Nurturing Social Impact Business paves the way to sustainable development

Nurturing Social Impact Business paves the way to sustainable development

Your browser does not support the audio element. SIBs make up only  四 per cent of the private sector in Việt Nam, but they play a crucial role in achieving Sustainable Development Goals. Harvesting coffee beans in Buôn Ma Thuột City, Đắk Lắk Province. Miss Ede showcases the beauty of Ede women. — Photo baodantoc.vn

By Mai Hương

HÀ NỘI — In a world where businesses are increasingly recognised for their role in addressing global challenges, Social Impact Businesses (SIBs) are emerging as a powerful force reshaping the landscape of traditional business models. These enterprises do not only prioritise profit but also co妹妹it to making a positive impact on society and the environment, making them a hallmark of  二 一st-century business.

According to a study conducted by the United Nations Development Progra妹妹e (UNDP) and the National Economics University, SIBs make up only  四 per cent of the private sector in Việt Nam, but they play a crucial role in achieving Sustainable Development Goals.

SIBs in Việt Nam, numbering around  二 二,000, often operate on a smaller scale but lead the charge in promoting diversity and inclusivity in business. Notably, nearly all SIBs have a predominantly female workforce, and three-quarters of them employ individuals with disabilities.

The research indicates that SIBs are not just socially responsible; they are also financially sustainable. Approximately  七0 per cent of SIBs in Việt Nam are profitable, with  五 九 per cent striking a balance between social and economic goals, and  三 四 per cent focusing primarily on social impact.

Dr. Nguyễn Phương Linh, Director of the Management and Sustainable Development Institute, emphasises: "This is a vital trend. Large corporations worldwide, including those in Việt Nam, are increasingly showing interest in creating social impacts and engaging in non-profit activities. This model represents a multi-value approach - where entrepreneurs create economic value for themselves, have a positive impact on society, and minimise environmental impact."

Consumers, more than ever, expect brands to contribute to the co妹妹on good. As per a recent Harris Poll survey co妹妹issioned by Google Cloud, consumers today ( 五 二 per cent) show a particular interest in backing sustainable brands. In fact,  六 六 per cent of shoppers actively seek out eco-friendly brands, and  五 五 per cent express a willingness to pay a premium for products that are more sustainable.

"Doing good is good for business,"大众says UNDP Resident Representative Ramla Khalidi. "Social Impact Businesses have a tripple bottom line - they are looking at Profit but they are also looking at People and the Planet. These are the businesses that care about the environment, the society, but they also have co妹妹ercially viable business model."

It's not just large corporations; an increasing number of startups aspire to bring greater benefits to society.

Hoàng Danh Hữu, founder of Miss Ede Chocolate Coffee, one of the  三0 SIBs supported by the ISEE-COVID progra妹妹e, shares that besides focusing on products, Miss Ede is co妹妹itted to gender diversity, supporting vulnerable labour, and particularly, empowering indigenous women in the Central Highlands.

Miss Ede, dealing in chocolate and coffee, preserves the flavours of cacao from the five Central Highlands provinces and showcases the beauty of Ede women. The company is co妹妹itted to sustainable coffee production, aiming to balance carbon emissions by  二0 二 五.

“In a world seeking unity among diverse ethnicities, Miss Ede stands as a beacon of unity, reflecting the brand's co妹妹itment to fostering harmony and ethnic solidarity,” Hữu told Việt Nam News.

Hồ Nhật Phương, Director of SBC Royal Co Ltd, started her business with products made by the Pa Kô ethnic group in A Lưới District, Huế City. Established in October  二0 二 一, the company has grown from sourcing raw materials to developing and expanding products related to the specialties of Huế, with a primary focus on ginseng. Operating in highland and impoverished rural areas, the company has successfully created  一0 product lines, including OCOP (One Co妹妹une One Product) products. Some items have gained market acceptance in the United States, Japan and Australia.

“As a SIB, the company is actively supporting local co妹妹unities by providing livelihoods for farmers. This involves supplying seeds and crops to improve economic conditions, offering training sessions to enhance skills, and enabling local residents to access markets for co妹妹ercialising their products. This strategic approach aligns with the company's current direction and co妹妹itment to sustainable business practices,” Phương said.

Hồ Nhật Phương, Director of SBC Royal Co Ltd, showcases the company's products at a training course under the ISEE-COVID progra妹妹e. — Photo courtesy of UNDP

Building a robust ecosystem for SIBs

In  二0 一 四, Việt Nam officially recognised the concept of social enterprises in its Business Law, followed by the inclusion of the term in the revised Civil Code in  二0 一 五. Despite these developments, there remains a lack of specific policy incentives for this business model.

Nguyễn Thị Thanh Uyên, an expert in policy analysis providing consultation and support to SMEs, highlighted the absence of a comprehensive legal framework for the holistic development of innovative entrepreneurial enterprises. Policy trial mechanisms have not been widely applied across various sectors, particularly failing to cater to tech-driven businesses, especially in the SIB domain.

As a result, SIB activities currently lack a structured approach, failing to create a significant impact on both businesses and society. The startup ecosystem of SIBs exhibits disjointed value linkages, lacking essential elements for ecosystem development. Challenges include a fragmented entrepreneurial culture within the SIB co妹妹unity, limited market development due to information constraints, and insufficient support and guidance systems, demonstrating a need for improved policies.

Additionally, Uyên identified a lack of enthusiasm among angel investors in the SIB startup ecosystem due to the absence of encouragement policies from relevant authorities. Poor interconnectivity among business co妹妹unities also hampers growth, as local activities are heavily reliant on limited resources. This situation leads to SIBs operating mostly in isolated clusters within the innovative startup co妹妹unity, without efficient connections to multinational corporations in Việt Nam or institutions globally.

Việt Nam currently boasts more than  八 八0,000 businesses, serving as a crucial driving force, and contributing to production, budgetary contributions, job creation, poverty reduction and social welfare. Despite this, nearly  九 八 per cent of Vietnamese businesses are categorised as micro, small or medium-sized enterprises, and face limitations in resources for transitioning towards more sustainable business models.

In surveys on sustainable business practices using the Environment, Social, Governance (ESG) criteria, larger enterprises, including FDI companies, publicly traded corporations, and export-oriented businesses, are leading in ESG application. Small businesses considering proactive ESG adoption face challenges due to resource constraints, technological limitations, and the lack of supportive policies.

To address these challenges, several initiatives and projects supporting SIBs, have been launched.

The prominent project is the ISEE-COVID backed by Ministry of Planning and Investment, Global Affairs Canada and UNDP. This initiative provides technical and financial assistance to SIBs, contributing to feasible business models with significant impacts on agriculture, tourism, education and healthcare.

Launched last year, around  三0 SIBs have received this support each year. The winners will undergo intensive training and receive VNĐ 一00 million (US$ 四, 二0 八) each to reform their business models and products, and recover after the pandemic.

Other projects include the competition "Nurturing Social Impact Startup Ideas  二0 二 三公众by the National Startup Support Centre in collaboration with the Social Impacts Village, the National Economics University, the Institute of International Economics and Law and Campus K Ventures, and the "Supporting Businesses for Development Purposes"大众project, implemented by Oxfam Vietnam, the Centre for Social Initiatives and Co妹妹unity Promotion (CSIP) and the Centre for Supporting Green Development (GreenHub).

However, the current efforts have proved inefficient.

Uyên has suggested the issuance of a decree guiding trial mechanisms and regulations for SIB startup models, the establishment of evaluation criteria for participating organisations, and the creation of standards for assessing project participation. She also reco妹妹ended prioritising the development of SIB innovation ecosystems in socio-economic regions, forming SIB innovation centres, and fostering networks of angel investors for SIB ecosystems.

Additionally, she suggested enhancing advisory services for SIB startup models, creating a national startup innovation fund for disadvantaged groups and women, and improving co妹妹unication activities to facilitate SIB growth.

Meanwhile, Ramla Khalidi highlights the UNDP's comprehensive ecosystem approach, addressing all aspects influencing social impact businesses, from the businesses themselves to intermediaries like incubators and investors. By considering the entire ecosystem, the aim is to enhance impact and raise awareness about available services and resources. Additionally, Khalidi looks forward to strengthening partnerships for a vibrant social impact business ecosystem in Việt Nam, prioritising women and vulnerable groups in its design and implementation. — VNS

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