Socially responbile Investment: VEDAN Vietnam issue

After finishing my lecture about SRI, it reminded me about issue of VEDAN Company in Vietnam, my own country. VEDAN company seems to have no responsibility to Vietnamese people and environment when discharge untreated waste into Thi Vai River, made the pollution level increasing. In 1995, VEDAN had compensated Vietnamese people near Thi Vai River area 15 billion VND however, the issue was keep continuing until early 2009 when VEDAN Vietnam was caught in flagrant. As a result, the life of Vietnamese people near the river was affected badly.

Why was VEDAN Vietnam so bad about corporate social responsibility? I think it is all about company’s recognization of CSR.  According to research by the World Bank, barriers and challenges to the implementation of social responsibility of enterprises, including: awareness of the concept of social responsibility is limited; productivity affected to make and many rules of behavior and lack of financial and technical resources to carry out social responsibility standards (especially for small and medium enterprises); the confusion caused by differential regulation of codes of conduct and the Code of Labor and local regulations affecting the implementation of the code of conduct. As such, the implementation of social responsibility of business is not an easy problem. However, in this context, I think company need to take social responsibility because consumers, investors, policy makers and non-governmental organizations worldwide is increasingly more interested in the impact of globalization on workers' rights, environmental and community welfare. The company does not make social responsibility can no longer market access opportunities. Consider VEDAN case, now reputation of VEDAN Vietnam is not as the same as in the past. Compare to AJINOMOTO Vietnam, the profit and market share of VEDAN is much less as a result of ignore CSR. If I were a social responsibility investor, I would rather not invest in VEDAN because of what it did to my country.

Social responsibility investment covers many more aspects. Many studies have shown that a modern enterprise can only be considered as social responsibility investment when ensuring their activities do not cause harm to the ecological environment i.e. to show the environmentally friendly in its manufacturing process.  This is a very important criteria for consumers. Firm has to concern about its employees not only phisical but also on mental.  Firm forces employees to work until exhausted or has no solution to help them reproduce their labor power are entirely against to the social responsibility.  Company must also respect the equal rights of men and women, not be discriminated against in terms of gender in employment and wages. Moreover, firm has to provide good quality product, not harm the health of consumers, this is a very important criteria of being responsible business to consumers. Company should aside part of their profits to contribute to the community support activities. Because community and burden to the community is a goal that businesses have social responsibilities towards the development objectives alongside its profits. Indeed, there are many children were saved, more children are in school ..., if businesses are willing to share with the community benefits.

However, the problem is how company can balance all those aspects and support shareholder wealth when has to spend a lot of money to those social issues. I think CSR is not about company’s own responsibility, it is about shareholders’ responsibility as well. That is what we call socially responsible investment. Investors will make investment decision where they concern and think it is right by themselves.