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Speeches & Transcripts March 4, 2019

Doing Responsible Business - the Best Foundation for the Successful Disruptive Development

Madam Truong Thi Mai, Member of the Politburo, Chairwoman of the Party Commission for People Mobilization,

Mr. Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce,

Ambassadors, Head of Delegations, Development Partners,

Leaders of Government Ministries and Agencies, Associations,

 

Distinguished guests, ladies and gentlemen!

Very good morning, xin chào!

It is my great pleasure to be here with you today at this important forum that brings together private sector representatives and especially women entrepreneurs and leaders from across Vietnam’s flourishing business sector. The topic of the event – Responsible Business – could not be more timely and relevant. As we consider Vietnam’s economic future, we often talk about the critical role of the private sector, of businesses and entrepreneurs as the key drivers of growth, job creation and prosperity.

But we are typically less concerned with the social responsibility of businesses. In fact, I recall a statement by the famous economist Milton Friedman who wrote in 1970 “the social responsibility of business is to increase profits”. This view saw businesses as primarily focused on serving their owners or shareholders. I would argue that this view is no longer true.

Today, corporate social responsibility has been broadened. While the bottom line is of course important, the focus of business leaders has increasingly shifted to encompass a wider set of stakeholders – those affected by a business’ past, present and future activities. Many companies – or more precisely leaders and individuals inside these companies, like many of you represented here today – are going beyond minimum legal requirements and obligations. Today’s most visionary companies increasingly focus on a triple “P” bottom line – People, Planet, Profit.

Indeed, more and more companies globally and here in Vietnam integrate social, environmental and ethical issues into their business operations and strategy. Beyond producing goods and providing services and of course making profits, these businesses recognize that they play important social roles.

They have recognized that, in the long run, a company’s profitability and returns on investment must be considered in the wider context of a company’s economic, social, and obligations. They voluntarily pursue social and environmental concerns that often go beyond what is required by laws and regulations ranging from labor and employment practices, environmental issues such as biodiversity, climate change, resource efficiency, and pollution prevention, combating bribery and corruption, to community involvement and development. As such, socially responsible businesses contribute not only to economic outcomes, but also play key roles in ensuring social inclusion, environmental sustainability and good governance through the supply chain. These principles are also reflected in the United Nations Global Compact, where businesses commit to ten principles in the areas of human rights, labour, environment and anti-corruption.

All this is of course good news for society. But it often also makes good business sense. We live in a world where consumers are increasingly concerned about the environmental and social footprint of products and services they consume. Many investors are also looking environmental, social and governance criteria in making investment decisions. For example, most international banks – including the World Bank but also leading commercial banks, such as Citi and HSBC – have committed to contributing to mitigating climate and put in place policies to prevent credit financing of coal plants. An increasing number of venture capitalists are looking into sustainable businesses in Vietnam, aiming to combine profit with positive contributions to communities. Their goal is clear: These investors want to contribute to society and make money at the same time. So paying attention to these issues and ensuring businesses thrive, not just economically but socially and environmentally, can pay good dividends.

Now here in Vietnam, we are also starting to see the beginnings of a trend towards greater corporate responsibility and a broader sense of ethical awareness in business – and indeed today’s event is a clear testament to this trend. Especially, some of the large enterprises, including both multinational and domestic firms clearly realize that for enterprises to develop sustainably, it makes good sense to comply with environmental protection standards, gender equality, labor rights, labor safety, equal pay, talent management and community development.

For example, I recently had a chance to visit FPT university campus in Hanoi. Founded in 2006, there are over twenty thousand students currently enrolled at this private university which was founded and is supported by Vietnam’s largest ICT company FPT. The university plays an important role in nurturing ICT talents, educating the programmers and software engineers that will fill tomorrow’s positions in FPT but also other ICT companies. This is of course helping FPT, but it is also a service to young talents seeking to develop relevant skills.

But you don’t have to be a large corporate machine to exercise responsible business strategies. For example, the start-up Fablab in Ho Chi Minh City fosters innovation by empowering innovators -many of them students. It has created a space for a bustling community of innovators to test, create and launch solutions to social problems. Most recently, FabLab Saigon, with its partners, pulled together a 72-hour event to design technological solutions for children living with disabilities.

These are just two examples of many. In fact, a study of ‘Corporate Philanthropy in Vietnam’ conducted in 2016 found that among the more than 500 companies covered by the study, around three-quarters had been engaged in some form of giving over the last 12 months. The study also found business size to be a key driving factor for philanthropy. The biggest businesses were the biggest givers, it showed. Some 96 percent of companies with more than 500 employees were engaged in charitable giving. In contrast, only 46 percent of businesses with 10 staff or less – which represent the vast majority of Vietnam’s registered businesses – were engaged in social activities.

So while there are good reasons to be optimistic we should note that corporate social responsibility is far from a generally accepted or practiced norm in Vietnam. Too often it is seen as corporate charity rather than an essential element of a sustainable business strategy.

The public has a continuing and legitimate expectation that the corporate sector will play its part, as partners of both government and the community.  These types of partnership can make a real difference to the community in which companies operate. Finding new and better ways to work together to build the social capital to help address some of the most pressing social and environmental issues of our times, including rising inequality and climate change.

We have come a long way since Milton Friedman. But there are still many opportunities to ensure that profits, social responsibility and our responsibility to the planet proceed hand in hand. Corporate social responsibility must seize these opportunities and maximize the contribution of business to achieve not just profits but the common good. And if we do it well, we will surprise ourselves by the differences we can make – differences we can make for the better of planet, people and – yes –  also profits.

Xin cảm ơn!

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