analyse the importance and impacts of corporate social responsibility (csr) in business towards the social and environmental issues in vietnam

ANALYSE THE IMPORTANCE AND IMPACTS OF CORPORATE SOCIAL
RESPONSIBILITY (CSR) IN BUSINESS TOWARDS THE SOCIAL AND
ENVIRONMENTAL ISSUES IN VIETNAM.

BY
DUONG THUY ANH
E0700254

Graduation Project Submitted to the Department of Business Studies HELP
University College, in Partial Fulfillment of Requirements for The Degree of
Bachelor of Business (Accounting) Hons

OCTOBER 2011

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DECLARATION OF ORIGINALITY
AND WORD COUNT

I hereby declare that the graduation project is based on my original work except for
quotations and citations that have been duly acknowledged. I also declare that it has
not been previously or concurrently submitted for any other course/degree at Help
University College or other institutions. The word count is 11,048 words.

______________________
DUONG THUY ANH
17 October, 2011

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ACKNOWLEDGEMENT
Firstly, I want to express my sincere gratitude to my supervisor, Dr. Pham Duc Hieu
International School, Vietnam National University Hanoi, who has guided me
throughout this thesis. Furthermore, I also wanted to express Ms. Sumathi, Help
University College, who initiated the project, provided guidance and support a lot
throughout the process.
Secondly, I want to thank the two managers, who have participated in my interview:
Mr. Ho Duc Lam- Chairman and CEO of Rang Dong Plastic Joint Stock Company
and Mr. Tran Tien Hoang- management systems distributors in the Central and
Northern of Kinh Do Company have spent their precious time to help me to complete
the interview. Besides, I also want to send my special thanks to the managers,
employees and citizens, who helped me to carry out the investigation because they
have supported me, shared their concerns, interest, and valuable suggestion. Without
them, I could not finish my project.
Finally, I also want to express my gratitude to my family, who are always on my side
to support and believe me.

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Analyze the importance and impacts of Corporate Social
Responsibility (CSR) in business towards the social and
environmental issues in Vietnam.
By

DUONG THUY ANH
OCTOBER 2011
Supervisor: Dr. Pham Duc Hieu
ABSTRACT

CSR and its components have become important issues in the world as well as in
Vietnam, a developing country. This study aims to understand the environmental
tasks and attitudes of citizens towards environment. We realized that, beside
manager, the awareness of citizens and workers about the social responsibility to the
environment is increasing. The implementation of social responsibility is a task that
is impossible to be neglected on the way of approach to the business integration in
Vietnam, because it’s beneficial for business and society, especially in improving the
competitiveness of enterprises. Therefore, day by day, Vietnam will have more
responsibility for social and environmental issues due to the increasing of awareness
and positive attitudes of managers, employees and citizens that shown in this survey.

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TABLE OF CONTENTS
Page
DECLARATION OF ORIGINALITY AND WORD COUNT………………… 2
ACKNOWLEDGEMENT…………………………………………………………. 3
ABSTRACT………………………………………………………………………… 4
TABLE OF CONTENTS………………………………………………………….. 5
LIST OF FIGURES ...………………………………………………………………8
LIST OF ABBREVATIONS……………………………………………………… 9
Chapter 1: INTRODUCTION…………………………………………………... 10
1.1 CSR in business and environment issue in the world……………… 10

1.2 CSR in business toward social and environment issue in Vietnam.. 11

1.3 Problem statement…………………………………………………… 13

1.4 Research objective…………………………………….………………14

1.5 Thesis structures………………………………………………………16
Chapter 2: LITERATURE REVEW………………………………………........ 17
2.1 Definition and conceptualization of CSR……………………………. 17
2.2 Responsibility of the firm…………………………………………….. 20
2.3 Corporate Philanthropy_ what does it mean? .........................................
21
2.4 Hypothesis…………………………………………………………....... 22

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2.4.1 Manager’s awareness of CSR and CSR reporting…………….. 23
2.4.2 Employee’s awareness of CSR and CSR reporting……………. 24
2.4.3 Citizen’s awareness of CSR………………………………............ 25
Chapter 3: RESEARCH METHODOLOGY………………………………….. 26
3.1 Research methodology…………………………………………….. 26
3.1.1 Qualitative methodology………………………………………… 26
3.1.2 Quantitative methodology………………………………………. 28
3.2 Data source………………………………………………………… 29
3.2.1 Primary data…………………………………………………….. 29
3.2.2 Secondary data………………………………………………….. 30
3.3 Data collection…………………………………………………….. 30
3.3.1 Questionnaire…………………………………………………… 31
3.3.2 Personal interview………………………………………………. 31
3.3.3 Annual report………………………………………………….... 32
Chapter 4: RESULTS AND DISCUSSION……………..……………………... 33
4.1 Sampling………………………………………………………….... 33
4.1.1 Sample population………………………………………………. 33
4.1.2 Sample frame.………………………………………………….... 33

4.1.3 Sample size………………………………………………………. 33
4.1.4 Sample techniques………………………………………………. 33
4.1.5 Limitation………………………………………………………... 33
4.2 Management……………………………………………………….. 34

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4.2.1 Finding from questionnaire survey…………………………….. 36
4.2.2 Finding from managers interview……….……………………... 38
4.2.3 Actual CSR disclosures by firm……….……………………….. 41
4.2.4 Overall evaluation of management’s respo……………………. 42
4.3 Employee………………………………….……………………….. 42
4.3.1 Finding from questionnaire survey………..…………………… 42
4.4 Citizen…………………………………….………………………... 44
4.4.1 Finding from questionnaire…………….………………………. 44
4.4.2 Overall evaluation of citizen’s responses……..………………... 46
4.5 Overall discussion…………………………..……………………... 47
Chapter 5: CONCLUSION AND RECOMMENDATIO……………………… 49
5.1 Conclusion…………………………………….…………………... 49
5.2 Recommendation…………………………………………………. 52
APPENDIX: Questionnaire…………………………….………………………. 54
Management survey……………………………………………………….. 54
Citizen survey……………………………………………………………… 57
Employee survey……………………………………………………………58
REFERENCES……………………………………………………………………..60

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LIST OF FIGURE
Figure 2-1The Business in Society
Figure 2-2 Employee Compositions by Region
Figure 4-1 Respondents
Figure 4-2 Citizens and Employees categories
Figure 4-3 Distribution of responses from management survey
Figure 4-4 Distribution of responses from management survey (percentage)
Figure 4-5 Distribution of responses from employee survey
Figure 4-6 Distribution of responses from employee survey (percentage)
Figure 4-7 Distribution of responses from citizen survey
Figure 4-8 Distribution of responses from consumer survey (percentage)

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LIST OF ABBREVIATION
CSR

Corporate social responsibility

SRI

Social responsibility investing

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CHAPTER I: INTRODUCTION
1.1 CSR in business and environment issue in the world

Corporate social responsibility is a concept that frequently overlaps with
similar approaches such as corporate sustainability, corporate sustainable
development, corporate responsibility, and corporate citizenship. While CSR
does not have a universal definition, many see it as the private sector’s way of
integrating the economic, social, and environmental imperatives of their
activities. In addition the most important aspect need to consider when talking
about CSR is environment aspect. It cannot be denied that nowadays of our
nature environment becomes more and more polluted by the human harm thus
to have better imagine in society all companies need also protect our
environment. For example, Nikon Company committed against environmental
pollution, making effective use of resources, and helps build a clean society,
thereby protecting and improving the environment worldwide and creating
sustainable development of society. Nikon is a company that has high social
responsibility; Nikon is committed to protecting the environment. Nikon’s
committed based on the understanding that the company is developing the
environmental protection act is should do because it is important for the
survival of humankind. Nikon will try to reduce CO2 emission and waste, reuse and recycle. Besides, Uno is one of the largest companies in Japan have
adopted recycled goods programs. Another example is the largest beverage

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company is Coca-cola have a lot of community activities such as recycling
bottles, distributing its products in water bottles is environmental friendly.

1.2 CSR in business and environment issue in Vietnam.
Corporate social responsibilities of business are an issue that is mentioned a lot in
Vietnam in recent time. However, awareness of this issue of business is still quite
limited, thus, the implementations of social responsibility of enterprises have many
shortcomings.

In recent year, although the mass media has frequently reported about violations of
environmental pollution of various companies, but most authorities are not strong
enough measures to handling these cases, while most businesses are finding ways to
evade all responsibility. Many people believe that talking about self-discipline of
enterprises in environmental protection seems like a distant story and not fact. But
the environmental pollution from production and processing of products of the
business now has reached alarming levels; demonstrating corporate social
responsibility for environmental protection is very limited.
Lack of social responsibility, lack of moral and cultural of many enterprises that
were to happen a series of events related to agricultural products and food does not
guarantee protection food safety, such as black soy sauce containing 3-MCPD (a
substance that can cause cancer), food preservation borax, irrigated vegetable growth
stimulants, fish were reared in environmental pollution, agricultural food products
processed using toxic preservatives, antibiotics or pesticides in excess material and
allow the most recent batch of milk products tainted with melamine- a toxic

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substances caused kidney stones in children, can lead to death. In China on 2008, at
least six children died and 300,000 others fell ill after drinking melamine
contaminated. Industrial chemicals were added to milk products to make them seem
to increase protein content.
For above reasons, social responsibility is a very urgent problem today. However, by
to endeavor, Vietnam had CSR Awards, which was organized by Vietnam Chamber
of Commerce and Industry, Ministry of Labor-Invalids and Social Affairs, Vietnam
Ministry of Industry and Trade since 2005, together with Vietnam Leather &
Footwear Association, and The Vietnam National Textile and Garment Group, in
order to honor enterprises and all limited companies that effective done of CSR and
environment duties. On August 21, on Sunday has program “not nylon bag” in

Hanoi, the Corporation Hanoi Trade for free environmentally friendly bags to
consumers at five centers. This program by three units specialized in manufacturing
non-woven products accompany Hapro. Mr. Nguyen Trung Thanh, head of business
of the The Cuong. Ltd company, a unit providing cloth bags environmentally
friendly, said that these products can be washed and re-used many times. “Scientists
have studied, nylon bag takes 500-1000 years to decompose, causing danger to the
environment, and non-woven bags can break down into humus soil within 6months
should environmental pollution”, he said. The program has attracted the attention of
numerous consumers. Mrs Mai Khue Anh, Director of Business Hapro said Hapro
will spend nearly 2billion for the project, twice the amount invested in the “Limit
manufactured using nylon bag for the environment” by 2010. Ms. Khue provide, in
the near future, when consumers were aware of the use of bags to protect the
environment, they will deploy Hapro sell them for only 4000-7000 per the contract,
depending the size, style.

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Monday March 26, true to the event Earth Hour 2011, Big C held on peak collection
of used batteries, a type of waste disposal is difficult and dangerous for the
environment, system-wide super- their market. The total number of batteries
collected in one day is over 100 kg. Representatives of the unit said Big C has
contracted with a company licensed to handle waste batteries. The batteries
collection will be handled to protect the environment by special procedures, not
through landfill.
An another example for CSR in business toward social is HUB café is one of the
small and medium-scale enterprise implementation of CSR by creating a community
library with more than 10,000 books of customer service. HUB café also being built
into a place to share knowledge, materials and help students to conduct research,
organize the sessions and workshops on issues of education, work experience and

vocational business. Typically, these social programs such as “6 millions cups of
milk for children in Vietnam” and funds scholarships “fireflies light” of the big brand
like Dutch Lady resonate and consumer support.
However, in Vietnam, there are still many difficulties in the application of social
responsibility and complete the task environment. First, do not have enough laws and
regulations required for companies to fulfill their responsibilities to society. Second,
it is also due to the lack of knowledge of the company about social responsibilities
and environmental duties. They do not have enough knowledge and experience.

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1.3 Problem statement
The thesis focuses on the following problems related to CSR and environmental
issues in the context of Vietnam. They are:
i, How is CSR important?
ii, Why should business companies engage in CSR?
iii, What is CSR brings to businesses?
iv, Does each person need to care about CSR?

1.4 Research objective
Through this project, I want to focuses on environment degradation and the need for
corporate organizations to fulfill their social responsibilities. Using the system
theory, the interdependence among the environment, organization and sustainable
development was examined. System theory has been modified to emphasize the need
for businesses to foresee the potential environmental consequences of a process, or
production activities from the planning stage to ensure the implementation strategies
to respond fully and promptly.
Pollution can be defined as the release of undesirable products of industrial
production decreased quality of the natural environment or society. This release can

be to air, water and soil, but noise pollution, light pollution, visual pollution and
radioactivity can also be distinguished. Pollution can harm flora, fauna, and human
health risk leading to extinction occurs. Substances, often non-existent in the natural

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environment, are added in such quantities that balances in the biosphere are
disturbed. Indisputable evidence that pollutants are affects the quality of life and
cause death to humans. Pollution can cause cancer, allergies and all kinds of forms of
asthma, among other things. Pollution as a problem came to the forefront mainly in
the late 19th and 20th centuries. Pollution is as old as humanity though. Increasing
populations and the industrial revolution with its large-scale industrial processes
resulted in much more intensified impacts. Initially, pollution was seen mainly in the
context of hindrance, i.e. dust and litter.
The realization of the immense and often irreversible effects of pollution has led to
an enormous growth in environmental regulations. In the 19th century several
countries issued Clean Air Acts and Hindrance Acts. Since the second half of the 20th
century, specific legislation has also been developed for water pollution, soil
protection, noise control, waste management and other environmental impacts. Most
of the legislation is based on direct regulation, i.e. permits. These media specific
regulations have serious shortcomings, such as shifting pollution from one medium
to another rather than eliminating it, constraining innovation, expensive enforcement
and high transaction costs. Hence, governments have tried to develop more
regulations aiming for integrated pollution control.
However, there are many enterprises will not be concerned about toxic waste from
the plant. It caused water pollution, polluted air of humans. This has led to the
experimental efficiency in the health of human such as cancer, allergies, and other
respiratory diseases.
Thereby, the first goal of this project is to provide a theoretical framework for

understanding the concept of environmental pollution and fulfill the social

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responsibility of business and related components follow this area to build a
framework for companies to have better understanding of CSR and they can avoid
violating any issues related to CSR.
The second goal of this project is to evaluate the impact of CSR in the environmental
issues in companies in Vietnam. On the other hand, given what they can achieve and
what their advantages when they implement CSR.
The last goal of this project is to obtain views from all of industry companies in
Vietnam is how the companies are related to social responsibility. This project will
also try to find the components of this cognitive impact. The questions are designed
to get more people thinking in receiving CSR as an annual activity of the company.
Thereby, this paper also enhancing the sense of responsibility of people to society.

1.5 Thesis structure:
My thesis structure is divided into chapters as follow:
Chapter 2 is Literature Review
Chapter 3 is Research methodology
Chapter 4 is Result and discussion
Chapter 5 is Conclusion

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CHAPTER 2: LITTERATURE REVIEW
2.1 Definition and conceptualization of CSR
Corporate Social Responsibility_ What does it mean?

According to Khoury at al., 1999, corporate social responsibility is the overall
relationship of the corporation with all of its stakeholders. These include customers,
employees, communities, owners/investors, government, suppliers and competitors.
Elements of social responsibility include investment in community outreach,
employee relations, creation and maintenance of employment, environmental
stewardship

and

financial

performance.

CSR is considered an important factor as the other traditional factors such as cost,
quality and delivery in business. Integrate CSR into business strategy and become the
conditions required for business survival and development. CSR describes the
principle that companies can and should make a positive contribution to society. CSR
is the practice of managing the social, environmental and economic impacts of the
company (by sustainability the 'triple bottom line'), being responsive to 'stakeholders'
(those who are affected by a business operation) and behaving according to a set of
values which are not codified in law.

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Figure 2-1

The other definitions are the World Business Council for Sustainable Development
in its publication “Making Good Business Sense” by Lord Holme and Richard Watts,
used the following definition “Corporate Social Responsibility is the continuing

commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families
as well as of the local community and society at large”.
Traditionally in the United States, CSR has been defined much more in terms of a
philanthropic model. Companies make profit, unhindered except by fulfilling their
duty to pay taxes. Then they donate a certain share of the profits to charitable causes.
It is seen as tainting the act for the company to receive any benefit from the giving.
The European model is much more focused on operating the core business in a
socially responsible way, complemented by investment in communities for solid
business case reasons. I think this model is more sustainable because first, social

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responsibility becomes an integral part of the wealth creation process- which if
managed properly should enhance the competitiveness of business and maximize the
value of wealth creation to society. Second, when times get hard, there is the
incentive to practice CSR more and better- if it is a philanthropic exercise which is
peripheral to the main business, it will always be the first thing to go when push
comes to shove.
For instance, the CSR definition used by Business for Social Responsibility is
“Operating a business in a manner that meets or exceeds the ethical, legal,
commercial and public expectations that society has of business”.
The UK Government, 2001 state that CSR recognizes that the private sector’s wider
commercial interest require it to manage its impact on society and the environment in
the widest sense. This requires it to establish an appropriate dialogue or partnership
with relevant stakeholders, be they employees, customers, investors, suppliers or
communities. CSR goes beyond legal obligations, involving voluntary, private
sector-led engagement, which reflects the priorities and characteristics of each
business, as well as sector and local factors.

Corporate social responsibility is achieving commercial success in ways that honor
ethical values and respect people, communities and the natural environment.
(Business for social responsibility, 2003b)
To sum up, these organizations have framed different definitions in different ways
between them, although there are also significant in common. My own definition of
social responsibility is the businesses voluntarily contribute to a cleaner environment
and a better society.

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2.2 Responsibility of the firm
Annual statistics on charitable activities in the business of the UK magazine, The
Guardian showed that 100 top companies in the stock market in London is only less
than 1% of profit before tax for the operation to charitable and community projects in
the past year. Although the total amount of British companies to contribute to
charities rise 7% to $1.6 billion, but fewer than 34 companies supporting more than
1% of profits. Charity fund was supported of the 14 companies at the bottom of the
list less than 0.01% of the profits. It is not fun is total revenues in 2004 of the charity,
the contributions from the business accounts for only 4.3%, decrease 4.8% from
2003. This is the reason that most UK companies are failing on creating trust from
the community. Only 15% of those surveyed believe that large companies always
ensure and enforce the commitments of their social responsibility, 10% oppose the
above, while more than 70% of those still skeptical about the CSR of the company.
In addition, more than 80% of respondents thought that companies should have to do
more to show people what they are doing to society.
Environment is one such problem. Pressure from organizations such as Greenpeace
has pushed companies to be more responsible with the environment and society from
the 1960s. Some large companies in the U.S and Europe has made environment
protection a priority in the manufacturing business, the national environment

standards and international companies have been in countries development concerns.
They considered the provisions on environmental protection as a burden to the
production management of their business. In particular, the concept needs to factor in

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environmental goods and services were less put into production and business
decisions of companies.
According to economic experts, companies need to consider issues of environmental
standards in production and supply of goods and services are the needs of the
company, from the interests of the company. While companies in many developing
countries is often argued that environmental costs are not included in the price of the
product structure so often reduces the competitiveness of goods, then in many
developed countries, such as USA, UK, the company apply the technology
investment-friendly environment has significantly increased revenue: Corporation of
America produce light, Haitech Group invested $4.3 billion USD to control
environmental pollution in 1994, which the company’s reputation and increase
exported to $8 billion in 1999. As the world’s major markets more difficult, the
product is required not only ensure quality but also requires “cleaner”. To
successfully penetrate the large market but difficult such as Japan, America and
Europe, companies need to strengthen research capacity to apply international
standards on environment, such as ISO 14000 and environmental standards of the
market to penetrate.

2.3 Corporate Philanthropy_ what does it mean?
Nowadays, companies were more concerned about the CSR, but many others still
choose to secure and most popular is charity (Corporate Philanthropy- CP).
However, there are many businesses use this activity as a way of branding. So, what
has actually achieved real benefits for their existence and their development, or is it

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the value of instant communication? In terms of benefits, CSR brings more value to
business than charity. For example, a large insurance company in Vietnam has
donated 1 billion VND to support food, clothing and cash for poor farmers in the
remote areas. However, charities are only short-term benefit for community groups
need help, not actually help them overcome difficulties in the long -term; not offer
specific benefits to enterprises outside the temporal change of reputation.
Meanwhile, the implementation of CSR is actually contributing and process changes
both inside and outside the enterprise.
Enterprises can implement CSR by internal improved activities, building a strong
system of Governance, efficiency, creating the highest value with the lowest impact
on the environment and society.
Besides, CSR encourages businesses to contribute resources and thought into the
overall sustainability of the community, becoming a company that is responsible for
all manufacturing operations and business. For example, the other insurance
company, by investing in CSR to improve the process and shorten the time for
settlement of compensation cases for clients as injured car owners, they can
significantly improve the level of customer satisfaction, but also attract new
customers and increase sales. Companies can use this money to develop community
education programs about traffic safety, it help them understand more about the
“concept to prevent” accidents, just pull off significantly traffic accidents.
Thus, the application of CSR is really effective in this mission to help businesses
succeed economically as well as bringing long-term benefits to the community. In
terms of communication, both philanthropy and CSR will help build good image for

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social enterprises. However, fame comes from charitable activities often exist only in
a short time.

2.4 Hypothesis
2.4.1 Managers’ awareness of CSR and CSR reporting
The term social responsibility means different things to different people. Generally,
corporate social responsibility is the obligation to take action that protects and
improves the welfare of society as a whole as well as organizational interest.
According to the concept of corporate social responsibility, a manager must strive to
achieve both organizational and societal goals. The areas in which business can
become involved to protect and improve the welfare of society are numerous and
diverse. Some of the most publicized of these areas urban affairs, consumer affairs,
environmental affairs, and employment practices. Although numerous businesses are
involved in socially responsible activities, much controversy persists about whether
such involvement is necessary or appropriate. Therefore, managers can use CSR as a
tool to raise the reputation of business; or to improve the relationship with the
stakeholder, consumers, and employees; or to raise the efficiency and effectiveness
on their performance.
Thus, it is recognized that to increase interest in the issue of social responsibility at
the management level, in addition to, managers not only attention to the financial
interests of the owners also pay attention to the interest of other group such as
employees, consumers, Government and general public. These interests are directly

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or indirectly affected by the pursuit of business activities and they are the
shareholders of the enterprises.
In the view point of stakeholders to some extent is affected by the behavior of

managers. In the substance of CSR issues, it is important to have managers’
awareness and commitment to carry out and improve the initiative of CSR. If the
managers are at least partly the proponent of the corporate culture, and integrating
CSR requires culture change, so, it is not easy to imagine the CSR becoming
institutionalized in the organization without the managements’ active support (Harris
and Crane, 2002)
Therefore, managers are very important, who make the right decision to build the
reputation for the business.
Following the above argument, the hypothesis is formulated:
H1: Managers’ awareness of CSR and CSR reporting is positive.
2.4.2 Employee’s awareness of CSR and CSR reporting
Nowadays, for staff, standard for assessing the implementation of CSR is the best
treatment policy for employees as salary, bonus, rent the house for them, etc. No
discrimination based on race, nationality, religion or gender, and working condition
reasonable. It will promotes an environment in which diverse employees can
maximize their individual potential and fosters personnel who are willing to take on a
more active role on the global stage.

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Figure 2-2

By supporting the growth of each individual employee and actively cultivating the
next generation of human resources, Konica Minolta is taking steps to improve the
vitality of the entire Group. To enhance the training results of on-the-job
development (OJD), the Group conducts a variety of knowledge and skill
development seminars, and position-based training for employees who assume new
positions and roles. The Group has introduced a complementary system which
encourages employees to request transfers on their own, with the aim of expanding

opportunities for employees to maximize their own professional abilities.
Employee’s awareness about CSR is very important, because they are preparing CSR
reports. If they do not have the objective view and knowledge, truth awareness, they
can give out false statements. Therefore, the recruitment of staff and their training is
indispensable in every business.
Following the above argument, the hypothesis is formulated:
H2: Employee’s awareness of CSR and CSR reporting is positive.

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