Vietnam's companies urged to balance profits and social goals

Tiếng Việt

Vietnam's companies urged to balance profits and social goals

Businesses in Vietnam should not delay embedding social and environmental objectives into their core strategies, said two international academics from The Business School at RMIT University.

Vietnam's economic dynamism is undeniable. The nation has witnessed remarkable growth in recent years, fuelled by a young workforce, foreign investment, and increasing global integration. However, surrounding this economic success, a crucial question looms: How can businesses balance the traditional pursuit of profit with the growing demand for environmental, social, and governance (ESG) responsibility?

“This question reflects a fundamental shift in the business landscape. Stakeholders, from investors to consumers, expect companies to contribute positively to society and the environment, and they are increasingly holding businesses accountable for their ESG performance,” said Associate Professor Burkhard Schrage, Associate Head of the Management Department at The Business School, RMIT Vietnam.

Stakeholders, including consumers, are expecting companies to contribute positively to society and the environment. (Photo: Pexels)

In 2023, a survey conducted by Schneider Electric with 500 companies in Vietnam found that 99 per cent of them have sustainable intentions, but over half have yet to act on them.

Associate Professor Schrage remarked that Vietnamese companies face a challenge – balancing the traditional focus on maximising profits for shareholders with the growing importance of ESG concerns. This shift can create tension between financial goals and broader societal expectations.

“Forward-thinking business leaders are beginning to recognise that profit and purpose are not mutually exclusive. They understand that ESG considerations are not just ethical imperatives but also smart business strategies,” he said.

The RMIT academic cited a study by McKinsey which found that businesses with a positive record on ESG issues achieve better financial results, such as 10 per cent higher business valuations than those with a negative record.

He explained that companies with strong ESG performance often enjoy enhanced brand reputation, attract and retain top talent, and gain access to new markets. These factors can contribute to long-term financial success and sustainable growth.

People working at laptops and printed charts

Forward-thinking business leaders are beginning to recognise that profit and purpose are not mutually exclusive. (Photo: Pexels)

Dr Santiago Velasquez, Associate Program Manager for the MBA program at RMIT, acknowledged that there might be unique challenges for Vietnamese businesses when implementing ESG practices compared to their global counterparts.

“These can relate to economic, infrastructure or regulatory factors specific to Vietnam. Nevertheless, businesses are well advised to implement global best practices and core principles of ESG,” Dr Velasquez said.

The upcoming CEO Talks 2024 conference, hosted by RMIT University, aims to explore the evolving landscape that current and aspiring business leaders will navigate. Themed ‘Profit and Purpose: Redefining Success in Tomorrow’s Business', the conference will feature keynote addresses from industry leaders at the forefront of integrating sustainability into their business models.

Mr Mai Lam Dong, Cluster President at Schneider Electric Vietnam and Cambodia, will delve into the key trends driving innovation and sustainability. Mr Bruce Delteil, Managing Partner of McKinsey Vietnam, will provide strategies for balancing sustainability with business success, and Dr Rita Mokbel, CEO of Ericsson Vietnam, will showcase how technology can drive sustainability.

RMIT University's inaugural CEO Talks takes place on 13 September in Ho Chi Minh City. This event offers a unique opportunity for business leaders, academics, and policymakers to engage in a forward-thinking discussion on the future of responsible business in Vietnam.