SUSTAINABILITY AND TRIPLE BOTTOM LINE REPORTING IN MANUFACTURING INDUSTRY IN VIETNAM

TABLE OF CONTENT LIST OF ABBREVIATIONS LIST OF FIGURES AND TABLES ACKNOWLEDGEMENT INTRODUCTION 1 CHAPTER 1: LITERATURE REVIEW 5 1.1 Sustainability and Triple Bottom Line 5 1.1.1 Sustainability 5 1.1.2 Triple Bottom Line 6 1.2 Theoretical Framework 10 1.3 Business benefit of sustainability and triple bottom line report 11 1.4 Sustainability and TBL in manufacturing industry in developed countries 12 1.4.1 Definition of sustainability in manufacturing industry 12 1.4.2 Application of sustainable and triple bottom line report in Australia 15 1.4.3 Application of sustainable and triple bottom line report in the United Kingdom 20 1.4.4 Lessons from sustainability and triple bottom line reporting in developed countries 26 CHAPTER 2: SUSTAINABILITY AND TRIPLE BOTTOM LINE IN MANUFACTURING INDUSTRY IN VIETNAM 29 2.1 Overview of sustainability and triple bottom line reporting in Vietnam 29 2.1.1 History of sustainability and triple bottom line reporting in Vietnam 29 2.1.2 Related organizations in issuing sustainability and triple bottom line reporting in Vietnam 30 2.1.3 Scope of sustainability and triple bottom line reporting in Vietnam 35 2.2 Sustainability and triple bottom line reporting in manufacturing industry in Vietnam 36 2.2.1 Overview of sustainability and triple bottom line reporting in manufacturing industry in Vietnam 36 2.2.2 Process of issuing the sustainability and triple bottom line report 37 2.3 Factors influencing the decision of issuing sustainability and triple bottom line report in Vietnamese manufacturing companies 44 2.3.1 Company age 44 2.3.2 Rank in Ara Vietnam award 45 2.3.3 Total debt 45 2.3.4 Total equity 46 2.3.5 Return on assets (ROA) 46 2.3.6 Type of industry 46 2.3.7 Big4 47 2.4 Multiple regression model 47 2.4.1 Multiple regression model 47 2.4.2 Regression model analysis 50 CHAPTER 3: RECOMMENDATIONS TO IMPROVE THE APPLICATION OF SUSTAINABILITY AND TRIPLE BOTTOME LINE REPORTING IN MANUFACTURING INDUSTRY IN VIETNAM 55 3.1 Development strategies of manufacturing industry in Vietnam 55 3.2 Opportunities and challenges for Vietnamese manufacturing industries in the future 57 3.2.1 Opportunities for Vietnamese manufacturers 57 3.2.2 Challenges for Vietnamese manufacturers 59 3.3 Recommendations to improve the application of sustainability and triple bottom line reporting 60 3.3.1 Recommendation for Vietnamese Government 60 3.3.2 Recommendation for Vietnamese manufacturers 63 CONCLUSION 67 REFERENCES 69 APPENDIX

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION

-o0o -GRADUATION THESIS

Major: International Business Administration

SUSTAINABILITY AND TRIPLE BOTTOM LINE REPORTING IN MANUFACTURING INDUSTRY

TABLE OF CONTENT

LIST OF ABBREVIATIONS

ASEAN Association of Southeast Asian Nations

Big 4 The Big Four are the four largest international professional services

networks, offering audit, assurance, tax, consulting, advisory, actuarial,corporate finance, and legal services

DOC/EPA The Green Suppliers Network

G250 The world’s 250 largest companies based on the Fortune ranking

GDP Gross Domestic Products

GRI Global Reporting Initiatives

ICOR Incremental Capital - Output Ratio

IFC International Finance Corporation

IUCN International Union for Conservation of Nature

MNCs Multinational Companies

MOLISA Ministry of Labor, Invalids and Social Welfare

N100 The largest 100 companies in each country

OLS Ordinary Least Square

TBL Triple bottom line

TNCs Transnational Companies

UNEP United Nations Environment Programs

UNIDO United Nations Industrial Development Organization

VBCSD Vietnam Business Council for Sustainable Development

VCCI Vietnam Chamber of Commerce

VGCL General Confederation of Labor

WTO World Trade Organization

WWF World Wildlife Fund

LIST OF FIGURES AND TABLES

This graduation thesis consumed huge amount of work, research and dedication.Still, implementation would not have been possible if I did not receive a lot ofadvices and useful assistance from many people

Firstly, I would like to express my sincere gratitude to my advisor Prof Le Tra Myfor the continuous support of my final thesis and related research, for her patience,motivation, and immense knowledge Her guidance helped me in all the time ofresearch and writing of this thesis I could not have imagined having a betteradvisor and mentor for my study

Besides my advisor, my sincere thanks also go to teachers at Foreign TradeUniversity, for their insightful comments and kindly valuable lectures, but also forhard questions, which incented me to widen my research from various perspectives.Finally, I am particular grateful to my family and friends, for supporting mespiritually throughout writing this thesis and my life in general

Hanoi, April 7th, 2016

Hoang Thi Bich Ngoc

1 Rationale of the thesis

Vietnam is a developing economy in the Southeast Asia Over the last few decades,this nation has been rising at an increasingly fast rate of development, especially inmanufacturing industry, with the averaged GDP Growth Rate of 6.15 percent from

2000 until 2015 (according to Trading Economics) Nevertheless, as themanufacturing industry continuously growth, newcomers as well as long-standinghistory members are facing with more pressure in expanding market share andkeeping their favorable positions Obviously, in that context, profitability is not theonly key competitive factor but the sustainable development becomes the leadingmission and important long-term strategy to any groups in the current and futureVietnamese market economy

After the reunification in 1975, the manufacturing became national objectives as it

is believed as the way to bring the financial resources and improve povertysituation In peaceful time, once again it is considered backbone of the economy,contributing nearly 50% of total GDP Besides the economic role, manufacturingplay multiple part in many different aspects such as social issues, employment,environment, etc It requires manufacturing companies pay more attention withissues such as environmental damage, the treatment of workers, and product safety

to meet the expectation from public and stakeholders For all mentioned reasons, aconsulting group invented a report called “Triple Bottom Line” (TBL) formeasuring the sustainable degree in three divisions (3Ps) – People, Planet, Profit It

is a needed action to gain the belief from stakeholders, affirm the company’sposition not only financially but also in term of social corporate responsibility.Although its impacts are great, sometimes publishing sustainable and triple bottomline report are consuming The research will review the Triple Bottom Line concept,explains how it can be useful and applied in Vietnamese manufacturing companies,and use econometric model to analyze various factors affecting the decision ofissuing Triple Bottom Line report Therefore, the subject for the graduation thesis is

“Sustainability and triple bottom line report in manufacturing industry in Vietnam”.

2 Overview of research issue

In recent years, there is growing concern of Vietnamese companies, especiallymanufacturing enterprises, to sustainable development matter In which, many havechosen to issues sustainable or TBL report in order to affirm its economic situation

as well as express their spirit in term of social corporate responsibility From thecollapse of many big companies, both national and multinational due to scandalsrelated to their corporate responsibilities such as Vedan with industrial wastespoiled or Tan Hiep Phat with poor food safety, issuing sustainable reportsassociated with annual reports is suggested for manufacturing companies toimprove their images and keep stakeholders’ belief

However, since Triple Bottom Line is a new report for special purposes, it normallytakes time and money to prepare Furthermore, based on business nature andspecific strategies of each company, only a specific company group isrecommended to issue this report As a result, in this research, we will use statisticdata and econometric model in order to make suggestion to improve the application

of sustainability and triple bottom line reporting

3 Objectives of the thesis

The purpose of this study is to investigate the extent of triple bottom line reportingactivities applied by Vietnamese companies, especially manufacturing companies

By analyzing the econometric model between TBL and some factors, it is going toanswer the following questions:

1. What is sustainability and TBL reporting in manufacturing companies indeveloped countries? What are lessons for Vietnamese manufacturingcompanies?

2. What are the factors affecting the decision of issuing Triple Bottom Linereport in Vietnam?

3. How should manufacturing companies apply TBL report? What arerecommendations for them to increase sustainability degree?

In order to achieve the above objectives, this research will focus on some specifictasks including synthesize the literature review of sustainability and Triple bottomline report, analyze case studies in Japan and Denmark, analyze econometric model,make recommendation for manufacturing company in Vietnam market

4 Focus and Scope of the thesis

The paper attempts to provide a basic literature on sustainability and Triple BottomLine report The study concentrates on main concepts of sustainability, TripleBottom Line, analyzes case studies in manufacturing companies in 2 developedcountries - Japan and Denmark, and gives recommendation of how to apply TripleBottom Line report on Vietnamese manufacturing companies

Due to the limitation in time and the availability of data, this study will only focus

on the data of financial year 2014 at 50 companies having best annual report atcompetition Ara Vietnam 2015 (in which, there are 34 companies in manufacturingindustry) Based on these data, it will analyze the relationship between issuingTriple Bottom Line report decision and eight factors including total owner equity,risk, type of industry, rank in Ara Vietnam 2014 competition, return on asset(ROA), debt, age of companies, liquidity level

5 Methodology

The study is conducted by various methods, including comparative methods tocompare the application of Triple Bottom Line in Japan and Denmark, statisticalanalysis, studying and colligating theories, analyzing and synthesizing manyreliable sources of information The information and data are collected from foreignand domestic resources such as report, research, news, etc Moreover, it ishighlighted that the evaluation and recommendations are given based on logicaljudgment of the author

In particular, the research uses quantitative method that the regression model is theleading instrument By collecting data of 50 companies through website for investor-Cophieu68.com, Probit and Logit regression will be established, then themathematic equation illustrating relationship between TBL decision and 8 variableswill be built Besides, the correlation between factors will be shown through LinearRegression model with Ordinary Least Square (OLS) estimation It is noted that thereason for choosing Probit and Logit model and meaning of this model will be fullyexplained in chapter 2, section 2.4 – Regression model.

6 Structure of the thesis

In order to solve the question mentioned in section 3 – objectives of the thesis, this study will be logically divided into 4 chapters as follows:

- Chapter 1: Literature review – provides theoretical background onsustainability and Triple Bottom Line

- Chapter 2: Sustainability and Triple Bottom Line in Vietnamesemanufacturing industry – Gives overview of TBL application in Vietnamesemanufacturing companies and analyzing regression model

- Chapter 3: Recommendations to improve the application of sustainabilityand TBL reporting in manufacturing industry in Vietnam – based onregression model analysis and evaluation of Vietnamese manufacturingindustry, gives recommendation for manufacturing companies in Vietnam

CHAPTER 1: LITERATURE REVIEW

1.1Sustainability and Triple Bottom Line

1.1.1 Sustainability

It is important to understanding the definition of sustainability and sustainabledevelopment as it will be the main topic throughout this study There are severaldefinition of sustainability and sustainable development as follows

Sustainability is considered as the principle of ensuring that our actions today donot limit the range of economic, social, and environmental options open to futuregenerations (John Elkington, 1994) He also argued that capitalism and states thatcapitalism as it stands, is most likely not sustainable

According to Luc Hens, sustainability may be defined as a dynamic condition in

which the economic, environmental and social systems meet the needs and wants ofthe present generation, while maintaining or increasing the resource and productivecapacities that are donated to the future generations Sustainable development is apositive change, which does not occur at the expense of the environment or socialsystems on which humans depend (Hens, 2010:875) This concept of Luc Hen will

be used as the definition of sustainability in this study

Traditionally, business has focused on shareholder wealth maximization, however,due to globalization, a company’s operating license is no longer granted by a singleinterest group but by public stakeholders who have access to a company’s financialand non-financial information There is a growing recognition that the value ofcorporate activity is defined too narrowly in that it influences the economic, socialand environmental factors that it sustains This recognition has led to the increasingpopularity of the TBL or sustainable development reporting (Hens, 2010:876)

According to Pearce, Makandia and Barbier (1989), sustainable developmentinvolves devising a social and economic system, which ensures that these goals are

sustained, that is that real incomes rise, that educational standards increase, that thehealth of nation improves, that the general quality of life is advanced.

However, the most well-knowed definition was stated in UN Brundtland

Commission that sustainable development is development that meets the needs of

the present without compromising the ability of future generations to meet theirown needs (1987) This definition will also be applied as official definition aboutsustainable development in this paper

It emphasizes that sustainability reporting should recognize the interdependence ofeconomic, social and environmental factors; and the importance of intergenerationaltimescales It also has a moral element to it – the need to focus on the impact on thepoor Arguably, when this definition is applied in practice it is so broad and vaguethat business and less enlightened governments can claim to care about theenvironment, but actually give priority to social and economic considerations There

is widespread interest in a global standard for sustainability (and well-being)reporting, but a key barrier to developing this is whether it is possible to reach auniversal and meaningful consensus on what ‘sustainability’ or ‘well-being’ maymean (ACCA, 2010)

In 1991, IUCN, UNEP, WWF said “Sustainable development, sustainable growth,and sustainable use have been used interchangeably, as if their meanings were thesame They are not Sustainable growth is a contradiction in terms: nothing physicalcan grow indefinitely Sustainable use, is only applicable to renewable resources.Sustainable development is used in this strategy to mean: improving the quality ofhuman life whilst living within the carrying capacity of the ecosystems.”

Corporate social responsibility (CSR) is a form of corporate

self-regulation integrated into a business model (D.Wood, 1991, pp.691) CSR policyfunctions as a self-regulatory mechanism whereby a business monitors and ensuresits active compliance with the spirit of the law, ethical standards and national orinternational norms

Profit People

It is highlighted that in this thesis, the terms “corporate reponsibility”,

“Sustainability” can have the same meaning

1.1.2 Triple Bottom Line

Over the last few years, the sustainable development has been considered as aleading strategy at many companies This long-term mission normally requirescompanies to change in many areas covered by the economic, social andenvironmental lines In 1994, a phrase called “Triple Bottom Line” was introduced

by John Elkington In 1997, Elkington wrote in his book “Cabinnals with Forkstriple bottom line of 21st century business” that described the separate financial,

social and environmental "bottom lines" of companies Triple bottom line is

an accounting framework with three parts: social, environmental (or ecological) andfinancial (Elkington, 1997) Elkington believe that preparing three bottom linesinstead of focusing solely on its finances can give companies a more comprehensiveview by consideration companies’ influence on social, economic and environmentalsituation

Figure 1.1 Three bottom line factors

Source: Created by author

Elkington's triple bottom line is intended to advance the goal of sustainability inbusiness practices The three measures include profit (the economic value created

by the company, or the economic benefit to the surrounding community andsociety), people (the fair and favorable business practices regarding labor and thecommunity in which the company conducts its business) and planet (the use ofsustainable environmental practices and the reduction of environment impact)

Economic Indicators – concern an organisation’s impacts, both direct and indirect,

on the economic resources of its stakeholders and on economic systems at the local,national, and global levels The reporting organisation’s wages, pensions and otherbenefits paid to employees; monies received from customers and paid to suppliers;and taxes paid and subsidies received are within economic indicators (Introducingthe 2002 Sustainability Reporting Guidelines 2002, GRI)

Environmental Indicators – concerns an organisation’s impact on living and

non-living natural systems, including eco-systems, land, air and water Included withinenvironmental indicators are the environmental impacts of products and services;energy, material and water use; greenhouse gas and other emissions; effluents andwaste generation; impacts on biodiversity; use of hazardous materials; recycling,pollution, waste reduction and other environmental programmes; environmentalexpenditures; and fines and penalties for non-compliance (GRI, 2002)

Social Indicators - concern an organisation’s impacts on the social systems within

which it operates GRI social indicators are grouped into three clusters: labourpractices (e.g., diversity, employee health and safety), human rights (e.g., childlabour, compliance issues), and broader social issues affecting consumers,communities, and other stakeholders (e.g., bribery and corruption, communityrelations) (GRI, 2002)

Wheeler and Elkington (2001) argue that communicating effectively withstakeholders on progress towards economic prosperity, environmental quality andsocial justice, and the TBL, will become a defining characteristic of corporate

responsibility in the 21st century Raar (2002, pp.181) found a similar trend to that

of 11 Wheeler and Elkington (2001), and witnessed a move away fromenvironmental and social information in reports, to information that is aimed more

at external relations in the category of sustainability However, there are noparticular subjects of TBL, most of companies have relied upon the guideline tostructure their sustainability reports, issued by the Global Reporting Initiativeorganization (GRI)

Institute of Directors “King III Report” (2010, pp.23) recommended that enterpriseswanting to develop their stakeholder identification and engagement of nonfinancialaccounting, control and disclosure processes could draw on a growing volume ofguidance material, including industry codes of practice, standards, practical methodand management tools Some examples according to the Account Ability 1000report (1999) would be the work of the Institute for Social and EthicalAccountability in its AA1000 framework, which include aspects such as the GRIguidelines, SA8000 from Social Accountability International, OHSAS 18000occupational health and safety standards, ISO 9000 quality management and qualityassurance standards, ISO 14000 environmental standards

In short, sustainability reporting aim to provides information to group of stakeholders Stakeholder is a person, group or organization that has interest orconcern in an organization Stakeholders can affect or be affected by theorganization's actions, objectives and policies Some examples of key stakeholdersare creditors, directors, employees, government (and its agencies), owners(shareholders), suppliers, unions, and the community from which the businessdraws its resources (Post, Preston, Sachs, 2002) A critical element of sustainabilityreporting is that the stakeholders of the business need to be identified and theirinformation requirements taken into account when a sustainability report is planned(Raar, 2002)

interest-The value of the Triple Bottom Line report

We are living in a limited resources world that requires company to operateefficiency and sustainably to save resources and operate in long-term Besides,companies’ existence has large impact on not only the economy but also social andenvironmental aspect and companies have to pay back society by fulfill their socialcorporate responsibilities

It is undeniable that triple bottom line report has successfully sent the information

of the companies’ sustainability degree to related parties, reaffirmed its compliancesand created positive images In the today increasingly competitive society, thesuccess of a companies can depends on a variety of factors It is unlikely to thetraditional business that profitability is the most important factor strengthening thecompany’s position Now, companies is expected to do more activities andcomplete its social corporate responsibilities to satisfy the need of manystakeholders

Sustainability reporting, in some extent, can be the symbol of transparency.According to Cheney (2004, pp.14) the debate regarding the reasons for a moretransparent way of reporting and the value of sustainability is one that is enjoying

an increased level of support from most leading companies Sustainabledevelopment can directly drive or limit value creation and that reporting can helpinvestors distinguish companies that are efficient now and well-positioned to protecttheir market competitiveness from those that are headed for volatile conditions

White stated in Redefining Corporate Disclosure (2002, pp.15) that while financialreports were then meeting certain narrow technical requirements and providing aglimpse of past performance, the future was to be questioned Organizations need tocreate capacity to innovate, train and enrich its human capital, enhance itsreputation, strengthen brands, alliances and partnerships The measurement ofpublic trust and the quality of governance is also critical in this process Theconcept of triple bottom line reporting, an assessment of a company’s performance

in relation to profit, people and the planet, is increasingly welcomed by financialanalysts and investors, because it helps them to make better judgments about the

true value and prospects of a company across a broader range of assets Moreover, itenables management to anticipate and exploit opportunities to strengthen the firm’smarket competitiveness and boost a company transparency.

1.2Theoretical Framework

There are many different theoretical approaches applied to explain Triple BottomLine reporting, in which two widely used theories on the social and environmentalaccounting literature are legitimacy theory (Suchman, 1995) and stakeholder theory(R Edward Freeman, 1984)

Legitimacy theory is one of the most discussed theories to explain the phenomenon

of voluntary social and environmental disclosures in corporate communication.Legitimacy is a generalized perception or assumption that the actions of an entityare desirable, proper, or appropriate within some socially constructed system ofnorms, values, beliefs, and definitions (Suchman, 1995) It suggests that legitimacy

of business entity operates in society depends on an implicit social contract betweenbusiness entity and society

Consistent with the notion of legitimacy theory, companies seek to gain, maintain orrepair their legitimacy by using social and environmental reporting Legitimacytheory may provide useful insights for corporate social and environmentaldisclosures However, there are a number of gaps in the literature dealing withlegitimacy theory, which have not been addressed, such as the development of ageneral framework of legitimacy theory These theories argue that a competitiveadvantage would be easily gained by corporations with proactive social andenvironmental programs by sharing their social and environmental activities withstakeholder groups (shareholders, customers, suppliers and creditors) For example,

by publishing the accounting reports on the websites, companies build up therelationship with stakeholders

In 1984, R Edward Freeman published his landmark book, Strategic Management:

A Stakeholder Approach, a work that set the agenda for what we now call

stakeholder theory In the intervening years, the literature on stakeholder theory hasbecome vast and diverse.

Stakeholder theory suggests that companies will manage these relationships based

on different factors such as the nature of the task environment, the salience ofstakeholder groups and the values of decision makers who determine theshareholder ranking process (Donaldson & Preston, 1995)

It considers corporations as a part of social system while focus on variousstakeholder groups in society As such, management will tend to satisfy theinformation demands of those stakeholders important to the corporations’ ongoingsurvival Majority of Japanese or Korean companies, the corporate governancefollow the pluralistic and inside system to conduct their businesses The companieshave to adapt their operating and reporting behaviors to meet the stakeholder’sexpectations changing overtime (C Deegan, 2001) In summary, stakeholder theoryconsiders corporations as part of a social system while focusing on the variousstakeholder groups within society

1.3 Business benefit of sustainability and triple bottom line report

Group 100 (2010, pp.5) states, “TBL reporting has little relevance to reportingcompany or its stakeholders if it is not aligned to company’s overall businessstrategy A decision to move to full TBL reporting should not be taken lightly Itmust have senior management endorsement and commitment, as it may have majorresource implementations, and half-hearted approach is likely to be worse than notadopting it at all.”

Although adopting TBL report may take time and resources, there are variety ofbenefits from sustainable reporting The business case for TBL reporting centers onimproving relationships with key stakeholders such as employees, customer,investors and shareholders (Group 100, 2010)

Some benefits gained from issuing TBL report can be listed as follows:

• Enhancement of reputation and brand;

• Securing a ‘social license to operate’;

• Attraction and retention of high caliber employees;

• Improved access to investors;

• Reduce risk profile;

• Identification of potential cost savings;

• Increased scope for innovation;

• Aligning stakeholders needs with management focus; and

• Creation of sound basic for stakeholder dialogue

Besides strengthening the relationships with key stakeholders, public accounting forenvironmental and social line can be considered as an important factor for internalbehavior change Managers and executives may be able to identify problems andfocus attention to specific aspects where enhancement is required if they can have awell-rounded information on economic, environmental and social performance ofcompanies

1.4Sustainability and TBL in manufacturing industry in developed countries1.4.1 Definition of sustainability in manufacturing industry

For the purposes of Commerce's Sustainable Manufacturing Initiative, sustainable

manufacturing is defined as the creation of manufactured products that use

processes that minimize negative environmental impacts, conserve energy andnatural resources, are safe for employees, communities, and consumers and areeconomically sound (the US Department of Commerce’s SustainableManufacturing Initiative) To put simply, sustainable manufacturing is all aboutminimizing the diverse business risks inherent in any manufacturing operationwhile maximizing the new opportunities that arise from improving your processesand products The economic, environmental and social aspects embraced by thisconcept are illustrated below This Guide focuses on helping you to improve theenvironmental performance of your facility

Figure 1.2 Three-dimensional aspects of sustainable manufacturing

Source: OECD, The sustainable manufacturing and the toolkit, 2011

With manufacturing industries, the Green Suppliers Network has defined the

concept of clean manufacturing as a systematic approach to eliminating waste by

optimizing use and selection of resources and technologies, thereby lessening theimpact on the environment Sustainable manufacturing focuses on both how theproduct is made as well as the product’s attributes This includes the inputs, themanufacturing processes, and the product’s design Furthermore, sustainablemanufacturing includes things such as making products using less energy andmaterials, producing less waste, and using fewer hazardous materials as well asproducts that have greener attributes such as recyclability or lower energy use.Sustainable manufacturing practices can range from very simple processimprovements to large investments in new technologies and product redesign.These concepts play important part in sustainable reporting at many manufacturingcompanies around the world

Key business benefit from sustainable manufacturing

Working and manufacturing in a sustainable manner can make a clear and positivecontribution to business and its bottom line A number of studies have shown adirect correlation between good environmental performance and better returns onassets, equity and investments Making your business environmentally sound canalso improve the stock price, increase sales, income growth and enhanced profitmargins (OECD, Sustainable Manufacturing Toolkit, 2011)

Advantages from sustainable manufacturing can be divided into 3 dimensionsincluding financial performance, business excellence, relationships withstakeholders

First of all, in financial aspects, TBL reporting helps to increase sales byanticipating environmental and social expectations better than your competitors Italso improves efficiency and productivity by reducing resource use and waste, and

by cutting regulatory burdens Besides, the dependence on expensive or hazardousmaterials is reduced by exploring, innovating and introducing greener alternatives

In terms of business excellence, companies issuing TBL report is able to stay ahead

of regulations by being proactive and shaping best practice, rather than reactingafter changes are implemented There are also opportunities for them to win access

to capital by reducing risks in operations, strategy and the supply chain and bydeveloping innovative solutions and new products for market In addition, TBLreporting support manager to gain strategic foresight by anticipating how yourbusiness can innovate solutions or adaptations to new added value

Finally, regarding relations with stakeholders, sustainable report enhancesreputation of companies through demonstrating green know-how and setting apositive example Moreover, employees’ morale and retention is improved byempowering them to contribute to a better environment and more productivebusiness Last but not least, a better community relation will be built bydemonstrating a responsible and proactive approach to the local environment andpeople

1.4.2 Application of sustainable and triple bottom line report in Australia

Today, with the growing concern in climate change and brand reputation, theimportance of sustainable or triple bottom line reporting is increasingly elevatingwithin many companies Along with this trend, stakeholders tend to expect in moreaccurate report, which truly reflects company’s position, performance andunderlying strategies Therefore, there is a noticeable growth in issuingsustainability report globally, and Australia is one of the leading countries.Sustainable reporting appeared in Australia in 1993, and is on a increasinglypopular trend

At the moment, corporate responsibility is not only considered as moral issue, but afundamental factors for the success or failure of a company In many developedcountries including Australia, there are increasingly number of investors believethat the environmental and social factors can have significant impact the company’svalue and financial situation Therefore, a question of what the potential financialinfluence of those issues on company’s financial performance could be, and howthe firms can do to mimimize the risks and maximize benefits (KPMGInternational, The KPMG survey of Corporare responsibility reporting,2013)

According to a survey of KPMG, the incidence of corporate sustainability reporting

in Australia witnessed an upward trend In particular, Australia is one of thecountries has fastest rate of growth in issuing sustainable report, increased from57% of firms issuing report in 2011 to 82 % of firms issuing report in 2013(Increase by 25 %) Triple bottom line report in Australia has high quality, reach 70point over 100 points

Figure 1.3: Growth in Australia reporting since 2005

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

In Australia, disclosing corporate non-financial information in annual report is nowstandard practice In 2013, the number of companies issuing TBL report accountedfor up to 65% of total publiced companies Moreover, normally, new companies,which first time issue sustainable report, choose to attach information of TBL report

in their annual report rather than disclose it standalone (KPMG,2013)

To be consistent with the world trend, manufacturing industry, including heavyindustry and resources-based sectors always has high rate of publishing report InAustralia market, 83 % of mining companies has reported the sustainable level(67% in 2011) Other sectors, such as financial, insurance and security sector, havealso witnessed a dramatic growth in reporting level from 33% in 2011 to 68% in

2013 (KPMG, 2013) The following figures describes the growth in reporting since

1993 of the largest 100 companies (N100) and the world’s 250 largest companiesbased on the Fortune ranking

Figure 1.4: Growth in TBL reporting since 1993

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

At the moment, most of companies in Australia use the Global Reporting Initiatives(GRI) guidlines as a standard to issues their corporate responsiblity (CR) report Inthe absence of regulatory requirement, voluntary reporting guidlines, such as GRI,play an important role in driving consistency and improving quality accross CRreport (KPMG, 2013) In the world, many companies as already adopted GRI fortheir reporting (78% of total reportin over the world), and Australia is not anexceptional According to KPMG survey about sustainability reporting in Australia

in 2013, GRI guidline is dominant in Australia market, accounting for 82% ofreporting in G250 group Besides GRI guidelines for sustainable reporting,Australian Department of Environment and Heritage also issues a guideline forcompanies to issues TBL report, which called Triple bottom line reporting inAustralia It builds on these existing guides and complements the Global ReportingInitiative’s work by providing Australian organization with tangible and easy to usemethodologies for measuring performance against key environmental indicators.Through this approach, this guide will assist organisations seeking to improve and

communicate their environmental performance.(Department of the Environmentand Heritage, 2003)

As many developed countries, environmental performance measurement is animportant part of TBL reporting which is highly concerned Manufacturing industry

is highly sensitive area in terms of environment as its activities might greatly affectsurrounding environment and ecosystems It is typical to define the scope of TBLpractice as including operations over which an organization has control orinfluence In these cases, normally, manufacturing businesses must decide whether

to address impacts upstream or downstream from the factory gate in their TBLreports A strong case could be made for including product distribution activities onthe basis they may cause significant environmental impacts

Figure 1.5: Proportion of reporting using GRI guidline in Australia and in the world

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

In Australia, according to research, Balancing Act A triple bottom line of theAustralian Economyof Manfred Lenzen and Christopher Dey, notwithstanding thetraditional smokestack image of the manufacturing sectors, its overall TBLperformance is reasonably balanced Energy use and greenhouse emissions areabove average while employment generation and income are below average Many

of the manufacturing sectors currently face strong competition from countries withlower wages and larger scale, and effective solutions are difficult to define.Nevertheless, three issues emerge from this analysis Industry strategies which aim

to increase value adding in Australia bring with them the social returns of increasedemployment and possibly increased use of resources such as energy and water Ifthese products can be developed with environmentally advanced production chains,then this may give an advantage in affluent countries where markets are concernedwith sustainability issues Finally, meeting the environmental challenges mayrequire industrial processes and material fabrication skills that are currentlyunderdeveloped in Australian industry Overall, there does not seem muchadvantage in Australia relying solely on being a cost efficient producer of averagequality materials and products

In Australia, the creditability of information play an important role in buildingrelationship with stakeholders Although external audit is not obligatory, 54% ofAustralian companies are using assurance service from external source, especiallyBig Four Audit firms, to increase the creditability of data as well as drive a betterquality and reliable CR data In G250 group, this proportion is 59% in 2013 and49% in 2011 It indicates a fact that in oder to gain competitve advantage, assuranceshould be applied not only in Australian companies but also global ones In 2013,57% of Australian companies have chosen the option of issuing sustainable report

by major accounting firms, an increase from 46% in 2011 Transparency is keyfactor in TBL reporting process Fifty five percent of Australian companies andseventy nine percent of G250 company identify that sustainable development andcoporate responsibility issues are important matter to their busines(KPMG, 2011)

Figure 1.6: proportion of assurance provider in Australia in 2013

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

1.4.3 Application of sustainable and triple bottom line report in the United

Kingdom

Sustainability has been an often mentioned goal of businesses, nonprofits andgovernments in the past decade, variously called sustainability, triple bottom line(TBL), corporate social responsibility (CSR), and environmental, health, and safety(EHS) reports are relatively young compared to financial reports Today, besidespublicly financial data, non-financial reporting is growing in significance as acompany’s performance is affected by many non-finacial data

Europe can be considered the birthplace of the sustainable development report, withthe leading countries in proportion of issuing sustainable reporting in 2013 such asDenmark (99%), France (99%), the UK (91%), Netherland (82%) (See in Figure1.7) In 1994, an England author -John Elkington gave the new definition aboutTriple Bottom Line through a book Cannibals with Forks: The Triple Bottom Line

of 21st Century Business, mark a milestone in non-financial reporting history in theworld, and in England in particular Today, percentage of non-financial reportingcompanies in England is still at the top of the world and in an upward trend This

part is going to analyze sustainable reporting situation in England over the pastdecade.

Figure 1.7: Proportion of sustainable reporting in some European countries

Source: KPMG International, The KPMG survey of Corporare responsibility reporting,2013

Sustainability reporting guidelines and awards in the UK

Recently, the rate of increase of UK reporting organizations has levelled off slightlycompared to previous years In 2008, 88% of FTSE100 companies published non-financial information, according to CorporateRegister.com However, the standard

of UK reporters’ disclosures continues to be of a high standard, with Vodafoneleading in the annual Accountability Rating for the second time and three other UK

organizations in the top 10 (EU sustainable reporting) Although no legislativerequirement for issuing non-financial report in UK, beside GRI guidance, HMTreasury (Her Majesty's Treasury) has issued a sustainable reporting guidance,setting up minimum requirement for companies

In UK, there is an award for sustainability reporting called Building Public TrustAwards The Building Public Trust Awards (BPTA) were established by PwC torecognize good practice in corporate reporting In 2014 Kingfisher, a home

improvement retailer, won the award for sustainability reporting in the FTSE 100,while Carillion, a support services company, won the award for sustainabilityreporting in the FTSE 250 Both reports were praised for their explanations of theirsustainability strategy, and for reporting on sustainability issues ‘upstream’ and

‘downstream’ in the value chain associated with their business – such asKingfisher’s reporting on timber procurement and promoting energy efficiencyamong customers Aegon, a Netherlands-based financial services company wasawarded the BPTA 2014 International award: towards integrated reporting (UKNational Audit Office, 2015)

Manufacturing industries and triple bottom lines

There are numerous changes in manufacturing industry in the UK over the past fewdecades, and it will look very different in the future As the result of globalization,besides local companies, manufacturer faces more competitors in many aspectswhich requires them to have wise strategies In fact, successful companies need tochanges their physical and intellectual infrastructure continuously, catch up with theadvancement in technology In addition, publicly reported data, both financial andnon-financial data, is playing a key role in this sustainable-development war.Production process is required to be sustainable, environmental-friendly, with built-

in reuse, remanufacturing and recycling for products reaching the end of their usefullives Companies must be highly social responsible to gain the trust from customerand investors as well as attract skilled workers All of these mentioned factors lead

to an upward trend in sustainable and TBL reporting in UK manufactures

According to the report of The UK Government Office for Science, in the period up

to 2050, interactions between manufacturing and the natural environment will besubject to a number of powerful changes The size of the global population, wherepeople live, the climate, the likelihood of extreme weather events and theavailability of resources will all undergo significant changes In addition, inresponse to the changing environment, there will be developments in the push andpull on manufacturers from both consumers and government The following figureshows a number of powerful environmental trends that are likely to converge totransform manufacturing activities by 2050

Figure 1.8: Environmental trend most likely to converge, leading to the

manufacturing activities more sustainable and resilient

Source: UK government office for Science, The future of manufacturing: a new era of

opportunities and challenge for the UK, 2013

As many countries in Europe, it is noted that reporting on carbon emission isincreasingly concerned in the UK Obviously, companies operating inmanufacturing can be significantly affected by the environmental protectionregulation and standard, which needs companies to disclose in their sustainablereport

Within the last 40 years, greater effort has been made by some governments toencourage improved environmental performance in the industrial sector By settingstandards such as ISO14001, environmental management in factories in manycountries has improved Out to 2050, standards will become increasingly important

in emerging economies as the population becomes wealthier and more demandingand expects better standards from manufacturers (The UK government office,2013).In April 2014 the European Parliament agreed a Directive to set a minimumstandard of non-financial disclosure across member states The companies or groups

concerned will need to disclose information on policies, risks and results as regardsenvironmental matters, social and employee-related aspects, respect for humanrights, anti-corruption and bribery issues, and diversity on boards of directors Thedefinition of a public interest entity covers listed companies, banks and insurancecompanies Member states can also choose to designate companies as public interestentities because of their activities, size or number of employees (UK national auditoffice) In other words, it is highly recommended report for some companies in highprofile industry.

Figure 1.9: Greenhouse gas emission by factors (UK)

Source: Ofgem, Department of energy and climate change Ofgem review final report, 2011

Figure 1.9 shows the downward trend in the greenhouse gas emission from 1990 to

2013 in the UK This is the results of many regulations in environmental reporting

in the UK The Companies Act 2006 (Strategic Report and Directors’ Reports)Regulations 2013 require quoted UK companies to report on greenhouse gas (GHG)emissions for which they are responsible Quoted companies are also required to

report on environmental matters “to the extent it is necessary for an understanding

of the company’s business within their annual report” As a results, some companies

in UK have to set target and tightly control carbon emission Defra (the UKDepartment for Environment, Food and Rural Affairs) has estimated that reportingwill contribute to saving four million tons of carbon dioxide emissions by 2021 TheConduct Committee of the Financial Reporting Council is responsible formonitoring compliance with the Companies Act It has the power to enquire intocases where relevant disclosures may not have been provided, and can apply tocourt for an order requiring company directors to prepare a revised report and/or set

of accounts (UK national audit office, 2015)

At the moment, the UK has also moved beyond pollution prevention and now, istrying to offer a better environmental performance in its domestic and exportedproducts By applying many rules and legislation, from reduce pollution level, the

UK government is encouraging innovation and business practice, focusing onresource productivity and clean technique Many developed countries areprioritizing environmental performance in manufacturing as an important futurestrategy, and the UK is not an exceptional It is true to say that UK is at the top ofcountries putting sustainable development as the heart of manufacturing with thecompetitive advantages in pollution prevention, adopting resources efficiency andclean technology

The dependence of manufacturing companies in the UK on high skilled workers isincreasing It is believed that People in the UK manufacturing sections play acritical role to the success of companies According to the UK government office,

UK manufacturing employment has declined significantly in the past (nine millionpeople in 1966 and below three million in 2011) Any future declines will be muchsmaller, with around 170,000 fewer people in the sector expected by 2020compared to 2010 However, there will still be strong demand for workers, witharound 800,000 roles to be filled up to 2020 as people retire or leave the sector.Manufacturing output is likely to continue increasing without associated increases

in direct employment Therefore, in the UK, issuing TBL and sustainable report is

necessary not only for the management purpose but also for the target of attractingand retaining talents by building trust and corporate responsibilities.

1.4.4 Lessons from sustainability and triple bottom line reporting in developed

countries

Corporate social responsibility concept was introduced in Europe since decadesago, and until now, it is still a top concerning topic in developed countries At thepresent age, although sustainability reporting is not legally required in manycountries, non-financial information disclosing is believed to be a must-do actionfor multinational companies to improve their competitiveness It is especially true inhigh income area where citizens are high demanding in not only product quality butalso the corporation’s implementation of codes of conducts

Unlikely to developed countries, the triple bottom line reporting is not a practice inemerging countries like Vietnam where the concept of sustainable development andcorporate responsibility are relatively new However, most of these countries aremanufacturing center of the world, who produced the majority of productmobilizing around the world For that reason, it is irreversible that these exportedcompanies will be required to focus more on corporate social responsibility to meetthe demand of customer in developed market In other words, corporateresponsibility now is no longer the story of any particular countries or companies, it

is becoming the hot topic for all corporations including Vietnamese manufacturers

Of course, with the experience in triple bottom line reporting from developedcountries, there are numerous valuable lessons for newbies

Global Reporting Innitiatives’s guideline should be used as the framework for sustainability and TBL reporting

GRI (Global Reporting Innitiatives) is an international independent organizationthat helps businesses, governments and other organizations understand andcommunicate the impact of business on critical sustainability issues such as climatechange, human rights, corruption and many others With the vision of creating afuture where sustainability is integral to every organization's decision makingprocess, GRI has pioneered sustainability reporting since the late 1990s,

transforming it from a niche practice to one now adopted by a growing majority oforganizations

With thousands of reporters in over 90 countries, GRI provides the world’s mostwidely used standards on sustainability reporting and disclosure, enablingbusinesses, governments, civil society and citizens to make better decisions based

on information that matters In fact, 92% of the world’s largest 250 corporationsreport on their sustainability performance (Global reporting.org)

At the moment, in almost all countries, the sustainability reporting is mainlyvoluntary Especially in developing countries, authorities and government seem to

be inexperience in controlling sustainability reporting In fact, at the moment, GRIguide line is the most well-known and widely-applied guide line in the world,hence, it is recommended for companies to apply this guidline to their sustainabilityreporting in order to have high quality and comprehensive report

Manufacturing companies should issue triple bottom line report

In many countries, manufacturing is considered as a high profile industry In otherwords, it is a sensitive industry For that reasons, many manufacturers chosen todisclosed a sustainability report to gain the public trust

As the matter of the fact, manufacturing industry growth normally can drive variousimpacts, especially in terms of environment In general, manufacturing industrycould be considered as a key factor leading to climate change and global warming

as these activities consistently discharge an enormous amount of chemical emssionsincluding carbon dioxide and sulfur dioxide to surrouding environment (includingair, water and land) Directly or indirectly, the environment destruction, as the result

of over-activated manufacturing industry, will negatively influence the lives andhealth of local people and next generations Therefore, in manufacturer’ triplebottom line reports, many companies focus on the “planet line” to prove that theirenvironmental effects are in the controllable level

Uses big audit firms to ensure the creditability of information

Creditability is one of the most important factors deciding quality of a report At themoment, many big multinational companies chosen to use big audit firms (Big 4) to

consolidate their financial report from many countries This suggestion is alsoapplied for sustainability report as it is a new concepts and creditability is needed togain the public trust.

In many developed countries, although external audit is not obligatory, usingassurance service from well prestigious audit firms can bring competitive throughthe high creditability of information According to KPMG report, 59% ofcompanies in G250 group using service from Big Four Audit firm because it isbelieved to satisfy the stakeholders and building relationship between companiesand key stakeholders

In long-term each government should issue a guideline for TBL reporting

It is undeniable that manufacturing industries in each country own distinctivecharacteristics due to the difference in society, geographic, politics, economics,natural resources, etc For that reasons, not all matters covering in GRI guideline isapplicable as well as GRI cannot cover all specific matters in their TBL reportingguideline To solve that problem, governments in some developed countries havedecided to design special guideline for their countries For example, AustralianDepartment of Environment and Heritage also issues a guideline for companies toissues TBL report, which called Triple bottom line reporting in Australia, with thefocus on environment (planet) line In the UK, HM Treasury (Her Majesty'sTreasury) has issued a sustainable reporting guidance, setting up minimumrequirement for companies Although most of these mentioned guidelines are notobligatory for companies, it is still a solution for local and multinational companiesoperating within this national boundary to disclose non-financial informationappropriately in the specific context

CHAPTER 2: SUSTAINABILITY AND TRIPLE BOTTOM LINE IN MANUFACTURING INDUSTRY IN VIETNAM

view of sustainability and triple bottom line reporting in Vietnam

2.1.1 History of sustainability and triple bottom line reporting in Vietnam

In the increasing competitive world, companies are put into the context withchallenges from limited resources and pressure from social and environmentalfactors, which requires every organization have to put more attention in corporatesocial responsibility matter The sustainability or triple bottom line reports wereborn to deal with these issues by raising the public trust In the world, according toGRI, in 2013, 92% of companies in G250 group had already issued sustainabilityreport However, the concept of sustainable development and triple bottom line isstill new concepts in Vietnam

The concept of triple bottom line was first introduced by John Elkington in 1997 InAsia, since early 21st century, corporate social responsibility began to receiveattentions from public (Chapple & Moon, 2009) In South East Asia, ASEAN setthe sustainable development as the target in the next decade Despite regionalinitiatives, the main reasons for the increasing in corporate social responsibility arethe expansion of Western transnational companies (Debroux, 2006, pp 17) anduntil now, the major CSR topic in Asian countries has been the environmentalstandards (Chapple & Moon, 2007, p.p185; Debroux, 2008, pp.25) This is also topconcerning topic in Vietnam with a series of scandal in complying environmentalstandard In 2018, Vedan’s Monosodium Glutamate plants was accused fordischarging tones of industrial waste to Thi Vai River during 14 years, causing thehigh level of water pollution in nearby areas, killing many animals and plants.(Nguyen & Pham, 2011)

The proposal of Brammer (2012) to perceive of CSR as an institution oftransnational governance perfectly applies to the situation in Vietnam, because CSR

is mainly caused by international and transnational companies Simultaneously, inthe transitional process from planned economy to a social-oriented market

economy, the topic of sustainable development and corporate social responsibility ishighly concerned In fact, the renovation period in 1985, with the governmentencourage and support for private-owned companies has push the economy growthand a better integration into the global economy In 2007, Vietnam became amember of WTO, which is regarded as a long step to integrate into globaleconomics In this situation, the sustainable development of Vietnamese companies

is known as an important policy for reaching the highly demanding internationalmarket such as America or Europe (Brigitte Hamm, 2012) According to theVietnam Chamber of Commerce (VCCI), corporate social responsibility conceptwas first introduced by transnational companies who required their partners tofollow behavior and ethical standards (Nguyen, 2007)

According to National report about sustainable development, after more than 20years of implementing national sustainable development policy since VietnamAgenda 21, there have been many noticeable results in terms of economic, socialand environmental area However, limitations and problems still exist in Vietnam’sinstitutional framework the need to improve in the future Recently, regarding toAra Vietnam, since 2012 the number of companies representing their sustainablereports has increased significantly In 2014, 28 companies in the top 50 companieswinning in Vietnam annual report 2014 reward disclose non-financial data in theirannual report or separate sustainable report While some big corporation such asVingroup, Bao Viet, Vinamilk had already been pioneers in sustainability and triplebottom line reporting in Vietnam, many other companies are not willing to disclosetheir information

2.1.2 Related organizations in issuing sustainability and triple bottom line reporting

in Vietnam

At the moment, Vietnamese companies normally follow GRI guidance to issuingsustainable report since there is no specific guidance from Vietnamese governmentand other organization However, in sustainability and triple bottom line reportingprocess, Vietnamese companies are affected as well as supported by the followingorganizations

Vietnam Chamber of Commerce (VCCI)

At present, VCCI is one of the most important public organization in expanding theconcept of CSR, but, it appears as weak actor partly due to a lack of funding.However, VCCI is play an important role in cooperating with related internationalorganization For example, in 2007, the Global Compact Network Vietnam(GCNV)was launched as the cooperation of the United Nations (UN) and the VCCIwith the support of the Spanish Agency for International Cooperation (AECI) andUnilever Vietnam.According to the official website, the GCNV has the goal “to bethe national corporate social responsibility center of excellence” Also, according tothe website, the GCNV had “over 95 active members, consisting of national andinternational companies, non-governmental organizations (NGOs), academic,United Nations (UN) and government agencies” in 2011 While the network wasgrowing until 2010, it seems to be stagnating since then Moreover, the Unitednation development program (UNDP) recently withdrew its support It seems that

up to now the GCVN cannot take over the role of facilitator of CSR activities inVietnam (Brigitte Hamm, 2012)

According to a survey conducted by VCCI in 2014, most of organizations needexternal help to issuing sustainability and triple bottom line report Many companieswant to improve their capability in disclosing non-financial information through thetraining of VCCI Nearly half of companies issuing TBL report (40.84%) believethat supports and training programs provided by VCCI is useful for them A quarter

of respondents said that they might publish sustainability report independently.Finally, only 9.68% of respondents want to use service from local consultingcompanies to issue sustainability report This result reveals the belief and trust fromVietnamese companies to the support and program of VCCI

Vietnam Business Council for Sustainable Development (VBCSD)

The Vietnam Business Council for Sustainable Development (VBCSD) wasestablished by the Vietnam Chamber of Commerce and Industry under the approval

of the Government in 2010 It is also a partner within the Global Network of theWorld Business Council for Sustainable Development

VBCSD is launch with the purpose of supporting Vietnamese business community

as well as encouraging enterprises to implementing the Strategic Orientation for

Sustainable Development in Vietnam (stated in Vietnam Agenda 21) It facilitatesexperience and solution sharing in terms of sustainable development, andstrengthens dialogues and close coordination among business community, theGovernment and civil organizations on this domain.

United Nations Industrial Development Organization (UNIDO)

The United Nations Industrial Development Organization is an importantinternational partner with many project spreading ideas of corporate socialresponsibility in Vietnam UNIDO is funded by the European Union In Vietnam,UNIDO has cooperated with universities, ministries, civil society organizations andlocal networks to expanding the concept of CSR within enterprise community Atthe moment, it helps Vietnamese small and medium enterprises adapt and adoptcorporate social responsibility for improve linkages with global supply chain insustainable production The target of the campaigns is to raise awareness about CSRand increase the implementation of codes of standards in small and mediumenterprises in Vietnam, therefore, improve their competitiveness in the globalmarket (Brigitte Hamm, 2012)

International Finance Corporation (IFC)

International Finance Corporation, a member of the World Bank Group, is thelargest global development institution focused exclusively on the private sector Ithelps developing countries, like Vietnam, develop sustainably by investing orproviding consulting services, and shifting capital in the international financialmarkets It corporates with the State Securities Commission of Vietnam, whosepurpose is to develop capital markets, regulate securities activities, license marketparticipants, and enforce regulations, to issue the Vietnamese SustainabilityReporting Handbook There is no doubt that this handbook is a useful tool forpromoting non-financial information of public companies in Vietnam

General Confederation of Labor (VGCL)

Similar to the VCCI the VGCL is more or less a government body While somedeplore that VGCL is not acting as a trade union standing up for workers’ rights,

others also see a positive development because VGCL branches are increasinglycooperating with unions from Western countries thereby taking up the topic of CSR

in order to strengthen labor rights Moreover, the government seems to be willing togrant the unions more autonomy via the reform of trade union law, which maystrengthen their role as stakeholder for workers’ interests (Chan & Wang, 2003) According to the Bertelsmann Stiftung (2007) the incorporation of further externalnon-state actors into agenda setting, such as NGOs, is also important for theenhancement of CSR in the country In addition to transnational NGOs such asOXFAM, national NGOs play an increasing role in the institutionalization of CSR.Mostly, they are networking with Western transnational NGOs An example is theCenter for Development and Integration (CDI), which is also an active promoter ofthe ‘Business and Human Rights’ discourse to Vietnam While these varioustransnational activities are meant to strengthen CSR as a mode of governing theVietnamese economy for the purpose of global market integration, we find manyexpressions of philanthropy as more traditional commitments of business to thecommunities and the overall society It seems that these two types of CSR more orless coexist However, the tradition of philanthropy may be a fertile soil for thereception of CSR in the Vietnamese society in the future

Related Ministries (Ministry of Finance, Ministry of Labor, Invalids, and Social Welfare, Ministry of Natural Resources and Environment)

In the process of establishing sustainability and triple bottom line reporting, thebusiness entity must follow the regulations created by related parties In 2003, thetopic of corporate social responsibility was brought to the Vietnamese governmentthrough the World Bank The country was a part of the World Bank’s programStrengthening developing country governments’ engagement with Corporate SocialResponsibility which “was set up to explore the potential roles of the public sectorwithin developing countries to encourage and strengthen […] CSR” (Twose & Rao,2003) Opportunities were seen in an increase of competitiveness of the involvedenterprises Also, a positive relation between CSR implementation and lawenforcement at the enterprise level was emphasized However, numerous

hindrances are still existing, as a result of lack of a respective legal foundation,weak law enforcement and also corruption

In particular, Ministry of Finance have close relationship with “profit line” In fact,Vietnamese companies must comply with Vietnamese accounting standard and taxregulations such as corporate income tax, personal income tax and valued addedtax Each year, Ministry of Finance might issue new degrees or decisions, whichrequire organization continuously update information and appropriately disclose inthe annual financial statements

The “people line”, indeed, might critically impacted by activities of Ministry ofLabor, Invalids and Social Welfare (MOLISA) They were directed towardsenhancing CSR in Vietnam, giving guidance to buyers and harmonizinginternational demands with national and local conditions However, it seems that inthe following years MOLISA did not take over an active role in this respect, and up

to now one major characteristic of CSR in Vietnam is the lack of a coherent publicCSR policy As the matter of fact, Ministry of Labor, Invalids and Social Welfareplays a vital role in protecting right of employees through Labor Law withrequirement in social and health insurance, working conditions, payments, workinghours, etc Today, there are attempts by the government to enhance CSR throughlaws such as the labor code and the reform of the union law It seems thattransnational companies and their associations such as the European and AmericanChambers of Commerce more and more address the Vietnamese government notonly to establish a business-friendly surrounding for doing business in the country,but also raise social issues such as decent wages as a means against the increasingnumber of wildcat strikes (Brigitte Hamm, 2012)

Finally, the relationship between Ministry of Natural Resources and Environmentand “Planet line” is another important part in sustainability and triple bottom linereporting The responsibilities of Ministry of Natural Resources and Environment issetting environment protection law, supervising the complying level of entities,especially in terms of industrial waste dealing process Besides, it also encouragescompanies to apply clean technology in production as well as using resourcingefficiently by organizing competition for green solution in production For example,