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Understanding Responsible Business Practices in the 21st Century

Responsible business practices are crucial in today's dynamic business environment due to evolving stakeholder expectations, ethical considerations, and the potential for societal impact. This article explores the concept, principles, and differences between Responsible Business (RB) and Corporate Social Responsibility (CSR) with insights from different perspectives. It delves into the importance of harmonizing benefits for all stakeholders and the need for businesses to integrate profitability, social responsibility, and sustainability targets.

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Understanding Responsible Business Practices in the 21st Century

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  1. SECTION 1a AN INTRODUCTION TO RESPONSIBLE BUSINESS

  2. Contents Why responsible business is needed? 1 • Two views of social responsibility • Three business models What is responsible business? 2 • Concept • Practices • Principles • What are differences between RB and CSR? 3 What should enterprises do? Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  3. 1. WHY RESPONSIBLE BUSINESS IS NEEDED?

  4. 1.1. Two views on social responsibility of business 21st century business context ●Importance of businesses ■ Traditional economic contribution “Making the biggest profit isn’t necessarily everything!” ■ Great potential to solve societal problems ● More demanding customers ■Having power to decide where to buy ■Knowledgeable customers: judgment & evaluation ●Ethics-valued employees ●Employees care about values & ethics (not only wages) Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  5. 1.1. Two views on the social responsibility of business Milton Friedman (Economist) Edward Freeman (Philosopher) The social responsibility of business is to increase its profit The social responsibility of business is to care about benefits of its stakeholders. Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  6. 1.1. Two views on social responsibility of business The Milton Friedman Perspective ⚬ Goal: Maximizing profit for the producer/Benefits of the consumers ⚬ Philosophy: By maximizing the profit, the firm contributes to development (Invisible hand) ⚬ Consequences: Imposed negative costs to other stakeholders and society Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  7. 1.1. Two views on social responsibility of business The Edward Freeman Perspective • Stakeholder approach • Goal: Harmonizing benefits for stakeholders • Philosophy: By harmonizing stakeholders' benefits, the firm is more socially responsible. • Possible risks: Decrease in revenues and profits; reverse responses from the financial market;... Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  8. Is it possible to have business practices that meet profitability, social responsibility, and sustainability targets? => RESPONSIBLE BUSINESS Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  9. 1.2. The three main logics of business 1.Benefits 2. Intervention Luật pháp Laws Firms Thị trường Market 3. Standards • Vague • Inconsistency • Not included in daily business processes Social Business Ethics Responsibility Consequence: There are still many profitable business activities that harm society Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  10. 1.2. The three main logics of business Business models: Efficiency CUSTOMERS RELATIONS ACTIVITIES METHODS OF ENGAGEMENT BETWEEN CUSTOMERS AND FIRMS GOAL/PLAN PARTNERS VALUES FOR CUSTOMERS DEVELOPMENT GOAL IS A KEY OF BUSINESS MODEL Stakeholders CREATIVE VALUES SERVICES RESOURCES DISTRIBUTION CHANNELS Method of distribution LABOR, FINANCE, TECHNOLOGY,... COST STRUCTURE • Source: Osterwalder and Pigneur (2010) REVENUE Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  11. 1.2. The three main logics of business Business models: Efficiency + Sharing CUSTOMERS RELATIONS CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES METHODS OF ENGAGEMENT BETWEEN CUSTOMERS AND FIRMS GOALS/PLAN VALUES FOR CUSTOMERS • SUPPLEMENTARY • Outside business process • Possible PR tools PARTNERS DEVELOPMENT GOALS IS A KEY OF BUSINESS MODEL RESOURCES Stakeholders CREATIVE VALUES SERVICES CORPORATE SOCIAL RESPONSIBILITY LABOR, FINANCE, TECHNOLOGY,. .. DISTRIBUTION CHANNELS Method of distribution • SUPPLEMENTARY • Outside business process • Possible PR tools COST STRUCTURE REVENUE • Business focus on efficiency/ profits • Besides, they provide some social responsibility activities Results: • Social responsibility has not been integrated into business process • Social responsibility compensates for bad conducts in some areas Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  12. 1.2. The three main logics of business Bus iness models: Social Enterprise ACTIVITIES PARTICIPATION GOALS/PLAN APPROPRIATE ACTIVITIES FOR DIFFERENT PARTICIPANTS METHOD OF ENGAGEMENT BETWEEN CUSTOMERS' ORGANIZATIONS SOCIAL VALUES PARTNERS SUPPORT FOR PRODUCTS AND SERVICES OF SOCIAL ENTERPRISES Social core values (for vulnerable groups) Sponsor RESOURCES SERVICES Human TO MASS PEOPLE COST STRUCTURE REVENUE • Social enterprises aim to solve hot social problems and target disadvantaged groups • Sociability is good but sustainability is low => Requires a business approach that integrates efficiency and sociality: RESPONSIBLE BUSINESS Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  13. 2. RESPONSIBLE BUSINESS

  14. 2.1. Definition • Many interpretations, but no consensus • UN’s Principles on Responsible Business: • Responsible Business is practice that prevents, minimizes and addresses the negative impacts of production and business on human rights, society, and the environment. • Provide remedial measures when negative impacts are imposed on human rights. • Contribute to society and sustainable development in general. • NEU Reseachers's team: Responsible Business is a business approach in which firms strive to achieve their goals (profit) and at the same time exercise their responsibilities to respect legitimate rights and interests, as well as ensure the welfare of stakeholders, and protect the environment, business integrity, and take remedial action when troubles emerge. • Thus, ⚬ Achieve the goal and mission of the business (profit) ⚬ Respect the fundamental rights of stakeholders ⚬ Does not harm while contributing to the welfare (including ethics and equity) of the stakeholders Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  15. 2.2. Terminology ￭Levels: Business attitude/philosophy vs. Business practices ￭Main areas: (i) Labor relations; (ii) Protection of customers; (iii) Government Relations; (iv) Environmental protection; (v) Community welfare; (vi) Business integrity ￭Stakeholders: Employees, Customers, Government, Community, Future Generations (regarding the environment and child labor, sustainability) and other affected stakeholders ￭Practices: Compliance – Beyond - Initiatives Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  16. 2.3. Principles ￭A business approach to achieve sustainable development goals, not just sporadic/separate practices. ￭Integration: ￭ Responsible Business is reflected in core values, functions, and operations of a business ￭ When designing business strategies and activities, Responsible Business requires managers to "ensure the legitimate rights and interests of stakeholders" and "business efficiency" ￭No compensation: 'Doing good' in one area cannot compensate for 'doing harm' in another.  Responsible Business requires businesses to adjust their Business Models, not just supplement their business practices Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  17. 2.4. Conclusion: RB vs CSR ￭CSR: choose to do SOME GOOD things ￭RB: to do EVERYTHING RIGHT => Some businesses practice "CSRs" in some areas (e.g. philantropy) to compensate for bad practices in other areas (e.g. pollution) Ideally: Do EVERYTHING right (RB) + SOME good things (CSR) Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  18. 2.4. Conclusion: RB vs CSR Responsible Business, Human Rights Corporate Social Responsibility State Doesn't play an important role Ensure that firms respect human rights Protect and minimize negative impacts on people Decide what can be done for society Firms Selection of stakeholders Consult all legitimate stakeholders Accountabilit y Minimize and remedy negative impacts, increase accountability No accountability for irresponsible actions Target Enterprises Stakeholders A CHOICE CALL FOR CHARITY/ETHICS RESPONSIBILITIES/RIGHTS Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  19. 3. WHAT SHOULD ENTERPRISES DO?

  20. Some suggestions ￭Raise awareness on RB and RBP ￭ Education/training ￭ NAP on RB ￭Implement HRDD ￭Develop and apply internal control and Code of conduct on RB ￭Develop or participate in grievance mechanisms to handle claims from stakeholders Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  21. Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  22. Conclusion Traditional Logics "Có thực mới vực được đạo" Responsible business logics "Có đạo mới tạo được thực lực" Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

  23. AUTHORS Ms. Nguyen Ngoc Hien Email: Hiennn@neu.edu.vn Mr. Nguyen Van Huan Email: nguyen.van.huan@undp.org Mr. Le Quang Canh Email: canh@neu.edu.vn Main author Mr. Yuji Shinohara Email: Yuji.shinohara@undp.org Ms. Do Nguyet Ha Email: do.nguyet.ha@undp.org Design and layout the training document Nguyễn Ngọc Hiên - hiennn@neu.edu.vnRBP Viet Nam Thực hành kinh doanh có trách nhiệm ở Việt Nam

  24. UNITED NATIONS DEVELOPMENT PROGRAMME INSTITUTE FOR SUSTAINABLE DEVELOPMENT Venue: 304 Kim Ma, Ba Dinh, Hanoi Phone: (+84 4) 38 500100 Fax: (84-4) 37265520 Email: registry.vn@undp.org Venue: Room 1503, A1 building, National Economics University, 207 Giai Phong, Hanoi. Phone: (84) 24.36280280/6550; 6551 Email: isd@neu.edu.vn Responsible Business Practices in Viet Nam RBP Viet Nam Nguyen Ngoc Hien - hiennn@neu.edu.vn

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