By Tran Vu Ngan Giang (Giang Tran), Consultant, NGOs Development & Corporate Social Impact Programmes –
Vietnam has become an increasingly significant global economy, so businesses need to rethink their CSR programmes in order to catch up with consumer demand, attract investors, and expand their business. CSR is therefore not simply just charitable giving or community activity; it is a tool that can be employed to create shared value for firms as well as the society as a whole.
In Vietnam, CSR (corporate social responsibility) is often communicated to the public as charitable giving and emergency response activity. It has therefore developed a perception within businesses as well as public, that charitable giving is CSR. This is not correct. The essence of CSR goes beyond this narrow interpretation: philanthropic responsibility is only a pillar of CSR, and CSR is not simply the act of giving. The scope of CSR is far broader and more interconnected.
A pizza that ‘makes the world smile for peace’
In 2011-2012, Pizza 4P’s was a small restaurant nestling in a small alley on Le Thanh Ton street, District 1, in Ho Chi Minh City (HCMC). However, you needed to make a reservation a few days, if not a week, in advance in order to dine here. Most of my foreign friends who have ever visited Vietnam says Pizza 4P’s is their favourite spot.
What has made this brand that special?
During the past nine years, Pizza 4P’s has grown considerably to comprise of 21 stores spreading from the south to the north of Vietnam. You will be impressed exploring how CSR has become an integral part of the operation and development of Pizza 4P’s.
Answering my question about the meaning of CSR to Pizza 4P’s, Mr. Yuma Nagata, Sustainability Manager said: “We don’t call CSR but we call it ‘Sustainability’ […] It really connects to our vision to ‘make the world smile for peace’ […] We are operating the restaurant but we want to achieve the inner peace of the people. That was how we started our business […] Sustainability is essential for us because if the society or our products are not sustainable, we can never achieve our vision”.
In the beginning, there was no cheese besides the one imported from Italy. Since the import of this vital ingredient was costly, they decided to learn how to make their own cheese to pursue the high quality ingredients for making their pizza. Today, almost all the cheese used in Pizza 4P’s is produced locally from their factory in Don Duong, Lam Dong.
The cheese production also releases 3,000 litre of whey water a day as a by-product. The wastewater contains high COD and BOD (the chemical elements) that cannot simply be discharged to the drainage system. The company has therefore developed a circular recycling process: a nearby organic farm comes to the factory every day to collect the whey water, ferments it and uses it as fertiliser for vegetables or feed cows. The rocket salad grown at this farm, fertilised by the whey water, is then supplied to Pizza 4P’s. Sometimes the whey water is also used for salad sauce and drinks at the restaurant because it contains much nutrition.
Since the early days, health and kindness to the environment have been developed as core elements in the way Pizza 4P’s conduct their business.
From farm to table:
Upholding the principle of ensuring health and bringing smiles to customers, Pizza 4P’s buys organic shiitake mushrooms directly from a farmer who is part of an ethnic minority community in order to produce pasta. This farmer used to grow coffee trees but in order to grow coffee trees, they had to cut down the forest, which is not good for the environment. Profit from coffee trees is not much either. There is a programme from UNESCO, which shifts coffee farms to shiitake mushroom farms. It does not need much space to grow shiitake mushrooms while profit from it is high. Catching up with this programme, Pizza 4P’s has partnered with the famer and created additional output for the mushroom crop.
Purchasing team of Pizza 4P’s, together with Mr. Nagata, directly go to the field to identify farming partners and to source vegetables and crabs that are organically and naturally farmed. This model costs more than the ordinary purchase through suppliers. However, Pizza 4P’s manages the balance between cost and price to maintain the model and ensure it brings mutual benefits to their customers, farmers and the environment. Mr. Nagata said: “Cost and price should not be the only element being taken into consideration in doing business”.
The spirit of responsibility is demonstrated by Pizza 4P’s business operation. According to research regarding Corporate Philanthropy and Corporate Perceptions of Local NGOs in Vietnam in 2013 by VCCI, The Asia Foundation, and CECODES, 58% of businesses that participated in the survey said that their charitable giving had not had any link to their business goals. In such context, Pizza 4P’s has been one of the pioneers, strategically embedding their social impact activities into the DNA of their business.
From waste to ‘edutainment’:
Waste is a big problem for a restaurant business. How can businesses sustainably process waste? To answer this question, Pizza 4P’s has come up with a creative and special solution.
Plastic bags have been replaced by biodegradable and compostable bags made from corn starch. It takes approximately 20 years for a normal plastic bag to degrade1 but it only takes six months for the corn starch alternatives to do the same. Plastic straws have also been replaced by grass straws in responding to the increasing interest of customers. In addition, 100% of the glass bottles used by the brand (wine, beer, etc.) are recycled in their stores in HCMC.
At the Xuan Thuy branch in District 2, HCMC, the restaurant uses earthworms to compost some of their food waste. These earthworms can manage around 70kg/month2. It is even more impressive as this branch is built on an ‘edutainment’ concept. It aims to help their guests to learn about sustainability through dining experience. They have a herb garden and all the water used for the garden comes from the fishpond. There are many fishes inside the pond and the waste from the fish provides nutrition for the herbs. It creates a circular system: water from the fishpond nurtures the herbs and the herbs are used at the restaurant. This branch also uses solar panels and has reduced 20.8 tonnes of CO2 during May 2019 and January 2021. This concept therefore educates and entertains the guests with an environmentally friendly dining experience and a sustainable circular model. This has probably made Pizza 4P’s unique, making it standing out against its competitors.
Sustainability during crisis:
The COVID-19 pandemic has hit the hospitality industry heavily; Pizza 4P’s is not an exception. As a means of saving cost, the chain has had to cut their sustainability’s budget. Despite this, COVID-19 has pushed the business to be even more creative and considerate in order to operate sustainably while creating commercial value.
They have started first with reviewing their energy consumption, something they have not yet done in detail before. From the beginning of the pandemic, Pizza 4P’s has launched a competition of energy saving amongst all the stores. This obviously helps to save cost; in addition, it reduces the emissions released into the environment and contributes to reducing the greenhouse effect. This competition has also helped the brand to reduce the consumption of energy from energy production factories and also the risk of running out of fossil fuels.
Careful attention to our earth and the environment has obviously brought meaningful results to business, especially during this recent crisis.
Smile for employees, happiness for customers and peace for the community:
I have always been impressed by the wonderful service and the smiley faces of Pizza 4P’s employees. Mr. Nagata told me: “If we want to bring peace to the world, we obviously need to think about our employees”. Applying the principles of the General National Happiness index (GNH) from Bhutan, Pizza 4P’s has developed a system to measure the happiness and satisfaction of their employees.
With the community, Pizza 4P’s has also been delivering many charitable activities. The restaurant has been a supportive partner of Thang Long Vocational Training School (for young people with disadvantaged backgrounds) in HCMC by recruiting the students to work for them. They have also been making a contribution to plastic waste cleaning activities, offering meals for patients at the National Hospital of Tropical Diseases, and creating ‘pizzas for peace’ and contributing all the proceeds to the peace fund of UN on the International Peace Day, etc.
Employees’ happiness is often looked after by HR departments and customers’ satisfaction is usually handled by operation departments. The way Pizza 4P’s treats their people reminds us that CSR cannot be separated from a business operation. The responsibility and ethics of this brand are embedded in their HR and operation functions. These factors are vital for Pizza 4P’s continued sustainable growth in the hospitality sector.
Sustainable business – creating shared value
The story of Pizza 4P’s clearly demonstrates a popular definition of CSR by Carroll (1991). Charitable responsibility is only one of the four pillars of CSR, alongside economic, legal and ethical responsibilities (picture 3)3.
During the past half-century, many concepts, ideas and tools have been developed under the umbrella of ‘CSR’, such as: ‘Corporate Social Responsiveness, Corporate Citizenship, Corporate Governance, Corporate Accountability, Sustainability, and Corporate Entrepreneurship’. However, CSR has been acknowledged as a management tool that adds significant value to a business, helping it to build on its competitive advantage by creating a positive impact on the community and the environment4. As Porter and Kramer (2011) define, CSR is a ‘Creating Shared Value’ model, in which businesses are ‘generating economic value in a way that also produces value for society by addressing its challenges’5.
Pizza 4P’s is a good case study of a local enterprise that started their business with a desire to add value to the community as well as making profit. Although CSR is popular in Vietnam and other developing countries, CSR is perceived as a concept of the West6. It is therefore not adopted at the central level of business operation. For small and medium enterprises (SMEs), CSR is even less welcomed as it is considered to be an activity only suitable for big corporations, and that may not be relevant for SMEs.
Traditional CSR approaches (i.e. policy development, compliance, community engagement, reporting, etc.) are criticised as being biased toward MNCs7: CSR is developed in, and for, big companies with the assumption that they set the norm for it8. SMEs are assumed to operate as ‘little big companies’ and that CSR practices present in some big companies can simply be scaled down to fit SMEs8. These assumptions are not true: SMEs are not a smaller version of big corporations because they operate in their own nature and dynamics, which are distinctly different to large firms.
The way Pizza 4P’s started their sustainability journey has proved that it did not follow a CSR blueprint from big corporations, but follows principles rooted in the business philosophy, vision and mission of its founders and leaders. It is the creative solutions employed to address the challenge of balancing business interests with the benefits of their customers, the community, the environment and the next generation that combine to make this brand’s use of CSR quite unique. From the first days of this business, as a small company with the advantages of being flexible, active and self-running, the founder (also the decision maker) has initiated a sustainability journey within brand, setting up the process of making their own cheese. Nine years later, CSR is still the backbone of Pizza 4P’s operation and builds on their competitive advantage. The chain today has 1,700 employees and has been praised by CNN as the best cheese maker in Asia9.
Vietnam has become a vital player in global economics. ESG (environment, social, governance) elements are therefore required in international trade agreements and attract more attention from investors. In addition, local consumers and customers also care more about the environment, health and ethics of business when spending their money. A recent study by Huang, Do and Kumar about the perceptions of CSR amongst Vietnamese consumers advocates for promoting the awareness of consumers in distinguishing the four elements of Carroll’s CSR pyramid. Consumers actively support CSR and hold high expectations for business to perform the four dimensions of CSR (photo 3)10.
The domestic market is changing: the growing young generation and millennial consumers have changed their consumption behaviours and pay more attention to the environment and society. In such context, firms perhaps need to review their CSR to catch up with their consumers’ expectations, to attract investment and to expand their businesses. CSR is therefore not simply an act of kindness; it is a tool that creates shared value for business and the wider society.
Published in Vietnamese on Tia Sang (a Gleam of Light) Magazine for Science and Development on 06 January 2021.
This is a translation of the original article and has been slightly edited to fit Sustainable Vietnam. English language reviewed by Hugo Driver
3 Carroll, A. (1991) ‘The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders’, Business Horizons, 34(4), pp.39-48
4 Freeman R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L and De Colle, S. (2010) Stakeholder Theory – The State of the Art. Cambridge: Cambridge University Press
5 Porter, M. E. and Kramer, M. R. (2011) ‘Creating Shared Value’, Havard Business Review, 89(1/2), pp. 62-77. Available at: http://web.b.ebscohost.com.oxfordbrookes.idm.oclc.org/ehost/error?vid=1&sid=59ea159b-0377-4122-bf1b-b0aaf891bfee%40sessionmgr102
6 Ciliberti, F., Pontrandolfo, P. and Scozzi, B. (2008) ‘Investigating Corporate Social Responsibility in Supply Chains: A SME Perspective’, Journal of Cleaner Production, 16(15), pp. 1579–1588. doi: 10.1016/j.jclepro.2008.04.016
7 Tran, A. N. and Jeppesen, S. (2016) ‘SMEs in Their Own Right: The Views of Managers and Workers in Vietnamese Textiles, Garment, and Footwear Companies’, Journal of Business Ethics, 137(3), pp. 589–608
8 Jenkins, H. (2006) ‘Small Business Champions for Corporate Social Responsibility’, Journal of Business Ethics, 67(3), pp. 241–256
10 Huang, Y.-F., Do, M.-H. and Kumar, V. (2019) ‘Consumers’ Perception on Corporate Social Responsibility: Evidence from Vietnam’, Corporate Social Responsibility and Environmental Management, 26(6), pp. 1272–1284. doi: 10.1002/csr.1746
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