Businesses which balance a social mission with profit have a direct and lasting impact on the communities in which they operate. In the case of Vietnam, the combination is vital to achieve the United Nation Sustainable Development Goals (SDG), stated Catherine Phuong, UNDP's Assistant Country Director in Vietnam.
Overview of the conference. Source: Ngoc Thuy
|
According to Phuong, Social Impact Business (SIB) is understood as "organizations that have both trading activities and a commitment to positively impacting society/environment as the two central tenets of their strategic operations."
They can create the value necessary to grow their business, whilst scaling up their social impact, Phuong said at the launch of UNDP's report on sustainable business model on September 27.
"This involves developing a more sustainable and inclusive approach to economic growth, through innovation and technology, improving productivity whilst addressing key social and environmental challenges faced by the country," Phuong added.
However, as SIB sector accounts for only 4% or 22,000 of the total private sector, it is therefore critical that UNDP support the growth of this sustainable business model in Vietnam and recognize such enterprises and entrepreneurs as key partners to the achievement of the SDGs, Phuong stressed.
A typical SIB in Vietnam is micro-sized in personnel and revenue. But SIBs are leaders in promoting diversity and inclusion. Almost all SIBs employ female staff and up to three fourths of them have people with disabilities in their workforce, which is why they are highly inclusive, she stressed.
UNDP's statistics showed that 70% of SIBs are making profit. 59% of SIBs in Vietnam choose to balance social and economic objectives, whilst 34% focus on their social mission. Jobs, Well-being and Environmental protection make up the top three areas of impact for SIBs.
Tran Tho Dat, rector of the National Economic University (NEU), said that business for society and sustainable development is the business model of the 21st century. "This is a win-win model that has many values and entrepreneurs create both economic profit and positive impact on society while mitigating negative impact on the environment," he said.
Huge potential for SIBs in Vietnam
Vietnam has a vibrant and rapidly growing ecosystem for SIBs, stated Truong Thi Nam Thang, lead researcher of the report from the NEU.
Vietnam is one of the few countries with legal recognition for social enterprises (SE) - a crucial model for SIB sector, as noted in Article 10 of the Vietnam Enterprise Law 2015. Nevertheless, there has been limited efforts to develop specific policies or design activities to foster the growth of the SE sector to date, Thang added.
"Currently, 84% of SIBs are registered under the Enterprise Law 2015, of which 72% are registered as for-profit enterprises with only 12% registered as SEs," she informed.
Moreover, shortage of capital and human resource capacity, as well as recruiting staff, remain the biggest challenges for the SIB sector in Vietnam.
However, SIBs in Vietnam are optimistic about the prospects for growth, with only 1% believing that revenues are likely to reduce, 7% believing that their revenues will be stable and 92% expecting to increase their income in 2018.
According to Thang, a business that chooses to create a social impact can garner the support and recognition of the community, which can lead to growth in customers. In addition, the opportunity to network with key stakeholders, as well as good branding will soon emerge. Thang pointed out that there is a strong sense of community and support to social projects, including SIBs.
"The mindset of supporting products or services with social good, is not a new thing to people in Vietnam," she said.
The UNDP's report stated that SIBs also recognize the unique opportunity and competitive advantage presented by pursuing a social mission, with impact startups in particular uniquely placed to drive new economic models for social good, including the sharing economy, circular economy and Industrial Revolution 4.0.
To support the growth of the SIB sector, UNDP suggested increasing access to sources of capital and other innovative financing methods for the SIB sector; strengthening the connection between SIBs and the wider private sector; and the establishment of a representative network for the SIB sector.
