'Strategy for sustainable development is a must to mobilize international capital'

By Gian Phuc - Sep 08, 2017 | 11:47 AM GMT+7

TheLEADERThe investors and researchers agree that the concept of sustainable development is the combination of environmental, social components and the governance mechanism of avoiding risks.

'Strategy for sustainable development is a must to mobilize international capital'
'Strategy for Sustainable Development for Business' workshop held in HCMC on 6 Sep. Photo: TL

That is the opinion of Pham Nguyen Vinh, Business Development Director at Dragon Capital Group, at the workshop "Strategy for Sustainable Development for Business" held in HCMC. The event was jointly organized by the TV program called CEO - Key to successful, Novaland Group, PwC Vietnam and Vietnam Business Council.

The seminar discussed two main themes: why businesses need sustainable development strategies and sustainable development experiences.

Success is not measured solely by financial returns

Tran Anh Dao, Deputy general director of the Hochiminh Stock Exchange (HOSE), introduced HOSE's sustainable development principles for listing and listing-oriented businesses.

Dao said that the stock market plays an important role in the Vietnamese economy. Therefore, the orientation of sustainable development of listed companies is also important to the economy.

HOSE is now holding 90% market share of listed companies, with average transactions reached VND3,850 billion (US$169 million) per day. The growth of the VN-Index in the first 8 months reached nearly 17%.

Supportive policies and the determination of sustaining growth are needed in order to maintain the growth, according to Dao. It does not stop at environmental and social issues, it is more about sustainability of the business.

Dao shared that the first factor of sustainable development for businesses is the growth of revenue and profit. Sustainable business does not mean to trade it all, but to sustain growth in the long run. In addition, the development of the business must be considered in terms of contributing to community and social development to some extent. Because business is a part of society.

The final factor is to build a solid governance system, which is needed to be prioritized by businesses to help companies avoid systemic risks.

However, what is the standard for sustainable development?

Mr. Hoang Duc Hung - Deputy General Director of PwC Vietnam shared the survey showing the views of CEOs around the world.

Up to 84 per cent of CEOs said they are expected to meet the needs of many stakeholders. Meanwhile, about 80 per cent of them valued long term rather than short term profit. 76 per cent of them supposed success is not just measured by financial returns. In particular, 72% of CEOs surveyed said they had to report financial and nonfinancial issues, Hoang Duc Hung, Deputy General Director of PwC Vietnam shared.

Hung also said that most CEOs said their business purpose is to create value for stakeholders.

Factors affecting to the businesses' sustainable development are differently considered. They said that the purpose of the business is to serve their customers (53 per cent), society (31 per cent), the business itself (26 per cent), shareholders (16 per cent), employees (14 per cent) and supply chain (5 per cent).

Investment criteria of Dragon Capital

Pham Nguyen Vinh, Business development director at Dragon Capital said that in the 1960s, CEOs were hired to make profits at all costs.

Dragon Capital is managing more than US$2 billion, 60-70 businesses and investing more than 90% of its assets in Vietnam. From 2012 to 2016, Dragon Capital has changed the terms of investment criteria seven times.

Its investment decisions are based not only on financial indicators but also on other factors such as their contribution to the community and environment of the business.

When implementing these investment indicators, Vinh acknowledged the Dragon Caimal faces many challenges. The biggest challenge is the narowing investment environment. However, it is better to invest in companies that respect social value and future generations rather than pouring capital into profitable businesses without respect for investors and stakeholders. Big returns are promising but hide potential risks.

Sustainable development is the strategy of many SMEs

Le Phung Hao, CEO of Global AAA Consulting, said that small and medium sized enterprises (SMEs) are now making some changes in their views of sustainable development.

The problem of SMEs is how to survive in the first place. Then, in the development process, SMEs prioritize community investment in the goal of success. To do this, SME must have a clear strategy right from the beginning, to help businesses grow steadily to lay the foundation for sustainable development in the future.

There are rising concerns whether child labor should be used, even if the business trains them and indirectly helps their families reduce economic pressures.

Dao affirmed that one of the criteria for sustainable development of HOSE is that listed enterprises are not allowed to use child labor.

Although many businesses are changing strategies towards sustainable development, many challenges are waiting them.

Sustainable development is the investment for the future; even it can not be seen in the short term. Hao said that it is not necessary to distinguish sustainable development from corporate value. When choosing sustainable development, the business will have good sympathy from the customers. This is definitely an investment for the future.