market development, and retain strong institutional links at all levels of

Government. Partly as a result of this, in 2003, Dragon Capital was entrusted with

Vietnam’s first domestic asset management license, in partnership with domestic giant,

Sacombank.”4

Environmental responsibility: With a population over 85 million in a relatively narrow strip of land and

with much of that population involved in agriculture or fishing, Vietnam has little room for avoidable

mistakes that can harm the environment. Almost any environmental damage quickly leads to human

suffering. Therefore, the private sector that is now driving growth in Vietnam must take care of the

environment if that growth is to be sustained in the long term, and if those private companies are going to

continue to be allowed a ―license to operate‖ by the public. Even in the short term, good corporate

environmental care systems are critical in minimizing the risk of accidents that hurt employees or

violations of increasingly well implemented regulations that bring the risk of fines, suits and reputational

damage. Vietnamese news media have recently become more aggressive in reporting environmental

problems and assessing corporate responsibility for them.

Transparency: With most listed companies having developed very recently out of family-run or state-

owned enterprises, an understanding of investor expectations of company information does not always

come quickly or easily to company leaders. Gaining access to reliable and extensive company

information, however, is essential to making good investment decisions. Such access to information for

an investment company requires the trust that comes from a strong corporate reputation and the reputation

of its leadership.

Longevity: Good reputations take time to establish and depend on a track record of honest, responsible

and effective operation. This kind of reputation is even more important in less mature markets. In

Vietnam, the access that is afforded by being a longstanding investor and having seats on many company

boards is a significant advantage. A track record of providing honest and effective advice to key

government agencies is critical in developing their trust as they establish laws and regulations to develop

and supervise the Vietnamese financial sector.

Financial regulation: The financial and legal system in Vietnam has come a long way in a short time, but

it is still changing and maturing rapidly. New laws, policies and regulations and interpretations of those

laws, policies and regulations are forthcoming frequently. It is important for an investment company to

have early and accurate understanding of such developments and changes and, if possible, to contribute to

the development of the regulatory system so that it enhances the opportunity for sustained and stable

economic growth.

4 Dragon Fund Limited, Annual Report 2009. Retrieved from

http://www.jsda.or.jp/html/foreign/fminfo/info3/kobetsu/8782(20100623)1.pdf

http://www.jsda.or.jp/html/foreign/fminfo/info3/kobetsu/8782(20100623)1.pdf

Dragon Capital

P a g e | 51

Dragon Capital has clearly developed and implemented its business and CSR strategies in line with these

key issues.

CSR Programming

Dragon Capital‘s CSR strategy is focused on four strategic pillars: economic development, environment,

society and governance. Based on these pillars, the company undertakes two types of CSR activities:

Integrating environment and social management system into the investment and decision

making processes.

Implementing CSR initiatives with key stakeholders through technical assistance projects;

round table discussions; seminars, public events, social and environment activities.

Within these two categories, Dragon Capital implements a number of specific CSR programs as described

below.

―Responsible investment” – Dragon Capital has developed a ―Social and Environmental Management

System‖ that details the policy, procedures and workflow to be followed for the investments made by

Dragon Capital. The objective of this E&S management system is ―to promote improved social and

environmental performance of investee companies through the effective use of management systems.5‖

The E&S management system established under the guidelines of the IFC‘s latest criteria is fully

incorporated in Dragon Capital‘s investment process for its public equity funds as well as all other funds

the company manages. In particular, the system is incorporated in the company due diligence process

right from the moment any new investment idea is generated and studied, and it is used to monitor E&S

risks throughout the life of the investment.

Dragon Capital staff work closely with their investee companies (existing and potential) to assess and

analyze risks, both social and environmental, using the IFC guidelines. In addition, the company

communicates frequently with local authorities to stay abreast of any regulatory changes, ensuring their

assessment criteria are always up-to-date. This way their investors are assured of regulatory compliance

for all portfolios.

Implementing CSR initiatives with key stakeholders through technical assistance projects, round table

discussions, seminars, public events, social and environment activities. CSR activities are focused on the

interests of key stakeholders, both internal and external, and reflect the mission and core values of the

company. The CSR activities related to governance included the following:

Financial capacity building

With KPMG and Grant Thornton, Dragon Capital holds free workshops for Vietnamese firms to educate

them on how to apply international accounting standards. Dragon executives sit on the boards of at least

25 Vietnamese companies with the objective of strengthening the financial and governance systems of

those companies to meet international standards.

5 Dragon Capital, internal document, Dragon Capital “Social and Environmental System”, 2008.

Dragon Capital

P a g e | 52

Environmental activities

To help combat global warming, the company achieved carbon neutrality in 2005 and in 2010 supported

the Mungcharoen Green Power Biomass Energy Plant in Thailand. This renewable energy plant converted

agricultural wastes, such as rice husk, into green electricity supplied to the power grid. The project also

provided an important additional source of income for the local farmers, and the waste ash, an important

soil conditioner, was provided free to the farmers. The project was expected to generate 72,000 carbon

credits over its projected lifetime and won the Thailand Energy Award in 2008. And, in 2009, Dragon

became a founding member of the Green Building Council, an organization established to create

workable environmental standards for building in Vietnam.

Since 2007, Dragon Capital employees have made annual visits to the Can Gio Mangrove Forest – the

first mangrove forest in Vietnam to be admitted to the World Network of Biosphere Reserves by

UNESCO. On each visit, the staff planted additional mangrove seeds as part of Dragon Capital's

commitment to protecting Vietnam‘s natural environment.

Corporate governance standards

Dragon says that it applies good governance criteria to all of its investment decisions. The company and

its funds are compliant with all relevant anti-money laundering laws and have adopted best international

practices including OECD, G7, FATF (Financial Action Task Force) due diligence "Know Your Client"

(KYC) rules and the rules of the Irish Stock Exchange, Luxembourg Stock Exchange and AIM of the

London Stock Exchange. Dragon is a member of the Asian Corporate Governance Association (ACGA),

an independent, non-profit membership organization dedicated to working with investors, companies and

regulators in the implementation of effective corporate governance practices in Asia.

Annual Report Awards: In 2010, Dragon Capital

was the sole sponsor for Vietnam's Annual Report

Awards (ARA) for the third year. The ARA was

started by Dragon Capital in 2007 with seminars for

listed firms on how to develop industry-standard

annual reports that emphasize the ethics of

professional and transparent reporting. Mr. Le Nhị

Nang, Deputy General Director of the HCMC Stock

Exchange, said this activity was one example of

Dragon Capital acting as ―a dynamic and active

member contributing and helping to develop the

HCMC Stock Exchange.‖

The Annual Report Awards 2010 included all listed companies from HCMC Stock Exchange and Hanoi

Stock Exchange. Thirty-three annual reports were honored from more than 500 reports submitted in four

categories: Best Annual Report; Excellent Annual Report; The Design Prize. The awards honor company

annual reports for their transparency, honesty and accuracy, including the willingness to report on adverse

as well as positive developments in annual reports. "Thanks to Dragon Capital for initiating the Annual

Report Awards, which created motivation for Hau Giang Pharmaceutical Corporation (DHG) and other

http://dragoncapital.com/Web/index.php?id=6&subid=5&subs_id=15

http://dragoncapital.com/Web/index.php?id=6&subid=11&subs_id=36

Dragon Capital

P a g e | 53

listed firms in improving our Annual Reports," said Ms. Pham Thi Viet Nga - Chairwoman and CEO of

Hau Giang Pharmaceutical Corporation.

Financial policy development: Dragon‘s experienced staff has provided free financial research and

advisory assistance to government agencies on request, especially in the areas of governance, debt and

equity-market development. With relevant stakeholders and partners, the company has held round table

discussions with the Ministry of Finance and other ministries on improving the Vietnamese stock markets.

Clean development fund: In 2010, Dragon Capital launched the Mekong Brahmaputra Clean Development

Fund L.P., (MBCDF). This is the first fund focused on development using clean technology in the Mekong

River region countries of Vietnam, Cambodia, Laos, Thailand and the Brahmaputra River Region,

comprising Bangladesh, Nepal, Bhutan and Sri Lanka. The fund is designed to make investments that meet

the "Triple Bottom Line" principles of "People, Planet and Profit" and thus increase the chances that each

investment will have a positive impact on the environment and contribute to sustainable development.

CSR Awards

2010 ―Corporate Recognition Awards‖ by Ho Chi Minh City People‘s Committee for the

outstanding contributions to sustainable development of finance market of Vietnam.

―Individual Awards‖ Mr. Dominic Scriven, OBE, CEO Dragon Capital Group. 2008 & 2010

Recognition Award by Ho Chi Minh City People‘s Committee for his outstanding contribution to

the development of the financial market of Vietnam

Tan Cuong Hoang Binh

P a g e | 54

Tan Cuong Hoang Binh (TCHB) was founded in 2001, joining the Tan Cuong Hoang Binh group of

companies. It does not have a long and storied history, but rather one that was born from an educational

trip and a creative suggestion from a professor.

Hoang Binh Furniture Company was a small enterprise of 15 employees, producing wood furniture. In

2001, the company CEO, Mr. Vu Duong Binh, was pursuing his MBA and traveled to the U.S. on a field

trip as part of his studies. He visited a California vineyard where the grapes were organically grown, but

also delivered a good price margin to wine producers in the area. One of Mr. Binh‘s professors there

encouraged him to think beyond traditional business (and his current furniture company) and consider

other options with potential. He suggested agriculture, particularly since there were still many agri-

business opportunities in Vietnam. In addition to the vineyard, Mr. Binh visited a lot of farms and was

impressed and influenced by what he saw – not just the agri-business benefits and the logic of organic,

chemical-free farming, but also the benefits the farms were having on their neighbors who lived and

worked nearby. He saw positive influences – jobs, community service, contributions to education, etc. —

in their communities.

Upon returning to Vietnam, he began to take note of agriculture products: cashews of Binh Phuoc, coffee

of Trung Nguyen, pomelos of Phuc Trach. He decided to focus on tea, as his home province of Thái

Nguyên is well known for tea and there appeared to be a growing market for it. After researching suitable

locations, Mr. Binh settled on the area of Tan Cuong Commune, which was known to have soil and

climate that supported good tea production.

“The land of Tan Cuong can give birth to excellent tea; just as the land of France gives birth to

excellent grapes…the tea is of this place only,” said Mr. Binh.

The Tan Cuong Hoang Binh Group case study will explore the concept of using a Corporate Social

Responsibility (CSR) philosophy focused on farmer and environmental protection to differentiate a

product in a crowded market.



P a g e | 55

The important role of tea in culture and business alike

Tea has been planted for over 3,000 years, and

Vietnam‘s tropical climate is well suited to tea

cultivation. Tea plantations are concentrated in

the north and central regions of the country, and

tea is a high value product for both domestic

consumption and international export. The tea

industry is important for Vietnam; it is the fifth

largest exporter of tea worldwide. Tea cultivation

has grown over recent years, from approximately

5,400 hectares in 1975 to more than 130,000

hectares in 20091. The tea industry exported more

than 117,000 tons in 2009 and labor productivity

in tea production has risen by 4% annually during

the last ten years.2

Drinking tea is common everywhere in Vietnam; it acts as a bridge, a link between people in both family

and business life. Drinking tea is a traditional daily pleasure and custom for most families. For business

meetings, tea is often offered to guests. For such a modest product, tea plays a special and traditional

cultural role in Vietnam.

Thái Nguyên City is the capital of Thái Nguyên Province, a mountainous region in northeastern Vietnam.

Beginning as a small township, Thái Nguyên officially became a city in1962, and is currently one of the

fastest growing cities in the north, with a population of 1,149,100 people. Thái Nguyên is best known

around Vietnam for its vast tea plantations, and famous for its delicious bitter-sweet green tea.

Tan Cuong is a region of Thái Nguyên, made up of three districts (communes): Tan Cuong, Phuc Xuan, and

Phuc Triu. Tan Cuong produces a unique tea, aromatic and sweet, which lingers on the tongue after it is

swallowed. Tan Cuong is protected from hot winds by the Tam Dao mountain range, and also benefits from

fresh water sources flowing from the Cong and Nui Coc Rivers. The average daily temperature ranges about 8

degrees Celsius, a much higher fluctuation than other regions of the country. These factors contribute to the

growing of exceptional black and green tea. About 80% of the population in Tan Cuong makes their

livelihoods from growing tea, and approximately 10,000 tonnes of tea are produced per year.3

Introducing Tan Cuong Hoang Binh

Tan Cuong is the home to Tan Cuong Hoang Binh, a Vietnamese tea company. Tan Cuong tea is a

traditional agricultural product grown, produced and marketed in ways that differentiate the product and

provide positive community impact. Its production demonstrates that success can be achieved when an

enterprise shows respect to people and nature.

1 ThanhHienNews.com, August 20, 2010

2 Vietnam Export Portal - VNEX.com.vn

3 Bi Quyet de co mot thuong hieu manh, pg. 254

Tea farmers in Tan Cuong


P a g e | 56

―Why not tea? Why not make this popular tea of Tan Cuong a well known, quality product, making Tan

Cuong worthy of being called the ‗Land of Tea?‘‖ company CEO Mr. Binh asked at a 2001 business

forum about how to improve and promote local Vietnamese brands. To focus his core businesses more

effectively, in 2007 he separated the businesses of his growing company into the Tan Cuong - Hoang

Binh Group JSC, a group of more than 10 different units. Tan Cuong Hoang Binh (TCHB), one of the

group companies, was created to focus on black and green tea. Tan Cuong has 95 employees in the tea

processing factory, sourcing tea from over 1,000 farmers. With more than 1,000 hectares of tea

plantations, Tan Cuong tea is now well known in the Vietnam market and packaged tea is exported to the

U.S., Europe, Japan, Taiwan, Korea and Germany. In addition, tea is sold in bulk to China and Pakistan.

Mr. Binh‘s strategy appeared to be sound. A Department of Agriculture and Rural Development

assessment for the period 2006-2010 determined that Thái Nguyên province tea development was the

most effective strategy for creating market stability and sustainable tea production.4 Overall, the province

holds a 70% market share of products for domestic consumption and 30% for export. A significant factor

for this is the high quality tea varieties and innovative propagation and stem cutting methodologies which

TCHB has championed.

Key issues to overcome

Two key problems existed when the company began. While market research uncovered that tea from Tan

Cuong was well known, 100% Tan Cuong tea was actually difficult to find in the market. Many teas are

advertised as ―Tan Cuong tea‖ but are not certified. Some are even cultivated in other regions but

advertised under this name.5 TCHB needed to figure out how it would differentiate itself from the already

flooded tea market.

The other major issue concerned farmers. Many come from generations of tea growing traditions, some

which are not very efficient despite being established and accepted methods. Most growers are families,

and many tea companies weakened their market power by grouping the families into small clusters with

little communication, unsophisticated cultivation and processing techniques, limited price knowledge and

no labor security. The growers were generally not aware that they were being taken advantage of or

missing out on opportunities for growth and security, as they had been growing and selling their tea the

―same old way‖ for generations. At the time, farmers‘ income was low and standards of living poor.

4 http://www.tainguyenmoitruong.com.vn

5 This problem is not an isolated one. For example, coffee from the high altitude farms around Antigua is

considered some of the best in the world, with more coffee labeled and sold as ‗Antiguan Highlands‘ than is

actually produced there. According to Fedecocagua, this excess is likely grown in Honduras and deliberately

mislabeled. Co-author David Lehr‘s interviews with Fedecocagua, 2006


P a g e | 57

Tan Cuong Hoang Binh’s CSR philosophy and business strategy

CEO Binh needed to adopt a business model that overcame these challenges while producing high quality

organic tea and positively impacting the communities in the province.

When someone thought of ―tea‖, he wanted them to think of TCHB. Binh wanted his brand to be

synonymous with producing quality tea, delivering value for staff, farmers and communities, and

respecting the environment.

The company invested more than US $1 million in technology, equipment, and training. They developed

a contingent of highly skilled technical engineers and workers fully capable of producing safe, clean and

high quality tea products.

TCHB believes they have a sound strategy for continued business success:

1) Recognize and understand the potential of local raw materials

2) Promote and leverage the region of Tan Cuong, already associated with fine tea, and brand with

a strong and traditional Vietnamese identity

3) Use advanced processing technology and expertise; be open to new and innovative technology

and provide training which keeps the workforce up to date

4) Take care of people, including those within the company and those who live in the

communities in which they grow and manufacture tea

To address these issues, TCHB decided to produce 100% natural tea based on the following three principles:

By following these principles, TCHB built a high-quality brand with teas produced in a conscientious

manner, which differentiates itself from its competitors. The company focuses on producing not only the

finest quality tea, but doing so in an ecologically sound way in partnership with tea farmers. It aims to

simultaneously develop the business and the farmers‘ capacities, while protecting the environment.

Excellent 100%natural tea

Environmentalstewardship

Respect for & investment in employees, farmers and

communities

Tan Cuong Hoang Binh:

Quality Model


P a g e | 58

Beginning in 2001, TCHB developed a management model that incorporated social responsibility into

their management philosophy. See the model below for an illustration of TCHB‘s management strategy.

Organic tea differentiation

TCHB believes organic farming is a logical, common-sense approach. While it is more expensive, it pays

for itself through:

Tastier, better quality tea

Lovely fragrance (important to tea drinkers and connoisseurs)

No chemical pesticides or fertilizers that damage the environment

Better for the community – people are healthier in a physical environment free of chemicals

Commands a premium price

TCHB farmers have substituted non-agricultural chemicals such as fertilizers, pesticides, and chemical

herbicides with organic alternatives such as compost and green manure, extracts from herbs, and pruning

(cutting the branches deep to eliminate weeds and pests).

TCHB has skillful technical engineers and well-trained workers with years of experience in tea processing

that advise farmers on how to produce safe, clean and high quality tea products. Products are processed

from high grade raw materials and modern machinery imported from China, Taiwan, and Germany. No

chemicals are used in the growing of the tea and all fertilizer is natural. The tea is also ―handmade‖;

processed by hand to ensure care and accuracy in separating out the different parts of the tea stalk and

leaves to ensure quality of the different grades of tea.

Tan Cuong Hoang Binh Management Strategy

Use only the best raw materials

Employ correct & careful processing (all natural)

Create thoughtful branding and

marketing approaches

Invest & reinvest in

technology and training

Support the communities in which we operate throughstrategic investment,

philanthropy and engagements

Take care of our people, employ fair

and above & beyond labor practices

Healthier community

Reduced illegal and aberrant activity

Higher standard of living

Loyal employees and farmers

High quality tea, sustainable tea

plantations

Environmental stewardship

Profits

Meet and exceed production and

quality standards


P a g e | 59

This high quality, organic tea plays a critical role in product differentiation. The corporate strategy for

this included:

Use only the best raw materials

Produce 100% organic tea

Create unique branding and packaging targeted at different market sectors: gift boxes that

include a special cultural aspect (e.g. the distinctive Sapa thocam cloth bag to hold the tea, and

Bat Trang ceramic tea cups/pot), tea used for religious ceremonies, extra high grade tea for gifts

and special ceremonies, and daily consumption tea which is high grade but affordable

Use no artificial fragrance

Produce a ―hand crafted‖ product; indeed, Mr. Binh says, ―Even the way the tea leaves and

tips are cut from the stalk is important to the taste of the product.‖

Hire experts: directors from

other tea companies served

as advisors when developing

the business strategy to

provide expertise and new

ideas

Local authorities and community

members are supporting the shift to

organic farming. Ms. Nguyen Thi Hoc,

the Central Military Commission

Chairman, said that tea growers that use

pesticides and chemical fertilizers

reduce the quality of tea.6

TCHB’s farmer strategy

TCHB management knew they would have to have a solid and patient strategy to win over Tan Cuong

farmers; they see the investment in their employees and farmers as an investment in the company and its

long term sustainability. Securing a reliable supply of quality raw materials is a must for TCHB. A plan

to engage farmers was created, and focused on a number of elements:

Build long lasting relationships with the farmers, sharing the strategic plan for the future

including how the company sees development and production of the tea to be sustainable and

successful in the long term

Teach farmers organic farming techniques

Share new farming techniques, such as how to grow and cut the tea in a way that produces the

finest products

Introduce new technology options to farmers, and provide loans to enable them to upgrade

their tea processing facilities

6 http://www.thiennhien.net/news/152/ARTICLE/10211/2009-12-22.html

A view of Tan Cuong Hoang Binh tea farming


P a g e | 60

Provide above average pay and above average prices for premium crops

Require exclusivity to supply TCHB; they become shareholders of the company

Provide farmers with benefits as if they were direct employees, including retreats, field trips,

rewards and recognition, etc.

TCHB CEO and management visit farmers often and ensure there is regular interaction

Contribute to the communities in which the tea growers live – e.g. education scholarships and

other school support

Through word and action, consistently communicate a message that the company cares not only

about profits but about having a positive impact on the farmers themselves and their communities

Employ fair labor practices, and employ no children under 15 years old

The company then approached the farmers of Tan Cuong to convince them that they should supply

exclusively to TCHB. It was not an easy task. Regardless of the difficulty of their lives, they were

reluctant to take a risk and try something ―unproven‖ and new. It took a long time for CEO Binh to

convince the farmers that an all-natural process and more care in harvesting the tea itself would reap a

finer organic product with more profitable results. However, building trust and relationships with these

farmers was essential to convince them to: 1) change and improve their ways of growing tea, 2) process

tea with new technology, and 3) commit to exclusively work with Tan Cuong.

As noted above, Binh also focused on treating his employees and his new farmers with respect and fair

pay. In addition, he guarantees purchase of their full crop if quality standards are met. According to

Binh, practices have improved at every step of the tea cultivation process: seeding, planting, tending and

harvesting, processing, storage, and transport to market.

Benefits

The company began to reap benefits quite quickly. After just two years, TCHB became well recognized

for quality tea and emerged as one of the top Vietnamese tea producers, accounting for approximately

30% of the local market share and approximately 35% of Vietnamese exports. TCHB exports tea to the

US, Europe, Japan, Taiwan, Korea, Pakistan and China.

Benefits extended beyond profits as TCHB cited a variety of gains to its farmers and their communities.

These include:

The total income of the average farmer has increased over ten times since Tan Cuong Hoang

Binh began to purchase their tea; from VND10,000 (before year 2000) to VND100,000/day

in 2010.

The farmers‘ standard of living has improved significantly. A farmer now has the potential to

own their own house and car, and support university level education for their children. Some

are able to send their children abroad for university.

While no hard data is available, community members believe petty crime and other social

disturbances have decreased. Mr. Tai, one of TCHB‘s tea farmers, said he had seen a notable

reduction in neighborhood troubles since TCHB began its partnership with the community.7

7 Face to face interview, Tan Cuong Commune, September 27, 2010


P a g e | 61

Raw tea prices have risen from VND50,000/kg to upwards of VND500,000/kg, thanks to

superior quality resulting in part from improved technology and processes provided by TCHB.

TCHB has received awards for fine tea. At the 2006 Tea Culture Festival in Da Lat, Lam Dong

Province, five TCHB tea brands were awarded places in the top ten teas, as well as awarded one

of 16 gold medals for quality, and one of their brands tied for the very highest score of 95

points. In 2007, Tan Cuong was awarded the Vietnam Gold Star Award for the fourth time.

In addition, TCHB was one of three privately held companies that received the prestigious Third-class

Labor Medal by the President of Vietnam in 2009. Party Committee Secretary of Thái Nguyên Province

Nguyen Van Vuong said, "I greatly appreciate the spirit of Tan Cuong Hoang Binh daring to invest in the

challenging industry of agricultural products. The efforts of Tan Cuong Hoang Binh and the way they

operate are highly valued and respected as their business has not only brought recognition of regional tea

excellence to Tan Cuong, but they‘ve also contributed significantly to improving the quality of life of

people in this tea region."

In spite of the progress, company management uncovered weaknesses that need to be addressed to ensure

company sustainability. Most of these are related to the absence of management tea-making expertise,

general business experience, and a strategic vision for the business. These are all areas the company

continues to focus on as it moves forward.

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Corporate social responsibility (CSR) is increasingly integrated into

the core culture of major companies. Well-known firms from Chevron

to Microsoft to IKEA have made a public commitment to CSR and

regularly report on their performance. More and more suppliers are

being held to worldwide ‗Codes of Conduct‘ that specify standards on

everything from environmental and resource management to labor and

human rights issues in order to gain access to global markets. Some

European and other governments even require companies to report on

their social and environmental performance.

Despite the increasing interest in and adoption of CSR, companies engaged in CSR follow a broad range

of strategies in crafting their approach. At one end of the spectrum is a focus on charity and philanthropy;

on the other a fully integrated program that pervades every aspect of the business. Rarely does a firm go

from one extreme to the next; instead their strategy typically evolves, often driven by basic compliance

with laws and regulations or international standards, and becomes more sophisticated over time. As with

all business activities, there are costs and benefits of CSR and companies pay close attention to these.

Tan Hiep Phat Trade & Service Co. Ltd. (THP) is one of the three leading beverage manufacturers in

Vietnam, and has invested heavily in its manufacturing and data management processes. It is also the

first company in Vietnam to achieve three important standard certifications: ISO 9001:2000 (quality

management), ISO 14001 (environmental management) and HACCP (food safety). THP has also been in

the news for less popular reasons, incurring a fine of VND 42.5 million in mid-2009 for not treating

wastewater properly before discharging it.1

THP has recently, and unequivocally, stated their desire to become a world class company. Though they

already have several CSR efforts in place, their management is committed to developing and

implementing an integrated CSR strategy throughout the firm. Part of this process is recognizing

mistakes and weaknesses especially when it is detrimental to the community or the environment, and

having the corporate will and fortitude to fix the problems.

The Tan Hiep Phat case is about a company moving along the CSR spectrum; evolving from a firm with

some CSR components led by their public relations and marketing teams to a company that wants to

wholeheartedly embrace corporate social responsibility in every aspect of their business. The desire is

there, but how to go about this is just beginning to be examined.

1 Thanh Nien News [Vietnam] 18 Aug 2009, http://www.business-

humanrights.org/Categories/Individualcompanies/T/TanHiepPhat

Tan Hiep Phat Beverage Group

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Tan Hiep Phat Beverage Group

Tan Hiep Phat Co. Ltd. (THP) was established in 1994 and has become one of the three leading beverage

manufacturers in Vietnam. Founded by Dr. Tran Quy Thanh, its first product was Ben Thanh beer. In

2001 THP diversified into non-alcoholic drinks with its ―Number 1‖ line of energy drinks. In the past

nine years, THP has continued to expand its product lines to include a large variety of packaged and

bottled drinks, packaged foods, and product packaging.

Founder Dr. Thanh is known as a strong leader who promotes

―breakthrough thinking.‖ He is an ―out of the box‖ thinker who

prioritizes staff development, training and capacity building, and

prioritizes the importance of team spirit.

Consumers may not know the Tan Hiep Phat name, but they will

know its products: Number 1 tonic water, Zero degree drinks and

teas, Juicie drinks, and Dr. Thanh‘s Herbal Tea. THP became the

first company selling bottled tea in 2006, after investing US$20

million in production equipment and launching the Zero Degree

brand. Last year, the sales from bottled tea increased by 30-40

percent according to Maximark, a chain of supermarkets.2

In 2008, THP moved to a vertical integration model to alleviate production hold-ups due to insufficient

packaging. THP created Pacific Packaging to enable their own in house production of product packaging

for their production needs. Pacific Packaging manufactures PET preformed bottles, plastic caps, carton

boxes, shrink wrap, polyethylene wrap, and printing.

Investing in international standard technology and infrastructure, THP regularly launches new products,

both nationally and for export. 2009 saw the successful introduction of herbal products with the Dr.

Thanh line of healthier herbal beverages, and VIP Café, a coffee milk drink made from 100% premium

Buon Ma Thuot coffee.

THP group is also the first company in Vietnam to achieve three important standard certifications: ISO

9001:2000 (quality management), ISO 14001 (environmental management) and HACCP (food safety),

and in June 2010, its beverages were selected to be one of the ―Vietnam Value‖ products, a selection of

Vietnamese products that are manufactured in Vietnam and symbolize Vietnam business success.

THP employs more than 3, 250 employees, and invests in foreign expertise at the senior and executive

management levels.

2 Vietnam Beverage Market Update, Feb 8, 2010, www.vinahealths.com

http://www.vinahealths.com/

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Company Strengths

THP believes their clarity of vision, mission, and core values provides them the leadership advantage,

employee energy, and creative thinking needed to charge ahead into a demanding marketplace and take a

competitive advantage. The Tan Hiep Phat‘s vision, mission and values follow:

Vision

To become a leading corporation in Asia with three main businesses: beverages, food (chips, ready-to-eat

vacuum fruit, instant noodles), and packaging.

Mission

THP Group manufactures and markets products that will improve the health of Asian families and individuals

with suitable taste and world class quality products, and continuously provides superior customer satisfaction

to be recognised as the preferred supplier / partner to do business or work with.

THP Core Values

Today is better than yesterday but not tomorrow.

Continuous improvement.

Can-do mindset.

Greatest family-oriented spirit.

Treat each other with love and respect.

Committed to world-class quality.

Reliable partner. Win-win spirit.

“I Own” business concept.

Responsible and honorable corporate citizen.

It builds on these leadership tenets with what it identifies as six core operational strengths:

1. Distribution – almost 200,000 outlets selling THB products

2. Branding – recognizable products which consumers believe to be top quality

3. Human resources – a focus on employees, with fair labor practices, safe working environment,

employee involvement programs, and a competency-driven code of conduct

4. Partnerships – THP considers partnership an important strength of the company. They prioritize

partnerships and seek to be a reliable collaborator with local and foreign partners, suppliers,

distributors, resellers, retail stores and consumers

5. R&D – investment in world class systems and experts

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6. IT systems – investment in SAP across all businesses of the THP group was implemented in

April 2010, including the company‘s beverage manufacturing and packaging plants, allowing

THP to operate more efficiently as an integrated unit3

Healthy beverages vs. a history of beer

THP began as a brewery, and it still markets Ben Thanh and beer brands. However, it is repositioning

itself as a ―healthy beverage‖ company, given consumer demand for healthy drinks. The company has

increasingly focused on natural and herbal beverages over the past several years, most notably with its

―Dr. Thanh‖ brand of herbal beverages. THP notes that they are the leader in the ―good for health‖

beverage market in Vietnam.

THP’s Focus on Society and Charity

Since its founding, THP has facilitated or participated in numerous social activities, led by their motto

―Profit is not the sole purpose.‖

Founder Dr. Thanh states on the THP website that ―I think that the development of an enterprise is always

related to that of the community…so that [THP] is closely connected with social activities is a

necessity…THP Group has always been the first pioneer to be sympathetic with and responsible for the

community…and consider our participation in social and charitable activities as part of our

responsibility.‖4

While the company believes that ―providing jobs is our primary contribution to Vietnamese society,‖5

they also have wide-ranging CSR focus areas, and are considering how to best manage CSR for the

future. THP does not have a dedicated CSR team; rather, responsibilities and coordination for its social

responsibility programming and activities are managed by the Marketing and Public Relations teams.

3 THP presentation, November 23, 2010

4 http://www.thp.com.vn/home_en.php - Social Activities

5 Face to face interviews with Tran Ngoc Bich, Deputy CFO and Annie Charasvirojna, Corporate Service

Director, Nov. 23, 2010

http://www.thp.com.vn/home_en.php

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Good governance

THP benchmarks other ―best in business‖ corporate governance processes to build transparent processes.

They cite adherence to standards at the level required by the Sarbanes-Oxley Act. THP believes this is

key for sustainable growth. Training for risk management and transparency is provided for management.

Human resources

THP has a documented ―integrity policy‖ that all employees must sign, which outlines codes of conduct

and company expectations for honesty and authenticity. Benchmarking Australian codes of conduct, they

drafted their own competency-driven code which directly links back to the company‘s core values. The

THP Code of Conduct constitutes ―part [of] our accountability framework and provides direction on a

range of ethical issues that all our employees confront in their day-to-day work. This Code forms an

important part of the employee agreement while working with THP as an employee. Additionally, this

Code of Conduct reflects the core principles of good and ethical behavior in the workplace as practiced in

numerous public and privately owned companies in Australia.‖6

The company gives equal opportunity to both men and women based on qualifications, skills and job

requirements. There is a large focus on training and development of employees, including sourcing of soft

skills and leadership training programs from world class external consultancies. Retaining talent is a

priority. Retention programs include the Young Professional Program, and an 18 month externally

outsourced coaching program which extends to middle management as well as senior management in

leadership coaching. The company just conducted an Employee Survey to identify areas of opportunity

and concern; results will be used to drive planning moving forward. This is the first such survey the

company has carried out to understand more specifically what employees are thinking. New ideas under

consideration, for example, include allowing flexible working hours, something quite new for Vietnamese

companies.

The company is building a new factory and company campus in New City of Binh Duong, and it will

work and house about 2,000 employees. A day care facility will be on site, providing factory workers

with small children day care options.

―This is a transition time; we are in a period of assessing and aligning business processes to ensure

sustainability for the future…we want to be a world class company,‖ declared Ms. Bich, Deputy CFO, in

an interview at THP headquarters on November 23, 2010. This means continuous examination of

existing processes of all kinds, and taking on board the voices of customers and employees alike to

identify areas for improvement.

Community engagement

Focusing primarily on education, THP provides financial support for scholarships. An initiative coined

―Dr. Thanh unites with poor students‖ will be implemented over a 10 year period, from 2010 to 2020,

launching with a budget of VND 600 million in the first year alone. Recipients are underprivileged

students who come from families struggling to make ends meet, which often puts the child‘s education at

risk. The company is in the process of setting up a separate foundation that will focus on these

6 Interview with Tran Ngoc Bich, Deputy CFO, Dec. 3, 2010

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scholarships and education related support. A portion of company profits will be used to fund and

maintain the foundation; THP is awaiting government approval.

For example, in a new pilot project, the company has made a commitment to support education costs for

200 underprivileged children over the next 10 years in Thanh Hoa province. The pledged amount of

VND 250,000 per child per month will allow these children to stay in school. Dr. Thanh said, ―We chose

Thanh Hoa for the pilot because it is one of the poorest parts of Vietnam, with many poor students who

face difficulties in achieving academic excellence because of their limited access to school.‖ He added

that once the pilot project has been successfully implemented in Thanh Hoa province, the company will

expand it to other provinces in the country.7

Environment In addition, the company supports sports and healthy lifestyle programs in schools. THP

sponsors sports activities throughout the country such as National Football V League, Cycling HTV Cup,

and the International Number 1 Football Cup.8

THP believes in supporting sporting activities to promote healthy lifestyles and support the government‘s

national goal to prevent diabetes. These efforts also support THP‘s new focus on health and wellness.

In 2009 THP coordinated with the Vietnam Red Cross to organize the "Power Humanitarian - 2009" charity,

an aid program which provided assistance to Storm 11 flood victims in Phu Yen province, as well as ongoing

support to Agent Orange victims and others in need of food and shelter.9

THP has been recognized for its community commitment. Ms. Nguyen Van Hung - Vice Chairman and

Permanent Secretary General VBA, and Editor of Beverage Magazine Vietnam, presented a trophy to

THP‘s Tran Uyen Phuong, Director of Group Communications, at a ceremony held last August 2010

where the scholarships were presented to the students.

Ms. Hung noted that THP contributes several billion VND every year to charitable causes, and sponsors a

number of community-based programs which provide direct assistance to the poor.10

That assistance also extends to disaster relief for families impacted by floods in central Vietnam. THP has

rebuilt houses, roads, and coordinated with other partners and the Vietnamese military to provide food gifts for

needy families. THP employees get involved, helping to deliver the food baskets.

Environment

Energy efficiency and water stewardship are two areas of focus. Solar energy panels are being installed at

the new factory campus mentioned above. These panels will be used to help power the new plant. THP

recycles the water it uses and encourages wise consumption, with ―Water is Breath‖ posters mounted on

walls and doors. The ―Water is Breath‖ project seeks to reduce and economize water resources in their

production process as well as their daily use. Two important components of ―Water is Breath‖ are the 3R

7 http://www.tinmoi.vn/Tan-Hiep-Phat-ho-tro-200-hoc-sinh-ngheo-trong-10-nam-08186383.html

8 http://www.tangduonghuyet.vn/TinTuc/10-

142/nha_tai_tro/tan_hiep_phat_su_phat_trien_gan_lien_voi_nhung_hoat_dong_mang_y_nghia_cong_dong.ht

m 9 http://chuthapdo.org.vn/redcross/vn/home/InfoDetail.jsp?ID=4358&area=45&cat=1688

10 Ibid.

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initiative (Reuse, Reduce, Recycle) and the 2A initiative (Assessment, Audit). Management‘s vision is

that water will not be wasted, internally or externally. In addition, they have plans to recycle waste water,

treating it sufficiently to allow human consumption.

In addition, the company uses green products and natural ingredients wherever possible. For example,

they do not use chemical fragrances in their products. The production process is very strictly controlled

with only natural ingredients and fresh raw tea. They do not use preservatives.

A factory incident

THP made headlines in Spring 2009 when toxic wastewater and other pollution from a Tan Hiep Phat

beverage factory was found to have contaminated communities in Vinh Phu Commune in Thuan An

District from 2001 to 2004. Local residents said the canal running through their neighborhoods turned

black in the two years since the factory opened. They complained, and said they used to use water from

their neighborhood canal for their daily needs which they could no longer do. Polluted water from the

canal also spoiled their gardens and killed fish in their ponds, they say, as during rainstorms the canal

would flood nearby residential neighborhoods. ―I used to raise fish but they‘ve all died due to polluted

water spilled into the pond from the canal,‖ said Nguyen Thi Hiep of Trung Hamlet.11

A 2005 investigation confirmed the community‘s complaints, with contamination substantiated by

government inspectors from the provincial Department of Natural Resources and Environment (DONRE).

The company responded with its own investigation and corrective actions, and invested in a US$ 2.5

million (approx. VND 50 billion) waste water treatment system, which they say remedied the problems.

The company has also publicly stated that it does believe environmental protection is an important

priority and is now integrated into its business planning.

The community sought compensation for their loss of livelihood and the hardship associated with the

canal contamination, and the Vinh Phu Commune People's Committee formally petitioned the DONRE in

Binh Duong Province, Thuan An district. THP was fined VND 42.5 million for not treating wastewater

properly before discharging it as final resolution of this episode. 12

Next steps

As mentioned previously, the company is moving through a period of assessment and evaluation of their

business processes to ensure sustainability for the future. This includes developing sound community and

environmental policies which adequately reflect its core values. From a corporate social responsibility

perspective, this will include not only steps to nurture a strategic and consistent CSR approach, but

building the internal fraework by which it can be managed and its impact measured.

11

http://www.lookatvietnam.com/2009/08/factory-pollution-turns-canal-black-2.html 12

http://www.tainguyenmoitruong.com.vn/moi-truong-va-cuoc-song/cty-tnhh-thuong-mai-dich-vu-tan-hiep-

phat-binh-duong-khac-phuc-o-nhiem-moi-truong-nhu-the-nao

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Vietnam‟s entry into the global market means big changes for firms wanting to export.

Vietnam began to liberalize trade in the 1980s. The country devalued its currency to increase exports,

and launched a policy of regional and international economic re-integration; integration with the world

economy has become one of the cornerstones of its reform program. Vietnam‘s accession to the World

Trade Organization in 2007 has further encouraged participation in the global economy. As a result of

these reforms, exports have rapidly swelled, growing by as much as 20%-30% in some years. In 2009,

exports comprised almost 62% of GDP.1 Over the same period, an increasing number of international

standards on labor, health and safety, and environmental protection have been adopted by multinational

corporations (MNCs) and in turn, have been required of suppliers.

For Vietnamese companies, such as Goldsun Household (Goldsun), supplying MNCs, has meant meeting

an increasing number of international standards. The case of Goldsun illustrates a Vietnamese business

that used these international requirements as a foundation to build its competitiveness and grow its

business by practicing both internal and external corporate social responsibility (CSR).

“…our company's major customers will only work with businesses and suppliers if those suppliers

meet international standards”, said Goldsun CEO Pham Cao Vinh.

International Codes of Conduct

MNCs have extensive and often growing supply chains around the world, usually concentrated in

emerging economies. The actual production of many MNC products is done by these suppliers; this is

also the place where the most important impacts occur in areas such as human rights, safety and labor

issues, the use of natural resources and environmental emissions.

It is often a challenge for any firm to understand and improve its impact on society and the environment

outside of its own operations. However, for MNCs that outsource much of their production, improving

the impacts that their suppliers make may be where they can make the most significant changes towards a

more sustainable world. Companies in their supply chains – often small- and medium-sized enterprises

(SMEs) - can and need to contribute to the creation of truly sustainable products and production

processes. As Vietnamese firms become increasingly global, they are finding that international firms

often have a standard code of conduct that must be followed in order to be considered as a supplier. After

complying with Vietnamese laws and regulations, initiatives to ensure international codes of conduct are

met often become a Vietnamese SME‘s first step in corporate social responsibility (CSR).

1 US Department of State, Bureau of East Asian and Pacific Affairs, Vietnam Background Note, May 27, 2010

Goldsun Household

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The international home products company IKEA, for example, created the I-WAY code of conduct— a

set of minimum requirements that suppliers must meet to do business with the company. According to I-

WAY‘s environmental and forestry standards, suppliers must agree to: work to reduce waste and

emissions; handle chemicals in a safe way; dispose of hazardous materials in a safe manner; contribute to

the recycling and reuse of products; and use wood from known areas and, if possible, use wood certified

as responsibly managed.2

The Business Social Compliance Initiative (BSCI), an initiative of European retail companies begun by

the Foreign Trade Association (FTA), Brussels, is another code of conduct, supported by about 100

member companies. Suppliers of these member companies need to comply with the code of conduct;

suppliers also need to take responsibility for producers who sell primary products to them. The BSCI code

is built on internationally recognized labor standards protecting workers rights, in particular the ILO Core

Labour Conventions. It aims at continuously improving the social performance of suppliers and their host

countries, while also improving transparency of the entire supply chain.3

While integration into the global economy has increased the importance of these standards, MNCs are at

the same time pushing their suppliers to lower prices and meet short delivery times. While these ongoing

pressures are a function of a competitive market, they tend to work in opposition to code of conduct

compliance.

Goldsun Household Appliance Joint Stock Company

Goldsun is a Hanoi-based company that specializes in the

manufacturing of household appliances (gas stoves, outdoor

barbecues, cookware) and the production of high-quality

cardboard packaging for both the domestic and international

markets. Their mission is to create value and enjoyment for

customers by producing quality household appliances. Goldsun

is focused on becoming one of the Vietnam‘s top exporting

enterprises, and outside of Vietnam sells much of its production

to IKEA (Sweden) and Landmann (Germany).

Goldsun was founded in 1994, and is privately held. In 2005 and 2007, Mekong Capital and the Vietnam

Investment Fund, respectively, invested in Goldsun and together hold about 41% of Goldsun‘s shares.

Today Goldsun Household has one factory in Hanoi, sales channels throughout Vietnam and over 700

employees. 2010 sales are expected to top 300 billion VND. Goldsun has been recognized for their

product quality, and in recent years won several prizes including Vietnamese Gold Star, Vietnam‘s High

Quality Product, Vietnam‘s Powerful Trade Mark, and Vietnam‘s Trustful and Applicable Prize. The

Goldsun Hanoi factory is 8,565 m2 and produces both household appliances and packaging.

2 http://www.ikea.com.sg/en/about-ikea/responsibility

3 http://www.bsci-eu.org

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Goldsun and Corporate Social Responsibility

Like many other SMEs, Goldsun initially

concentrated on complying with the applicable

laws and regulations in Vietnam, many of which

are focused on labor. The Labor Code, under the

management of MOLISA (Ministry of Labor,

Invalids, and Social Affairs) protects the right to

work, the interests and other rights of employees

as well as the legitimate rights and interests of the

employer. It addresses specific aspects of

employment relations such as labor contracts,

working hours, wages, termination of employment,

working rules, safety, disputes, child labor, and the

stipulations for benefits and retirement.

Over time, Goldsun has moved well past basic compliance to CSR, motivated by three important drivers:

investment, international markets, and employee commitment. Goldsun‘s investors - Mekong Capital and

Vietnamese Investment Fund – place a premium on transparency and strong corporate governance.

Policies and procedures for ethics, operations, financial control, and reporting are key to helping them

minimize investment risk. Putting effective corporate governance policies in place was a critical first step

for Goldsun to take before a reputable equity partner would consider investing.

The company culture supports these efforts. The human resource department described the culture as

exhibiting these three qualities:

Unity among employees, and between the Board of Directors and employees: employees have a

voice to discuss and share concerns with executive management

Fair opportunity: employees earn what they deserve

Transparency: policies and procedures are clear4

The second major driver is the desire to access international markets and supply leading global companies

such as IKEA and Landmann. Large MNCs have come under increasing scrutiny for their overseas

practices and most follow a Code of Conduct such as I-Way or BSCI. In addition to fair labor practices,

these Codes usually also set environmental and safety requirements, which takes most suppliers

significant time and expense to comply. Goldsun management has invested heavily in this effort and in

many cases gone behind the minimums (and was recognized by IKEA for this) both because it benefits

their employees and the community at large, while also increasing their attractiveness to outside clients.

To ensure compliance, regular inspections are conducted, often without advance notice. Goldsun‘s human

resources manager emphasized that CSR was a huge issue for foreign customers only, as most

Vietnamese customers where focused solely on price.

4 Interview with Tran Thi Hong Gam, HR Deputy Manager, Goldsun Household, November 26, 2010

Goldsun Factory

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Goldsun also strives to be a preferred employer by investing in

safe and environmentally friendly equipment, paying salaries

higher than the average, limiting the work week to 42 hours

(Vietnam‘s labor law allows for a 48 hour work week), and

providing ongoing employee training. Goldsun supports the

community in several ways. They have been particularly active in

helping disaster affected areas. While overall direction comes

from the CEO, cross functional employee teams are responsible

for many of the decisions around community engagement. Funds

for these activities come from a combination of employee

contributions, donations from the labor union and Goldsun itself,

with the amount determined uniquely for each situation.

Goldsun‘s executive leadership is committed to building a

workplace that employees are proud of and want to stay with for

the long-term. Pham Xuan Hoang, a factory manager who has

worked for Goldsun for six years, exhibits that employee pride. ―My boss takes care of his employees;

management tries their best to look for ways to improve our workplace and work environment, ensure our

safety, and pay a fair salary. I really appreciate their attitude. Imagine, we are a collection of more than

700 employees, and all of us benefit from the company policy. I can also see clearly that the company

really does focus on CSR and community work. I like participating in our community activities. For

example, last month I joined a company team to help flood victims. We traveled to Nghi Xuan District in

Nghe An Province to help people affected by the recent flash flood there. It was such a great experience

for me and all of my colleagues, we helped people and that made us feel so good. Our company gave us

that opportunity to do something meaningful!‖5

Tran Thi Hong Gam, the Human Resources Deputy Manager, also gave a positive employee testimony.

She has worked for Goldsun since 2006, and as a HR professional, she appreciates the importance the

company places on treating employees well.

―My company,‖ she says, ―works hard to ensure labor rights. I feel very proud of Goldsun because the

board of directors provides very good working conditions, including fair salaries, work schedule,

allowances, and many other benefits. You may find that not all Vietnamese companies work with this

same vision...we have a trade union, where all employees have the freedom to meet, to speak up and have

our voice heard, and together with the company we built a code of conduct. The company also does a lot

of community work, such as helping poor people, visiting and helping people affected by a disaster, or

visiting the family of an employee who is sick. As an employee, I feel very proud to work for Goldsun. I

feel enthusiastic to help needy communities. I think it reflects well our company strength and unity‖.6

5 Interview with Pham Xuan Hoang, a factory manager, Goldsun Household, November 26, 2010

6 Interview with Tran Thi Hong Gam, HR Deputy Manager, Goldsun Household, November 26, 2010

Goldsun‘s employee

working in the factory

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Value of the CSR business decision

Goldsun is also aware of the pressure that the media and NGOs can bring on companies that are not

focused on CSR and wants to make sure its actions are perceived positively by these stakeholders. Like

any business decision, however, Goldsun must balance the demands of their customers with the likely

return they will get; the significant pressure from buyers to keep lowering costs competes for resources

with CSR investment. Goldsun believes that their CSR approach is competitive with others in the

industry, and that in addition to providing access to international customers, it has benefitted them most in

their ability to retain and motivate staff and ensure stability in their business.

The company continues to build a foundation for a long, healthy, profitable future in the global

marketplace. Goldsun CEO Pham Cao Vinh provides helpful perspective. He notes that the company‘s

values and their manifestation are anchored in their company slogan:

“Unity – Friendship – Sustainable Development”

He says, ―We do need to direct our policy systems toward sustainable development. We seek to invest in an

open, transparent way – this includes human resources, manufacturing and business alike. We see this as an

investment for the future and a competitive advantage for our company.‖

CEO Vinh recognizes that customer requirements and regulatory compliance are key business drivers as

well. Vietnam labor law, environmental law, as well as multinational customer requirements necessitate

high standards. This means that ―Our customers are driving social responsibility, motivating enterprises

to embrace CSR. We are under pressure to understand and manage our stakeholder relationships, which

are numerous these days – consumers, investors, the media, NGOs, international organizations…but I

believe the development of a sustainable enterprise means having a respected brand to our customers and

suppliers worldwide, and Goldsun is living up to and energized by this challenge. We will continue to

build a respected global brand, supported by a community-oriented and environment-friendly strategy.‖7

Though Goldsun‘s CSR efforts began in earnest in 2005, they have not conducted a formal cost and

benefit analysis of their strategy. While evidence is only anecdotal, the human resources department

believes that there is a direct tie between its CSR efforts and employee health, morale and satisfaction and

low staff turnover. As noted earlier, Goldsun has won numerous Vietnamese awards for product quality;

another likely outgrowth of having satisfied workers.

Benefits they have identified so far include:

A CSR focus and transparent system of control build business confidence. Strong CSR allows

Goldsun sales network to expand to a greater number of global companies; interest in Goldsun

products is increasing.

A safe and healthy work environment means lower risk of accidents or mistakes on the

production line.

Employees are motivated and morale is high – this translates to higher productivity and product

quality.

7 Interview with Pham Cao Vinh, CEO of Goldsun Household, November 26, 2010

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Employee company loyalty is high, not only due to a healthy work environment, but because of

the transparent and fair labor policies and employee benefits.

The Goldsun name is becoming increasingly known as respected, ethical and fair.

Goldsun admits its CSR journey has just begun. CEO Vinh prioritizes continued focus on customer

requirements, and moving beyond compliance and what is required to developing a CSR program that is

meaningful and strategic. He wants to maximize his customers‘ requirements in a way that will propel

Goldsun forward as a pioneer for Vietnam, and be a brand of choice for ―smart and responsible consumers.‖

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As Vietnam‟s health system becomes partially privatized, one of Vietnam‟s top hospitals is simultaneously

meeting the needs of the poor, and the doctors‟ desire to serve them.

As Vietnam‘s health system has changed from being entirely state run to primarily a fee-for-service

system, there are increasing concerns that the poor are not being adequately served. As a state hospital,

and the provider of healthcare services for over 15 million of Vietnam‘s citizens, Hue Central Hospital

has focused on delivering high-quality health services to everyone, regardless of their ability to pay, and

believes that serving the poor is one of its most important social responsibilities.

According to Vice Director Dr. Nguyen Duy Thang, ―Being a doctor means helping people. From the

beginning when a new doctor comes to work at our hospital, they are trained to know about Hue Central

Hospital‘s tradition of working for and contributing to the local community. The central part of Vietnam

is the poorest part of the country, and we all have a responsibility to make a contribution to the local

community. I just hope that in the future, when our country is more developed, there will be fewer poor

people and our community can benefit from a higher standard of living.‖1

This case illustrates how a public service organization has adapted to a changing state funding system and

the challenges of meeting its mission with a limited and decreasing budget. It also highlights how

motivated staff can drive social responsibility and leverage limited resources to have an impact.

Vietnam: A Changing Health Care System

Since the beginning of Doi Moi, Vietnam‘s health care system has evolved from an entirely state-financed

institution that promised health services as a right of citizenship to one that is increasingly based on fees

for service. In 2007, an estimated 60% or more of total health expenditures were paid out of pocket,2 i.e.

directly by individuals. Furthermore, research shows the burden of health care is falling

disproportionately on the poor. A study published in 2000 found that spending on health care in

1 Interview with Dr. Nguyen Duy Thang, Vice Director, Hue Central Hospital, October 27, 2010

2 London, Jonathan D., Reasserting the State in Viet Nam Health Care and the Logics of Market-Leninism,

Science Direct, Policy and Society (2008), page 119.



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households that reported illness amounted to 22% of income for poor households, compared to only 8%

for the better-off households. Recent data suggest such conditions persist.3

While there are strong arguments that market-based health systems improve efficiencies and patient

choice, they are criticized as favoring wealthier, urban-based population segments that have better access

to higher quality facilities, leaving the poorest population segments (poor and ‗‗near-poor‘‘) most

vulnerable to both rising costs and inadequate access.

In light of this criticism, Vietnam has developed a system of safety-nets to protect certain segments of the

population. In 1993, the government introduced its Hunger Eradication and Poverty Reduction project

(HEPR), a set of programs designed to ameliorate the widening gap between high- and low-growth

regions and between richer and poorer segments of the population. It extends fee exemptions for health,

education, and other services to government-designated poor communes and individuals falling below the

state set poverty line.4

In 1999, the Council of Ministers mandated the public provision of health insurance for all households

certified as ‗‗hungry‘‘ as well as those in the poorest 30th percentile of any given locality. This was

expanded in 2002 when the government set new eligibility criteria for fee exemptions and reductions, and

stipulated that all provinces must establish ‗‗health care funds for the poor‖.5


Our mission: “Apply medical knowledge, advanced diagnostics and therapeutics, and effective systems of

information and communications for the purposes of enhancing operational and medical performance,

improving medical training, and proving a better quality of care across the central region of Viet Nam”

Hue Central Hospital (HCH) was established in 1894 by King Thanh Thai as a state hospital to serve the

poor, and was the first Western-style hospital in Vietnam. Along with Bạch Mai Hospital in Hanoi and Chợ

Rẫy Hospital in Ho Chi Minh City, HCH is one of the three largest hospitals in the country managed by the

Ministry of Health. HCH is the central medical institution for 16 of Vietnam‘s provinces (having over 15

million residents), and plays a leading role in guiding the provincial hospitals, particularly in terms of

training. HCH trains 300 outside medical professionals and 2,500 medical students each day. The hospital

has 2,030 beds, a staff of 2,500 and serves over 1,500 patients at any one time. It is also the primary training

facility for Hue Medical College and was the site of Vietnam‘s first open heart surgery in 1999.

In addition to their commitment to train the medical community and provide high-quality medical

services, HCH is also strongly committed to serving the poor, especially since they operate in areas that

have significantly lower earnings than the major cities of Hanoi and Ho Chi Minh City.

3 Ibid.

4 Cao Nhn Nguyet, Social and Environment Department, General Statistical Office, Concepts, contents and measurement of poverty in Vietnam.

5 London, Jonathan D., Reasserting the State in Viet Nam Health Care and the Logics of Market-Leninism,

Science Direct, Policy and Society (2008), page 121.


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Social Responsibility at Hue Central Hospital

Though HCH reports to the Ministry of Health, they are autonomous in how they serve the poor and how

their CSR resources are deployed. Before 2005, HCH‘s annual CSR budget was approximately VND 10

billion. As the central government takes an increased role in providing health insurance for the poor and free

care to children under six-years of age, there is less direct funding for the Ministry‘s hospitals, and HCH‘s

recent CSR budgets have been significantly reduced. Although the central government used to give more

funds to the provinces to work at the local level, with increasing centralization, fewer funds are being

provided. HCH‘s 2008 CSR budget was VND 3 billion VND and the 2009 CSR budget was VND 2 billion.

The budget cuts are due to the central government taking a greater role to provide services to the poor.

Before HCH played that role as there was insufficient coverage from the government. HCH actually

believes this is a positive development, because it shows increasing attention and commitment by the state

to help poor people, which is its role. HCH hopes the government will continue to show increasing

responsibility in serving the poor.

For their part, what is most important (regardless of state assistance or not) is to fill medical gaps for the

poor, including emergency response and other community support. People who are poor or who live in

remote areas need medical assistance same as the rest of the population.

HCH‘s CSR strategy has four main components:

1) Serving the poor. HCH offers reduced medical and hospital stay fees to those who cannot afford to

pay. They concentrate on serving the following groups:

Ethnic minorities

Patients who are not considered poor, but are faced with economic crisis due to a serious illness

or an excessively long hospital stay

Deceased‘s families in cases where the family is either unable to collect the deceased‘s remains

or unable to pay for funeral costs

Patients who have insurance that only covers a portion of their hospitalization fee and they are not

able to cover the rest.


P a g e | 78

Though the fees are reduced, the poor receive the same level of service (doctor quality, hospital care,

equipment, use of technology, etc.) as the patients who pay for their services in full.

2) Emergency support. Medical teams are often sent to respond to emergencies – a critical service since

central Vietnam is particularly prone to flooding. HCH will also help with house rebuilding efforts or

provide direct cash assistance in some cases. HCH has a budget of VND 100 to 150 million to

provide emergency support. For example, in October 2010, a group of 30 doctors went to Nghe An

and Ha Tinh provinces to help people affected by flash floods. They carried VND 50 million in cash

and a variety of medicines to provide medical and nutrition assistance.

3) Serving the borderline poor. HCH also assists those that they considered borderline poor, or those

who typically are not eligible for reduced fees.

4) Medical outreach services. In coordination with the local health agencies, HCH sends medical teams

to rural, primarily ethnic minority areas, to provide free consultation, diagnostic services, minor

surgeries and medicines. More serious cases are taken to HCH and treated free of charge. HCH

conducts these visits on a monthly basis.

According to HCH staff these campaigns are especially effective since they know the needs of the

communities they serve and have strong relationships with those communities. They are also valuable to

the physicians that participate. In the words of Dr. Tran Xuan Phu ―Participating in community activities

is a way of getting away from stress. Moreover, by going to the community, doctors can learn and

improve their skills and their relationship with the patients by learning how to share the patients‘ pain.

This is a great chance to also share with my colleagues at HCH.‖6

The hospital staff sees social outreach and a commitment to the community as their duty. However, Dr.

Phu also emphasized that he would seek ways to serve the disadvantaged even if there were no formal

hospital programs to participate in.

Dr. Thang also reiterated that to be a doctor is to help people: it is the very essence of the role. Each of

his staff is provided training and orientation in their first days at the hospital. This is not only to provide

technical and professional know-how. Equally important, it is for each of them to understand and absorb

the ―serve and heal‖ traditions of the hospital: the culture of selflessness, of doing their best to help

restore their patients to health, and to keep the patients‘ best interests at heart. This orientation is

important to link the hospital‘s institutional commitment to health and to the community with its

expectations and desires for staff performance, care and proper attitude. HCH makes it clear that its sole

focus is not simply healing within the hospital walls, but through its efforts at the village and community

level. For Dr. Thang, driving social responsibility comes from his heart and soul, and his desire (and

expectations) for each of his staff is for them to develop and possess the same passion for serving and

caring for their greater community.

6 Interview with Dr. Nguyen Duy Thang, Vice Director, Hue Central Hospital, October 27, 2010


P a g e | 79

He said, ―As doctors, we must have a responsibility for the community; it is inherent in the job.‖7 For Dr.

Thang, it is a tradition as well of this central region of the country: it is the poorest part of Vietnam, and

people must work together at every level to meet the great needs of the citizens who make this part of the

country their home.

Stakeholder relationships

HCH has a broad spectrum of stakeholders that it manages, as follows:

HCH has formal relationships with over 30 government and non-profit organizations from around the

world and hosts between 100-120 international delegations a year. These outside entities are a source of

training, equipment, and funds (HCH has received approximately US $50 million since 2004). Official

Development Assistance from Japan and Germany has facilitated the expansion and capacity of the

hospital. HCH received a grant of US $30 million in 2002 from Japan to build a new hospital wing in

2006. German organizations provide training and workshops for HCH doctors. In addition, the

American Foundation Atlantic Philanthropies, partnering with the East Meets West Foundation, funded

the Hue Ophthalmology and Training Center, a cardiology center and a pediatrics center totaling

approximately US $14 million. Partnerships with NGOs have enabled HCH to offer volunteer services,

provide scholarships to underprivileged students, train doctors and nurses, and make operations available

to those who could not otherwise afford them.

7Ibid, Dec. 2, 2010

HCH

Ministry of Health

Local health

authority

Communities

Patients & their families

Administration & medical staff

Medical students

NGO & international organizations

Provincial hospitals

Hue Medical College

Hue Central Hospital Stakeholders


P a g e | 80

Looking Forward

Although there have been many significant achievements, Vietnam‘s health care system still faces many

difficulties and challenges, including the central problem of making the system more efficient and equal

in a socialist-oriented market economy. Existing fee exemptions cover only one component of health

services, and the poor have a hard time making up the large gap between formal fees and other costs, such

as transport, medicines, food, lodging fees for relatives, and informal payments.

In the short to medium term, Dr. Thang advises they will still try their best to work for the community.

As mentioned before, HCH believes it is a vital responsibility as medical professionals. They will

continue their focus on helping people in need, and to go to rural areas where medical care is in short

supply. They also hope that the government will continue to enhance public policies to take increasingly

broader care of poor people, and that these impoverished communities will being to see a higher standard

of living. In the meantime, they will do as much as they are able with the funds they secure from both

public and private sources.

Dr. Thang believes fostering existing and new relationships with international government and non-

governmental organizations to develop and improve their medical capacity is important to helping HCH

help more people, to have the greatest impact possible.

KTC

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KTC mini-case

Company Overview and Philosophy

KTC Assurance & Business Advisors (KTC) is a Vietnamese firm that provides auditing and consulting

services to foreign and domestic companies. The company is led by Mr. Pham Duy Hung, the managing

director. As a Buddhist, Mr. Hung believes that we must live in harmony with the environment and must be

responsible for our actions, and he reflects these philosophies in the work place. Furthermore, Mr. Hung

believes all relationships and actions have consequences. These beliefs have shaped KTC‘s business, and

are reflected in the company‘s office arrangement, treatment of employees, and business conduct.

Emphasis on Employees

KTC‘s CSR strategy focuses on its number one stakeholders- its employees. It promotes a balance

between work and personal time, as well as a less hierarchical organizational structure in order to allow

for easier communication and a more relaxed workplace. In order to create high moral and job

satisfaction, KTC has focused on investing in the physical office to make it a better working environment.

The company has built a kitchen for staff use, provides more space than the norm for each staff member,

and implements a green office policy for recycling paper. However, perhaps the most significant

investment is the yoga room at the office in Hanoi. ―Yoga has its own philosophy but I practice yoga

with Buddhism philosophy, similar to some westerners practice yoga with Christianity philosophy‖,

explained Mr. Hung. In the yoga room, employees can practice yoga, meditate, or just relax. Yoga classes

are offered to staff and the public for a small fee (staff receive a 50% discount), and KTC encourages its

employees to practice yoga and attend classes.

KTC also focuses on personnel development through staff training. According to Mr. Huang, this is a

relatively rare practice in Vietnam outside of the major firms. All levels of the company get involved,

with KTC‘s partners helping employees review materials before exams and coaching the younger

employees while on assignment.

Employee Volunteering Initiatives

KTC also supports community programs and volunteering initiatives. The Ho Chi Minh City office

arranges community activities including book and clothing donations and support for students with good

grades. The Hanoi office volunteers help out at a center for orphans.

KTC

CSR and Buddhism

KTC

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Honest Business Practices

Buddhist philosophy is also reflected in the workplace through the company mission ―to do the right

thing‖ on the job. This means KTC will not acquiesce to client pressure to present facts in a manner

favorable to the firm, despite being in violation of auditing regulations. KTC ensures compliance with

regulations, even if it results in an unhappy client. ―In the short-term, we may lose some clients because

we do not meet their immediate needs. However, in the long-run, we believe we will gain trust from our

remaining clients,‖ explained Mr. Hung. Through transparent business practices and good corporate

governance, KTC expects to gain more, better quality clients in the future.

Benefits of Buddhist Influence

KTC experiences several distinct benefits from the influence of Buddhism in its business practices.

Respecting relationships with employees and providing an exceptional work environment leads to high

levels of job satisfaction. In turn, this gives KTC a competitive edge in recruiting and retaining highly

skilled and motivated workers. Incorporating yoga in the work place and an opportunity for meditation

results in more relaxed employees and creates a balance in life. Finally, Buddhist philosophy promotes

honesty in company actions, resulting in high levels of client trust and attracts new clients to the firm.


Part 3




CSR Research

IN THIS SECTION:

CSR research overview 84

o Vietnamese university students‘ understanding of CSR:

The relationship between social responsibility and

business for students 85

o Consumer Behaviors and Attitudes towards Corporate

Social Responsibility 108

o The State of CSR in Vietnam 139

o A Study of Corporate Community Involvement in Vietnam 160

P a g e | 84

CSR research overview

K.I.Asia conducted four research studies in order to gather basic information on the perception of key

stakeholders including students, consumers and companies on CSR issues. Each study entailed desk

research and a survey. The topics were chosen to provide knowledge to stakeholders and to provide

information to help design the curriculum.

1. A study was conducted on students in Vietnam, and was called ―Vietnamese university

students’ understanding of CSR: The relationship between social responsibility and

business for students‖. This study aimed to access student understandings of CSR, their interests

in CSR education and activities together with their perceptions of the CSR-related courses and

activities currently available at their universities. The survey results were used to support the

design of a responsible management course curriculum and contents for CSR education in

Vietnam.

2. Another study explored consumer behavior and attitudes towards CSR. Titled ―Consumer

Behaviors and Attitudes towards Corporate Social Responsibility”, the study aimed to gain

insight into Vietnamese consumers‘ understanding and awareness of CSR, reaction and

perception towards socially responsible businesses and products, tendency towards socially

responsible consumption, and expectation towards a firm‘s CSR initiatives. In order to collect this

information, middle-level consumers with buying capabilities in Ho Chi Minh City and Hanoi

completed a questionnaire.

3. In order to understand the top priority issues, drivers, obstacles, practices and expectations for

CSR in Vietnam, K.I.Asia conducted a survey on “The State of CSR in Vietnam”. The survey

was conducted on CEOs, high level executives and CSR managers of member companies of the

VCCI and the GCNV. By surveying top companies in Vietnam, the study aimed to develop a

comprehensive understanding of the current state of CSR in the country.

4. ―A Study of Corporate Community Involvement in Vietnam among Global Compact

Network Vietnam Members‖ analyzed patterns and practices of CCI among a group of leading

companies, examining the structures and strategies companies have in place to provide financial

and in-kind assistance to community causes. Through desk research and a survey of CCI

managers in firms, the research assesses existing and emerging approaches to community

involvement, the business rational for involvement, and issues raised through this involvement by

business with communities.

Students’ Survey

P a g e | 85

Abstract

This paper reports on a survey of Vietnamese university students‘ understanding of Corporate Social

Responsibility (CSR) undertaken during April and May 2010. More than 1,900 students, both graduates

and undergraduates, responded to the survey at four leading Vietnamese universities. The objectives were

to assess student understanding of CSR, their interest in CSR educational activities and their perceptions

of the CSR courses and related activities currently available at their universities. The survey results

indicate that the term CSR is known to about 60% of the respondents, but many were unclear on its

meaning. Only about 30% of those surveyed knew of CSR-related courses or academic activities at their

universities. However, more than 80% of the students say they want more CSR education and some 70%

say CSR should be integrated into required courses. Students say they are particularly interested in

courses on topics such as branding CSR, strategic CSR, managing corporate-community relations and

sustainable enterprises. Although the respondents want more CSR education, they indicate that CSR will

not be a major factor in seeking employment. Their top priorities are good pay and career advancement.

I. Rationale

Recently, CSR has become an important concern for many private companies throughout the world, in

both developed and developing countries. This growing importance of CSR has increased the need for

business management courses that educate future managers on the planning and management of CSR

activities and the ways that CSR can be integrated into normal business practices. More and more leading

business institutions are putting greater emphasis on CSR-related education for their employees. This has

clear consequences for students getting ready to enter the business world and on academic institutions

trying to produce capable and qualified students.

In 2008, nearly 180 business schools from around the world signed up to a United Nations-backed

initiative called the Principles of Responsible Management Education (PRIME). PRIME is aimed at

producing a new generation of business managers who are more ethical and socially responsible. The key

PRIME principles, established by the UN Global Compact, commit the business schools to provide

courses on CSR issues such as human rights, corruption, and the environment.

CSR education is already an important component of business school curriculum in North America and

Europe and is an emerging trend in Asia. These schools have responded with CSR courses, CSR

concentrations and greater integration of CSR topics into more traditional business courses such as

strategy, marketing, finance and human resource management. CSR is being taught through degree

programs at the graduate and undergraduate levels as well as through short executive courses for working

business people. For example, the Stanford Graduate School of Business offers an education program

called ‗Corporate Social Responsibility: Strategic Integration and Competitiveness‘ involving a series of

Vietnamese University Students’ Understanding of CSR:

the relationship between social responsibility and business for students

Students’ Survey

P a g e | 86

group work activities and interactive lectures.1 Harvard Business School offers a variety of courses that

focus on CSR-related topics for interested graduate students (i.e. The Moral Leader, Social Marketing and

Strategies beyond the Markets) and offers special CSR programs for senior executives.2 The Kenan-

Flagler Business School at the University of North Carolina at Chapel Hill offers a concentration in

―Sustainable Enterprise‖ and maintains a ―Center for Sustainable Enterprise‖ that undertakes teaching,

case-writing and research on CSR issues.3 Many European business schools such as RSM Erasmus and

Nottingham University Business School have made CSR a priority and have moved up the rankings in the

Beyond Gray Pinstripes survey on the CSR capability of business schools. The biennial survey and ranking

of the CSR offerings of business schools has shown an increase from 111 schools from 18 countries

participating in 2007 to 149 schools from 24 countries in 2009. The average number of CSR course

offerings at the surveyed schools increased from 12 courses per school in 2005 to 19 courses in 2009.

In Southeast Asia, despite an increase in CSR business activity, CSR educational development is

relatively minimal. This has been particularly true in Vietnam where interest in CSR has risen more

rapidly than the ability of Vietnamese business schools to serve this interest. Initial Vietnamese interest in

CSR focused on the treatment of workers in labor-intensive and export-driven industries such as garments

and footwear. The Vietnam Business Links Initiative, a multi-stakeholder initiative, developed a local

code of conduct for the footwear sector in the late 1990s. The Initiative now provides annual CSR Awards

for the footwear, garment and textile industries, and recently initiated an award for CSR in the marine

products industry. Numerous other initiatives advancing the CSR cause exist, including the establishment

of CSR projects by the Vietnam Chamber of Commerce and Industry (VCCI) in cooperation with the

UNDP. UNDP and the VCCI initiated the project ‗Embedding Corporate Social Responsibility in

Vietnam through Research, Training and Curriculum Development‘ or ‗Embedding CSR.‘ This project

aims to gradually and sustainably develop responsible management education in Vietnam in conjunction

with the UN‘s Global Compact Network Vietnam (GCNV). This survey of Vietnamese student opinion

on CSR was funded by the GCNV.

Research questions

This study aims to answer the following research questions:

1. How do Vietnamese university students understand CSR?

2. Should business schools put more emphasis on sustainability and corporate responsibility in the

curricula?

3. How does CSR affect Vietnamese university students‘ decision-making in their career paths?

4. Are Vietnamese businesses focusing on their social responsibilities?

1 Stanford Graduate School of Business, http://www.gsb.stanford.edu/exed/csr/, accessed on 14 July 2010.

2 Harvard Business School, http://www.hks.harvard.edu/m-rcbg/CSRI/init_educ.html, accessed on 14 July

2010. Also, http://www.exed.hbs.edu/programs/csr/, accessed on 14 July 2010. 3 UNC Kenan-Flagler Business School, http://www.kenan-flagler.unc.edu/cse/, accessed on 14 July 2010.

http://www.hks.harvard.edu/m-rcbg/CSRI/init_educ.html

Students’ Survey

P a g e | 87

II. Literature Review

To date, there are no similar surveys of Vietnamese student opinion on CSR. Studies elsewhere in the world

have varied considerably in methodology and conclusions. A survey of third and fourth year university

students in Romania, for example, found that only 1.87% of the surveyed students declared themselves very

familiar with the CSR concept, while 19% said they were familiar with it. The great majority (76.25%) of

Romanian students reported that they had little or no knowledge of CSR. Nearly half of the students (42.5%)

said they had never heard of CSR. The comparison with Romania is of particular interest because Romania,

like Vietnam, has adopted market economics within the last two decades.4

In the United States, Net Impact and the Aspen Institute conducted a survey to understand MBA student

opinions on their careers, their graduate programs, and the relationship between business and

social/environmental issues. Some 1,850 MBA and graduate students, representing over 80 different

programs, responded to the 2008 online survey. It showed that only 31% of respondents think that

corporations are working towards the betterment of society, but that was nearly double the percentage in a

similar survey two years earlier. Despite this, most students said they believe that the for-profit sector

should play a role in addressing social and environmental issues (88%) and that being responsible leads to

corporate profits (77%). Only 24% of respondents strongly agreed that their MBA program is helping

them learn how to make business decisions that will avert similar financial crises. The students in the

survey felt that their business schools place moderate or little emphasis CSR issues. They agreed that

business schools should include more content related to sustainability and corporate responsibility

(78%).5 A similar survey in 2009 by The Association of MBAs‘ Research & Consultancy Center found

that 54% of the 544 MBA graduates surveyed believe that corporate social responsibility should

―underpin the actions of organizations,‖ and 59% believe that business education programs should focus

on all stakeholders affected by an organization‘s actions, not just shareholders.

In a survey of MBA students at the Royal Melbourne Institute of Technology (RMIT) in Australia, the

overwhelming majority of respondents (73.5%) said business ethics was a fundamental requirement for

good business and a civil society, but almost 20% said other business issues were more important. Some

30% of the RMIT respondents said that they would be more interested in taking business ethics courses if

they had better information on course content. Asked whether ethics should be a required subject, 63% of

the students said it was better left as an elective.6

On the issue of CSR course availability, a US study in 2007 examined the availability of business school

courses on ethics, corporate social responsibility, and sustainability. It concludes that a majority of the

schools studied require courses in at least one of these areas and one-third require courses in all three. The

4 Cristina Nicolescu. ―Corporate Social Responsibility in the Romanian Higher Education,‖ - policy study July

2006 under the Developing Socially Responsible Elites and the Challenge of Higher Education Reform working

group. 5 Net Impact and the Aspen Institute. ―New Leaders, New Perspectives: A Survey of MBA Student Opinions

on the Relationship Between Business and Social and Environmental Issues‖ 6 Michael Segon and Christopher Booth. ―Business Ethics and CSR As Part Of MBA Curricula: An Analysis

of Student Preference,‖ International Review of Business Research Papers Vol. 5 No. 3. April 2009 Pp. 72-81.

Students’ Survey

P a g e | 88

study reports a 500% increase in the number of courses on ethics since 1988 and says student interest in

CSR courses is highest at the top 10 rated business schools.7

The Aspen Institute‘s 2009-2010 edition of ―Beyond Grey Pinstripes‖, a biennial survey of MBA

programs that integrate sustainability and social responsibility into the curriculum, reported that the

demand for CSR courses has increased dramatically. The percentage of schools surveyed that require

students to take at least one course dedicated to business and society issues has increased dramatically

over time, from 34% in 2001 to 69% in 2009. Despite the increase in courses offered, the report said that

only 7% of faculty at the surveyed schools published scholarly articles on social, ethical or environmental

issues in peer-reviewed journals.8

In a 2004 survey of European Business Schools, Matten and Moon found that 47% of respondent business

schools offered subjects in CSR or related fields, such as citizenship, governance, and business ethics and

38% embedded CSR concepts in existing subjects.9

III. Operational Definition

There is little consensus among scholars on a single, agreed definition of CSR. In general, CSR is taken to

involve a concern for the so called triple Ps: planet, people and profits, but on what basis and to what extent?

Some schools of thought say CSR is based on a voluntary basis, while others believe it is company‘s formal

commitment to sustainable development. For example, the European Commission defines CSR as ―a

concept whereby companies integrate social and environmental concerns in their business operations and in

their interaction with their stakeholders on a voluntary basis.‖10

On the other hand, the World Business

Council for Sustainable Development defines CSR as “the continuing commitment by business to behave

ethically and contribute to economic development while improving the quality of life of the workforce

and their families as well as of the local community and society at large.‖11

However, for the purpose of this report, we have used K.I.Asia‘s own CSR definition:

"CSR is a company‟s commitment to and implementation of strategies that create

sustainable economic, social, and environmental value for shareholders and other

stakeholders."

7 Lisa Jones Christensen, Ellen Peirce, and et al. ―Ethics, CSR, and Sustainability Education in the Financial

Times Top 50 Global Business Schools: Baseline Data and Future Research Directions,‖ Journal of Business

Ethics (2007) 73, pp. 347–368.

8 Aspen's Global 100: Beyond Grey Pinstripes 2009-2010,

http://www.aspeninstitute.org/sites/default/files/content/ docs/pubs/BGP2010.pdf, accessed on 14 July 2010. 9 Matten, D. and Moon, C., 2004, ―Corporate Social Responsibility Education in Europe‖ Journal of Business

Ethics, vol. 54, pp 323–337. 10

Commission of the European Communities, http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:200 6:0136:FIN:en:PDF, accessed on 14 July 2010. 11

World Business Council for Sustainable Development, http://www.wbcsd.org/templates/TemplateWBCSD5/

layout.asp?type=p&MenuId=MTE0OQ, accessed on 14 July 2010.

Students’ Survey

P a g e | 89

IV. Methodology

1. Objectives of the Study of Student Understanding of CSR

The study is intended to support the development of responsible management education, or CSR

education, in Vietnam by providing data on students‘ general level of understanding of CSR and their

interest in courses on CSR management practices and skills. This information is used to support the

design of responsible management course curriculum and contents for Vietnamese institutions.

2. Population

The population of the study is Vietnamese university students enrolled in business-related programs

(undergraduate level) and MBA programs (graduate level). The survey includes information from

randomly selected students at four Vietnamese leading universities. These institutions were chosen

because they offer bachelor‘s and master‘s programs in business administration and they are university

partners that have agreed to assist in development and testing of CSR curriculum and training of trainers

activities under the Embedding CSR project. These institutions are:

o Foreign Trade University (FTU): Established in 1960, with two main campuses located

in Ho Chi Minh City and Hanoi, this university trains high quality students in economics,

business administration, finance, banking, technology, and foreign languages. It creates

and transfers scientific knowledge to meet the demands of the economy and business

community. More than 26,000 students enrolled in this university in 2009.

o Ho Chi Minh City University of Economics (UEH): Established in 1976, this university

provides students with high quality training in economics and business administration. It

transfers the results of scientific research into practical contributions to human resource

development for industrialization and modernization of the country in the context of

global economic integration. The university offers twelve faculties and departments,

seven of them focusing on business and economics, and enrolled more than 56,000

students in 2009.

o Hanoi School of Business, Vietnam National University (HSB): Established in 1995, HSB

is a business school which provides both undergraduate and graduate students with a

strong global focus. It is a member of the Association of Asia-Pacific Business Schools

(AAPBS), and offers numerous international joint programs, faculty & student

exchanges, and research collaboration with universities in the US, Europe, Asia, and

Australia. Professors & students conduct industry, market and policy studies (State

Owned Enterprises (SOE, government, Vietnamese & foreign private sector). While

Vietnam National University is the largest comprehensive higher education and research

center in Vietnam, HSB is exclusive, with approximately 800 full time students.

o Thai Nguyen University (TNU): Established in 1994 and located in the northern region of

Vietnam, this university is the academic and government center for the 16 northernmost

provinces. It has 9 faculties, and international training center, and 18 vocational training

centers. The university has over 80,000 students.

Students’ Survey

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3. Data Collection

The two main areas of data collection cover how Vietnamese university students understand the CSR

concept and how their attitudes towards CSR affect their career and educational decisions. The study also

provides data on current academic offerings on CSR, including both courses in degree programs and non-

degree trainings. This information is intended to be helpful in determining what activities and materials

are needed to better embed CSR in Vietnamese university programs. Data collection was carried out with

a random sampling of students in business-related programs at the four universities.

4. Instrumentation

The information in this study comes from both undergraduate students and graduate students in response

to a Vietnamese language questionnaire. The questionnaire has five parts: 1) background information on

the respondents, 2) CSR knowledge and activities, 3) CSR curriculum at their university, 4) attitudes

towards business and social responsibility and 5) desired career path.

V. Findings

1. Respondent Characteristics

The survey findings provide information on Vietnamese university students enrolled in a business-related

faculty in leading universities, but with diversified backgrounds in terms of sex, location, education level

and work experience. The survey respondents are comprised of 1,960 students, including 1,754

undergraduate students and 206 graduate students [figure 1].

Figure 1: Total respondents

The number of female undergraduates responding to the survey is much greater than the number of male

undergrads, while the number of male graduate students was slightly higher than the number of female

students responding to the survey. Note that 43 undergraduate respondents and one graduate respondent

did not indicate their sex.

Most undergraduate students are in their second and third years [see figure 2] from various academic

institutions. More than one-third of the undergraduates are enrolled at the Foreign Trade University in Ho

Chi Minh City. For graduate students responding to the survey, however, almost half are enrolled at the

Hanoi School of Business.

600

1111

107 98

0

500

1000

1500

Male Female

Undergraduate students Graduate students

Students’ Survey

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Figure 2: Education Level

Table 1: Institution

Undergraduate

students

Graduate

students

Response

percent

Foreign Trade University (FTU), Ho Chi Minh City 741 1 38.0%

Thai Nguyen University (TNU), Thai Nguyen City 341 24 18.7%

Foreign Trade University (FTU), Hanoi 280 23 15.4%

University of Economics, Ho Chi Minh City 245 40 14.6%

Hanoi School of Business (HSB), Hanoi 139 112 12.8%

Other 4 5 0.5%

Total 1,955 1,750 205

The largest number of respondents (40%) were in general business administration programs and did not

name a specific college or faculty. A significant number of respondents were in international programs –

International Business (10.6%) and International Finance (8.3%). Students in Banking-Finance (5.5%),

Accounting (5.0%) and Economics (3.9%) faculties came next with the remaining respondents coming from

a wide variety of faculties, including Corporate Finance, Commerce, State Finance and Rural and

Agricultural Development.

Figure 3: Response percent by university location

All but three of the respondents indicate that they come from ‗big cities‘ (up to 1 million habitants) or

‗other metropolises‘ (more than one million habitants) [figure 4]. It is possible that this shows that almost

all students have grown up in large cities, but this would be surprising as most of Vietnam‘s population

329

730627

53206

1st year 2nd year 3rd year 4th year Graduate

(MBA)

number of respondents

Ho Chi Minh

City

53%Thai

Nguyen

City

19%

Ha Noi

27%

Other

1%

Students’ Survey

P a g e | 92

lives in smaller cities, towns and villages. It is also possible that the responses show a misunderstanding

of the question and indicate present location rather than place of origin.

Figure 4: Respondents‟ origin

Figure 5: Expected study level

A large majority of undergraduate student respondents expect to further their studies to a higher level

[figure 5 above]. The greatest interest appears to be in getting an MBA.

The overwhelming majority (99.1%) of undergraduate students say they have never taken any courses

about CSR. The few courses identified by the students were on topics such as Environmental Economics,

Business Ethics and Corporate Culture. For graduate students the percentage with no experience of a CSR

course was only slightly lower (92.2%). The CSR-related courses identified by the graduate students were

on ethics and business and society. It is worth noting that the names of the courses provided by the

students included no course of study focused explicitly on corporate social responsibility. The CSR

concept appears to be dealt with in other courses, such as ethics or business and culture.

245

413

597

483

3

103

21

60

22

0

0 100 200 300 400 500 600 700

Hanoi

Ho Chi Minh City

Other Metropolis (more than 1,000,000

population)

Big city (500,000 - 1,000,000 population)

Medium-sized city (50,000 - 500,000

population)

Graduate students Undergraduate students

44.6% 40.5%

7.9% 5.8%1.9%

71.3%

17.0%6.8%

Undergraduate

(4 years)

MBA Doctoral Others


Students’ Survey

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2. CSR knowledge & activities

This part of the survey focused on the students‘ understanding of CSR together with their opinions on

university CSR activities. The survey asks ―Have you ever heard about Corporate Social Responsibility?”

Figure 6: Background on CSR

According to figure 6, the survey results indicate that more than half of the respondents, both

undergraduate (56.3%) and graduate (67.5%) students, have heard of CSR.

Asked to define ‗corporate social responsibility‘, undergraduate respondents cite community involvement

(69.2%), taking care of the environment (61.9%) and compliance to regulations and laws as the most

important parts of CSR (34.6%). The graduate students surveyed cite community involvement (76.3%),

taking care of the environment (64.8%) and philanthropy (50.4%) as the most outstanding characteristics

of CSR. Students were allowed to select multiple choices for this response [figure 7].

Taking a closer look at figure 7, it can be seen that while there is agreement between graduates and

undergraduates on most aspects of CSR, there are also are some clear differences. Graduate students place

greater emphasis on sustainable business (48.9% to 28.7%) and philanthropy (50.4% to 27.9%) compared

to undergraduate students.

Figure 7: Respondents‟ CSR definitions

* Total number of respondents was 988 undergraduates and 139 graduates;

respondents could choose multiple answers

56.3% 67.5%

43.7% 32.3%


Q: Have you ever heard about Corporate Social Responsibility?

yes no

Taking care of the environment

Philanthropy

Community involvement

Fair labor practices

Compliance to regulations and laws

Sustainable business

Other

61.9%

27.9%

69.2%

31.0%

34.6%

28.7%

4.2%

64.8%

50.4%

76.3%

33.1%

43.2%

48.9%

3.6%


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Furthermore, on the question of “Have you ever heard about the UN Global Compact, or the Global

Compact Network Vietnam?” more than half of the respondents (from both groups) indicate that they are

unaware of the Global Compact. However, for those who had heard about the Global Compact, they

associate it with universal principles of social responsibility and a business initiative for responsibility

and sustainability [figure 8 & 9].

Figure 8: Knowledge about the UN Global Compact or the GCNV

Figure 9: Perception of Global Compact objectives

* Total number of respondents was 543 undergraduates and 86 graduates;

respondents could choose multiple answers

On the question “Does your university organize activities that emphasize Corporate Social

Responsibility, environmental management, ethics, corporate governance, social entrepreneurship,

sustainable development or a related topic?,” the results indicate that a significant number (28.4% of

undergrads and 39.5% of graduate students) are aware of such activities. More importantly, however,

about an equal number of students say they are unaware of such activities but are interested in joining

them if they exist. Only a relatively small number of respondents show no intention to participate in such

CSR-related activities [figure 10].

32.2% 41.7%

67.8% 58.2%


Q: Have you ever heard about the UN Global Compact,

or the Global Compact Network Vietnam?

yes no

Guidance for universal principles of social

responsibility

A business initiative for responsibility and

sustainability

Corporate governance

United Nations

Not sure

Other

59.5%

46.0%

17.7%

15.1%

5.9%

2.8%

68.6%

33.7%

18.6%

12.8%

8.1%

1.2%


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Figure 10: Awareness of university CSR activities

According to figure 10, about one-quarter of respondents say they do not know.

In relation to the previous question, the respondents provide their suggestions about university CSR

activities. The responses show that university students want to see activities to link students and business

people through CSR activities, and CSR forums. [figure 11].

Figure 11: Suggestion on university CSR activities

* Total number of respondents was 1,684 undergraduates and 206 graduates; respondents

could choose multiple answers

The survey data also shows that undergraduate respondents prefer CSR projects and activities whereas

graduate students prefer CSR forums. This difference may be due to the more academic interests of the

graduate students. Apart from this, the responses on other activities are similar, which means that if that

particular activity is held, it can draw student attention from both education levels.

28.4%35.3%

9.6%

26.7%

39.5%33.2%

2.4%

24.9%

Yes Not that I know of, but

I‘m interested in joining

this type of activity.

No, and I‘m not

interested in this type of

activity.

I don‘t know

Q: Does your university organize activities that emphasize Corporate Social

Responsibility, environmental management, ethics, corporate governance, social

entrepreneurship, sustainable development or a related topic?


55.0%

18.6%

14.8%

12.5%

4.5%

3.3%

34.0%

15.5%

11.7%

17.5%

2.4%

44.2%

Projects to link students & businesspeople …

CSR club

CSR contest

CSR day

Other

CSR forums (for students and/or faculty) …

Q: Which CSR activities would you like to see taking place at your university


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3. CSR curriculum at the university

In addition to extra-curricular CSR-related activities, the survey shows respondents‘ opinions on their

university curriculum and courses related to CSR.

The survey data indicates that the majority of students, especially graduate students (84%) think that CSR

or responsible management should be integrated into existing required classes in business management

programs [figure 12].

Figure 12: Opinion on CSR as required curriculum classes

The student responses indicate that there are several courses focusing on ‗responsible management‘

currently offered. However, the responses also appear to show that there are more responsible

management courses offered for graduate students than for undergraduate students. The responses

indicate that existing courses at both levels do not include and courses dedicated entirely to CSR.

According to the graduate students, CSR is one embedded ingredient among others in business courses

such as Management Ethics, Corporate Culture and Business Strategy [figure 13]. Undergraduate students

responded that human resource management, environmental economics and management ethics were

among the course offerings they thought included CSR content.

Figure 13: Existing CSR courses offered by the university

* Total number of respondents was 1,682 undergraduates and 203 graduates; respondents could choose

multiple answers

68.8%

24.5%6.7%

84.0%

13.6%2.4%

Agree Neutral Disagree

Q: CSR or ―responsible management‖ is a topic that should be

integrated into required curriculum classes in college

business/management program.


0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Human Resource Management

Environmental Economics

Management

Business Strategy

Quality Management

Other

Q: Current courses on ―responsible management‖ that your university offers


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The next question addressed the kind of course of interest to the respondents. Considering the data shown

in figure 14, the most popular topics for undergraduate students are branding/marketing CSR, strategic

CSR and finance & CSR. On the other hand, graduate students say they want to learn more about

branding/marketing CSR, managing corporate-community relations (community engagement) and

introduction to CSR [figure 14].

Figure 14: CSR topics students are interested in

Most respondents said they want their university to place more emphasis on training socially and

environmentally responsible individuals than they currently do. In fact, almost all graduate students

(93.7%) expect more CSR education from their university [figure 15]. Despite the lack of CSR courses,

more than half of the respondents believe that their university is currently preparing students to work

towards the betterment of the society [figure 16]. Compared with undergraduate students, graduate

students seem to have more positive attitudes towards university interest in social responsibility.

Figures 15 &16: Opinion on university extra-curriculum CSR activities

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Branding/marketing CSR

Finance & CSR

Introduction to CSR

Employee volunteering (CSR & HR)

Int‘l standards & reporting programs

Operational health & safety

Social innovation, social enterprise

Microfinance/microenterprise

Q: Please indicate whether or not you would like to learn more about any of the following topics while

you are pursuing your college degree


61.2%

26.4%12.4%

67.3%

21.5%11.2%

Agree Neutral Disgree

Q: I believe that universities are currently preparing

students to work towards the betterment of society.


82.9%

15.7%1.4%

93.7%

6.3% 0.0%


Q: Vietnamese universities should place more emphasis

on training socially and environmentally responsible

individuals than they currently do?


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4. Business & social responsibility

The survey questionnaire asks whether the students agree with the idea that „business should work

towards the betterment of society.‟ Most of the students say they agree, but more than half of the

respondents add a caveat, checking the response ―agree but think that it must be managed in line with

shareholder interests” [figure 17].

Figure 17: Business‟s role in the betterment of society

The figure above indicates that slightly more graduate students regard social responsibility as a real

corporate commitment, while more undergraduate students add the proviso that social responsibility

should be consistent with shareholder interests.

Focusing on businesses in Vietnam, the survey data indicates that a large number of university students

think that local businesses are not currently working towards the betterment of society. According to the

data [figure 18], 42.7% of undergraduate students are not satisfied with their local business‘ current role

on social responsibility issues, while 26.7% of graduate students are dissatisfied. However, the large

number of students that reply that they are neutral indicates that many are unsure whether or not local

businesses are currently working with social responsibility in mind.

Figure 18: Opinion on local businesses current role on CSR

40.2%

52.5%

6.2%

1.1%

51.0%

46.6%

1.9%

0.5%

Agree

Agree, but this must be managed in

line with shareholder interests

Neutral

Disgree

Q: I believe that business should work towards

the betterment of society.


25.3%32.0%

42.7%33.0%

40.3%

26.7%


Q: I believe that most businesses in Vietnam are currently

working towards the betterment of society.


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The next question asks whether business should be socially and environmentally responsible.

As shown in figure 19, most of the respondents agree that „Business professionals should take into account

social and environmental impacts when making business decisions.‟ Similarly, the majority of students

expect the for-profit sector to play a role in addressing social and environmental issues [table 20].

Figure 19&20: Opinion on local businesses concern on environment

However, the respondents are split on whether being socially responsible will lead to corporate financial

profits. Only a few students disagree, but a large number are neutral. [figure 21]. Yet, even if it doesn‘t

immediately produce greater profits, most of the respondents say they believe that „CSR is the right thing

for companies to do‟ [figure 22].

Figure 21 & 22: Opinion on CSR and corporate profits

81.1%

15.9%3.0%

90.3%

9.7%0.0%


Q: The for-profit sector should play a role in addressing

social and environmental issues.


82.2%

14.0%3.8%

89.3%

9.2% 1.5%


Q: Business professionals should take into account social

and environmental impacts when

making business decisions.


81.6%

16.3%2.0%

91.7%

7.8%0.5%


Q: Even if it doesn‘t immediately produce greater

profits, CSR is the right

thing for companies to do.


46.1% 46.6%

7.3%

50.0% 47.6%

2.4%


Q: CSR makes good business sense because

it leads to financial profits.


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5. Desired career path

The last part of the survey concerns the respondents‘ desired career paths. When asked where the

respondents plan to live and work immediately after graduation, about half of the undergraduate respondents

selected Ho Chi Minh City and a quarter of them chose Hanoi. None of the respondents say they plan to live

in a medium-sized city, much less a rural area such as a village or the mountains [figure 23].

Figure 23: Desired location after graduation

Two-thirds of the undergraduate students say they do not think they ought to have working experience before

going on for an advanced degree. For those aiming to acquire working experience prior to graduate education,

half of them plan to work in the private sector. However, more than half (106) of the graduate respondents

say they already have more than seven years working experience, while 59 students have 1-3 years

working experience [figure 24]. This conflicting data may indicate that there is a growing trend for

undergraduate students is to continue to higher education level without previous working experience. The

experience of the graduate students was most often in finance or a state-owned enterprise.

Figure 24: Graduate students working experience

The career preferences of undergraduate and graduate students are different. After graduation, the

majority of the undergraduate respondents see work in a foreign private company (60.5%), in a

Vietnamese private company (21.1%) or in their own businesses (11.3%) as the most desired career

choices [table 2]. However, most of the graduate students replied that they are or have worked with a

state-owned enterprise (23.4%), a Vietnamese private company with less than 200 employees (14.6%), a

Vietnamese private company with more than 200 employees (13.1%) or the public sector at the municipal

level (12.7%) [table 3]. The relatively small number (7.7%) of graduate students with experience working

Hanoi

28%

HCMC

53%

Other

Metropolis

11%

Big city

7%

Other

1%

5938

106

9

1-3 years 4-6 years More than 7

years

None

Q: How many years work experience

Students’ Survey

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in foreign companies is noteworthy. It is also interesting that less than 2% of the graduate students have

worked in their own businesses.

Table 2: Desired career after graduation (undergraduate students)

Q: Immediately following college, I plan to work: Response

percent

With a foreign private company 60.5%

With a Vietnamese private company (< 200 employees) 21.1%

Start my own business 11.3%

State-owned enterprise (SOE) 11.2%

Non-governmental organization (NGO) 8.7%

In the public sector (government) at the Municipal 4.5%

Other 4.5%

With a Vietnamese private company (> 200 employees) 3.1%

In the public sector (government) at the State 1.2%

Other private sector 0.1%

Private sector transportation 0.06%

* Total number of respondents was 1,631; respondents could choose multiple answers

Table 3: Previous working experience (graduate students)

Q: If you have work experience, describe the type of enterprise. Response

percent




In the public sector (government) at the Municipla 12.7%


Finance 4.2%

Industrial (construction, engineering) 4.2%


Agriculture, joint venture, education 3.1%



Consumer/retail goods 1.9%

IT 1.9%

Health care 0.4%

Oil & Gas 0.4%

Telecommunications 0.4%

Transportation 0.4%

Travel & leisure (includes hospitality) 0.4%

* Total number of respondents was 206; respondents could choose multiple answers

Students’ Survey

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One interpretation of tables 2 and 3 is that more undergraduates expect to join foreign companies, while

most graduate students are currently working in a state-owned enterprise. This could show a difference

between the employment hopes of undergraduate students and the employment realities of the graduates.

After completing graduate school, many of the older students (42.2%) want to return to the same job,

while a significant proportion of these MBA students want to seek a new job (34.3%) or continue their

education (19.7%) [figure 25]. However, when asked their preference if forced to seek a new job, some

students indicated they prefer starting their own business (15%) or working with state-owned enterprise

(13.6%) [table 4].

Figure 25: Plan after graduate school

Table 4: Desired career after graduation (graduate students)

Q: If seeking a new job I will look in the following employment area Response

Percent







Industrial 5.1%

Finance 3.7%


In the public sector (government) at the Municipal 2.8%

Consumer/retail goods 2.8%

Travel & leisure 1.4%

Health care 1.4%

Transportation 0.9%

Telecommunications 0.9%

IT 0.4%

* Total number of respondents was 143; respondents could choose multiple answers

Return to

the same

job

42%Seek a new

job

34%

Continue

my

education

20%

Other

4%

Q: After completing graduate school, I plan to...

Students’ Survey

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In making s decision on their career path, more than half of undergraduate students (54.5%) feel it is

important to find a job that is socially responsible while some of the respondents (10.1%) are more

pragmatic and indicate that this is not a priority [figure 26].

Figure 26: Concerns about socially responsible career (undergraduate students)

To the question “During the interview/hiring process, did you discuss your interest in corporate social

responsibility with the potential for-profit employer?” most graduate students (40.3%) respond that ‗if the

interviewer brings it up, otherwise they don‘t ask.‘ However, a surprising number of students (29.1%) say

that they always ask about the company‘s social responsibility mission or programs [figure 27].

Figure 27: Concerns about socially responsible career (graduate students)

The survey indicates that most undergraduate students want to make sure that their career is secure before

they consider working with a socially responsible company, but graduate students, even though they have

a stronger will to work with a socially responsible company, choose not to discuss the issue with the

employer unless asked.

46.7%

7.8%

18.2%

10.1%

2.9%

Yes, after I am established and can afford

to prioritize the kind of employer I want

I plan to start my own business and CSR

will be a priority

I haven‘t thought about it

This isn‘t a priority for me

Other

Q: Sometime further in my career, I will seek employment that includes

a strong focus on social responsibility.

29.1%

26.2%

40.3%

4.4%

Yes, I always ask about their social

responsibility mission or programs

Sometimes

If the interviewer brings it up, otherwise I

don‘t ask

No

Q: During the interview/hiring process, did you discuss your interest in corporate social

responsibility with the potential for profit employer?

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In response to a question asking the respondents to rate a firm‘s characteristics when considering a job

offer, the majority of undergraduate students (77.1%) say they consider career advancement as the most

important factor when considering a job offer, followed by financial gain (61%). Only one-third of the

respondents take CSR into account [table 5]. Unlike the undergraduate students, the majority of graduate

student respondents indicate that company alignment with personal values (50.8%), financial gain

(44.3%) and positioning for their future career (42.7%) are the top three priorities [table 6].

Table 5: Factors for career choice (undergraduate students)

Q: How do you rate a firm’s characteristics when considering a job offer? Response

percent

Positioning for your future career 77.1%

Financial gain 61.0%

Company alignment with your personal values 48.3%

Intellectual challenge 41.6%

Company‘s social values and practice of social responsibility 31.8%

Type of business 30.4%

Lifestyle 18.3%

Geographical location 16.8%

* Total number of respondents was 1,684; respondents could choose multiple answers

Table 6: Factors for career choice (graduate students)

Q: How do you rate a firm’s characteristics when considering a job offer? Response

percent

Company alignment with your personal values 50.8%

Financial gain 44.3%

Positioning for your future career 42.7%

Intellectual challenge 30.8%

Company‘s social values and practice of social responsibility 20%

Type of business 21.6%

Geographical location 10.2%

Lifestyle 8.1%

* Total respondents 185

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VI. Discussion

The survey responses indicate there are three main differences regarding career path between graduate

and undergraduate students [table 8]. First, undergraduate students do not think they have to obtain work

experience prior to pursuing a higher degree; however, two-thirds of graduate students have more than

four years work experience prior to starting their MBA program. Second, these two groups have different

career preferences. Unlike undergraduate students who aim to work with foreign private companies,

graduate students are more likely to work with Vietnamese state-owned enterprises (SOE). And third,

undergraduate students consider career advancement as their first priority, while postgraduate students

pay more attention to company alignment with their personal values. Still, both groups of students place

clear emphasis on financial gain [figure 28]. One similarity these two groups share is their uncertainty

about when CSR should be included in the career path decision. Undergraduate students want to wait

until their career is secure enough before considering a company with a strong CSR focus, and graduate

students say they choose not to mention CSR with their employers during interviews.

Figure 28: Comparison of factors influencing career choice between undergraduate and graduate students

It may be useful to compare the results of the survey in Vietnam with Net Impact‘s 2008 survey of MBA

students in the United States. One major difference is the level of awareness of CSR and understanding of

the key concepts. The US survey assumes familiarity with CSR and respondents are able to offer detailed

information and suggestions on CSR. Some 35% of the American respondents are or have been members

of Net Impact, a CSR-oriented association. In contrast, 43.6% of the Vietnamese undergraduates and

32.2% of the graduate students report that they have never even heard of CSR. Despite this difference,

responses to both surveys reflect a demand for more CSR content. The Net Impact survey report indicates

that 78% of the respondents think that the business school curriculum should include more content related

20.2%

42.7%

31.0%

10.3%

47.4%

11.3%

43.7%

20.7%

30.4%

77.1%

41.7%

16.9%

48.3%

18.3%

61.0%

31.8%

Type of business

Positioning for your future career

Intellectual challenge

Geographical location

Company alignment with your personal values

Lifestyle

Financial gain

Company‘s social values and practice of social

responsibility

Q: How do you rate a firm‘s characteristics when considering a job offer?

undergraduate students graduate students

Students’ Survey

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to sustainability and corporate responsibility.12

The Vietnamese survey shows a similar interest in

improving and expanding the CSR content of university business programs. The Vietnamese students go

even further, saying that CSR content should be required.

The Net Impact survey shows that most American business students believe that the for-profit sector

should play a role in addressing social and environmental issues. The American students also believe that

being socially responsible can lead to financial profits.13

Although most Vietnamese university students

believe that the for-profit sector must concern itself with CSR, they do not see financial profit as a reason

for corporate responsibility, but suggest that CSR is simply the right thing for companies to do.

The two surveys show differences in career preference between Americans and Vietnamese. American

business college students prioritize work/life balance and challenging job responsibilities whereas

Vietnamese university students consider career advancement and financial gains as the most important

factors in career decisions. Also, unlike most American students, many Vietnamese students say they

want to work in a foreign private company.

Both surveys reflect increasing interest in CSR among business students. The fact that CSR is already a

major part of US business curriculums may indicate that the interest in CSR in Vietnam is only just

beginning and may continue to grow as more CSR content is added to their courses.

VII. Overall Conclusions

According to the survey data, it seems that students in business-related faculties at leading Vietnamese

universities are not very familiar with the CSR concept. In fact, about half of the respondents say they

have never heard of CSR. This is not surprising and is similar to the level of awareness shown in the

survey of Romanian business students cited earlier in this report. Although there are several courses that

include CSR content offered by the surveyed universities, very few of the students have taken such

courses. Also, they tend to be unaware or uncertain of university activities related to CSR. However, both

graduate and undergraduate students would like to see more CSR activities at their universities.

Despite knowing little about CSR, most students indicate they want to learn more about CSR and suggest

that CSR should be integrated into the required curriculum. CSR courses the students consider most

important include branding/marketing CSR, strategic CSR and finance and CSR. Many of them believe

that CSR is a crucial part of the role of business in society.

Some students appear to think that Vietnamese businesses are not currently working towards the

betterment of society. However, most of them believe that business professionals should take into account

social and environmental impacts when making business decisions because, even though it does not

always lead to corporate financial profits, CSR is the right thing to do.

12

Net Impact and the Aspen Institute. ―New Leaders, New Perspectives: A Survey of MBA Student Opinions

on the Relationship Between Business and Social and Environmental Issues‖ 13

Ibid.

Students’ Survey

P a g e | 107

In contrast to their positive attitudes towards the relationship between social responsibility and business,

the respondents say they themselves hesitate to prioritize CSR in their career decision making. The

students, especially those at the undergraduate level, say they are more concerned with professional

advancement and financial gain.

It may be concluded from the survey data that although Vietnamese university students have positive

attitudes towards CSR and expect to see more concrete development of CSR in Vietnamese businesses,

they still focus on careers that promise rapid advancement, and financial gain, regardless of CSR. This

may reflect their financial uncertainties at this point in their lives, because most indicate they will pay

more attention to socially responsible employment later in their careers when they are more secure.

For universities developing CSR activities, courses and materials, the survey responses indicate that

courses that appear to be purely CSR may not draw as much interest as those that are seen to include

practical business management tools valued by employers. The data also indicates that universities with

CSR offerings need to take steps to prove to students that CSR knowledge and skills are in demand by

employers and can lead to career advancement.

Consumer Behaviors

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Abstract

This paper examines Vietnamese consumers‘ attitudes and behaviors towards corporate social

responsibility. Questionnaires were distributed to 500 respondents between the ages of 20 and 60 years

old living in Ho Chi Minh City and Hanoi. The results show that Vietnamese consumers understand the

basic concept of CSR, and rate environmental issues, such as environmentally friendly manufacturing and

pollution reduction, as the most significant aspect of CSR. Most respondents have positive attitudes

towards socially responsible consumption, saying they would prefer to buy from socially responsible

companies – sometimes even with a higher price – if they knew the product or the company producing it

provided benefits to society and the environment. Yet there is an inconsistency between the attitudes of

respondents and their actual consumption behavior. Respondents reported that their decision to buy a

product is based primarily on price and quality, not on the product‘s or company‘s social responsibility.

However, some respondents claim that they make decisions based on price and quality because they are

unable to identify which companies have CSR initiatives. This inability to differentiate companies with

CSR from those without appears due to companies‘ difficulties in communicating CSR credibly and

effectively.

I. Introduction

Corporate Social Responsibility (CSR) is growing in importance. But why? For decades, scholars have

tried to explain the correlation between CSR and profit maximization—to define what it means for a

company to be socially responsible. According to Adam Smith, corporations, in the pursuit of profit, will

produce the greatest social good because of ‗the invisible hand of the marketplace.‘ Many contemporary

thinkers, however, see limitations to Adam Smith‘s invisible hand concept; arguing that market forces

often fail to generate the greatest social good due to consumers‘ lack of information and imperfect

competition.1 However, the pressure of consumers and their values can lead companies to adopt CSR, as

more consumers look for ethically produced products and services, finding socially responsible

companies more attractive. This is especially true for those consumers who are better informed about both

socially responsible issues as well as the social responsibility of companies.2 Market forces, especially

consumer demand, have encouraged the development of socially responsible companies and the belief

that CSR has become increasingly important for today‘s businesses.

1 Mohr, Lois A. and Webb, Deborah J., 2001. Do consumers expect companies to be socially responsible? The impact of Corporate Social Responsibility on buying

behavior. The Journal of Consumer Affairs, 35(1), 45-72.

2 Ibid

Consumer Behaviors and Attitudes towards

Corporate Social Responsibility

Consumer Behaviors

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Although CSR is a broad concept, it is based on the idea of corporations going beyond maximizing

profits, especially short-term profits, and focusing on the social and environmental as well as financial

dimensions of their decisions. This approach is known as the triple bottom line and calls for balance

among economic, environmental and societal factors in order for businesses to grow sustainably.

However, CSR cannot guarantee profitability. The financial benefits of CSR depend on the nature of an

enterprise and the CSR measures it undertakes. One advantage of CSR is improved brand recognition and

reputation, as stakeholders and consumers become more socially conscious and more attuned to the CSR

of particular companies. Companies that perform well in CSR benefit from this advantage. Those that fail

in CSR must deal with damage to their brand image and may suffer a decline in consumer trust, which

can ultimately affect the company‘s profits and survival.

According to some scholars, a crisis is needed to attract business attention to CSR.3 However, as a result

of globalization and the interconnectedness of global information, businesses can no longer cling to the

traditional view that it is acceptable to maximize short-term profits without concern for the consequences

on the environment and society; they must now also be socially responsible to their stakeholders.

Companies focused solely on creating wealth, while simultaneously consuming and contaminating

resources, may lose customers and their competitiveness in the marketplace. Consumers as well as

companies have evolved in light of CSR. Recent consumer theory claims that many people now adopt

Socially Responsible Consumer Behavior (SRCB), whereby consumers care about ethical products and

business processes. Such consumers also use their purchasing power to pressure corporate commitment to

CSR by purchasing responsible products, sometimes paying more to do so, and boycotting socially and

environmentally irresponsible products.4 Scholars see this as a global trend toward socially responsible

consumerism.5

Several factors affect socially responsible consumers and their behaviors These include the quality of

CSR reporting, which depends on the tools and communication channels used, the level of consumer

education, which affects awareness of CSR; and consumers‘ perceptions and expectations of businesses

and CSR practices, which define their demands and pressures on corporations. This research examines

consumers‘ behaviors and attitudes towards the CSR of business organizations in Vietnam. The survey

explores whether Vietnamese consumers consider business CSR issues before making purchasing

decisions, and investigates the rationale behind those decisions. In addition, the study identifies

Vietnamese consumers‘ awareness of CSR as well as their expectations of business organizations.

This paper includes a CSR literature review, the project‘s conceptual framework, the research methods, a

presentation and discussion of findings, and overall conclusions drawn from the research.

3 United Nations ESCAP, 2009. Creating business and social value: the Asian way to integrate CSR into

business strategies. United Nations Publication.

4 Carter, Robert E., 2009. Will consumers pay a premium for ethical information? Social Responsible Journal, 5 (4).

5 Ferreira, Daniela A., Avila, Marcos G., and De Raria, Marina D., 2010. Corporate social responsibility and

consumers‘ perception of price. Social Responsible Journal, 6 (2).

Consumer Behaviors

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Corporate social responsibility

As mentioned above, the basic concept of CSR is that corporations have responsibilities to go beyond the

traditional business objective of maximizing short-term profits and protect and nurture society and the

environment. However, the extent to which corporations must implement CSR in order to be considered

socially responsible is controversial, as there is no consistent definition of CSR and no accepted way to

measure it. Numerous studies attempt to define ‗corporate responsibility‘ from various perspectives, with

descriptions ranging from ‗corporate philanthropy‘ to ‗business ethics‘.

Archie Carroll breaks corporate social responsibility down into four components: economic, legal, ethical

and philanthropic responsibilities.6 Carroll describes economic responsibility as the expectation that

corporations will maximize profits for shareholders and legal responsibility as the requirement for

corporations to obey laws and regulations. Ethical responsibility means businesses must do what is

expected morally and ethically. Philanthropic responsibility means businesses should be charitable

towards society.7

Influenced by Carroll‘s pyramid of corporate social responsibility, Cochius also divides CSR into four

categories: economic responsibility, legal responsibility, ethical responsibility and discretionary

responsibility. Legal responsibility includes abiding by consumer, product, environmental and

employment laws while also adhering to laws and regulations governing competition in the marketplace.

According to Cochius, laws are important but often inadequate, since they cannot possibly address all

issues confronting corporations.8

The UN Global Compact defines companies with strong corporate social responsibility as those that

―embrace, support and enact, within their sphere of influence, a set of core values in the areas of human

rights, labor standards, the environment and anti-corruption.‖9 These core values are known as the ‗Ten

Principles‘. The European Commission defines CSR as ―a concept whereby companies integrate social

and environmental concerns in their business operations and in their interaction with their stakeholders on

a voluntary basis.‖10

According to K.I.Asia‘s definition, "CSR is a company‘s commitment to and implementation of strategies

that create sustainable economic, social, and environmental value for shareholders and other

stakeholders."11

The institute also proposed the five levels of CSR, called the CSR tree. The levels include

(1) meeting government regulations, (2) philanthropy, (3) community support, (4) strategic CSR and (5)

6 Carroll, A., 1991. The pyramid of corporate social responsibility: towards the moral management of

organizational stakeholders. Business Horizon, 39-47.

7 Ibid.

8 Cochius, Timo, 2006. Corporate Social Responsibility in Dutch SME: Motivation and CSR Stakeholder.

Maastricht University, Netherlands.

9 UN Global Compact, The Ten Principles. Retrieved from

http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html.

10 Commission of the European Communities, http://eur-lex.europa.eu/LexUriServ/LexUriServ.

do?uri=COM:200 6:0136:FIN:en:PDF, accessed on 14 July 2010.

11 Kenan Institute Asia, 2010. Strategic CSR: from talk to action. Presentation on October 15, 2010.

Consumer Behaviors

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sustainable enterprise. The definition of CSR in this research paper is based on K.I.Asia‘s definition and

the five levels of CSR.

Stakeholder theory

Many scholars point to stakeholder theory as an influencing factor in corporate decisions and motivation

to invest in CSR.12

Stakeholder theory says an organization‘s survival and success correlates strongly with

its ability to align its objectives with that of its various stakeholders. By satisfying stakeholder demands,

corporations develop trust and loyalty among those stakeholders. More and more corporations promote

socially responsible actions and policies to effectively respond to stakeholder demands.13

Stakeholders consist of shareholders and investors, employees, customers, suppliers, governmental

organizations, trade associations, environmental groups, and members of the community where a

company operates. This paper focuses on consumers, some of the most influential stakeholders and the

key determinants in the correlation between CSR and profitability.

Consumer behavior towards CSR

Scholars and corporate researchers alike are interested in consumer behavior related to CSR. Many

research papers suggest that there is a positive relationship between corporate CSR activities and

consumers‘ attitudes towards the company and its products.14

The results of studies show that consumer

attitudes and purchase intentions are influenced by CSR initiatives – if consumers are aware of them.15

CSR is effective in eliciting favorable consumer attitudes and behaviors. Once consumers are aware of a

company‘s CSR initiatives, their loyalty and attraction to the company will gradually increase.16

In the Mohr, Webb and Harris article, the findings of a survey on the impact of CSR knowledge on

consumers‘ attitudes and purchase decisions indicate a significant relationship between CSR and consumer

responses.17

Sen and Bhattachary conducted research on consumers‘ reactions to CSR that also showed

that CSR directly affects consumers‘ intentions to purchase corporate products.18

Research conducted by

the University of Maryland found that approximately 75% of consumers are willing to pay an additional $5

on a $20 item if they know that it was not manufactured in a sweatshop.19

Surveys on CSR-consumer

12 Argandona, A., 1998. The stakeholder theory and the common good. Journal of Business Ethics, 17(9/10).

13 Pirsch, J., Gupta, S. and Grau, S., 2007. A framework for understanding corporate social responsibility programs as

a continuum: An exploratory study. Journal of Business Ethics, 70, 125-140.

14 Ellen, P., Webb, Deborah J., and Mohr, Lois A., 2000. Building corporate associations: Consumer

attributions for corporate social responsibility programs. Journal of the Academy of Marketing Science, 34 (2).

15 Pomering, Alan and Dolnicar. Assessing the prerequisite of successful CSR implementation: Are consumers aware

of CSR initiatives? Journal of Business Ethics, 85, 285-301.

16 Marin, L., Ruiz, S. and Rubio, A. The role of identity salience in the effects of corporate social responsibility on

consumer behavior. Journal of Business Ethics. 84, 65-78.

17 Mohr, Louis A., Webb, Deborah J. and Harris, Katherine E., 2001. Do consumers expect companies to be

socially responsible? The impact of corporate social responsibility on buying behavior. The Journal of

Consumer Affairs. 35(1) 45-72.

18 Sen, Sankar and Bhattacharya, C. B., 2001. Does doing good always lead to doing better? Consumer reactions

to corporate social responsibility. Journal of Marketing Research. 34, 225-243.

19 University of Maryland, 2000. American on Globalization: A Study of Public Attitudes.

Consumer Behaviors

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relationships show that French and German consumers appear more willing to actively support responsible

businesses than U.S. consumers.20

According to a Chen and Kong article on Chinese consumer perceptions of socially responsible

consumption, CSR performance affects Asian consumers‘ purchase intentions as well.21

In Thailand,

research conducted by K.I.Asia and Dhurakijpundit University in 2005 indicated that consumers in

Bangkok had the knowledge and understanding concerning the corporation social responsibility of the

business enterprises in Thailand at the high level. About 50 percent of the people in Bangkok bought the

products / services of the business organizations with corporate social responsibility. They are concerned

about company‘s CSR initiatives although price and quality of the products are more influential in their

purchase decisions.22

However, some research on similar topics comes up with different findings and conclusions. A study on

consumer purchase intentions in Pakistan showed that there is no relationship between the awareness of a

firm‘s CSR activities and a consumer‘s purchase decision, although there is a slight relationship between

service quality and consumer satisfaction.23

Socially responsible consumer behavior

Socially Responsible Consumer Behavior (SRCB) refers to the ―acquisition, usage, and disposition of

products [based] on a desire to minimize or eliminate any harmful effects and maximize the long-run

beneficial impact on society‖.24

In other words, SRCB reflects consumers‘ choices to buy or not to buy

products based on certain values. For example, the SRCB of green consumption implies consumers make

purchasing decisions based on environmental values.

SRCB incorporates non-economic criteria into purchase intentions and decisions, such as decisions to

sacrifice lower price for higher quality. In reference to SRCB, Paek and Nelson coined the lexicon

‗buycotting,‘ a play on boycotting. The research suggests that while boycotting is intended to punish

unethical companies, buycotting is an activity intended to reward socially responsible companies.25

Moreover, Shanka and Gopalan‘s exploratory research on students‘ perceptions towards SRCB indicates

20 Maignan, Isabelle, 2001. Consumers‘ perceptions of corporate social responsibilities: A cross-cultural

comparison. Journal of Business Ethics. 30, 57-72.

21 Chen, Hua and Kong, Yusheng, 2009. Chinese consumer perceptions of socially responsible consumption.

Social Responsibility Journal. 5(2), 144-151.

22 Kenan Institute Asia and Dhurakijpundit University, 2005. A Survey on Consumer‟s Behavior and Attitude towards Corporate Social Responsibility of business organizations in Thailand.

23 Ali, Imran, Ur Rehman, Kashif and et al., 2010. Effects of corporate social responsibility on consumer

retention in cellular industry of Pakistan. African Journal of Business Management. 4(4), 475-485.

24 Mohr, Louis A., Webb, Deborah J. and Harris, Katherine E., 2001. Do consumers expect companies to be

socially responsible? The impact of corporate social responsibility on buying behavior. The Journal of

Consumer Affairs. 35(1) 45-72.

25 Paek, H. and Nelson, M., 2007. Socially Responsible Consumer Behavior and Implications for Advertisers.

Paper presented at the annual meeting of the Association for Education in Journalism and Mass

Communication, The Renaissance, Washington.

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the tendency to become more conscious about SRCB depends on societal aspects as age increases.26

SRCB is therefore dependent to societal and personal factors.

Apart from studies on rationales for SRCB, there is at least one research paper investigating the lack of SRCB.

Mohr, Webb and Harris explained two major factors affecting the lack of SRCB: 1) consumers self-interest

influencing their criteria for buying decisions, which include price, quality and convenience, and 2)

consumers‘ low CSR awareness and degree of difficulty in obtaining CSR information on companies.27

The concept of SRCB illustrates the correlation between consumers‘ purchasing decisions and the

expectations they have towards corporations as well as the influence of their personal values on their

choices. It suggests that sometimes consumers, especially socially responsible consumers,28

have particular

non-economic criteria that affect their decisions to pay more for environmentally friendly or ethically made

products. SRCB is driven by motivation to support or reward companies practicing social responsibility.29

CSR in Vietnam

The state of CSR in Vietnam is intimately linked to doi moi (renovation) and the effects of globalization.

In December 1986, Vietnam‘s Community Party adopted a ‗market-oriented socialist economy under

state guidance.‘ Since then, the Vietnamese state and society have undergone dramatic transformations.30

Vietnam has been transformed from a state-led economy to a more market-oriented one. There were

challenges to state-owned enterprises, including foreign investment and donor pressure. Joining the World

Trade Organization (WTO) continued to drive the shift from state to market orientation. With this shift,

CSR, an initiative of the market, comes to the fore. CSR plays a major role in the environmental and

social sustainability of the country. The forces of doi moi and globalization brought the pressure of

international codes of compliance to Vietnamese firms. Not only did citizens become more aware of the

importance of social responsibility, but the legal code of the country now had greater need to adapt to

meet and enforce international standards. Although Vietnam did not adopt an explicit CSR policy, the

government began to address some CSR-related issues within the sustainability strategy called Vietnam

Agenda 21.31

This document, officially signed by the prime minister in 2004, provides a strategy for

sustainable development in Vietnam. It puts people at the center of development, but says that

environmental protection is inseparable from benefits for people. It aims at a balance between the

interests of present and future generations so that actions taken now do not imperil the well-being of the

26 Shanka, Tekle and Gopalan, Gabriel, 2005. Socially Responsible Consumer Behavior – Higher Education Students‟ Perceptions. Presented at ANZMAC 2005 conference: corporate responsibility.

27 Mohr, Lois A. and Webb, Deborah J., 2001. Do consumers expect companies to be socially responsible?

The impact of Corporate Social Responsibility on buying behavior. The Journal of Consumer Affairs, 35(1),

45-72.

28 A socially responsible consumer refers to ―a consumer taking into account the public consequences of

his/her private consumption or attempting to use his/her purchasing power to bring about social changes‖

quoted from Webster, Frederick E., 1975. Determining the characteristics of the socially responsible consumer.

Journal of Consumer Research, 2, 188-196.

29 Dean, Dwane H., 2004. Consumer perception of corporate donations: Effects of company reputation for

social responsibility and type of donation. Journal of Advertising, 32, 91-102.

30 Beresford, Melanie, 2008. Doi Moi in review: The challenges of building market socialism in Vietnam.

Journal of Contemporary Asia. 38(2), 221-243.

31 Tai, Nguyen Dinh, 2009. Country Study on „Corporate Social Responsibility in Vietnam.‟ OECD Regional

Conference on Corporate Responsibility, November 2-3, 2009, Bangkok, Thailand.

Consumer Behaviors

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future. The strategy calls for training, workshops and media outreach to improve understanding of

sustainable development and the management capability to achieve it. Agenda 21 allocates budget for

these activities and calls for efforts to strengthen international cooperation on sustainable development.

Consumers in Vietnam

Customers in Vietnam often have to suffer from unsafe, potentially life-threatening, poor-quality products

that break down just after purchase. Consumer rights in Vietnam have been seriously violated in various

ways. A number of high-profile cases have recently come to light in which consumers have bought fake

and/or poor quality goods ranging from vegetables sprayed with pesticides, cosmetics containing toxic

chemicals and fake medicines. The Viet Nam Standards and Consumers Association (Vinastas) receives

1,000 complaints and petitions per year, while the Consumer Protection Unit has received approximately

100 complaints in the last five years. 32

However, no penalties or sanctions have been imposed on

enterprises and producers that break the law. Still, due to the rise of CSR in Vietnam and the growing

awareness of Vietnamese consumers, people are more and more aware of consumer rights and the

responsibilities of business organizations. The consumer protection in Vietnam is a growing political and

business agenda.33

On 17 November 2010, the Vietnam Parliament adopted Law no. 59/2010/QH12 on Protection of

Consumer‘s Rights, which will become effective as of 1 July 2011. This new law replaces the 1999

Ordinance No. 13/1999/PL-UBTVQH10 on Protection of Consumer‘s Rights. The new law provides for

particular legal stipulations on the rights and obligations of consumers; the responsibilities of traders to

consumers and the responsibilities of social organizations in protection of the rights of consumers; disputes

and settlement of disputes between consumers and traders; and the responsibilities of the State to protect the

right of consumers. The new law will be implemented under official guidelines that are not yet available.34

While existing literature supports the idea that companies investing in CSR tend to achieve positive

benefits from stakeholders, this paper suggests how businesses in Vietnam can maximize consumer

stakeholder response to CSR programs. By carefully identifying stakeholder expectations and

communication channels for CSR initiatives, Vietnamese companies will be better able to affect

stakeholder purchase intentions and decisions. In other words, they can make good use of CSR to lead to

long term profitability. This research paper will provide guidelines for CSR managers on how to

effectively approach consumers and contribute to academicians and practitioners.

32

Tai, Nguyen Dinh. Consumer Protection in Vietnam. OECD Conference on Consumer Empowerment and

Responsibility Business Conduct. 33

VOV News, 2010. Vietnam Consumers Need Legal Protections. October 14, 2010. 34

ALB News, 2010. Vietnam: New Law on Protection of Consumer‟s Rights. 10 December 2010.

Consumer Behaviors

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III. Conceptual Framework

This research identified several variables in determining consumer behavior towards CSR, which include 1)

independent variables: level of education, location, access to information and CSR performance of

companies 2) perceptual variables: awareness level of CSR and perception and attitudes towards CSR and 3)

dependent variable: consumer behavior. The independent variables can be categorized into two groups:

internal factors, or consumer characteristics, and external factors, or CSR performance of companies. These

independent variables influence the perceptual variables of consumer awareness of CSR and their attitudes

towards CSR. These, in turn, affect consumer behaviors and purchase decisions [see figure 1].

IV. Methodology

Objectives of the Study

This study supports responsible management education, or CSR education, in Vietnam. Information on

consumer behaviors and attitudes towards the CSR of business organizations in Vietnam is to be included

in responsible management course curriculums and content for Vietnamese institutions. This study can

also be used as a reference for future research.

The objective of the study was to gain insights into Vietnamese consumers‘ behaviors and attitudes

concerning their:

1) understanding and awareness of CSR

2) perceptions and attitudes towards socially responsible businesses/products

3) behaviors regarding socially responsible consumption

4) expectations of corporate CSR initiatives

Research questions

Figure 1: A conceptual framework of consumers’ attitudes and behaviors towards CSR

Education level

Access to CSR

information

CSR performance of

companies

Perception and

attitudes towards

socially responsible

company and its

products Location

Consumer behavior

Awareness level of

CSR

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In order to examine consumer behaviors and attitudes towards CSR in Vietnam, a set of research questions

was developed that can be divided into four main points:

1) Consumer‟s general awareness of CSR – asking to what extent Vietnamese consumers

understand CSR. Questions are designed to generalize the concept of CSR enough to identify

if consumers are knowledgeable on the concept despite being unfamiliar with related jargon.

2) Consumer‟s response to CSR-concerned businesses and products – questioning what

consumer reactions towards socially responsible businesses are, compared to ones with little

to no CSR. Are consumers more attracted to companies and products that incorporate CSR?

Are consumers more likely to promote these companies and products to others?

3) Consumer‟s tendency towards socially responsible consumption – investigating to what

extent consumers consider socially responsible consumption. What is their purchase intention

regarding CSR?

4) Consumer‟s expectations towards a firm‟s CSR initiatives – exploring to what extent

consumers expect a firm to be socially responsible.

Population

The population for this research was Vietnamese consumers in Ho Chi Minh City and Hanoi. The target

population was approximately 500 respondents: 250 from Ho Chi Minh City and 250 from Hanoi. The

age range was between 20 - 60 years old. The preferred largely middle class respondents were individuals

with moderate buying capability. As individuals with higher purchasing power are more densely located

in Ho Chi Minh City and Hanoi, the research focused on these areas.

Data Collection

The survey was randomly distributed to individual Vietnamese consumers shopping and/or living in Ho Chi

Minh City and Hanoi, Vietnam. The survey was carried out between October and November 2010. Two

hundred and fifty completed questionnaires were collected from each of the two targeted provinces. The data

obtained was analyzed by the SPSS program where cross tabulation of the descriptive statistics was used.

Instrumentation

A questionnaire survey was distributed to collect data from consumers in Vietnam. The questionnaire

consisted of four major sections. Section one focused on general demographic information of the

respondents, which included gender, age, level of education and monthly income, and obtained their

understanding towards the concept of CSR. Section two explored consumer behavior towards responsible

businesses and products. Section three examined consumer attitudes towards corporate social

responsibility and section four focused on consumer expectations of a firm‘s CSR initiatives. From the

later part of the second section through the fourth section, the questionnaire was designed using an

adaptation of the Likert scale ratings. The scale was reduced from five points to four points, with ‗1‘ for

disagree and ‗4‘ for strongly agree.35

35

The reason for the adjustment was because the questionnaires were distributed in the shopping areas.

Therefore, the traditional five point Likert scale ranging would cause more time for the respondents answering

the questionnaire.

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V. Findings

Respondent Characteristics

The survey respondents are comprised of 500 Vietnamese consumers, including 250 consumers from Ho

Chi Minh City and 250 consumers from Hanoi. This section presents the demographic background of

survey respondents.

According table 1, females represent 52% of the respondents and males represent 48%. Age range was

divided into five categories, with most of the respondents 21 to 30 years old (40%) and below 21 years

old (39%). Since the majority of the respondents were in the so-called young adults, 70% were single.

Concerning education levels, the highest percentage of the respondents (56%) obtained lower bachelor

degree followed by bachelor degree.

Table 1: Summary of respondent characteristics

Gender %

Male 48.4

Female 51.6

Age

Below 21 38.6

21-30 40.2

31-40 11.0

41-50 6.2

Above 51 4.0

Marital status

Single 69.9

Married 26.5

Other 3.6

Highest education

Lower than bachelor degree 55.8

Bachelor degree 29.7

Postgraduate 14.5

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Figure 2 shows that 44% of respondents were students. Respondents with paid occupations were mostly

corporate employees (25%) and business persons (15%). Only 32 out of the 500 respondents (only 7%)

earned more than 500,000 VND a month [see figure 3]. Having an even spread of respondents with

diversified average incomes is beneficial for this survey, as generalizations can be drawn more accurately

about consumers with different purchasing capabilities.

Figure 2: Distribution of Respondents by Occupation

Figure 3: Distribution of Respondents by Average income

9

16

74

29

13

125

222

12

Farmer

Wage laborer

Trader/business person

State official

State employee

Corporate employee

Student

Other

Lower than

VND

300,000

VND

300,000 -

VND

400,000

VND

400,000 -

VND

500,000

More than

VND

500,000

Series1 166 157 145 32

0

50

100

150

200

(N = 500)

Consumer Behaviors

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Consumer general awareness of CSR

This section presents findings on respondents‘ general awareness of CSR. As there is no straightforward

definition of CSR, in order to simplify the concept for respondents unfamiliar with technical terms and to

avoid confusing jargons, respondents were asked to define CSR by selecting activities they believed

should be labeled as CSR.

Table 2: What is CSR?

Items Responses Response

percent

Company concern with its business impact on

society and the environment 294 59.2%

Company compliance with laws and regulations 219 44.1%

Company donations of money/equipment to the local

community 100 20.1%

Don‘t know 66 13.3%

Other 24 4.8%

*Respondents could choose multiple answers.

As seen above, the majority of respondents (59%) defined CSR as „Company concern with its business

impact on society and the environment‟ followed by „Company compliance with laws and regulations‟

(44%). Less than one third (100 respondents) define CSR as corporate donations while 66 surveyed

consumers do not know what CSR is.

Additionally, when asked to identify CSR activities, almost all of the surveyed consumers (92%) regard

creating socially and environmentally responsible products and services as a CSR activity, whereas 400

respondents consider environmental improvement or reducing pollution a CSR activity. These top two

activities, chosen by more than 90% of the respondents, reflect that Vietnamese consumers consider

business impacts on the environment and pollution the most important aspects of CSR. Stakeholder

engagement however ranks the lowest indicating that the business organizations should consider socially

and environmentally responsible products or services first rather than engaging stakeholders [see table 3].

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Table 3: Activities consumers consider as CSR

Rank Items Responses Response

percent

1 Socially and environmentally responsible product and service 414 92.2%

2 Environmental improvement or reducing pollution 400 90.1%

3 Good labor practice 369 85.2%

4 Corporate philanthropy or charitable giving 340 81.0%

5 Community investment and development 327 77.7%

6 Human rights 307 75.8%

7 Good corporate governance 259 60.8%

8 Supply chain responsibility 207 53.2%

9 Stakeholder engagement 189 48.5%


These findings indicate that majority of the respondents seem to have good grasp of CSR. According to

Vietnamese consumers‘ definition, CSR refers to corporate responsibility requiring business organization

with CSR to be responsible for its business impacts on society and environment, and to be concerned

about environmental improvement and pollution reduction. In addition to societal and environmental

responsibility, CSR includes responsibility towards employees, which means companies with CSR must

operate with good labor practices.

When asked whether companies provide enough information to the public about their socially responsible

activities, there was no definitive response. Fifty-nine percent of the respondents are unsatisfied with

information they receive from companies, whereas 41% think otherwise [see figure 4].

Figure 4: Consumers‟ opinion about company CSR activities

Yes

41%No

59%

Do you think companies provide enough information to the public about

their socially responsible activities?

Consumer Behaviors

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Respondents were asked to specify the channels through which they receive information about CSR

initiatives. The best information channels for conveying CSR activities are television (61%), the Internet

(56%) and newspapers (54%) [see table 4]. These results reinforce the efficiency of social media.

Compared to television or newspapers, communicating via the Internet costs much less. Company CSR

reports and business newsletters are not as effective, as only 7% of the surveyed consumers have ever

heard of company CSR activities via these channels. Yet, referring to the research entitled ‗The state of

CSR in Vietnam‘ conducted by K.I.Asia, it shows that almost half of companies in Vietnam communicate

their CSR and sustainability performance through reporting.36

However, this finding shows that CSR

reports are ineffective in communicating with consumers. Vietnamese consumers‘ dissatisfaction with

current CSR communication (59% expect more CSR information) reflects that companies are not using

the right tools for effective communication with their customers.

Table 4: Channels through which consumers receive information about CSR activities

Items Responses Response

percent

Television 303 60.8%

Internet 278 55.8%

Newspapers 271 54.4%

Advertisement/brochure 166 33.3%

Radio 74 14.9%

CSR report of company 35 7.0%

Business newsletters 35 7.0%

Other 11 2.2%


In conclusion, most Vietnamese consumers are able to explain the general concept of CSR and understand

its links with socially, environmentally and legally responsible corporate behavior. The key channels

delivering CSR information to consumers are television, the Internet and newspapers, although it is

unclear how effective these channels are overall.

36

Kenan Institute Asia, 2010. The State of CSR in Vietnam: The current state of corporate social responsibility

in Vietnamese companies, as seen by members of VCCI and GCNV.

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Consumers‘ attitudes towards socially responsible businesses and products

This section shows the results of consumers‘ attitudes towards socially responsible businesses and

products. This part of the questionnaire was designed to examine two different dimensions of consumers‘

attitudes: personal perception of socially responsible consumption, and perception of a company‘s CSR

initiatives. Surveyed consumers were asked to read the statement and rate their level of agreement, from

disagree (1) to strongly agree (4). The given statements were designed to examine respondents‘

perceptions and attitudes regarding socially responsible businesses and their products. The summary of

results on consumers‘ attitudes is below.

Table 5: Summary of consumers‟ attitudes towards socially responsible business and its products

Statement

Agreement level (%)

Strongly

agree Agree Neutral Disagree

1. The socially responsible performance of a company

affects my purchasing intention/decision. 17.6 44.0 30.8 7.6

2. Consumers should support goods and products of a

company that benefits society. 23.2 59.4 15.0 2.4

3. Consumers should avoid buying products made by

companies with reputations for corruption and bribery. 18.2 40.4 29.2 12.2

4. Although buying products from a socially responsible

company sometimes costs more,

I am willing to pay because of its additional value to

society.

13.0 45.4 32.2 9.4

5. I feel proud when I purchase things from a socially

responsible company. 21.0 49.0 26.0 4.0

6. Companies implement social and environmental

development projects because the companies cause

damage or pollution to the environment and society.

20.2 30.4 29.8 19.6

7. Corporations promote a good company image by

implementing socially responsible activities. 30.0 48.6 16.4 5.0

8. Companies promote their socially responsible activities

only for marketing purposes. 19.0 30.2 26.8 24.0

9. Corporate socially responsible behavior affects my

attraction to a company. 15.8 42.2 34.0 8.0

10. Good social and environmental responsibility by

a company leads to consumer loyalty. 15.8 47.4 27.8 9.0

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More than half of the respondents think that ‗the socially responsible performance of a company affects

their purchasing intention/decision.‟ Still, one third of surveyed consumers are not certain about the

influence of CSR performance on their consumption [see figure 5].

Figure 5: Opinion on the effect of CSR initiatives on consumers‟ purchasing decisions

Figure 6: Opinion on consumers‟ role in supporting companies with CSR

Figure 6 above shows that over three-fourths of the respondents agree that consumers should be

supportive of the goods and products from a company that benefits society. Only 2% of the respondents

protest the idea.

88

220

154

38

Strongly agree

Agree

Neutral

Disagree

The socially responsible performance of a company affects my purchasing

intention/decision.

116

297

75

12

Strongly agree Agree Neutral Disagree

Consumers should support goods and products of a company that benefits

society.

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Moreover, when asked about their purchasing intentions, 58% of the surveyed consumers think that

consumers should be willing to pay a higher price for the products with additional value to the society

[see figure 7]. On the other hand, the relationship between support of CSR products and purchasing

decisions of Vietnamese consumers is not a direct correlation, since some 10% of the respondents (47

counts) think that consumers should support products from a socially responsible company, but do not

think the products should cost them more.

Figure 7: Opinion on socially responsible consumption

While 72% of the respondents think that consumers should be pro-active and buy from companies

benefiting society, the findings also show that over half of the respondents suggest that consumers should

avoid buying products made by company with a reputation for corruption and bribery [see figure 8].


65

227

161

47


Although buying products from a socially responsible company sometimes

costs more, I am willing to pay because of its additional value to society.

91

202

146

61


Consumers should avoid buying products made by companies with reputations

for corruption and bribery.

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The majority (350 respondents) explains the reason behind supporting and buying socially responsible

products, saying it makes the buyers feel proud [see figure 9].


In addition to attitudes towards socially responsible products, the survey result shows that 393

respondents (78%) think that corporations can build a good company image by implementing socially

responsible activities [see figure 10].


105

245

130

20

Strongly agree

Agree

Neutral

Disagree

I feel proud when I purchase things from a socially responsible company.

150

243

82

25


Corporations promote a good company image by implementing socially

responsible activities.

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Fifty-eight percent of the respondents believe that corporate socially responsible behavior affects

consumer attraction and loyalty to the company, while one-third do not think CSR initiatives play any

roles creating company attractiveness [see figure 11].

Figure 11: Opinion on CSR and consumers‟ attraction and loyalty to the company

However, when asked for their opinions on the rationale behind CSR initiatives, the respondents are

uncertain whether companies promote their CSR activities in order to leverage the environmental

damages they cause or for marketing purposes, as seen in figure 12.

Figure 12: Opinion on company‟s rationale behind CSR

Strongly

agree

Agree Neutral Disagree

16%

42%

34%

8%

16%

47%

28%

9%

Corporate socially responsible behavior affects my attraction to a

company.

Good social and environmental responsibility by a company leads

to consumer loyalty.

20%

30% 30%

20%19%

30%27%

24%


Companies implement social and environmental development

projects because the companies cause damage or pollution to the

environment and society.Companies promote their socially responsible activities only for

marketing purposes.

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In summary, most Vietnamese consumers have positive attitudes and purchasing intentions towards socially

responsible products and businesses. They believe that consumers should support products or companies

that provide some benefits to society and avoid buying from corporations with a history of corruption and

bribery. In addition, the respondents think that sometimes consumers should be willing to pay a higher price

for products that add value to society, mainly because it makes them feel proud. The majority agrees that

CSR leads to a positive image for a company, which affects consumers‘ attraction and loyalty to socially

and environmentally responsible corporations. However, they are not quite sure whether companies

implement CSR activities only for marketing purposes or to their negative impact on the environment and

society.

Consumer behavior towards socially responsible businesses and products

This section demonstrates findings on Vietnamese consumer behavior towards socially and

environmentally responsible businesses and products, which can be divided into three key parts including

1) respondents‘ background on socially responsible consumption, 2) factors influencing their purchase

decisions and 3) their purchase intentions towards socially responsible consumption. The overall findings

can be seen in the summary table below.

Table 6: Summary of consumer behavior towards socially responsible businesses and products

Statement

Agreement level (%)

Strongly

agree Agree Neutral Disagree

1. I choose to buy from companies that regularly give

back to society rather than those that don‘t give

back.

21.8 43.3 28.1 6.8

2. I am willing to buy from a socially responsible

company although its products are more expensive. 11.8 47.2 31.0 10.0

3. I choose to buy from companies whose

manufacturing techniques are more environmental-

friendly.

27.0 55.4 16.4 1.2

4. I will not purchase products or services from

companies with a bad reputation

(e.g. violation of labor or animal rights, causes

pollution).

30.0 35.4 19.0 15.6

5. I will not buy products from companies with a

background of corruption and bribery. 22.6 31.0 27.8 18.6

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Regarding the respondents‘ background on socially responsible consumption, 64% of surveyed

consumers said they buy or consider buying products from a socially responsible company. Moreover, as

seen from the table below, it shows that Vietnamese consumers with a higher income tend to have more

experience buying from a socially responsible company. Almost 90% of people earning more than VND

500,000 a month buy from companies with CSR.

Table 7: Respondents‟ background on socially responsible consumption

Have you ever bought or

considered to buy

products from a socially

and environmentally

responsible company?

Income level

Total Lower than

VND 300,000

VND

300,000-

400,000

VND

400,000-

500,000

More than

VND 500,000

Yes 62.6% 60.5% 65.3% 87.5% 64.3%

No 37.4% 39.5% 34.7% 12.5% 35.7%

Total 100% (163) 100% (157) 100% (144) 100% (32) 100% (496)

More than half of those with no previous experience buying from a socially responsible company (99 out

of 177 respondents) say that they cannot identify which firms or products are socially responsible. Twenty

percent choose not to buy from a socially responsible company because of the higher price, while 19% do

not understand why it is important to buy from such a company [see figure 13]. The 20% not buying due

to price reflects that though the respondents have positive attitudes towards socially responsible

consumption, they are more concerned about the cost.

Figure 13: Reasons for not buying from a socially responsible company

36

34

99

12

It is expensive.

I do not know why it is important.

I cannot identify which firms or

products are socially responsible.

Other

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When asked to identify factors influencing their purchase decisions, surveyed Vietnamese consumers said they

consider better product quality (29%), lower price (27%) and famous brand (15%) as the most significant

factors influencing their purchase decision. On the other hand, a company‘s CSR activities are the least

influential factors on the respondents‘ decisions to buy a product [see figure 14].

Figure 14: Factors influencing consumers‟ purchase decision on a product or service

Ironically, even though the survey results show that a company‘s CSR activities play the least important

part in influencing consumers‘ purchasing decisions, 63% of the consumers said they pay attention to the

company‘s socially and environmentally responsible activities when deciding to buy goods, products or

services [see figure 15]. One likely explanation for this paradox is that Vietnamese consumers are unaware

of companies‘ CSR initiatives. Although most surveyed consumers intend to be supportive and do pay

attention to a company‘s CSR activities, they cannot identify which companies incorporate CSR. Thus,

CSR activities of companies end up as the least important factor influencing consumer purchase decisions.

This implies that CSR communication is a major issue in Vietnam.

Figure 15: Attention to company‟s socially and environmentally responsible activities

28.7%

26.7%

14.8%

13.4%

9.6%

5.4%

1.8%

Better quality

Low price

Famous brand

Good packaging

Good service

Company's CSR activities

Other

Factors influencing purchase decision

Yes

63%

No

37%

Do you pay attention to a company's socially and environmentally

responsible activities?

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Sixty-five percent of the respondents said they choose to buy from companies that regularly give

something back to society. More than half of the surveyed consumers insist that they are willing to buy

from a socially responsible company regardless of a higher price. Yet one third of the respondents are not

sure whether or not CSR matters in regard to their purchasing decisions and a minority refuses to buy

from and pay more to companies with CSR [see figure 16].

Figure 16: Consumer behavior regarding socially responsible consumption

The following part of the survey results indicate that there is another important factor influencing

Vietnamese consumer purchasing decisions – the manufacturing process. As seen from figure 17, more

than 82% of the respondents agree that they will choose to buy from companies whose manufacturing

techniques are more environmentally-friendly.


21.8%

43.3%

28.1%

6.8%11.8%

47.2%

31.0%

10.0%


Choose to buy from companies regularly giving back to society rather

than those that don‘t give back.

Willing to buy from a socially responsible company regardless the

higher price

27.0%

55.4%

16.4%

1.2%


Choose to buy from companies whose manufacturing techniques are more

environmental-friendly

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However, the respondents are split regarding boycotting behavior. Sixty-five percent of the surveyed

consumers choose not to buy from companies with a bad reputation i.e. violating of labor or animal rights

or causing pollution, while half of the respondents will not buy from companies with corruption or a

bribery background. Some respondents do not think these two characteristics affect their purchase decision

whereas a certain number are neutral. Considering the idea of boycotting among surveyed consumers,

company‘s bad reputation is slightly more influential than company‘s corruption and bribery background

as 46.4% of the respondents still find it acceptable to buy from companies with unethical practices [see

figure 18].


In addition, when asked whether or not they will suggest the purchase of products/goods from socially or

environmentally responsible companies to their family members or friends, 72% of the respondents agree

while less than one-third of the sample disagrees [see figure 19].

Figure 19: Suggest products/goods from companies with CSR to family or friends

30.0%

35.4%

19.0%

15.6%

22.6%

31.0%

27.8%

18.6%

Strongly agree

Agree

Neutral

Disagree

Choose not to buy from companies with corruption or bribery

background

Choose not to buy from companies with bad reputation

Yes

72%

No

28%

Do you suggest the purchase of products/goods from socially or

environmentally responsible companies to your family members or

your friends?

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To summarize, according to the survey results, 64% of Vietnamese consumers have ever bought or

considered buying products from socially responsible companies, while the rest argue that they have

never bought products from such companies due to the lack of information on CSR given by the firms.

Still, the most important factors influencing their purchase decisions are product quality, lower price and

the brand itself. More than half of the respondents choose to buy from companies that give back to

society, and they are willing to pay more for these companies‘ products. Moreover, the majority

emphasizes that they choose to buy from companies operating with environmentally-friendly

manufacturing. More surveyed consumers choose not to buy from companies with a bad reputation than

boycotting ones with a background of bribery.

Consumers‘ expectations on business CSR initiatives

This section presents survey findings on consumers‘ expectations of Vietnamese business organizations

in terms of socially responsible activities. The first part of the findings shows general expectations of

CSR and Vietnamese businesses while the later part presents consumers‘ expectations towards a

company‘s CSR initiatives.

The survey results show that while 58% of respondents expect ‗the government to promote CSR practices

in Vietnam by encouraging Vietnamese not to buy from companies with poor corporate governance,‟ 17%

think otherwise and a quarter shows no particular opinion [see figure 20].

Figure 20: Expectation on Vietnamese government role on encouraging CSR practices

The number of the respondents who strongly agree with the statement is very close to those claiming they

disagree. Combining the ‗disagree‘ respondents with ones saying they are neutral, approximately 42% of

the respondents indicate they do not want or do care for the government to intervene by encouraging

people to boycott certain companies.

19.2%

39.1%

24.6%

17.0%


The government should encourage people not to buy from companies with

poor corporate governance practices.

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The majority thinks that ‗Vietnamese business should put more emphasis on working towards the

betterment of the society‟ as shown in figure 21. In fact, one-third of the respondents insist that they

strongly expect a more intense role of corporations in societal development. The findings also show none

disagreeing with the statement, which highlights the strong expectation consumers have on business

organizations.

Figure 21: Consumer expectations of local businesses‟ role in relation to CSR

Moreover, 82% of surveyed consumers add that Vietnamese businesses should take into account social

and environmental impacts when making business decisions [see figure 22]. In other words, most

respondents expect more from local businesses in terms of both the betterment of the society and the

impacts caused by any business decisions.

Figure 22: Consumer expectations of local businesses‟ role in relation to CSR

30.7%

55.1%

14.0%

0.2%


Vietnamese businesses should put more emphasis on working towards the

betterment of society.

34.5%

47.2%

15.1%

3.2%


Vietnamese businesses should take into account social and environmental

impacts when making business decisions.

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According to figure 23, most respondents feel the need for Vietnamese companies to provide more

information on their CSR activities. Almost half of the sample agreed with this statement, and another

quarter strongly agreed with the idea. The survey results show that the majority of Vietnamese consumers

are unsatisfied with current practices on companies‘ CSR communications and expect more information

on CSR activities to be available. Only a small number of the respondents are neutral about the issue of

CSR communication.

Figure 23: Consumer expectation on CSR communication

The survey asked respondents to elaborate on their expectations of CSR initiatives by rating how

important they think certain CSR activities are for a company to implement. The options and responses

are below.

Table 8: Summary of consumer expectation on company‟s CSR initiatives

Rank of

importance

CSR activities that companies should be involved in %

1 Decreasing environmental impacts 72.9

2 Emphasizing consumer issues 62.6

3 Focusing on employee rights 58.7

4 Providing corporate philanthropy 52.5

5 Supporting education 51.6

6 Contributing to local development projects 50.9

7 Operating with fair practices 44.7


26.1%

49.7%

19.6%

4.6%

Strongly agree

Agree

Neutral

Disagree

Vietnamese companies should provide more information about their socially

responsible activities.

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According to the above table, consumers view environmental impacts (73%), consumer issues (63%) and

employee rights (59%) as the most important areas for companies. Other CSR activities such as corporate

philanthropy, education or local development projects are also rated as important. Fair practices including the

anti-corruption, fair trade and fair marketing are considered to be the least important issues. These findings

seem to be in line with the identification of CSR activities in section two showing that the majority of the

respondents find it is vital for business organizations to consider social and environmental impacts of business

decisions.

The way the respondents consider environmental impacts, consumer issues and employee rights most

significant aspects of CSR for companies is consistent with Cochius‘ concept of legal responsibility.

Referring to Cochius, legal responsibility means abiding consumers and product laws, environmental

laws, and employment laws whilst adhering to laws and regulations governing competition in the

marketplace.37

Although unaware of the concept, surveyed Vietnamese consumers are somehow able to

capture the gist of legal responsibility. This survey result reinforces the importance of legal responsibility

of companies among consumers.

In conclusion, Vietnamese consumers expect the government to encourage CSR practices. The majority

of respondents expect businesses to put more emphasis on working towards the betterment of society.

Also, 76% of the respondents expect to see more information about companies‘ socially responsible

activities. The topic most Vietnamese consumers expect companies to place more emphasis on is

decreasing environmental impacts, including water and ground pollution, and employee rights, which are

considered a legal responsibility of corporations. However, philanthropy is considered a second important

aspect of CSR.

VI. Discussion

To a certain extent, CSR appears to affect Vietnamese purchase intentions and decisions. The results

show that consumers are more concerned with companies fulfilling their legal social responsibilities, than

with company involvement in philanthropy and community affairs. Legal responsibility, compliance to

laws and regulations, is the most basic component of CSR according to the five levels of K.I.Asia‘s CSR

tree. The CSR priorities of Vietnamese consumers are similar to those around the world. A study of

French and German consumers showed that they rate legal concerns, followed by ethical and

philanthropic responsibilities, as most important,38

while Malaysian consumers perceive economic

responsibility followed by philanthropic and ethical responsibility most important.39

37

Cochius, Timo, 2006. Corporate Social Responsibility in Dutch SME: Motivation and CSR Stakeholder.

Maastricht University, Netherlands. 38

Maignan, Isabelle, 2001. Consumers‘ perceptions of corporate social responsibilities: A cross-cultural

comparison. Journal of Business Ethics. 30, 57-72. 39

Rahim, Rahizah Abd, Jalaludin Farah Waheeda and Tajuddin, Kasmah, Consumer Behavior towards

Corporate Social Responsibility in Malaysia. University Tunku Abdul Rahman.

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The findings of this research are consistent with another study conducted by K.I.Asia called ―The State of

CSR in Vietnam‖, which focused on the CSR perceptions and practices of business organizations in the

country. Like consumers, Vietnamese companies consider legal responsibility the most crucial area of

CSR (70%), followed by community affairs (54%) and philanthropy (51%). Asked to identify key areas

of integrating CSR into business practices, surveyed companies indicated product and service

development as the most important; this reflects consumer demands for product and service quality.40

Although surveyed companies consider consumers the least influential factor in driving CSR initiatives,

this consistency indicates there will be a positive future of CSR and SRCB in Vietnam, where consumer

needs and corporation responses are in line.

The historical background of poor consumer protection and low levels of workers‘ rights in Vietnam most

likely shapes the emphasis of both consumers and corporations on legal responsibility. For decades,

consumer rights in Vietnam have been seriously violated. Unlike other countries, Vietnamese consumers

have not had the power, rights, or legal system to oppose poor quality products. Vietnamese consumers

have suffered for years against poor quality and potentially health hazardous products.41

Vietnamese consumers feel companies not only have a legal responsibility for consumer protection, but

also for workers‘ rights. While Vietnam has historically failed to protect the consumer, labor rights have

become much more stringent. Vietnamese workers do not hesitate to strike if, for example, forced into

excessive overtime work. Moreover, local authorities and the government usually side with workers

instead of suppressing strikes and disturbances.42

Like consumer issues, employee rights and protection is

a normative belief understood and held by most consumers in Vietnam. Therefore, when asked about

corporate social responsibility, they think of a company‘s responsibility to comply with consumers and

product laws together with employee rights. That is how they define CSR and why legal responsibility of

corporations is the most influential aspect of CSR in their buying intentions and decisions.

Despite the consciousness of CSR and positive attitudes towards socially responsible consumption,

Vietnamese consumers struggle when it comes to translating their attitudes into purchasing behavior. One

possible explanation for this dissonance between actual purchasing (based on quality and price) and

values for purchasing (supporting socially responsible companies and products) is that CSR in Vietnam

is still emerging, and ineffective company communications may not provide enough information to

consumers for them to make informed purchasing decisions. Thus, consumers still maintain traditional

price and quality criteria when making a buying decision. Similar to concepts presented by Mohr, Webb

and Harris, constraints to socially responsible consumer behavior in Vietnam include the influence of

consumer self-interest, where purchases are based on price and quality, coupled with the degree of

difficulty in obtaining companies‘ CSR information.

40

Kenan Institute Asia, 2010. The State of CSR in Vietnam: The current state of corporate social responsibility

in Vietnamese companies, as seen by members of VCCI and GCNV. 41

Tai, Nguyen Dinh, 2009. Country Study on „Corporate Social Responsibility in Vietnam‟ OECD Regional

Conference on Corporate Responsibility, November 2-3, 2009, Bangkok, Thailand. 42

Chan, Anita and Wang, Hong-zen, 2004/2005. The impact of state on worker conditions—comparing

Taiwanese in China and Vietnam. Pacific Affairs. 77(4), 629-646.

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VII. Overall conclusions

This research investigates Vietnamese consumer behaviors and attitudes towards corporate social

responsibility. The study contains a qualitative stage studying literature and a quantitative stage through

the use of a questionnaire examining Vietnamese consumers‘ awareness level of CSR, their attitudes and

purchase intentions, buying behavior and their expectations with regards to socially responsible

companies. Survey respondents were consumers in Hanoi and Ho Chi Minh City.

The research‘s conceptual framework explains the CSR attitude-behavior correlation among consumers in

Vietnam. Independent variables (awareness of CSR, education, occupation and CSR performance of

companies) affect perceptual variables (consumer attitudes and perceptions of CSR) that become a

catalyst for consumer purchase decision making. The research indicates that consumers‘ attitudes and

behaviors should be a decisive motivator for business organization in Vietnam to adopt a socially

responsible position. By becoming economically responsible, companies have the opportunity to satisfy

market demands by responding to their consumers‘ desires to feel good about a purchase. This in turn

impacts the company‘s reputation and consumer loyalty.

The research results show that most Vietnamese consumers have an understanding of the concept of CSR.

They regard the legal responsibility of corporations as the most important aspect of CSR, followed by

philanthropy and community affairs. Knowledge of a company‘s CSR can positively affect consumers‘

intentions and decisions to purchase that company‘s products. The majority of respondents say they

would choose to buy from companies with environmentally-friendly manufacturing systems, while they

usually decline to buy from companies with a bad reputation. They are unsatisfied with the current role of

Vietnamese businesses in the betterment of society and expect more from local businesses. As a result,

most respondents agree that Vietnamese companies must put more emphasis on decreasing environmental

impacts.

The survey results suggest a behavior-attitude inconsistency for socially responsible consumerism among

Vietnamese. Although most surveyed Vietnamese consumers have a positive attitude towards socially

responsible companies and their products, but when making a purchasing decision, they care most about

high quality and low price. Attitudes are highly positive in relation to CSR. The majority of respondents

believe that good CSR affects purchasing decisions and increases a company‘s attractiveness. Seventy

percent think they should support products from a socially responsible company, and more than half feel

consumers should be willing to pay a higher price for a product that adds value to society. Sixty percent

claim to pay attention to a company‘s socially and environmentally responsible activities when deciding

to buy certain goods/products and service.

The survey results, however, show a disconnect between consumers‘ attitudes and behaviors when it

comes to purchasing socially responsible products. One-third of survey respondents stated that they have

never bought goods, products or services from a socially responsible company because they did not have

enough information about the company‘s CSR. Specifically, over half of the respondents find it difficult

to identify which companies are socially responsible and which products come from company with good

CSR practices. Seventy-five percent of the respondents expect companies to provide more information

about their CSR activities. Regarding CSR communication, the best way to reach the consumers in terms

of CSR communication is via television, the Internet and newspapers.

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This research is intended to be valuable to both practitioners—CSR managers, CSR-responsible persons

aiming to encourage the engagement and disclosure of CSR activities, and academics—those scholars and

theoreticians interested in CSR and SRCB studies. The research shows it is essential for socially

responsible companies to work to develop consumer awareness of their CSR performance, as a large

number of respondents expressed a desire for more information so that they can be more supportive.

Vietnamese consumers are less complicated than consumers elsewhere: their expectations for CSR

activities are mainly for companies to be compliant with laws and regulations, especially consumer,

environmental and product laws. They even support an increase in product or service price if it is in

relation to a company being more legally responsible.

Vietnamese consumers claim that higher prices for socially and environmentally responsible products and

services do not negatively affect their buying decision, as long as the product or service is affordable and

good quality. Following SRCB makes consumers feel proud, and is a positive incentive for them to buy

from socially responsible companies. Therefore companies should make decreasing the difficulty in

accessing CSR information a top priority. Understanding consumer expectations of CSR initiatives is also

important in the development of a successful CSR program.

It is important to highlight that this research was designed to be part of CSR curriculum for Vietnamese

universities, as part of a Global Compact Network Vietnam initiative to strengthen the education of future

business leaders in Vietnam. Although the research objective focuses on CSR curriculum, the data

obtained can have other benefits. Corporate managers, for example, can use the findings to justify

improvements in both CSR activities and CSR communication. The conclusions open up discussion for

further studies, such as an in-depth research on Vietnamese consumer behaviors and attitudes towards

CSR and SRCB conducted with a more narrow scope, research on the possibility for companies with

ruined reputations to regain consumer trust, or a study on whether SRCB differs regarding foreign and

indigenous companies.

The State of CSR

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Abstract

This research paper examines the state of Corporate Social Responsibility (CSR) in Vietnam on the basis

of a survey questionnaire distributed to 63 member companies of the Vietnam Chamber of Commerce and

Industry (VCCI) and the Global Compact Network Vietnam (GCNV). While there is large scale foreign

direct investment (FDI) in Vietnam. Vietnamese-owned companies are getting bigger and investing more.

With more corporations operating in Vietnam, there are more interactions between corporations and their

stakeholders. Therefore, CSR has become increasingly important for businesses. The results of this survey

show that many business executives in Vietnam see CSR as a fundamental part of business. Most of the

respondents have integrated a CSR vision and mission to guide their employees in operating social and

environment projects. Companies most frequently implement CSR in order to meet government

regulations of expectation. Community affairs is the most common level of CSR met by the respondents.

Interestingly, the findings suggest that business strategy is the key factor driving CSR initiatives. In terms

of reporting, workplace quality is the most reported CSR issue for the surveyed companies.

I. Introduction

Vietnam carried out its economic reforms, called Doi Moi (renovation), in the mid-1980s1. Since then, the

country‘s economy has become better integrated into the world economy, with increased openness mainly

a result of the policies that were introduced to liberalize trade by removing trade barriers and promoting

FDI. With Doi Moi, other types of enterprises, i.e. locally owned private enterprises and foreign-invested

enterprises, have emerged. Vietnam‘s export growth has been led by rapid increases in light manufactured

exports like footwear, textile and garment.

CSR in Vietnam has been stimulated by fast growth of the economy, improvement in living standards,

intensive investment in manufacturing, rising concerns about the environment, better educated domestic

customers and the CSR interests of foreign customers. In Vietnam, CSR has been accepted as both a tool

for both business and social development. CSR activities impact multiple stakeholders such as company

shareholders, executives and employees, as well as communities, consumers, government agencies and

NGOs. As a result, there are great numbers of CSR projects being undertaken by both multinational and

local companies. Press releases, news reports and anecdotal evidence suggest that Vietnamese companies

have made considerable advances in CSR; however, it is not clear in which areas, nor to what extent. This

study, therefore, attempts to contribute a more systematic, if limited, assessment of the state of CSR in

1Shizuo Fukada, Corporate Social Responsibility in Vietnam: Current Practices, Outlook, and Challenges for

Japanese Corporations. www.keidanren.or.jp/CBCC/english/.../200709observations.pdf

The State of CSR in Vietnam

The State of CSR

P a g e | 140

Vietnam by examining CSR priority issues, key drivers, and obstacles and challenges. This paper includes

a CSR literature review, a description of the research methods used, a presentation and discussion of

findings, and overall conclusions drawn from the research.

This paper is one component of a CSR project funded by the United Nations Development Program

(UNDP) and Vietnamese Chamber of Commerce and Industry (VCCI) in partnership with the Global

Compact Network Vietnam (GCNV) called ‗Embedding Corporate Social Responsibility in Vietnam

through Research, Training and Curriculum Development‘ or ‗Embedding CSR in Vietnam.‘

Research Question

To better understand the state of CSR in Vietnam, the following questions were posed in the survey

instrument:

1. What CSR activities are undertaken most frequently and what types of activities have the

surveyed Vietnamese companies implemented?

2. What CSR issues are given priority by the surveyed companies?

3. What are the key factors driving corporate CSR initiatives according to company executives?

4. What problems or barriers, internal and external, are encountered by the surveyed companies

when implementing CSR activities?


This section reviews the theoretical framework of CSR, driving forces of CSR, and the CSR outlook

in Vietnam. Reviewing literature, we found that no similar research on CSR in Vietnam has been

conducted in the last five years.

Kenan Institute Asia2 defines CSR as "a company‘s commitment to and implementation of strategies that

create sustainable economic, social, and environmental value for shareholders and other stakeholders."

The most obvious type of CSR that firms implement is corporate philanthropy, which often is limited to

providing funds to worthy charities. More sophisticated CSR programs progress to involvement in

community affairs and community engagement. As more thought, resources and time are committed to

CSR, companies seek ways to align their business strategies with their corporate responsibilities to

society through strategic programming. The most sophisticated firms fully integrate their CSR efforts into

all aspects of their business, becoming truly sustainable enterprises that ensure the long term profitability

of the firm while contributing to society and preserving the environment. These different levels of CSR

can be viewed as follows:

2 Kenan Institute Asia, 2010. Strategic CSR: from talk to action. Presentation on October 15, 2010.

The State of CSR

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Figure1: Level of CSR

CSR Strategies

The essence of CSR is managing and meeting the needs and expectations of key stakeholders including

shareholders, employees, suppliers, investors, government agencies, community members and customers.

Sony explains this multifaceted commitment:

―Sony Group recognizes that its business activities have direct and indirect impact on the

societies in which it operates, and therefore sound business practice requires that business

decisions give due consideration to the interests of its stakeholders including shareholders,

customers, employees, suppliers, business partners, local communities and other

organizations.‖3

For each of these key stakeholders, there are corresponding business activities and units that implement

strategies. Truly strategic CSR must recognize the links between stakeholder needs and business activities

so all the pieces of the puzzle can be put together into a coherent picture. This can be represented as follows:

© The Center for Corporate

Citizenship at Boston

College

BoardOfficers

Sr. Leadership

Marketing& PR

Investor Relations

Environment, Health & Safety Legal

Government Affairs

Community Involvement

Lines of Business

Supply Chain

HumanResources

The Scope of CitizenshipAn Organizational Perspective

3 Sony, 2010. About CSR Report 2010. Retrieved from http://www.sony.net/SonyInfo/csr/report/index.html

The State of CSR

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Driving forces for CSR

CSR has evolved from business responses to requests for help (largely philanthropy) to reducing risk and more

recently achieving business objectives. In his article ―CSR in Developing Countries‖4, Dr. Wayne Visser

identified drivers for corporate sustainability and responsibility, or corporate social responsibility, as follows:

Table 1: National Drivers for CSR

National Drivers Description

Cultural tradition CSR often draws strongly on deep-rooted indigenous cultural

traditions of philanthropy, business ethics and community

embeddedness.

Political reform

CSR cannot be divorced from the socio-political policy reform

process, which often drives business behavior towards integrating

social and ethical issues.

Socio-economic

priorities

CSR is often most directly shaped by the socio-economic

environment in which firms operate and the development priorities

this creates.

Governance gaps CSR is often seen as a way to plug the ―governance gaps‖ left by

weak, corrupt or under-resourced governments that fail to

adequately provide various social services.

Crisis response CSR responses can be catalyzed by economic, social,

environmental, health-related or industrial crises.

Market access

CSR may be seen as an enabler for companies in developing

countries trying to access markets in the developed world.

Table 2: International Drivers for CSR

International Drivers Description

International standardization CSR codes, guidelines and standards are key drivers for

companies wishing to operate as global players.

Investment incentives CSR is given an incentive by the trend of socially responsible

investment (SRI), where funds are screened on ethical, social

and environmental criteria

Stakeholder activism CSR is encouraged through the activism of stakeholder or

pressure groups, often acting to address the perceived failure

of the market and government policy.

Supply chain CSR activities among small and medium-sized companies are

boosted by requirements imposed by multinationals on their

supply chains.

4 Visser, W. 2008, CSR Drivers: The Forces Shaping Corporate Sustainability and Responsibility, CSR

Inspiration Series, No. 3.

The State of CSR

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In 2005, K.I.Asia conducted the State of Corporate Citizenship in Thailand survey of 67 executives and

practitioners from both Thai firms and Multi-national Corporations (MNCs). The findings showed that over

50% of respondents recognize the importance of CC and acknowledge the need to identify and prioritize their

CC activities. The majority of companies surveyed already applies the International Organization for

Standardization (ISO) series to their businesses, and integrate CC practices into their marketing, management

and operational strategies. The survey found that top level managers are often leading corporate efforts to

introduce good CC practices. While CC broadly covers labor, environment, governance and community

issues, the primary focus of CC in Thailand is community engagement on a number of different fronts,

including education, environmental and healthcare. The majority of companies responding to the survey were

satisfied with their overall CC performance. However, they expressed the need to improve their CC activities

through stakeholder dialogue, CC related forums, conferences and other activities. That said, the main barrier

companies face in implementing CC programs is a lack of resources (time, money, human resources, etc.).5

In Vietnam, some CSR activities are regulated by the government and corporate business plans generally

recognize the need to follow state regulations. Additional incentives for CSR include meeting the

environmental, safety and labor requirements of import partners and avoiding conflicts with local labor unions

that often have connections to the ruling Communist Party. A key challenge is to raise the level of awareness

of CSR among consumers who have limited appreciation of CSR and do not relate it to social concerns.

III. Research Methodology

This research examines the current state of CSR in Vietnam by collecting information from the member

companies of VCCI and GCNV. The research was conducted through a survey questionnaire and the results

were based mainly on quantitative analysis of the data.

1. Research Objectives

The research aims to understand executives‘ perceptions of the state of CSR in Vietnam by collecting

information from Vietnamese companies who are members of VCCI and GCNV. Because the surveyed

companies may be considered CSR leaders in Vietnam, the conclusions cannot be generalized to all

companies. The findings may, however, suggest trends in CSR that will extend to other companies in the

future. The specific objectives are:

To study current CSR activities of selected companies in Vietnam

To examine the priority CSR issues for those companies

To investigate key factors driving CSR initiatives in the selected companies

To identify obstacles and limitations of CSR as perceived by executives of leading companies in

Vietnam

5 The State of Corporate Citizenship in Thailand Year 2005. Kenan Institute Asia.

The State of CSR

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2. Population and Sampling Design

Vietnamese member companies from VCCI and GCNV were the target population for this research. As

noted above, companies in the GCNV are committed to the standards of the United Nations Global

Compact and the VCCI is the manager of that network of committed companies. Therefore, in general,

the target population for the survey can be considered companies that are relatively more aware and more

committed to CSR than other companies in Vietnam.

A brief description of these institutions is as follows:

- Vietnam Chamber of Commerce and Industry (VCCI): This organization is a national and

independent organization of the Vietnamese business community. Originally named the Chamber of

Commerce of the Democratic Republic of Vietnam, it was established in 1963 in Ha Noi with 93

members. In 1982, the Chamber changed its name to the Chamber of Commerce and Industry of the

Socialist Republic of Vietnam. It promotes trade between Vietnam and the rest of the world6.

- Global Compact Network Vietnam (GCNV): This organization is an alliance of companies, the

government, trade unions, the United Nations and non-governmental organizations. The GCNV

promotes the principles of the United Nations Global Compact, which aims to improve the social

and environmental conditions of workers, their communities and companies. The GCNV is funded

by UNDP, and managed and hosted by VCCI. The GCNV is both a policy platform and a practical

framework for companies that are committed to sustainability and responsible business practices7.

Sampling Design and Procedures

The objective of this research is to examine CSR from the point of view of companies operating in Vietnam.

However, due to financial and time constraints, a limited number companies in Vietnam could be surveyed.

Therefore criteria for selecting a sample population were set (see below), and a total of 63 respondents from

VCCI and GCNV participated in the survey.

Criteria for Selection

In this research, the following criteria were set up for the selection of the target group:

The company must be private company

Member of VCCI or GCNV

The respondent must be a CEO or managing director, CSR managers or manager in charge of

CSR activities

3. Data Collection

A structured questionnaire was used as a data collection tool for this research. Designed and developed by

K.I.Asia‘s research team to gather data on the current state of CSR in Vietnamese companies, the survey

questionnaire was divided into five sections as follows: company information, CSR activities and

6 A brief of VCCI, http://www.batin.com.vn/vninfo/vcci.htm, accessed on 20 November 2010

7 Global Compact Network Vietnam, http://www.ngocentre.org.vn/webfm_send/510

http://www.batin.com.vn/vninfo/vcci.htm

http://www.ngocentre.org.vn/webfm_send/510

The State of CSR

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projects, CSR priority issues, key factors driving CSR initiatives and problems or obstacles in

implementing CSR activities. The questionnaire was then sent to the research team in Vietnam for

translation and distribution.

4. Data Analysis

After the data was collected, it was organized and analyzed. The research team used the Statistical Package

for Social Sciences (SPSS), a computer program for analyzing quantitative data from survey questionnaires.

Descriptive statistics such as frequency, and percentage were used to describe the findings.

IV. Findings

This section presents the findings of the survey. The basic respondent and company information is presented

first to provide a general overview of the survey participants. The report next reviews the CSR activities and

projects of respondent companies, followed by the priority issues for company CSR and the key factors driving

CSR initiatives. Information on the problems and issues of implementing CSR concludes this section.

1. General information of respondents and companies

Slightly more males (58.7%) than females (41.3%) responded to the survey (Figure 2). In order to gain in-

depth information about a company‘s CSR activities, the study aimed to have individuals with specific

positions answer the survey. In particular, the survey targeted CSR managers or the individuals in charge

of company CSR activities. As shown in Figure 3, more than half of the total respondents are managing

directors (53.0%), 28.0% are CSR managers, and 19 % are CEOs.

Figure 2: Gender of respondents Figure 3: Position of respondents

Male

59%

Female

41%

Managing

director

53%

Chief

excutive

officer

19%

CSR

manager

28%

The State of CSR

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As presented in Figure 4, more than half of the companies (54%) are members of VCCI and 30.2 % are

members of GCNV. The remaining 15.9% are members of both VCCI and GCNV. According to Figure 5,

the survey results indicate that most of the companies are locally-owned private companies (73.7%). Multi-

national enterprises made up 18.4% of respondents, and state owned enterprises made up only 7.9%.

Figure 4: Member type Figure 5: Company type

The survey respondents were spread across numerous sectors, with the most involved in the textile and

garment industry (45.5%), followed by manufacturing (6.8%), food and beverage (6.8%), and media

publishing (6.8%). The findings suggest that the garment and textile industry is particularly interested in

CSR issues and therefore willing to respond to the questionnaire. (Figure 6).

Figure 6: Type of business

Figure 7 shows that just under half (44.4%) of the companies are small business, and 38.1% are medium-

sized. Only a few respondents are large companies (17.5%)

54

30.2

15.9

0

10

20

30

40

50

60

VCCI GCNV Both (VCCI

&GCNV)

Percen

tag

e (

%)

7.918.4

73.7

01020304050607080

State owned

enterprise

Multi-national

enterprise

private company

Percen

tag

e (

%)

45.5

6.8

6.8

6.8

4.5

4.5

4.5

4.5

4.5

2.3

2.3

2.3

2.3

2.3

Textile and garment

Manufacturing

Food&Beverages

Media&Publishing

Agricultural Products

Telecommunications

Transportation

IT Hardware&Software

Consumer Products

Energy/Oil/Gas

Automotive

Financial &Banking

Insurance

Other

Percentage

The State of CSR

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Figure 7: Company Size

Most respondents have not been in business for a long time, with 37% less than 5 years old and another

30% operating for 6-10 years. However, some respondent companies (11%) have been in operation for

more than 21 years (Figure 8). As shown in Figure 9, nearly half of the respondents (46%) reported that

their firms have less than 100 full-time corporate staff members. This finding is consistent with the

number of small sized enterprises reported above.

Figure 8: Number of years in business Figure 9: Number of employees (full time)

2. CSR activities & projects

This section provides information on the CSR activities of respondents. The questions in this part of the

survey were designed to ask about both past and present CSR activities and related actions.

On the question ―Is there a board committee or a director responsible for CSR in your company?‖ over

half the respondents (57.1%) responded yes. This implies that many companies pay high-level attention

to CSR (Figure10).

17.5

38.1

44.4

05

101520253035404550

Large Medium Small

Percen

tag

e (

%)

37%

30%

16%

6%

11% Less than 5

years

6-10 years

11-15 years

16-20 years

More than 21

years

46%

27%

11%

16%

Less than 100

101-500

501-1,000

More than 1,001

The State of CSR

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Figure 10: A board committee responsible for CSR

In line with the statistics concerning a board-level on CSR, 55.6% of respondents claim to have a CSR

vision and mission to guide their employees on social and environmental projects. Another 30.2% of

firms have not clearly established a CSR vision and mission, but have implemented CSR activities

(Figure11).

Figure 11: CSR vision and mission

According to the results in Table 3, most large and medium sized companies have created a company CSR

vision and mission. In contrast, the small businesses responding to the survey tend not have to created vision

and mission statements on CSR (46.4%) even though they have CSR projects or related activities.

Table 3: CSR vision and mission classified by company size

Does your company have a

CSR vision and mission

Company Size (%)

Total % Large Medium Small

Yes 72.7 70.8 35.7 55.6

No 9.1 12.5 17.9 14.3

No, but there are CSR projects

or related activities 18.2 16.7 46.4 30.2

Total 100(11) 100(24) 100(28) 100(63)

57.1

42.9

0

10

20

30

40

50

60

Yes No

Pe

rce

nta

ge

(%

)

55.6

14.3

30.2

0

10

20

30

40

50

60

Yes No No, but there are

CSR projects

Percen

tag

e (

%)

The State of CSR

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Creating a CSR vision and mission statement is, of course, not the only way for a company to ingrain CSR

values. Codes of conduct are also important guidelines for companies to ensure they are acting in socially

responsible ways, so the survey asked about codes of conduct concerning human rights and labor, internal

auditing, employee rights, environmental standards, product responsibility, and corporate community

investment. As shown in Figure 12, most companies (69.8%) have a code of conduct related to human rights

and labor, with fewer companies having codes concerned with internal auditing, employee rights and

environmental standards. Just over a third of companies (36.5%) have a code of conduct concerning

community involvement, and a few companies reported either not knowing about (14.3%) or not having

(7.9%) a code of conduct.

Figure 12: Code of conduct


Next, the survey explored external initiatives and guidelines the company is aware of, as these external

factors can also affect the company‘s CSR values and practices. The question asked ―Has your company

joined or publicly supported any of the following CSR voluntary initiatives and/or international CSR

guidelines?‖ Nearly half of the respondents stated that their company follows the UN Global Compact,

which is not surprising because 46% of the respondents were GCNV members. Only a small number of

the respondents reported that their firm applies the Equator Principles into their CSR practices (Figure 13)

and this response rate probably overstates the facts and reflects misunderstanding of the Equator

Principles, which apply only to financial institutions doing project finance, since only 2.3% of the

respondents identified their companies as financial institutions.

69.8

58.7

55.6

50.8

44.4

36.5

14.3

7.9

30.2

41.3

44.4

49.2

55.6

63.5

85.7

92.1

Human rights and labor

Internal auditing

Employee rights

Environmental standards

Product responsibility

Community investment

Don’t know

None

Yes No

The State of CSR

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Figure 13: Using CSR guidelines


After asking about the internal and international guidelines, codes of conduct, etc., that shape a

company‘s CSR values, the survey explored CSR reporting. Less than half of the respondents (47.6%)

answered yes to the question ―Does your company report on CSR/sustainability performance?‖ This

means that half of the companies surveyed do not publically report their CSR activities (Figure14). Since

the companies surveyed could be considered CSR leaders, it may be inferred that the rate of CSR

reporting among all Vietnamese companies is even lower.

Figure 14: Reporting on CSR and sustainability performance

49.2

41.3

27

23.8

23.8

11

50.8

58.7

73

76.2

76.2

88.9

UN Global Compact

CSR national

agreements

Trading Initiative

International

agreements…

Global Reporting

Initiative

Equator Principles

Yes No

47.652.4

0102030405060708090

100

yes no

Percen

tag

e (

%)

The State of CSR

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Considering CSR reporting by company size, large companies are, as might be expected, the most likely

to report their CSR activities (63.6%).

Table 4: Report on CSR/sustainability performance classified by company size

Does your company report on

CSR/sustainability performance

Company Size (%)

Total Large Medium Small

Yes 63.6 54.2 35.7 47.6

No 36.4 45.8 64.3 52.4

Total 100(11) 100(24) 100(28) 100(63)

Respondents were also asked whether their companies have adopted specific reporting guidelines in the

most recent CSR/sustainability report; 60.3 % of the respondents who answered yes in pervious question

also answered yes to this question, indicating the importance of following a guideline for reporting.

Figure 15: Adopting specific reporting guidelines

For those companies that do report on their CSR activities, the survey asked about the topics covered in the

reporting, as shown in Figure 15. The most reported topics were workplace quality (58.7%), human resource

management (49.2%) and environmental protection (46%). This reflects the significant proportion of garment

and textile companies in the survey population as such companies tend to be labor-intensive and concerned

with buyer labor standards that focus on workplace quality and fair treatment of workers.

60.3

39.7

0

10

20

30

40

50

60

70

Yes No

Percen

tag

e (

%)

The State of CSR

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Figure 16: CSR issue included in company‟s reporting


According to K.I.Asia‘s definition of CSR, there are five levels of development for CSR that firms

commonly follows: meeting government regulations, providing corporate philanthropy, concentrating on

community affairs, implementing strategic CSR and engaging in fully sustainable enterprise. The

approach to each type of CSR is unique, so understanding the type of CSR implemented by companies

helps the research team understand CSR as a whole in Vietnam.

The survey results show that most companies implementing CSR do so to meet government regulations

(69.8 %). The most common level of CSR are community affairs and philanthropy. Operating a

sustainable enterprise was however ranked the lowest (Table 5). It is possible that these responses were

skewed by relatively greater understanding of the first three types of CSR compared to strategic CSR or

sustainable enterprise.

Table 5: Level of CSR development

Level of CSR development Percentage

Meeting government regulations 69.8 %

Community affairs 54.0%

Philanthropy 50.8%

Strategic CSR 47.6%

Sustainable enterprise 31.7%


58.7

49.2

46

31.7

24.4

23.8

41.3

50.8

54

68.3

74.6

76.2

Workplace quality

Human resource

management

Environmental

protection

CSR strategy

Community investment

project

Ethical supply chain

Yes No

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In Table 6, the survey asked respondents to rate the key issues integrated into their business practices,

with the choices including product and service development, leadership, monitoring and reporting, and

policy setting. Respondents rated developing products and services (39.7%) leadership and monitoring

and reporting at similar levels.

Table 6: Key issues integrated into business practice

Key issues integrate into business

practice

Percentage

Product/service development 39.7%

Leadership 38.1%

Monitoring and reporting 38.1%

Policy setting 19.0%


Over 85% of respondents claim to have a policy or stated commitment to stakeholder engagement in their

business. This indicates that most companies in Vietnam pay attention to their stakeholders and the issues

that they raise (Figure18).

Figure 18: A policy or stated commitment for stakeholder engagement

Results on good corporate governance indicate that transparency, participation, and rule of law are most

frequently implemented by the respondents. Accountability, effectiveness and efficiency, equity and

inclusiveness, and responsiveness were implemented by about half of the companies surveyed, while

consensus-oriented governance was less frequently implemented (Figure19).

85.7

14.3

0102030405060708090

Yes No

Percen

tag

e (

%)

The State of CSR

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Figure 19: Implementing good corporate governance


To evaluate the extent of company involvement with stakeholders, the survey asked respondents to

indicate with which groups of stakeholders their company conducted a dialogue. Not surprisingly, the

majority of the respondents (65.1%) reported that corporate employees are the main group that

participates in stakeholder dialogue, followed by customers, suppliers and shareholders, respectively.

As Figure 20 shows, companies tend not to engage local people and communities as much as they do

other stakeholders. Few company respondents say they engage with government agencies or NGOs. The

low level of dialogue with government agencies seems surprising, but may reflect the respondents‘

perception that interaction with government agencies is more listening and accepting agency requirements

rather than real dialogue. This issue – the nature of interactions between companies and government

agencies on CSR-type issues is worthy of further study.

71.4

69.8

68.3

54.0

52.4

50.8

47.6

36.5

28.6

30.2

31.7

46

47.6

49.2

52.4

63.5

Transparency

Participation

Rule of law

Accountability

Effectiveness and efficiency

Equity and inclusiveness

Responsiveness

Consensus oriented

Yes No

The State of CSR

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Figure 20: Stakeholder Engagement


3. CSR priority issues

The perceived importance of implementing social and environmental CSR and engaging with

stakeholders is growing rapidly for companies. Good CSR is important in making businesses competitive

in the increasingly global market. The survey asked companies to rate the priority they give to different

CSR issues.

As presented in Table 5, the results showed that building an understanding of CSR is ranked as the

highest priority issue, with almost half of the respondent citing it. This indicates that companies generally

believe that CSR is not well understood and work is needed to build understanding, perhaps as a

precursor to dealing with other CSR issues. Given less priority were reducing environmental impacts,

improving supply chain policies addressing labor relations issues, combating business corruption and

developing products/services with social or environmental attributes. It is somewhat surprising that labor

relations issues were rated so low given the high percentage of companies that said they had guidelines on

human rights and labor and employee rights. However, since such guidelines were already in place, less

priority could be given to labor relations issues. The lowest rating was given to improving company

sustainability reporting. This seems to contradict the response that improving understanding CSR was a

high priority. Apparently the respondents do not see sustainability reporting as a way to improve

understanding of CSR.

65.1

52.4

50.8

44.4

41.3

22.2

17.5

12.7

9.5

34.9

47.6

49.2

55.6

58.7

77.8

82.5

87.3

90.5

Employees

Customers

Suppliers

Shareholders

Business partners

Trade unions

Local communities

NGOs

Government

agencies

Yes No

The State of CSR

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Table 7: Ranking and Percentage of CSR priority issues

Rank CSR priority issues Percentage

1 Building understanding of CSR 45.8 %

2 Reducing environmental impact 13.6 %

3 Improving supply chain policies 11.9 %

4 Addressing human rights 8.5 %

5 Addressing labor relations issues 6.8 %

5 Combating business corruption 6.8 %

5 Developing products/services with

social or environmental attributes

6.8 %

6 Improving company‘s sustainability reporting 3.4 %

* Total Responses = 61 (multiple answers)

4. Key factors driving CSR initiatives

In response to the question ―What are the major factors driving CSR initiatives in your company?‖ the

survey findings in Table 4 show that business strategy is the number one factor. Company traditions and

values are rated as the second factor influencing CSR initiatives followed by community expectations as

the third.

In addition, the study shows that companies associate implementing socially and environmentally

responsible activities with good corporate image and reputation.

Table 8: Ranking and percentage of key factors driving CSR initiatives

Rank Key factors driving CSR initiatives Percentage

1 Business strategy 33.3 %

2 Company traditions and values 23.8 %

3 Community expectations 22.2 %

4 Concern for corporate image/reputation 11.0 %

5 Recruitment and retention of employees 9.5 %

5 Laws and political pressures 9.5 %

6 Consumer/customer satisfaction 3.2 %


The low rating give to consumer/customer satisfaction may indicate that the surveyed companies do not

believe that Vietnamese consumers are demanding better CSR and will prefer buying from a company

with good CSR.

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5. Problems and obstacles in implementing CSR activities

Finally the survey asked participants to rank the obstacles to CSR. Respondents identified three major

issues: inadequate financial support, lack of CSR knowledge, and no CSR vision and mission. Almost

50% of the respondents named budgetary constraints as the top problem. This makes sense in light of the

fact that most companies view charitable donations as CSR. One critical finding to note in the table below

is that CSR is not suffering due to lack of employee involvement (only 1.7% of companies rated this as an

issue), meaning if other obstacles can be overcome, participation should not be hard to achieve within

Vietnamese companies.

Table 9: Ranking and percentage of problems and obstacles in implementing

CSR activities

Rank Problem Percentage

1 Inadequate budget 48.3 %

2 Lack of CSR knowledge 20.7 %

3 No CSR vision and mission 15.5 %

4 Lack of team support 10.3 %

5 Complicated process 8.6 %

6 No leadership support 5.2 %

7 Limited participation from employees 1.7 %


The State of CSR

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V. Discussion

The survey findings are related to the current state of CSR in Vietnam, CSR priorities issues for

companies, key drivers of CSR and the problems with implementing CSR activities. The research

findings on these topics raise three significant issues for discussion.

First, the study shows that CSR is beginning to build momentum in Vietnam. The majority of the

surveyed companies are implementing CSR activities, most often corporate philanthropy and community

affairs. Companies also implement CSR programming to meet government regulations and expectations.

This is not surprising in a nation where the government plays a major role in social and economic

development. Many companies also have codes of conduct for human rights and labor. This base shows

that leading companies in Vietnam are beginning to understand the importance of operating responsibly in

order to succeed. The findings are skewed by the fact that only members of VCCI and GCNV were

surveyed. The membership in these organizations indicates that these companies are relatively

sophisticated and likely to understand the growing need for CSR. However, it can be posited that if these

leading companies move forward on CSR and sustainability, they will pave the way for other companies

to follow. While the survey shows a strong start to CSR in Vietnam, it also indicates there is a long way

to go. Companies still need to focus more on engaging stakeholders, especially community members, and

including these topics into their codes of conduct. The survey findings are consistent with other studies on

CSR in Vietnam8, which show the most common CSR activity for companies is giving away cash and in-

kind contributions to people in areas where they do business.

The second important finding of the study is the varying priority that companies place on different aspects

of CSR. The respondents rated building an understanding of CSR as the top priority, which indicates that

companies recognize that CSR knowledge is a key factor leading to success, both in terms of operating

responsibly and competitively. This finding helps explain other findings concerning the obstacles to CSR.

Most companies rate inadequate budget as the biggest limit to CSR. However, many of these companies

also lack a CSR vision and mission, meaning there is no clear idea of how to implement CSR or what it

means to the company. It could be that building CSR knowledge and creating a vision and mission would

lead companies to recognize that budgetary constraints are not as significant as they once thought. If the

company understands there is more to CSR that simply giving to charity or philanthropy, and that CSR

can be ingrained into company practices without major expenditures, there is potential for these

companies to also recognize the barriers to CSR are not as great as they imagined. A better understanding

of CSR can also lead companies to increasing profits. Greater attention and budget might be given to CSR

if company leaders can see how CSR increases their global competitiveness and ability to enter more

markets or work more easily with international partners.

Finally, it is interesting to note that Vietnamese businesses rate business strategy as the key driving factor

for CSR initiatives. This differs from other countries in the region, such as Thailand9, which stated that

religion is the major factor influencing Thai businesses tend to state that they desire to be good corporate

8 The Lin Center for Community Development, 2009.Corporate Philanthropy in Ho Chi Minh City.

9 Kenan Institute Asia, 2006. The State of Corporate Citizenship in Thailand Year 2005

The State of CSR

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citizens for ethical reasons. A study in Dubai10

also showed religion to be the driving factor, rating Islamic

religion and corporate culture as the biggest influencing factors driving CSR initiatives. This difference in

key drivers to CSR is a topic worthy of further investigation, and this research can serve as a foundation

for future studies.

CSR in Vietnam is clearly at an initial stage of development. CSR practices are focused mainly on

philanthropy and community affairs, typically the beginning levels of CSR activity. However, Vietnam

has begun to build a solid foundation for CSR in the country, and can now gradually increase the

integration of CSR concepts and understanding into their business practices.

VI. Conclusions

This research has examined the current state of CSR of selected companies in Vietnam. It investigated

company perceptions of CSR issues and key factors influencing CSR initiatives. This study also aimed to

identify the problems and limitations for companies in implementing CSR practices in Vietnam. The

respondents were CEOs, CSR managers, or other CSR-related individuals from companies that are

members of VCCI or GCNV.

The results indicate that CSR in Vietnam is becoming increasingly important, as many firms are

implementing some form of CSR. While some firms have CSR vision and mission statements, many do

not. Creating these visions and mission statements is a critical next step for CSR in Vietnam. However,

over half the respondents are implementing some form of CSR, even if they lack a vision and mission.

Meeting government regulations and providing corporate philanthropy, such as cash donations and

charitable activities, are the two most common forms of CSR. According to the respondents, CSR in

Vietnam is driven by business strategy and company traditions and values, which can be seen as relatively

solid bases for CSR expansion and improvement.

This research shows that, while still in the early stages, the leading companies in Vietnam are aware of

CSR. Most companies implement the most basic of CSR practices, yet they show a clear understanding of

the need to develop a better understanding of responsibility and sustainability, and then integrate this

understanding into their business practices. This appears to be a reasonable basis for further progress.

10

Dubai Chamber Centre for Responsible Business, Beyond „Zakat”: Corporate Community Involvement in

Dubai 2010

Corporate Community Involvement

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Abstract

This paper presents the results of a survey on Corporate Community Involvement (CCI) in Vietnam

undertaken in 2010. The objectives were to explore current CCI practices among leading Vietnamese

companies that are members of the Global Compact Network Vietnam and for use in Corporate Social

Responsibility (CSR) curriculum. The survey results indicate that the majority of companies surveyed

have developed strategies and plans that address key community issues, especially by funding

occupational training for local community members. The findings also show that the surveyed

Vietnamese companies already undertake community projects to give back to society. However, fewer

companies train their employees on community responsibility or systematically measure their CCI inputs,

outputs and outcomes. In addition, the results show that the main limitations in implementing CCI are

inadequate funding and lack of team support for community development projects.

I. Rationale of this research

CCI is growing in importance in Vietnam with the increased empowerment of local communities and

community organizations. This increased ability to affect decisions means that the so-called ‗license to

operate‘ no longer rests solely with the government. The legal operating license of companies must now

be accompanied by a ‗social license to operate‘ that can only be obtained from communities and their

constituent neighborhoods or organizations.1 Unlike legal licenses to operate, social licenses to operate

can be ―more demanding and enforced through the threats of adverse publicity or complaints to

regulators‖.2 Local communities, therefore, must be identified as an essential corporate stakeholder.

3

At first, corporate strategies related to communities were primarily intended to secure their social licenses

to operate. Yet, as the role of the Vietnamese government in wealth creation and provision of social

services is declining, corporations are confronted with heightened societal expectations for both wealth

and services.4 CCI activities are not only one of the most visible aspects of CSR, but also a key ingredient

to its success.

1 Burke, M.E., 1999. Corporate Community Relations: The Principles of the Neighbor of Choice. Quorum

Books, London. 2 Thornton, D., Kagan, A.R., Gunningham, N., 2003. Source of Corporate Environmental Performance.

California Management Review, 127-141. 3 Carroll, A.B. and Buchholtz, A.K.. 2003. Business & Society. Ethics and Stakeholder Management, Thomson

South-Western, USA. 4 Kooiman, J., 1999. Social-Political Governance: Overview, Reflections and Design. Public Management, 67-91.

A Study of Corporate Community Involvement in Vietnam


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CCI refers to business involvement in social initiatives to provide financial and in-kind assistance,

contributions of time and expertise (employee volunteering) and assistance through partnerships with

nonprofit community organizations. It is sometimes referred to as ‗social investment‘ or ‗corporate

community engagement‘. Apart from direct benefits to the communities, CCI can benefit companies as it

leads to healthier business environments, information flows that benefit business, employee moral

improvement, positive brand image and, of course, social license to operate.

Because of its documented advantages to businesses, CCI has gained in global popularity and evolved

from corporate philanthropy (cash and non-cash giving [mostly during emergencies]) to more complex

forms of CCI activities with broader impacts on society. In most multi-national enterprises, CCIs are

strategically integrated with corporate business plans and core competencies. The age and size of a

corporation are also important variables influencing CSR practices, especially CCI activities.

Vietnam is considered one of the 13 emerging economies with ―the potential to grow significantly faster

than the established Organization for Economic Co-operation and Development (OECD) countries.‖5

Under its ―Doi Moi‖ (renovation) policy, the government of Vietnam has shifted from traditional

socialism and central economic planning to a ―socialist-oriented market economy‖6 that allows a much

greater role for various forms of private enterprise. In addition to massive foreign direct investment in

Vietnam, Vietnamese-owned companies are increasing in number, size, investment capital, production

and activities. The increase in corporations operating in Vietnam leads to more interactions between

corporations and their stakeholders. This leads to the question of the extent to which companies in

Vietnam, both foreign and indigenous, are practicing strategic CCI approaches. Based on earlier Kenan

Institute Asia (K.I.Asia) research on the state of CSR in Vietnam, there are strong indications that even

though companies pay attention to stakeholder engagement, too few companies (13%) are focused on

local community relations.7 This lack of focus on CCI may prove short sighted, as research on

Vietnamese consumer behavior and attitudes show consumer demand for companies to implement CCI

activities. Survey results indicated that 78% of consumers regard CCI as one of the most influential

factors affecting their purchase intentions.8

Although CCI is a critical component of CSR, there has been no previous research on CCI conducted in

Vietnam. There is, however, a growing interest among Vietnamese companies in CSR and CCI, as

evidenced by the membership of the Global Compact Network Vietnam (GCNV) membership. GCNV

members have agreed to adhere to 10 key principles ranging from human rights protection to

environmental responsibility and anti-corruption.9 Although these principles do not include a clear

commitment to engage in CCI, some would state it is implicit in the spirit of the principles. Therefore,

this study explores current CCI practices among GCNV members to determine if and how they are

implementing CCI. This information is intended to be useful for CSR curriculum development.

5 PricewaterhouseCoopers International Limited (PWCIL), 2008. Vietnam may be fastest growing emerging

economy. 6 Tap Chi Cong San (Communist Review) Issue 24, 2010 at:

http://www.tapchicongsan.org.vn/details_e.asp?Object=29152838&News_ID=18459436 7 Kenan Institute Asia, 2010. A Survey on the State of CSR in Vietnam.

8 Kenan Institute Asia, 2010. Consumer Behaviors and Attitudes towards Corporate Social Responsibility.

9 See the complete description of the UN Global Compact‘s ten principles at

http://globalcompactvietnam.org/detail.asp?id=27

http://www.tapchicongsan.org.vn/details_e.asp?Object=29152838&News_ID=18459436

http://globalcompactvietnam.org/detail.asp?id=27


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This research is a component of a CSR project funded by the United Nations Development Program

(UNDP) and the Vietnamese Chamber of Commerce and Industry (VCCI) in partnership with the GCNV

known as ‗Embedding Corporate Social Responsibility in Vietnam through Research, Training and

Curriculum Development‘ or ‗Embedding CSR in Vietnam.‘

Research questions

This research aims to answer the following questions:

1. What is the pattern of Corporate Community Involvement (CCI) among Global Compact

Vietnam Network member companies?

2. What are the obstacles or challenges facing these companies when dealing with CCI in Vietnam?


This section outlines the review of the theoretical framework of CCI from scholarly literature in CSR and

highlights important findings from earlier research. From the literature survey, it was found that there has

been no similar research on Vietnamese CCI patterns and challenges in implementing CCI programs

conducted to date. However, there have been many papers examining trends and patterns of CCI practiced

in developed countries such as the United States, the United Kingdom, the European Union countries,

Australia and New Zealand. In the developing country context, CCI has been studied in the Philippines

and Dubai, though only the Dubai study is relevant for this research. These papers will serve as the

foundation for the theoretical framework for this study.

1. Corporate Social Responsibility (CSR)

CSR generally means the way firms integrate social, environmental and economic concerns into their

values, culture, decision making, strategy and operations in a transparent and accountable manner and

thereby establishes better practices within the firm, creating wealth, and improving society. CSR is

essentially a strategic approach for firms to anticipate and address issues associated with their interactions

with others and, through those interactions, to succeed in their business endeavors over the long term.

Porter and Kramer (2002) point out that CSR initiatives need to be undertaken not for ―feel good reasons‖

or as defensive actions to avoid scandals, but that they should be integrated into an organizations‘

competitive strategy.10

Companies need to be clear about how CSR initiatives contribute to organizational

success and efficiency. The Ashbridge Centre for Business and Society categorized CSR activities into

the following:

Leadership, vision, and values

Marketplace activities

Workforce activities

Supply chain activities

Stakeholder activities

Community activities

10

Porter, M.E.; Kramer, Mark R (December, 2002). The Competitive Advantage of Corporate Philanthropy.

Harvard Business Review (pp. 5-16).


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Environmental activities11

It is clear from this that involvement in community activities is linked to other aspects of CSR and

constitutes an important mechanism for companies to build trust and strengthen their reputation with

stakeholders.

2. Corporate Community Involvement (CCI)

For the purpose of this study, CCI is defined as a corporate function that typically encompasses corporate

practices that enable the company to form relationships with members of the communities in which it

operates (or with which it has relationships), and with ―society‖ at various levels (local, regional, national

and global).12

By involving themselves with local communities or broader society, companies themselves can also

benefit. There is a growing consensus among academic and business professionals about the connection

between CSR and business success, and the important role CSR can play in contributing to sustainable

development. Companies should, therefore, view community needs as opportunities for the firm to

develop ideas and demonstrate business technologies, to find and serve new markets, and solve long –

standing social (business) problems.13

In practice, CCI is about supporting a broad range of causes and organizations such as schools,

environmental groups, cultural organizations, relevant leisure and sports clubs and other community

organizations. The London Benchmarking Group (LBG) classifies CCI practices as follows:

Supporting charity. Gifts of cash and other forms of assistance in response to appeals by charities

and community organizations.

Engaging in partnerships for social investment. Partnering with charities and community

organizations for sustained involvement in resolving social issues carefully chosen by the

enterprise to protect its long-term interests and reputation.

Applying commercial initiatives. Activities in support of the commercial success of the

enterprise, promoting its name in partnership with supported organizations.14

11

Ashbridge Centre for Business and Society, 2005. Catalogue of CSR Activities: A broad overview. 12

Waddock, Sandra, 2004. Parallel Universes: Companies, Academics, and the Progress of Corporate

Citizenship. Business and Society Review, 109: 5–42. 13

Kanter, Rosabeth, 1999. From Spare Change to Real Change: The Social Sector as Beta Site for Business

Innovation. Harvard Business Review, 122-132. 14

Nottingham University Business School for CAF (Charities Aid Foundation), 2006. An evaluation of

Corporate Community Investment in the UK: Current developments, future challenges.


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In addition, to effectively deliver CCI, companies should have in place a range of internal systems and

structures as illustrated below;15

In conclusion, CCI, therefore, should be treated no differently than other core business management

functions. However, this is a view that has formed over time in developing countries, as evidenced by the

significant evolution in CCI in the developed world, which has resulted in more complex practices and

management designed to achieve and communicate greater CCI impacts. As noted by Hess, times have

changed and the approach by businesses to CSR and CCI has become more professional and strategic.16

3. Strategic CCI approach

The general consensus on CCI today holds that a strategic CCI approach is the best means for achieving

meaningful and effective community relationships. Research findings by the Centre for Social Impact on

CCI among leading companies in Australia and New Zealand support this view. According to this

research, strategic CCI can be segmented into five key areas;

1. Adopting a professional approach to CCI through a clear set of written policies, plans, objectives,

targets and procedures.

2. Alignment of CCI to core business goals: the more closely tied a social issue is to the company‘s

core business, the greater opportunity to leverage the firm‘s resources and capabilities, providing

benefit to the community as well as the company.

3. Philanthropy to partnerships: The third feature of a strategic approach to CCI is a move away

from traditional corporate philanthropy in the form of cash donations, which were usually

dispersed, reactive and uncoordinated, to developing longer-term, multifaceted partnerships with

15

The center for Social Impact (CSI). Corporate Community Involvement among leading companies in

Australia & New Zealand. www.csi.edu.au 16

Hess D., N. Rogovsky and T. W. Dunfee. 2002. ―The Next Wave of Corporate

Community Involvement: Corporate Social Initiatives.‖ California Management Review

44(2):110–125.

Include internal communication &

dialogue with employees on community related

issues

Assign people with specific responsibilities for community issues

Provide relevant training to those with specific

community responsibility

Employee volunteering & fundraising integrated

into employee's development strategy &

plan


P a g e | 165

community non-profit organizations. While community-business partnerships may still contain a

traditional philanthropic component, such as cash or in-kind donations, they can be broader and

deeper in nature, and involve the exchange of non-financial resources, staff expertise and

mentoring. Such broader partnerships tend to lead to better societal outcomes and improved

delivery of services at a local level.

4. Measurement and evaluation of CCI: Part of treating CCI like other business functions requires

companies to specify clear, measurable objectives and track their results over time.

5. Transparency and accountability: Finally, with the greater acceptance of CCI among stakeholders

(including shareholders) has come increased demand for greater transparency and accountability for

the resources allocated to community initiatives. Companies taking a strategic approach to CCI are

expected to publicly disclose their CCI activities and outcomes to all stakeholders and preferably

provide an independent assurance process for their community activities and achieved outcomes.17

Today‘s view on CSR holds that it is a key element of business success and sustainability. In order to

derive the full benefits of CSR, companies must treat their CSR activities as they do all core business

activities. CCI, as a key component of CSR, must be subjected to the same accountability as production,

marketing, human resources or procurement. Therefore, a company‘s CCI activities must be professional,

must be aligned to core business goals, must be subjected to measurement and evaluation, and must be

transparent and accountable.

III. Research Methodology

1. Objectives of the study

The study is intended to support the development of responsible management education or CSR education in

Vietnam by providing an overall picture of how CCI is commonly managed among Vietnamese companies

participating in the GCNV. This information will used to support responsible management course curriculum

and contents for Vietnamese institutions of higher education and as reference for future research.

2. Population

The targeted population of this research is Vietnamese companies that are members of the Global

Compact Network Vietnam (GCNV). The GCNV currently consists of over 100 members (including

Vietnamese and international companies, universities, civil society) and is still growing. GCNV members

have agreed to adhere to a set of core principles regarding their business practices, as set forth by the

United Nations Global Compact.18

GCNV serves as the local chapter for the global initiative and is

developing Vietnamese CSR solutions to Vietnamese problems. Companies belonging to the GCNV were

selected for this study as they should represent the forefront of CSR and CCI activities in Vietnam.

Future studies can test this assumption against a sample of non-GCNV companies. Due to time and

budget limitations, the survey results from 25 companies are included in the study. These 25 companies

were willing to participate in the survey and provided responses within the allotted timeframe.

17

Zappalà, Gianni, and Denni, Arli, 2010. Corporate Community Involvement among leading companies in

Australia and New Zealand: Strategies, structure and measurement. 18

Global Compact Network Vietnam. About GCNV. Retrieved from http://globalcompactvietnam.org/


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3. Data collection

The data is derived from a survey questionnaire and review of secondary data on related studies. The

questionnaire surveys included general information as well as information on company strategy or plans

for CCI activities, characteristics of current CCI activities, employee capacity building on CCI,

measurement and evaluation of CCI programs, decision making in the company on CCI initiatives and

problems or obstacles faced in implementing CCI activities. The telephone interview technique was

applied in this study in order to effectively collect information from respondents in a timely fashion.

4. Data Analysis

After the data was collected, it was organized and analyzed. The research team used the Statistical

Package for Social Sciences (SPSS), program to analyze quantitative data from the survey. Descriptive

statistics like frequency, percentage and mean were used to describe the findings. The results are

presented in diagrams, graphs and tables. In addition, the review of secondary data was analyzed through

content analysis by the research team with the aim of quantifying emerging characteristics and problems

in implementing CCI activities.

IV. Findings

This section presents the findings from secondary data survey derived from the State of CSR in Vietnam

and other relevant research as well as the Vietnam CSR Award 2009 booklet and primary data collected

from the 25 GCNV respondents. 19,20

Following are the results.

Findings from the secondary data survey

To understand the context of CCI in Vietnam, this paper uses relevant findings from the study on the state

of CSR in Vietnam and information from GCNV members. The findings reveal that more than half of all

respondents integrated a CSR policy or a commitment to stakeholders into their business practices. This

was especially true in the textile and garment industry. For the focus of their CSR-related stakeholder

engagement, the majority of the respondents reported that corporate employees are the main group that

participated in stakeholder dialogue, followed by their customers and finally suppliers and shareholders,

respectively. The results also indicated that most companies are implementing activities primarily to meet

government regulations. Meeting community expectations ranked second. The study also showed that

most companies have no board committee or management team directly responsible for CSR.21

Based on

these findings, it is clear that the concept of strategic CSR in Vietnamese companies needs more time and

effort to be adopted systematically by management. Without these mechanisms, it may be difficult to

provide direction or administrative assistance to CSR and it makes it unlikely that result of CSR activities

will be monitored with respect to their support of both business or stakeholder objectives.

19

Kenan Institute Asia, 2010. A Survey on the State of CSR in Vietnam. 20

Van phing PTBV and VCCI, 2009. CSR Award 2009: Businesses with best CSR practices. 21

Kenan Institute Asia, 2010. A Survey on the State of CSR in Vietnam.


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Findings from questionnaire survey

The respondents to the survey were executives of Vietnam companies that are members of the GCNV.

They replied to a series of questions about their CCI policies and activities, as well as the limitations and

obstacles that their companies have faced in implementing CCI.

Q1: Has your company established a strategy or plan for CCI activities?

As shown in figure 1, slightly over half of the respondents (52%) stated that their companies have

developed a strategy and plan for CCI activities that address one or more key community issues.

Although companies may not have a formal strategy, this does not mean that they do not engage in CCI.

Figure 1: Percentage of Companies with Corporate Community Involvement Strategies

Q2: Does your company have community development projects?

The vast majority of firms (84%) have operated community projects.

Figure 2: Percentage of Companies with Community Development Projects

52%

48%

yes no

84%

16%

yes no


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Q3: Does your company provide training to employees on community responsibility?

Shown in Figure 3, the survey results indicate that only 40% of firms provide training to employees on

community responsibility. This is a surprisingly low figure given the sampled companies membership in

the GCNV and the desire of these companies to engage their employees as key stakeholders.

Figure 3: Percentage of Companies Providing Training to Employees

on Community Responsibility

Q4: Does your company have a group of employees or a team responsible for community

relationships?

In most developed and many developing countries, large companies that implement community projects

have a group, committee or responsible team to build relationships with communities. As shown below in

Figure 4 below, the majority of surveyed companies (72%) have no group or responsible team designated

to work on this task.

Figure 4: Percentage of Companies with a Dedicated Group or Team Responsible for Community

Relationships

40%

60%

yes no

28%

72%

yes no


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Q5: Has your company ever measured the performance of its CCI program?

In order to effectively measure the performance of CCI programs, companies need to have measurement

guidelines and conduct monitoring and evaluation. However, figure 5 shows that 80% of the respondents

stated that their company has no measurement guidelines for reviewing the CCI process. Without proof of

the effectiveness of CCI programming, it is difficult to justify increases in CSR and CCI budgets. It is

therefore not surprising that inadequate funding was identified as a key constraint to more effective and

extensive CCI.

Figure 5: Percentage of Companies that Measure CCI Performance

Q6: What types of external community involvement does your company implement?

Figure 6 shows that most companies provide financial support to communities (68%), followed by

partnerships with non-governmental organizations (48%). The majority of these companies, however,

have failed to implement the employee volunteering programs or sponsorship for the communities (only

28% and 20%, respectively).

Figure 6: Type of external community involvement implemented by Vietnamese companies

*Notes: Respondents were asked to choose all that apply in their companies and may

include multiple answers from respondents.

20%

80%

yes no

68

48

44

28

20

Cash donations

Partnership with NGOs

Service donations

Employee volunteering

Sponsorship


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Q7: In the past year, what aspects of community involvement has your company primarily

implemented or provided for local communities?

Figure 7 shows that more than half of the respondents reported that their organization operated activities

promoting occupational training for local people (60%). Health care programming was also a key area of

investment for 44% of the respondents.

Figure 7: Aspects of Community Involvement that Companies Implemented or

Provided for Local Communities

*Notes: Respondents were asked to tick all that apply in their companies and may


Q8: Who is the main decision maker in your company for approval of community involvement projects?

Sixteen companies responded that the main decision maker for approving community investment

programming is the managing director (MD), followed by the chief executive officer (CEO) for 9 companies.

Only a few respondents stated that the CSR manager or others with similar titles have the authority or

decision-making power over such issues. This demonstrates the top down nature of community involvement

programming in Vietnam.

Figure 2: The Main Decision Maker for Approval of

Community Involvement Programming in Vietnamese Companies

60

44

32

28

Promoting occupation for

local people

Health care

Education& Scholarship

Environmental issue

0

5

10

15

20

Managing

Director

CEO CSR manager

or CCI

committee

other

12

9

2 2

No

.of

re

sp

on

de

nts

Main decision maker for CCI project


P a g e | 171

Q9: What are the problems and obstacles to corporate community involvement faced by your

company?

As illustrated in Figure 9, the highest response to this question is inadequate budget (68%). The second

identified limitation is lack of team support for community development projects (44%), followed by lack

of knowledge on community issues (36%) and limited participation from corporate employees in CCI

programs (32%).

Figure 9: The Problems and Obstacles to Corporate Community Involvement

*Notes: Respondents were asked to choose all that apply in their companies and may


V. Discussion

The objective of this research study is to gain a better understanding about CCI practices in GCNV

member companies. Results from the secondary data analysis and survey findings indicate that the

majority of companies surveyed currently have activities in CCI, yet they are still at an early stage of

development and not well integrated into their business practices.

The study results brought some key issues to light. First, regarding the CCI pattern in Vietnam, the results

indicate that the managing director or CEO is the person who most likely makes the decisions and sets the

direction of CCI activities. For the type of external community involvement activity that GCNV

companies implemented, cash donation ranked highest, while partnerships with NGOs ranked second.

The survey results suggest that most companies focus their CCI activities in the area of promoting

occupational training for local people and health care. Additionally, surveyed companies are not doing

enough to involve their employees in CCI activities.

68

44

36

32

24

Inadequate budget

Lack of team support for community

development project

Lack of knowledge on community

issues

Limited participation from employees

other


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Despite being at an early stage of CCI development, Vietnamese companies initiated a number of CCI

partnerships with NGOs, which can be considered strategic alliances that help ensure that the initiatives

are meaningful. When comparing the results with similar research on CCI patterns in Dubai22

, where most

companies conduct CCI practices by providing cash donation and in-kind product/service donations,

GCNV members companies appear to be more strategic. Due to the number of NGOs operating in

Vietnam, and the preference for Vietnamese companies to partner with NGOs in developing sustainable

relationship with the communities, Vietnamese companies should be able to learn from their NGO

partners. This aspect can be considered as an important asset of CCI in Vietnam.

The findings suggest that monitoring and measuring the success of community involvement activities are

generally unstructured. Without tracking and measuring, the companies are unable to assess the costs and

benefits of any CCI activity. This demonstrates an area for much needed improvement of current CCI

practices. There is also evidence from this survey that development of financial and team support is seen

by the respondents as the main challenge for the development of CCI projects. Without results to

demonstrate the success of previous and ongoing CCI activities, it may be difficult to justify increasing

the company resources provided to those activities.

VI. Overall Conclusions

Community involvement has become increasingly important to companies operating in Vietnam. Yet,

more progress is needed in implementing and integrating strategic CCI approaches, especially in the areas

of measurement and employee volunteering. The findings reinforce the belief that there is much room for

wider adoption of good CCI practices in Vietnam, and that partnerships with NGOs might be an

expedient way to achieve this. It is very important for Vietnamese companies and communities to

understand that the real benefits of CCI are not limited to their ability to earn higher short-term profits or

to achieve environmental standards. Rather, it is a means to build a healthy, sustainable society in which

to live, work and do business successfully and sustainably over the long term.

Further understanding of CCI approaches will assist companies to tailor their CCI activities to the needs

of their stakeholders, and hence to facilitate the management of reputation within the context of changing

societal expectations of business.

22

Dubai Chamber Centre for Responsible Business, Beyond „Zakat”: Corporate Community Involvement in

Dubai 2010


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Documents

Kenan Foundation Asia · P a g e | i Overview As a component of the Global Compact Network Vietnam (GCNV), the Embedding Corporate Social Responsibility in Vietnam through Research,