SOCIAL IMPACT ACCELERATION

  A. Social business description

A1. Social mantra one-liner

In 2018, a coconut crisis hit Vietnam. Prices plummeted, leaving farmers in despair (around 35,000 – 45,000 VND  for 10-12 coconuts). Thạch Chal Thi and Phạm Đình Ngãi, who graduated with Master’s degrees in Food Technology and Engineering, wanted to help the villagers and decided to return to their hometown. Their passion for agriculture transformed into Sokfarm, producing organic coconut flower nectar. This boosted farmers’ income by 3-5 times.

Sokfarm – organic coconut nectar – a bricolage of Sustainable farming, Empowering the underprivileged, Reviving tradition.

Sok means happiness in Khmer. Sokfarm, Happy Agriculture, we choose to pursue a business model that creates a social impact, contributing to a healthy and sustainable life for the community. Our business model has been adapting to climate change and saltwater intrusion, providing sustainable agricultural solutions. Sokfarm is committed to providing sustainable livelihoods for farmers and integrating the underprivileged into the production chain by reviving the traditional craft of Khmer people in the Mekong Delta.

A2. Social impact clarity and significance 

1. Problem: Saline Intrusion

• Symptom: The lack of freshwater leads to the death of many plants, resulting in shriveled coconut fruits and failed yields.
• Causes:
  • EL NINO Phenomenon: This climatic event leads to reduced rainfall and increased evaporation, exacerbating water scarcity.
  • Geographical Location and Global Warming: The coastal and low-lying positioning of the Mekong Delta makes it vulnerable to rising sea levels, which displace freshwater resources with saltwater.
  • Overexploitation of Groundwater: Intense groundwater pumping decreases aquifer levels, making it easier for seawater to infiltrate.
  • Hydropower Plants Upstream: These reduce the downstream flow of freshwater, which is crucial for diluting the encroaching seawater during dry seasons.

2. Problem: Harmful Effects of Refined Sugar on Health of Workers and Consumers

• Symptom: Increased consumption of refined sugar is linked to obesity, diabetes, and heart disease, while workers suffer from various health issues due to exposure to hazardous conditions.
• Causes:
  • High Consumption: Refined sugar is prevalent in numerous food products, greatly exceeding recommended intake levels.
  • Nutritional Impact: Refined sugars are calorie-dense but nutrient-poor, contributing to various metabolic diseases.
  • Food Industry Practices: The industry’s reliance on refined sugar for enhancing product appeal encourages overconsumption.
  • Lack of Awareness and Education: Insufficient information and misleading labeling prevent consumers from making informed choices.
  • Chemical Exposure in Production: Workers face exposure to harmful chemicals like lime and phosphoric acid, which are used extensively in sugar refining.
  • Inadequate Safety Measures: A lack of proper protective equipment and training leads to health risks for workers.

3. Problem: High unemployment and socio-economic inequalities.

• Symptom: There is a significant lack of job opportunities, particularly in the rural areas where the Khmer community is prevalent.
• Causes:
  • Limited Educational Opportunities: Access to higher education is restricted for the Khmer community, limiting job prospects.
  • Lack of Economic Diversity: Economic activities are concentrated in a few sectors, not enough to generate sufficient employment.
  • Fragmented Land Structure: Small and divided land holdings prevent the development of large-scale agriculture or industry.
  • Inefficient Agricultural Practices: Outdated farming techniques on small plots result in low productivity and economic returns.

 

A3. Solution effectiveness and ESG integration 

1. The solution design addresses the root cause and creates the intended impacts

Problem	Solutions	Impacts	Relevant SDGs
Saline intrusion And gas emission	– Choose coconut trees to adapt to saline intrusion. (can stand 5-10‰ level of salty)  – Implement organic farming and nectar harvesting practices. – Use organic fertilizer  – International organic certification for the cultivation area – Use surface water and reuse distilled water during production. – Grow mature coconut trees to absorb CO2.	Before Sokfarm’s Solution: Context: The Mekong Delta, including Tra Vinh, has been experiencing severe saline intrusion due to rising sea levels and reduced freshwater flow. In 2016, saline intrusion affected over 39% of the total land area in Tra Vinh, leading to a 30-70% reduction in coconut yield, as reported by the Vietnamese Ministry of Agriculture and Rural Development (MARD). Environmental Impact: The lack of saline-resistant crops and conventional farming practices resulted in a significant loss of agricultural productivity and increased carbon emissions from traditional farming methods. After Sokfarm’s Solution: Land Area: Sokfarm expanded the area of organic coconut nectar production by 20 hectares in 2024, from an initial 5 hectares in 2018, leading to a 50% increase in productivity in the affected areas. Carbon Emissions: By planting mature coconut trees that absorb CO2, Sokfarm reduced its carbon footprint by 10% annually, achieving a total reduction of 30% over three years. The initiative also helped to sequester an estimated 100 tons of CO2 per hectare annually. Water Management: The introduction of surface water use and distilled water reuse reduced Sokfarm’s dependency on freshwater resources by 40%, contributing to greater water security in Tra Vinh.	SDG 12: Responsible Consumption and Production: Focus on organic farming, reduced water usage, and organic certification. SDG 13: Climate Action: Growing mature coconut trees for CO2 absorption aligns with this goal. SDG 14: Life Below Water: Indirectly contributes to this goal by promoting sustainable water management. SDG 15: Life on Land: Choosing coconut trees as an adaptation strategy helps protect ecosystems.
Harmful effects of refined sugar on health of workers and consumers	– Maintain organic certification and ensure product processing avoids chemicals. – Have ISO 22000:2018 and HACCP standards certified factory	Before Sokfarm’s Solution: Context: Tra Vinh’s sugar industry was characterized by high levels of chemical use, leading to significant health risks for workers and consumers. In 2017, a local health survey revealed that 15% of sugar factory workers reported chronic health issues related to chemical exposure. Health Impact: The consumption of refined sugar, linked to higher obesity and diabetes rates, was prevalent, with over 20% of Tra Vinh’s population being at risk of diabetes. After Sokfarm’s Solution: Health: After introducing the organic coconut nectar, Sokfarm saw a 25% reduction in reported health issues among workers due to the absence of harmful chemicals in processing. Consumers also benefited, with a 15% decrease in sugar-related health problems, particularly in obesity and diabetes rates, as measured by local health assessments in 2023. Production Standards: The establishment of an  ISO 22000:2018 and HACCP-certified factory ensured all products met international health and safety standards, reducing worker health complaints by 50% over five years.	SDG 3: Good Health and Well-being: By avoiding chemicals, the solution contributes to better health for workers and consumers. SDG 12: Responsible Consumption and Production: Organic certification and avoiding chemicals promote sustainable production.
High unemployment among Khmer people in Tra Vinh	– Create jobs for over 100 Khmer people. – Provide training and career development, especially to women and ethnic minorities. – Train local workers and establish long-term procurement policies with farmers. – Develop fair employment practices and training programs.	Before Sokfarm’s Solution: Context: The Khmer ethnic community in Tra Vinh faced a 40% unemployment rate, according to the 2016 census, with many residents migrating to urban areas in search of work. The average annual income for farmers was approximately 20 million VND (about $860 USD), which was insufficient to cover basic living expenses. Social Impact: High unemployment and low income levels led to increased poverty rates, with over 30% of Khmer households living below the poverty line. After Sokfarm’s Solution: Employment: Sokfarm’s employment initiatives reduced the Khmer community’s unemployment rate by 25% within three years, cutting it to 15% by 2023. Income: The average income for participating farmers increased by 3-5 times, from 20 million VND to between 60-100 million VND annually, lifting many families out of poverty. By 2023, 80% of these households had moved above the poverty line. Training: Sokfarm’s training programs, which reached 50% of ethnic minority employees each year, enhanced job-specific skills and improved career prospects. This led to an 80% employee satisfaction rate and reduced turnover to below 10% by 2023.	SDG 8: Decent Work and Economic Growth: All solutions directly contribute to this goal. SDG 5: Gender Equality: Focusing on women and ethnic minorities aligns with this goal. SDG 10: Reduced Inequalities: Fair employment practices and training programs contribute to reduced inequalities.

 

2. The positioning in the solution landscape

• Environmental sector (solutions toward saline intrusion)

• Sokfarm: Uses coconut trees that can adapt to saline conditions, offering a scalable solution. Coconut farming is prevalent in the Mekong Delta, and the trees are resilient to saline conditions, providing a lasting impact.
• Halofai: Focuses on cultivating salt-tolerant plants like mangrove apple and Indian jujube. These plants provide a strong long-term solution by transforming saline lands, but their scalability may be limited due to specific environmental requirements.
• Vietnipa: Cultivates Nipa palm, which thrives in brackish water and saline environments. The Nipa palm has a long lifespan (up to 50 years), providing a lasting impact. However, scalability is limited due to the slow growth cycle and specific habitat needs.
• Betrimex: Primarily focuses on coconut products and uses coconut plantations. Betrimex operates on a large scale, with an established supply chain and processing infrastructure. The scalability of their saline intrusion solution is high due to their extensive farming networks. However, their lasting impact may depend on the effectiveness of their farming practices and technology used to combat saline intrusion.
  

• Environmental sector (solutions toward gas emission reduction)

• Sokfarm: Sokfarm’s solution has moderate to high scalability due to the widespread cultivation of coconut trees in the Mekong Delta. It also has high efficiency in emission reduction as mature coconut trees absorb significant amounts of CO2, and organic farming practices minimize emissions.

• Vietnipa: Vietnipa’s solution has high scalability, especially through carbon credit trading, which can be applied across various regions. The efficiency is also very high due to the long-term carbon sequestration provided by Nipa palms and the direct impact of carbon credit trading.

• Halofai: its solution has moderate scalability as the salt-tolerant plants are specialized and require specific environmental conditions. The efficiency is also moderate as well as the plants contribute to carbon sequestration but may not be as efficient as other methods.
• Betrimex: the scalability of the solution is very high due to its extensive farming operations and established supply chain. But also because of the extensive supply chain, emissions can be hard to mitigate. Social sector (solutions towards reduction of local unemployment rate)

• Sokfarm:

• Job Creation: High. Sokfarm creates significant employment opportunities for the local community, particularly focusing on providing jobs to over 100 Khmer people, with an emphasis on women and ethnic minorities.
• Skill Development: Moderate. Sokfarm engages in training programs, but the focus is primarily on employing rather than significantly upskilling the workforce. The skill development is aligned with the needs of organic farming and traditional agricultural practices.

• Vietnipa:

• Job Creation: Moderate. Vietnipa generates jobs related to the cultivation and processing of Nipa palms, but the scale of job creation may be limited by the specialized nature of the crop and its slow growth cycle.
• Skill Development: High. Vietnipa emphasizes the importance of training in sustainable practices and carbon credit trading, which can enhance the skills of the local workforce and provide opportunities for career advancement.

• Halofai:
• Job Creation: Moderate. Halofai contributes to local employment through the cultivation of salt-tolerant plants, but job creation is limited by the specialized nature of their agricultural focus.
• Skill Development: Moderate. While Halofai may offer some training related to salt-tolerant plant cultivation, the opportunities for skill development might be less diverse compared to companies involved in more varied agricultural activities.
• Betrimex:

• Job Creation: High. Betrimex is a large-scale operation, providing numerous job opportunities across its extensive coconut farming and processing operations.
• Skill Development: High. Betrimex invests in advanced technologies and sustainable practices, offering training programs that enhance the skills of their workforce, particularly in areas like vCloudcam management and sustainable agriculture techniques.
  

3. ESG practices are integrated into the solution strategy

Sokfarm’s business effectively addresses key issues such as saline intrusion, gas emissions, the harmful effects of refined sugar on the health of workers and consumers, and the high unemployment rate among the Khmer people in Tra Vinh. ESG (Environmental, Social, and Governance) practices are thoughtfully embedded throughout Sokfarm’s value chain. This integration not only resolves the underlying problems but also fosters a sustainable, responsible, and inclusive business model that enhances the well-being of employees, the local community, and consumers alike.

 

In Firm Infrastructure, the challenges related to factory emissions, energy consumption, and worker safety are managed by adhering to  ISO 22000:2018 and HACCP standards. The planning of a new factory incorporating renewable energy sources demonstrates Sokfarm’s commitment to reducing its carbon footprint and ensuring a safer work environment.

 

In Human Resource Management, Sokfarm addresses the high unemployment rates among the Khmer community by providing jobs to around 100 local individuals. To mitigate cultural misunderstandings due to ethnic differences, Sokfarm offers regular training sessions and bonding activities to foster a more inclusive workplace. The company supports the health of its employees by providing insurance and promotes their children’s education through free English classes, with plans to establish a school for underprivileged children in the future. Regular training sessions are held multiple times a month to continually enhance the skills of the workforce, ensuring they are well-equipped for their roles. Additionally, the income stability provided by Sokfarm has lifted many farmers out of poverty, offering them a reliable and sufficient livelihood compared to their previous unstable earnings.

 

In Technology Development, Sokfarm has invested in advanced machinery and technology that significantly increase labor productivity and efficiency. This not only boosts production but also reinforces the company’s commitment to strong social ESG practices by creating a more efficient and safer work environment. The introduction of these technologies has streamlined operations, reduced manual labor strains, and allowed Sokfarm to scale up its production while maintaining high standards of quality and safety.

 

In Procurement, Sokfarm ensures the quality and sustainability of coconut nectar by avoiding chemical fertilizers and pesticides, instead opting for organic fertilizers and biological pest control methods, such as using beneficial insects to manage pests. This practice supports the health of both the environment and the farmers. The selection of coconut trees that can withstand saline intrusion (5-10‰ salinity) further showcases Sokfarm’s dedication to sustainable agriculture in challenging conditions.

 

For Inbound Logistics, efficiency and sustainability are improved by using a check-in system for farmers delivering nectar, which optimizes time and enhances productivity. The collection points are strategically located within a 4 km radius of local farmers to reduce transportation distances, thereby minimizing CO2 emissions and ensuring the freshness and quality of the nectar, crucial for maintaining its integrity.

 

During Operations, Sokfarm addresses water wastage by implementing rainwater collection systems and reusing distilled water, promoting energy efficiency. Worker safety is prioritized through adherence to international organic standards, which avoid the use of harmful chemicals. To tackle plastic waste, Sokfarm reduces packaging by eliminating plastic wraps on bottle caps. Food safety concerns are mitigated by maintaining organic certification, ensuring that all product processing avoids chemicals and adheres to the highest safety standards.

 

In Outbound Logistics, transportation emissions are minimized by optimizing delivery schedules to twice a week, specifically on Wednesdays and Saturdays, to reduce the carbon footprint associated with distribution.

 

In Marketing and Sales, Sokfarm emphasizes the health benefits of coconut nectar over refined sugar, promoting it as a safer alternative for consumers. By educating consumers about the nutritional and environmental benefits of their products, Sokfarm ensures that customers can make informed choices that align with their values of sustainability and health.

 

In After-Sales Service, Sokfarm is planning to implement a program for collecting and recycling plastic bottles and packaging materials. This initiative is part of their broader sustainability efforts, which also include plans to establish refill stations to minimize the need for single-use plastic bottles. These stations will enable customers to refill their containers, further reducing waste and promoting a circular economy. This future-forward approach not only supports environmental sustainability but also strengthens Sokfarm’s commitment to responsible consumption and production practices.

B. Social impact acceleration 

B1. Mechanisms to accelerate impacts

Current Situation

Sokfarm’s Operational Capacity

As of 2024, Sokfarm involves 93 individuals, including 47 direct employees and 23 farming households (with two workers each). The company has been steadily growing since its inception in 2020.

Each month, the current 20-hectare plantation yields between 45 and 60 tons of raw organic coconut nectar.

Sokfarm has invested in advanced farming techniques and training to expand its organic coconut nectar production to 20 hectares by 2023. The current production facility, spanning 500 square meters, adheres to ISO 22000:2018 and HACCP standards. This facility has required an investment of over 3 billion VND.

Future Expansion

Sokfarm aims to double the number of participating households within the next five years, expanding its workforce and community involvement. Additionally, the company plans to increase the organic coconut nectar production area by 10 hectares in 2024, bringing the total to 30 hectares.

To support this growth, a new, larger factory equipped with a 1000 square meter solar power grid is planned. This facility will contribute to Sokfarm’s commitment to sustainable and green operations.

This plan outlines Sokfarm’s initiatives to achieve sustainable growth in 3 years while maximizing social impact. It focuses on three key areas:

B2. Financial stability and profitability  

In the process of creating value for society, we have designed a revenue stream and cost structure that ensures financial stability and sustainability while aligning with the core principles of ESG criteria.

B2.1 Financial Model

• Initial Investment:
  • Factory & Warehouse: Our factory is equipped to handle all production processes, from raw material input to the finished product. Additionally, warehouses are essential for storing packaging materials and products before distribution to agents and manufacturers sourcing materials.
  • Machine & Equipment: Inside our factory, modern machinery and equipment are designed to increase output and ensure consistent quality. By integrating advanced technologies, including vacuum concentration technology, we can enhance production capabilities and reduce energy waste. Depreciation of machinery is also factored into our fixed cost structure.
  • Raw Material Area (owned by Sokfarm): To ensure a sustainable supply of organically produced raw materials, Sokfarm invests in its own raw material regions, accounting for 20% of input. 80% of the remaining inputs (coconut nectar) are sourced from local farmers.
• Cost Structure:
  • Labor: We invest heavily in human capital to maintain a high-quality workforce while striving to build a strong work environment. Thus, we allocate 38,8% of our cost structure to labor.
  • Marketing & Sales: Accounting for 23,71%, we allocate a suitable budget for marketing campaigns to reach our target customers. As the coconut nectar industry is a niche market, Sokfarm has invested significantly to convey a high-quality image and a sustainably growing business within the coconut nectar value chain. Additionally, we invest in after-sales services to maintain good relationships with partners and customers, ensuring convenience and health benefits when using Sokfarm products.
  • Management and operating: We allocate nearly 17,24% of our budget to the production process, including investment in machinery. This encompasses various stages in the coconut nectar production process, ensuring the organic raw material region, and converting coconut nectar into complete packaged products.
  • Shipping: Sokfarm primarily sells products through partner distributors, allocating 8,58% of the budget for transportation and export. This includes the cost of shipping to distributors and sea freight and customs services.
  • Rent: This accounts for 2,3%, covering the costs Sokfarm incurs for leasing or renting properties or equipment necessary for our farming operations. This includes coconut land for cultivation, storage facilities for crops and machinery.
  • Depreciation of machinery and equipment: Depreciation of machinery and equipment expenses reflects the gradual reduction in value of Sokfarm’s physical assets used in farming operations. This includes items like tractors, harvesters, irrigation systems, and processing equipment. This expense accounts for just 0,74%
  • Other: This accounts for 8,62% and is used in special events such as Sokfarm tours, trainings, distribution fairs,…
    Revenue Stream: (Pie chart)Our revenue comes from two sources: B2C (90%) and B2B (10%).For Business-to-Customer model,
    • Partnerships with Distributors, Supermarkets, and Retail Agents: Sokfarm collaborates with distributors, supermarkets, and retail agents to display products on shelves, offering commission rates ranging from 20% to 44%. Second-tier agents receive a commission of 20%, first-tier agents are provided with rates from 25% to 27%, consolidated agents receive commissions ranging from 30% to 34%, and distributors enjoy rates from 40% to 44%. Currently, this distribution channel is Sokfarm’s main source of revenue, accounting for 80% of the market.
    • Direct Sales to End Customers: Currently, Sokfarm sells products directly to end customers when they visit our raw material areas or factory. This direct sales method accounts for 5% of our total sales. Besides purchasing products, customers experience the coconut nectar massage model and enjoy the natural sweetness of the coconut nectar right after it is extracted. These interactive activities not only promote a deep understanding of our model and products but also facilitate purchasing behavior
    • International Market: Sokfarm has successfully expanded its market scope internationally, accounting for 5% of our total sales. Our products have been exported to major markets including the USA, Germany, the Netherlands, and Japan. In 2022 alone, we sold a total of 400,000 product units in these international markets.

	2021	2022	2023	2024
Netherlands	8/2021	x	x	6/2024
Japan	9/2021	x	x	x
USA	x	x	5/2023	7/2024
Germany	x	x	10/2023	01/2024
Australia	x	x	x	04/2024

 

For the Business-to-Business model, 

• Sokfarm supplies products as raw materials to bakeries and businesses in the food and beverage (F&B) industry, as well as to food processing factories for nutritional products. This revenue stream currently accounts for only about 10% of total revenue, as these industries often prefer traditional ingredients over organic ones. Therefore, we are approaching demanding foreign markets more carefully and sincerely to fully convince consumers
  
• ROI: 
  

  Year	Investment	Revenue (billion VND)	Costs (billion VND)	Profit (billion VND)	ROI	NPM
  2020	1,5	5	4,6	0,4	6,56%	6,5%
  2021	3	6,8	5	1,8	22,5%	26,1%
  2022	4	12,3	9	3,3	25,38%	27,3%
  2023	5,5	18,6	16,5	2,1	9,54%	10,9%

SROI:

• Cost of illness (diabetes) treatment saved: 295,083 USD 
• Income for local generated: 334.428 USD 
• Carbon Credits: 25.000 USD

=> Total: 654.511 USD

B2.2 Financial Projection

B2.3 Risk Management

To proactively address unforeseen challenges, we have identified key risks that could potentially affect our revenue and financial stability. To address these risks, we have developed comprehensive plans and solutions aimed at effectively managing and mitigating their impact.

• Micro-environment (Stakeholders):

Financial capital Risk (Company)

High possibility and moderate impact. Sokfarm is seeking external funding to support its expansion plans (includes building new factories with renewable energy sources and penetrating into the international market). While initial success has been achieved with existing resources, diversifying funding sources is crucial for sustainable growth. Clearly, participating in Social Business Creation 2024 competition is part of multiple methods we can execute. From this competition, we have received a lot of valuable advice from experts, coaches, and judges, and we also have the potential to receive investment from the competition’s funds or investors.

Operational Risks 

• Potential supply shortages (Supplier): While current raw material supply meets customer demand, future shortages may arise as the business expands and demand increases. This could hinder sales goals. To mitigate this, Sokfarm aims to expand partnerships from 35 to 500 farmers by 2030 and reach 200 hectares of coconut cultivation, leveraging Tra Vinh province’s favorable conditions:

• Tra Vinh has the second-largest coconut cultivation area in Vietnam, with 27.390 hectares of coconut farm land and an annual production of approximately 444 million coconuts. Additionally, Tra Vinh has 1,294 hectares of organic coconuts that have met European standards and obtained organic certification from the United States Department of Agriculture (USDA).

• Tra Vinh province has a population of over 1 million people, with nearly 32% belonging to the Khmer ethnic group. The majority of the population relies on agriculture for their livelihood, and many still face significant challenges. By creating sustainable livelihoods for struggling farmers and ethnic minorities through the coconut nectar harvesting model, Sokfarm recognizes the substantial local workforce potential that the company can tap into.
• Sokfarm’s raw material area ensures year-round, daily harvests, so the supply chain remains uninterrupted. This allows us to consistently secure the minimum required amount of coconut nectar while minimizing the risks associated with reliance on external raw materials.
  

• Customer acquisition challenges (Customer): 

• Potential risks for Sokfarm include a shortage of market demand. With ingredients exclusively derived from coconut nectar, Sokfarm can offer customers alternatives to other sweeteners that may not be suitable for their health conditions (Experts agree that coconut nectar is a healthier option than most other commercial sugars). Our solid revenue and relatively stable annual growth demonstrate that our pricing remains appropriate for our target market — upper middle-income consumers who are willing to pay a premium for reputable, high-quality organic products.
• This risk can be mitigated by the increasing demand for organic products both in Vietnam and globally, ensuring an outlet for Sokfarm’s products. Additionally, our existing customers also act as advocates for our products; they are enthusiastic about what we offer and thus help Sokfarm promote and introduce the brand further.

 

Competition (Competitors): Given the sensitivity of Vietnamese consumers to price, Sokfarm faces challenges in reaching consumers with a pricing strategy that is not highly competitive. We understand this, therefore instead of competing on price, we strive to highlight the nutritional value of our products. 

According to the E-commerce Market Trend Report for the keyword “Coconut nectar,” Sokfarm is currently leading in terms of sales and volume. Additionally, Sokfarm is the first company in Vietnam to bring organic coconut nectar to the global market. This demonstrates our successful efforts in promoting brand awareness and attracting a stable consumer base in Vietnam, while gradually reaching the international market. To maintain our brand position in the current market, we actively participate in trade fairs, exhibitions, and competitions, as well as sponsor social projects to spread brand awareness and reach our target customers. To the international market, we highlight the nutritional value and suitability for people with diabetes and who are following a dietary regimen in developed countries such as the EU and North America.

Commitment and quality assurance are paramount at the retail stage (Distributor): With distributors and retailers, we recognize the primary risk lies in their long-term commitment and relationship with Sokfarm in distributing products and reporting customer insights and feedback.

• To mitigate this risk, we have an attractive sales policy to maintain relationships with distributors, offering various support and incentives. You can refer to our sales policy here: policy. Additionally, Sokfarm has acquired product quality certifications, further enhancing the faith of both domestic and international distributors in Sokfarm’s potential within these demanding markets.

• Furthermore, to demonstrate ESG compliance throughout Sokfarm’s supply chain, we have been and continue to welcome partners to visit our farms and factories directly. They can assess our processes, conduct inspections, and even experience the coconut nectar harvesting process firsthand, much like tourists. As we expand into the international market, Sokfarm is committed to showcasing our potential and ability to secure quality certifications. We are also highlighting the growth potential of our product, aligning with the increasing global demand for organic products.

• Macro-environment: 

Environment: 

• Salinity intrusion poses a significant risk to Sokfarm’s coconut nectar products by potentially altering their flavor and reducing production yields. This could result in reduced sales and revenue loss. To mitigate this, Sokfarm is launching a coconut nectar “soy free”, utilizing the salty flavor to mask any salinity variations. This innovative product diversification strategy aims to ensure consistent taste, protect brand reputation, and create new market opportunities amidst the challenges of climate change.
• Simultaneously, with our coconut nectar farming model solution, we contribute to addressing the issue of saltwater intrusion. This problem is not only prevalent in Vietnam but also affects many other parts of the world. Therefore, in the future, we can expand this model and create a greater impact in various regions across the globe, not just limited to Vietnam.

Legal: 

Governance policy poses financial risks for Sokfarm, particularly concerning taxes, environmental regulations and trade. 

• Currently, Vietnam does not have a mandatory carbon market. However, to promptly adapt to the globally developing carbon market, Sokfarm is actively researching the conditions and procedures to establish carbon credits for coconut trees. Specifically, Sokfarm has contacted several international organizations regarding training on carbon credit certification. In addition, the company has also discussed with the Vietnam Chamber of Commerce and Industry (VCCI) to learn about policy regulations for this matter. It is known that some provinces in Vietnam have accessed this market through the World Bank, and we are learning from their experience to continue building and creating additional income sources for the farmers.
• To facilitate initial agreements with foreign distributors, Sokfarm has obtained crucial certifications required for exporting to demanding markets. Simultaneously, recognizing that the import policies of these demanding markets, despite their stringent nature, offer special support for organic agricultural products like those of Sokfarm, and heeding the advice of mentors and experts from this year’s SBC competition, Sokfarm has been actively implementing ESG reporting to ensure even stronger documentation and records when undergoing customs inspections and investor due diligence.
  
  Economic: Inflation and exchange rate fluctuations: High inflation rates can increase input costs and erode profit margins. Additionally, fluctuations in exchange rates can impact the cost of imported goods and the competitiveness of Sokfarm’s products in international markets. Looking towards a more sustainable future, to mitigate this risk, we will research and approach banks that offer exchange rate insurance services. With our export market currently at a moderate level, we will focus more on this service in the near future when the potential in export markets is higher and more evident.

B3. Team and leadership 

Sokfarm’s requirements	Team members’ capacities
As we need people having specialized knowledge of growing agricultural products	We recruit Specialized agricultural technicians and engineers who have expertise in growing organic crops.  The business’s founder is Ms. Thach Thi Chal Thi – a master in food technology major of University of Science and Technology. With a strong passion and specialized knowledge, she has successfully run the business in the field of developing high-quality food products. In addition, Sokfarm is also managed by Mr. Pham Dinh Ngai Ngai – an electrical engineering master, who is knowledgeable of the industry. They have demonstrated their skills through the development of the business as well as in competitions on different scales.  These professionals are essential for ensuring that Sokfarm’s organic practices are both effective and sustainable. Their deep knowledge of organic farming techniques enables Sokfarm to maintain high-quality standards and comply with organic certification requirements.
Besides, Sokfarm’s success is also attributed to staffs who are adept at Using traditional way of extracting coconut flower nectar from coconut trees	20-30% Our employees are Skilled workers who are adept at the traditional way of extracting coconut flower nectar.  Khmer workers are ensured to have in-depth knowledge in these specific techniques to maximize yield and ensure the quality of the nectar, which is a crucial component of Sokfarm’s product line. The ability to handle this delicate extraction process effectively is fundamental to the company’s operational success.
Additionally, being able to apply advanced machines to facilitate the production process is important	Sokfarm’s staffs are composed of Individuals with a background in technology.  Engineers and technicians with expertise in modern machinery and automation are available at Sokfarm to operate, maintain, and troubleshoot these complex systems. Mr Le, the department’s leader, is specialized in agriculture technology. Having been awarded a scholarship to study abroad, he then worked at Sokfarm to manage production process and support farmers.
Besides, Promoting brand awareness plays a crucial role, and …	Our Talented marketing team has contributed a lot to the business’s success.  This team in Sokfarm is proficient in creating compelling content and have strong editing skills. They have specialised knowledge in terms of brand promotion, creating crafted persuasive messaging and innovative promotional materials that resonate with the target audience, enhancing Sokfarm’s visibility and appeal in a competitive market. Ms Chau Ngoc Phuong is the leader of the marketing team. She specializes in biotechnology and content marketing. Fully understanding the business’ products, she has led the team to successfully enter various markets and build contents that effectively reaches customer segments.

To ensure sustainability, as leaders of the business, the founders demonstrate great ethical responsibilities, holding a business philosophy: Business and environment are not mutually exclusive. By integrating sustainable practices, businesses can improve their general well-being, develop competitive advantages and make a significant impact on the international stage Therefore, Sokfarm often collaborates with Tzuchi Charity foundation to organize voluntary trips to the Mekong Delta region. 

Sokfarm’s human resource strategy is designed to align with its long-term business goals and ensure both operational efficiency and stakeholder trust. A key element of this strategy is building stakeholder’s trust. Sokfarm establishes long-term contracts for collecting and purchasing coconut flower nectar. By securing five-year and ten-year agreements with workers, Sokfarm builds stable and reliable relationships that support sustainable sourcing and foster trust among stakeholders. This approach not only ensures a steady supply of high-quality nectar but also demonstrates Sokfarm’s employees retention strategy. With such activities, Sokfarm ensures 100% employee retention rate during 5 consecutive years, commencing from 2020.

In terms of member recruitment, Sokfarm focuses on attracting top talent through strategic efforts. Attending industry fairs and recruitment events allows the company to engage directly with recent graduates and emerging professionals, showcasing its commitment to innovation and growth. This proactive recruitment strategy helps Sokfarm bring in fresh perspectives and skills. Each year, Sokfarm’s number of employees has increased steadily since 2020. In 2024, Sokfarm has created job opportunities for nearly 100 workers. 

To support employee retention and create a supportive work environment, Sokfarm implements comprehensive social welfare policies. For female employees, Sokfarm has implemented maternity leave policy, allowing workers having under 1-year-old offspring to take a 60-minute break per work day while still earning the same amount of salary. Additionally, the business’s reward scheme is also strengthened to encourage employees to meet goals. One notable initiative is the opening of English classes for workers’ children, which enhances employees’ quality of life and demonstrates Sokfarm’s commitment to their families. Additionally, Sokfarm’s corporate social responsibility (CSR) activities, such as providing rice and other support to employees’ families in Tieu Can, contribute to a positive organizational culture and reinforce loyalty among staff. Striving to make significant social impacts, Sokfarm has also participated in CSV activities by creating job opportunities for Khmer people, providing career development as well as developing fair employment practices. 

 

Continuous learning and adaptation are  the top initiatives  in Sokfarm’s human resource strategy. Sokfarm operates two parallel categories of Learning and Development (L&D) activities, addressing the objectives of both staff and leadership teams, collectively creating a cohesive and forward-thinking organization. With the objective of bettering 1% everyday, both leaders and employees place an emphasis on continuous learning and sharing. To keep employees abreast of the latest developments and trends, the company creates opportunities for staff to attend global agricultural, commercial events, such as Thaifex, Biofach,… or recently Business Connection Forum 2024. These experiences not only broaden their knowledge but also foster a culture of innovation within the organization. Regular internal training sessions are organized to ensure that staff members continuously upgrade their skills, namely marketing or sales, and stay competitive in the evolving market. The business has organized 10 training sessions, with 2 designed specifically for ethnic minorities. 70% of Khmer workers have participated in these programs. Employees’ skill sets have also improved massively through 6 business culture sharing sessions annually. Besides, with the aim of nurturing employees’ mental well-being, Sokfarm also holds quarterly tea parties, sharing lessons about ethics or life philosophies, fostering understanding and sympathy. Sokfarm ensures that sustainability does not only lie in business activities, but also encourages all employees to embrace and practice sustainability in both their work and personal lives. 

The leadership team at Sokfarm is also consistently eager to learn and expand their expertise, which helps improve the company’s vision and develop more competitive strategies. Recently, they embarked on a trip to Europe to observe the market and innovations in the international arena. Sokfarm’s business founder promptly applied the learning points to their organization, sharing and discussing these insights with the staff, thus fostering an open learning environment.. By investing in ongoing professional development, Sokfarm ensures that its workforce remains knowledgeable, motivated, and capable of driving the company’s success forward.

B4. Partnership and collaboration  

1. Farmers

Farmers have been one of Sokfarm’s important partners since the early days of establishing the business. 80% of Sokfarm’s workers are Khmer, 70% are women, who have traditional coconut nectar collection techniques that help bring higher coconut nectar collection productivity. The main resources of farming households are land for growing coconut trees and coconut nectar. This is an important input material for the production process

Farmers regularly have feedback with businesses through purchasing coconut nectar directly at Sokfarm. Farmers want a stable price, helping them have a sustainable livelihood to feed their families. Because to ensure the quality of raw materials, coconut planting must comply with many principles: Do not use pesticides or herbicides in the growing area, only fertilize coconut trees with cow manure, do not intercrop with other plants, do not wash coconut nectar collection tools with chemical cleaners but must wash with enzymes.  

With a long-term development strategy, Sokfarm is always interested in building relationships with farmers through purchasing coconut nectar at prices higher than the average market price so that farmers have a stable income and a high commitment to the business. Currently, Sokfarm purchases fresh coconut nectar for 15.000 VND/kg and concentrated coconut nectar for 9.000/kg while the market price is only 8,000-10,000 VND/kg. 

Thanks to that, Sokfarm has signed contracts with 35 households to provide input materials for businesses. Since then, Sokfarm has implemented many projects with farmers. Most recently in June 2024, Sokfarm conducted an organic re-evaluation of the raw material area and production factory, tracing back to the product. When implementing this project, farmers have actively cooperated with businesses to prepare a diary to monitor organic farming, ensuring compliance with international standards including USDA, EU, JAS and CANADA.

2. Distributors

Sokfarm’s distributors are mainly supermarkets, organic food store chains, and vegan restaurants and convenience stores, some of which include large distributors such as Farmers Market, Annam Gourmet, Xanhsam Natural & Organic, and Homefood with 25 chain stores in 2 big cities: Hanoi and Ho Chi Minh City. At the same time, Sokfarm also has a number of distributors in Japan, Australia and America markets such as Yodobashi, Nature Benefits store chain, LNS International Corporation, Organic Ha Phuong,… The strength of a distributor lies in diverse distribution channels and the ability to search and expand markets to reach more potential customers. 

Distributors have feedback for businesses on two main issues: sales profits and product brand. Regarding sales profits, distributors want high discounts to have the motivation to work long-term with the business. Regarding product branding, distributors need to have eye-catching packaging and effective communication support policies to attract consumers.

This is an important lesson for Sokfarm to attract distributors. Sokfarm has built an attractive sales policy with a discount rate of up to 20-44% and a bonus for exceeding sales of up to 5%. At the same time, Sokfarm focuses on supporting distributors in product communication. For example: When participating in fairs/exhibitions, distributors will be supported with 50% of booth costs and support in designing fair publications.

 

In addition to our existing domestic partners, we actively participate in international trade shows to attract foreign distributors. Most recently, we had the opportunity to participate in THAIFEX – Anuga Asia 2024, marking Sokfarm’s third year at this leading food and beverage trade show in Asia. There, we engaged in in-depth discussions with partners from various parts of the world, including Russia, Australia, South Korea, and more.

To date, Sokfarm has more than 400 agents, distributing products to more than 30/63 provinces in Vietnam. Distributors are always ready to accompany Sokfarm in corporate projects, most notably the Sokfarm Tour held annually to connect Sokfarm distributors and agents. With the theme Happy Agricultural Journey, Sokfarm Tour 2023 welcomed 80 agents and distributors to Tra Vinh province to learn more about the coconut nectar collection industry and the social impact values ​​that we are building together. For them, returning to Sokfarm means coming home.

3. Investors

Sokfarm’s investors are the ones who provide financial resources for Sokfarm to expand its production scale and be able to access more markets. The majority of Sokfarm’s investors are angel investors, with the aim of supporting sustainable startups. Initially, Sokfarm did not call for investment because the scale of the business was still small. In the coming years, Sokfarm is planning to expand its market in Vietnam and export, at which time the business needs to equip more factories and machinery. Therefore, businesses need capital to expand production scale. Investors have great financial power and can provide abundant capital to improve production capacity and develop technology.

Investors have given feedback to Sokfarm when the business participated in the startup competition. Investors advice that Sokfarm needs to have clear financial statements, audited by reputable agencies. 

Thereby, Sokfarm has learned lessons to attract more investors. Sokfarm has built an accounting process within the business to ensure that the figures on revenue, costs, and profits given to investors are all realistic. Besides, the business always ensures high SROI, definitely bringing profits to investors. Thanks to that, Sokfarm signed an investment memorandum worth 1 million USD with Triple Impact, a social impact investment fund based in the Netherlands. This is not only an opportunity for Sokfarm to invest in processing technology and product development, but also helps Sokfarm achieve its 2028 goal of organic coconut growing area of ​​up to 300 hectares, creating jobs for 200 workers. local and associated with more than 500 farming households.

4. Manufacturers

The food manufacturer is one of Sokfarm’s important partners. Most manufacturers buy raw materials from Sokfarm to produce confectionery (Vicosap, Alluvia Chocolate, Marou Chocolate, Mỹ Phương Food, Humbl. foods – Granola and Smoothie bowls) and spices (Spico). The manufacturer has large production capacity to expand product lines made from coconut nectar while helping the Sokfarm coconut nectar brand become more widely known.

The manufacturer provides feedback to Sokfarm about product packaging and color. The manufacturer wants Sokfarm to pack coconut nectar sugar into individual bags depending on different requirements. At the same time, the manufacturer also wants the product to have a more beautiful color. Initially, the concentrated coconut nectar product has a very beautiful color, like amber. However, after a few months of storage, the concentrated coconut nectar turns black, making the color when mixed with other ingredients unattractive.

Understanding the manufacturer’s feedback, Sokfarm always pays attention to product packaging. Unlike intermediary distributors, Sokfarm can package products itself and can customize the packaging to suit orders from distributors. Besides, Sokfarm also focuses on R&D to overcome product discoloration. Sokfarm processes coconut nectar using vacuum concentration technology, giving the product a sweet, slightly salty taste of minerals and a characteristic sour aftertaste due to the fermentation process. Thanks to that, Sokfarm has provided coconut nectar as an input material to produce other foods: macapuno coconut candy, toasted coconut cake, moon cake, chocolate, energy bar, granola, chili sauce…

 

5. Government agencies and organizations

Government agencies have supported Sokfarm a lot in the business development process. Agencies such as the Vietnam Chamber of Commerce and Industry (VCCI) have provided information and prepared documents for Sokfarm to win the 2021 ASEAN Business Awards in the Inclusive Business category. Recently, Sokfarm also received support from the Biotrade project, sponsored by the Swiss Government, to promote trade and expand markets as well as build relationships with sustainable production businesses to create stronger social impact together. In addition, these agencies, along with Foundations and social organizations, also regularly organize contests so that Sokfarm can participate and increase recognition with awards and certificates of merit from 10 contests. From there, Sokfarm can build trust with the brand and promote the brand more easily.

6. Social Media

We have extensively communicated our company’s inspiring story across various media channels, receiving direct feedback from celebrities about the quality of our products. Furthermore, we are fortunate that most of our articles and news stories are proactively sought out and interviewed by journalists, rather than having to spend a lot of money on promoting our brand. Through this, investors can also easily follow our development journey and export achievements. We are also actively engaged in developing and enhancing Sokfarm’s brand awareness on major social media platforms in Vietnam, achieving impressive results as follows:

 

Platform	Achievement
Shopee	4.9-start rating/595 reviews 4,600 followers
Facebook	17,000 likes 21,000 followers
Tiktok	52,300 followers 724,800 likes
Youtube	195 videos 1,130 subscribers

The most prominent event is that Sokfarm received an invitation to cooperate, becoming one of the three brands opening the livestream series “Tinh Hoa Viet Du Ky” of Shopee in April 2024. Throughout the 2-hour livestream, “Shopee – Tinh Hoa Viet Du Ky” continuously offered Flash Sale sessions with discounts for Sokfarm products, from which Sokfarm products reached more than 15,000 viewers nationwide.

7. Research Institute

Sokfarm has built relationships with a number of research institutes such as: Business Studies & Assistance Center (BSA), Seed Planter, Seed Planter, FTU Innovation and Incubation Space (FIIS),… These centers have the main task and mission of supporting startup activities that create social impact. This is also the operating model that Sokfarm has pursued since its establishment. Therefore, Sokfarm’s CEO regularly has discussions with representatives of these centers to enhance the competitiveness of the business and improve company management activities.

These centers have provided feedback for Sokfarm to invest more in the business’s ESG strategy to improve production efficiency and meet the requirements of developed countries in the world that are increasingly having challenges. ESG reporting requirements are increasingly strict.

From there, Sokfarm began to focus on measuring and building ESG reports in accordance with the United Nations’ sustainable development goals.

C. ESG reporting  

C1. Measurement and reporting 

1. ENVIRONMENTAL:

Issue 1: Greenhouse Gas Emissions (SDG 7, 9, 13): Sokfarm reliance on conventional electricity for production processes might contribute to greenhouse gas emissions, impacting climate change and its associated environmental consequences.

• Solution 1: Building bio-gas power plants

Planning to invest in a bio-gas power plants and bio-boiler technology, where organic waste generated throughout our operations, such as coconut husks, shells, and even food waste, can be converted to fuel the power plant.

Solution 2: Expanding the organic farming area

The process begins with surveying the planting area to assess its suitability for organic farming. Once identified, farmers are trained to adhere to organic certification standards, ensuring they understand and implement the required practices. Following training, an application is submitted to the Control Union (CU) for certification. The area is then re-evaluated, and a new assessment is conducted to confirm that the organic coconut material area meets the necessary criteria for certification, ensuring compliance with organic farming standards.

Solution 3: One-piece flow and closed-loop production process

A one-piece production process follows a linear approach where resources are extracted, used to create products, and then discarded as waste, often leading to resource depletion and environmental harm. In contrast, a closed-loop production process is circular, where waste materials are reused, recycled, or reintegrated into the production cycle, minimizing resource consumption and environmental impact. This shift from a one-way to a closed-loop system emphasizes sustainability and responsible resource management.

• Impact 1:

• Reduce the company’s carbon footprint by 10% annually, aiming for net-zero emissions.
• Reduce Sokfarm’s electricity consumption by 50%, translating to a potential saving of 50,000 kW/month by 2025.
• Increase the proportion of renewable energy sources to 50% within the next five years.he planned biogas plant and the technology used ensure environmental safety:

Impact 2: 

• Increase the area of organic coconut nectar production by 10 hectares in 2024 

Impact 3: 

• Reduces the amount of waste sent to landfills and lowers the environmental footprint.
• Conserves natural resources and minimizes the environmental impact associated with resource extraction and processing.
• Metric 1:

– More energy-efficient: Electricity = 0.85 kg CO2 per KWh, while biogas= 0.0226 kg CO2/kWh.

–

– The plant site is located far from residential areas

Metric 2:

 – The total area of organic coconut nectar production: Sokfarm has maintained a planting area of 20 hectares over the past three years and plans to increase it to 30 hectares in the near future

 – Applying biological control agents on organic soil

Sokfarm has released over 5,000 red-eyed wasp eggs onto its organic crop areas. These wasps exhibit parasitic behavior by laying their eggs inside the eggs of pest insects. When the wasp eggs hatch, the larvae consume the pest eggs, killing them and preventing the pests from hatching and causing damage. Red-eyed wasps are capable of controlling over 200 pest species, with a particular focus on black head caterpillars on coconut trees.

However, red-eyed wasps are sensitive to temperature variations. They thrive within a temperature range of 25°C to 30°C. Temperatures significantly outside this range—either higher than 30°C or lower than 25°C—can adversely affect the development and effectiveness of the wasps’ eggs, potentially diminishing their pest control abilities.

Trà Vinh’s average temperature, which ranges between 26°C and 28°C, is well-suited to the needs of red-eyed wasps. This temperature range is optimal for their development and reproduction, ensuring effective pest management on coconut trees. The stable and appropriate temperatures in Trà Vinh mitigate the risks associated with temperature fluctuations, making it an ideal location for deploying red-eyed wasps as a biological control method.

 

Metric 3:

• The factory meets quality standards

Issue 2: Water Resource Depletion (SDG 6, 12):While Sokfarm prioritizes water conservation, even surface water use can strain local resources and disrupt ecosystems if not meticulously managed. Overuse can impact water tables, affecting surrounding communities and agricultural productivity.

• Solution: Rainwater harvesting system

Sokfarm has set up a rainwater harvesting system, including optimal collection points and storage tanks, and has identified effective rainwater treatment and filtration methods. They have also integrated this system with their irrigation processes for coconut farms.

• Impact:

• Reduce dependence on surface water resources, ensuring water security for both Sokfarm and the local community 

• Minimizes environmental impact and further strengthens circular production model.

 

• Metric:
• Technique of treating rainwater

2. SOCIAL

Issue 1: The well-being and economic growth of local communities (SDG 8)

 

• Solution: 

Sokfarm is investing in advanced farming techniques and providing training to farmers, aiming to expand its organic coconut nectar production by 20 hectares in 2024.

 

• Impact:

• Increase average farmer income by 3-5 times within the next three years.

• Increase the number of participating households by 200% within the next five years.

• Metric:

• Price and volume of raw materials purchased from farmers

6,000 VND – 15,000 VND per liter

• Total number of households participating in Sokfarm’s coconut nectar program.

2020: 6 workers + 6 farming households (each with 2 workers) = 18 people

   2021: 15 workers + 8 farming households (each with 2 workers) = 31 people

2022: 32 workers + 15 farming households (each with 2 workers) = 62 people

2023: 42 workers + 20 farming households (each with 2 workers) = 82 people

2024: 47 workers + 23 farming households (each with 2 workers) = 93 people

 

Issue 2: Cultural Differences (SDG 16)

 

• Solution 1:

Implementing intercultural training programs about:

• Coconut flower nectar extraction massage technique
• Coconut tree care technique
• Remind the regulations of Sokfarm for farmers, including: Commitment to not using herbicides or pesticides in the nectar collection gardens; Prohibition of intercropping other fruit trees in the nectar collection gardens; Care for coconut trees according to organic practices.

Solution 2:

• Regular feedback, recognition, and involvement in decision-making. 
• Competitive compensation, flexible work arrangements, and robust benefits.
• Positive workplace culture, and supporting employee wellbeing 
• Effective communication, comprehensive onboarding, and mentorship programs

 

• Impact 1:

• Reduce employee turnover to below 10% within the next two years.

Impact 2:

• Increase the number of participating households by 200% within the next five years.

 

• Metric:

• Conduct regular employee satisfaction surveys to measure job satisfaction, engagement, and overall well-being.

Satisfaction of farmer

• The annual employee turnover rate is 5%

 

Issue 3: SDG 5: Gender Equality

 

• Solution:

• Expanding the number of training programs specifically designed for women employees. These programs could focus on skill development, leadership training, and career advancement opportunities tailored to the needs and aspirations of women in the workforce
• Creating a supportive workplace culture that values and respects diversity

• Impact:

• Increasing the number of training programs and providing incentives directly contribute to closing the gender gap in the workplace, aligning with SDG 5’s goal of achieving gender equality
• Flexible work arrangements help women manage their work-life balance, reducing stress and improving overall job satisfaction. This leads to higher productivity, lower turnover rates, and a more inclusive workplace

 

• Metric:

• Incentives for female workers: Female workers with children under 12 months old are entitled to a 60-minute break each workday. This break period is paid in full according to the employment contract
• Programs about women that Sokfarm organizes and participates in:
• International Women’s Day
• Discussion “The Voice of Women”
• Training program aimed at enhancing capacity, raising awareness of the role and skills of women, and promoting gender equality in the coconut flower nectar value chain.
• Female employees are allowed to participate in training programs and internal bonding activities.

Issue 4: SDG 10: Reduced Inequalities

• Solution:
• Offering targeted educational programs, workshops, and mentorship initiatives. 
• Impact 1:

• Provide training opportunities to at least 50% of ethnic minority employees each year
• Enhancing job-specific skills, improving professional development, and promoting career advancement.

Impact 2:

Engage with at least 50% of the Khmer community members in the region through various initiatives each year.

• Metric:

• Number of training programs specifically designed for ethnic minority employees: Two programs have been organized, with 70% of the participants being Khmer individuals.
  
  

  3. GOVERNANCE

Issue: Business Ethics & Transparency

• Solution 1:

• Utilize traditional farming and production methods in creating their coconut flower nectar, showcasing the cultural heritage of the Khmer people.
• Incorporate cultural elements in branding and packaging to highlight the unique heritage and traditions of the ethnic group.
• Partner with local communities in the production process.

Solution 2:

• Adhere to recognized international financial reporting standards (IFRS)/ Vietnamese accounting standards (VAS)

 

• Impact 1:

• Emphasizes the preservation and appreciation of cultural heritage, particularly that of a potentially marginalized ethnic group

Impact 2:

• Ensures consistency and comparability with other companies, allowing investors to make informed decisions

 

• Metric 1:

• Mission: be a “beacon of Vietnamese heritage” by honoring traditional coconut nectar collection practices of the Khmer peopleAdhere to recognized international financial reporting standards

Metric 2:

• Using efficient accounting software  
• The financial report is audited by the tax authority

 

C2. Compliance with ESG standards and frameworks 

The GRI Standards provide Sokfarm with a comprehensive framework to monitor and report their performance across environmental, social, and governance metrics. This enables Sokfarm to assess their impact on organic farming, fair labor practices, workforce diversity, and other sustainability areas. By integrating with the UN Sustainable Development Goals (SDGs), Sokfarm can demonstrate their progress in minimizing negative externalities and contributing to global sustainability. The emphasis on transparency and stakeholder inclusivity aligns with Sokfarm’s goal of openly communicating their ESG efforts to consumers, investors, and local communities, fostering trust and confidence. Additionally, the GRI Standards’ modular and adaptable framework allows Sokfarm to prioritize and evolve their metrics in line with their sustainability goals, ensuring ongoing relevance and commitment to best practices. In the near future, Sokfarm plans to implement ESG reporting as follows:

• Understanding and Aligning with GRI Standards

• Objective: Ensure Sokfarm’s sustainability reporting aligns with GRI Standards (Universal, Sector, and Topic Standards)
• Actions:

• Conduct an internal workshop to educate all relevant departments on GRI Standards
• Review Sokfarm’s business activities, especially those related to sustainability (e.g., sustainable farming, health benefits, and eco-friendly processes), and map them to relevant GRI Standards

     – Identify key topics from the GRI Standards that are most applicable to Sokfarm, such as energy consumption, water usage, community impact, and economic performance

   – Timeline:

• Workshop within the first month
• Mapping and identification within two months

   – Responsible Teams: ESG team, HR, and department heads

 

•  Materiality Assessment

• Objective: Identify and prioritize the ESG issues that matter most to Sokfarm and its stakeholders
• Actions:
• Conduct surveys and interviews with key stakeholders (farmers, employees, investors, customers, and local communities) to understand their concerns and priorities 
• Use the feedback to perform a materiality assessment, focusing on issues like environmental impact, fair trade practices, and product safety 
• Regularly review and update the materiality matrix to reflect changing stakeholder expectations and business expansion
• Timeline:
• Initial engagement and assessment within three months
• Ongoing review every six months
• Responsible Teams: ESG team, Marketing, Customer Relations

 

• Data Collection and Alignment with GRI Indicators

• Objective: Collect accurate and comprehensive data on identified material topics to ensure full alignment with GRI indicators
• Actions:
• Expand current data collection efforts to include all relevant aspects of production, such as energy use, water consumption, waste management, and social impact
• Implement a centralized data management system to streamline data collection, verification, and reporting
• Align the collected data with specific GRI indicators to ensure transparency and comparability
• Timeline: 
• Data system setup within four months
• Continuous data collection and alignment thereafter
• Responsible Teams: IT, ESG team, Operations

• Developing and Drafting the ESG Report

• Objective: Create a comprehensive ESG report that meets GRI Standards and reflects Sokfarm’s commitment to sustainability
• Actions:
• Draft the report based on the data collected, focusing on key areas such as environmental stewardship, social responsibility, and economic performance
• Ensure the report includes a GRI Content Index and Statement of Use, specifying the “Core” or “Comprehensive” level of reporting
• Highlight Sokfarm’s value proposition, such as eco-friendly production and support for local farmers, to showcase the company’s unique contributions to sustainability
• Timeline: 
• Initial draft within six months
• Finalization and review within eight months
• Responsible Teams: ESG team, Communications, External Consultant (if needed)

 

• Publishing and Communicating the ESG Report

• Objective: Distribute the ESG report to stakeholders and ensure transparency in Sokfarm’s sustainability efforts
• Actions:
• Publish the report on Sokfarm’s website and distribute it to key stakeholders, including investors, customers, and partners
• Develop a communication strategy to share the key findings of the report through press releases, social media, and stakeholder meetings
• Notify GRI by providing them with a link or copy of the report
• Timeline:
• Report publication within nine months
• Communication and distribution immediately after publication
• Responsible Teams: Communications, ESG team, PR

 

• Continuous Improvement and Future Reporting

• Objective: Continuously improve the reporting process and prepare for future ESG reports.
• Actions:
• Gather feedback from stakeholders on the published report to identify areas for improvement.
• Implement a system to monitor updates to the GRI Standards and other relevant guidelines to ensure ongoing compliance.
• Plan for the next reporting cycle, integrating lessons learned and stakeholder feedback.
• Timeline: 
•  Feedback collection within two months after report publication.
• Ongoing improvements and monitoring.
• Responsible Teams: ESG team, Stakeholder Relations, Continuous Improvement.

 

•  Training and Capacity Building

• Objective: Build capacity within Sokfarm to ensure all departments understand and can effectively contribute to the GRI reporting process.
• Actions:
• Conduct regular training sessions for all relevant staff on GRI Standards and the importance of accurate ESG reporting.
• Develop training materials and guidelines that can be used for ongoing education and new employee onboarding.
• Engage external experts to provide advanced training on specific areas, such as data management or stakeholder engagement.
• Timeline
• Initial training within the first three months.
• Ongoing training sessions every quarter.
• Responsible Teams: HR, ESG team, External Trainers (if needed).

 

• Audit and Verification

Based on the details of Sokfarm’s business model, including its focus on sustainability, organic farming, and social impact, the most suitable audit firms are those with experience in working with SMEs, a strong understanding of sustainability reporting, and the ability to provide comprehensive advisory services. Thus, Sokfarm has selected audit firms that meet the criteria such as Grant Thornton Việt Nam, Baker Tilly Việt Nam, KPMG Việt Nam, and Deloitte Việt Nam. However, considering Sokfarm’s current financial capacity, Grant Thornton Việt Nam is the most suitable choice.
Grant Thornton Việt Nam is particularly well-suited for Sokfarm due to its specialized expertise in working with small and medium-sized enterprises (SMEs) and its strong focus on sustainability and ESG reporting. With a deep understanding of the unique needs of SMEs, Grant Thornton can offer tailored audit and advisory services that align with Sokfarm’s commitment to environmental impact and social responsibility. Their comprehensive service offerings and balance of local knowledge with global resources provide Sokfarm with the support needed for effective financial management and strategic growth. This makes Grant Thornton an ideal partner for Sokfarm as it navigates its financial and sustainability objectives.

• Objective: Ensure the accuracy and credibility of the ESG report through third-party verification.

• Actions:
• Engage an external auditor to review the data and processes used in the ESG report.
• Address any discrepancies or areas of improvement identified by the auditor.
• Include an assurance statement in the ESG report to enhance credibility.
• Timeline:

 

Initial Preparation (1-2 Weeks)

• Internal Review:
  • Assess Documentation: Review all financial statements, operational documents, and ESG reports.
  • Identify Gaps: Identify any gaps in documentation or processes that might need improvement or updating.
• Engagement Meeting:
  • Schedule a Meeting: Arrange an initial meeting with Grant Thornton to discuss the scope of the audit and specific requirements.
  • Provide Background: Share relevant background information about Sokfarm’s business model, operations, and any specific areas of focus.\

Document and Data Collection (2-4 Weeks)

• Financial Records:
  • Organize Financial Statements: Ensure that all financial statements for the relevant periods are accurate and complete.
  • Compile Supporting Documents: Gather all supporting documents such as receipts, invoices, and contracts.
• ESG Reports:
  • Review ESG Reporting: Ensure that ESG reports are up-to-date and aligned with GRI standards.
  • Compile Relevant Data: Collect data related to environmental impact, social initiatives, and governance practices.
• Operational Documentation:
  • Update Policies: Ensure that company policies, procedures, and internal controls are documented and up-to-date.
  • Record Keeping: Ensure that records of all business activities are properly maintained and easily accessible.

 Implementation and Adaptation (4-6 Weeks)

• Internal Controls:
  • Review and Strengthen Controls: Evaluate and strengthen internal controls and accounting procedures as needed.
  • Implement Recommendations: Make any necessary changes based on feedback from Grant Thornton.
• Training:
  • Train Staff: Provide training for relevant staff on any new procedures or documentation requirements.
  • Ensure Compliance: Make sure staff understand the importance of compliance and proper documentation.
• System Integration:
  • Adapt Software: If needed, adapt accounting software or systems to align with Grant Thornton’s requirements.
  • Ensure Data Accuracy: Verify that all data entered into systems is accurate and up-to-date.

Ongoing Support and Communication (Continuous)

• Regular Updates:
  • Communicate Progress: Keep Grant Thornton updated on any changes or improvements made.
  • Seek Clarifications: Reach out for clarifications or guidance on any requirements or processes.
• Feedback Loop:
  • Implement Feedback: Act on feedback provided by Grant Thornton to continually improve processes and documentation.
  • Review Performance: Periodically review performance and compliance to ensure ongoing adherence to requirements.

Timeline Summary:

• Initial Preparation: 1-2 Weeks
• Document and Data Collection: 2-4 Weeks
• Implementation and Adaptation: 4-6 Weeks
• Ongoing Support and Communication: Continuous

Total Estimated Time: Approximately 8-12 Weeks for initial setup and adaptation. Ongoing communication and support will continue beyond this period.

• Responsible Teams: ESG team, External Auditor.

This detailed plan will guide Sokfarm in effectively applying GRI reporting, ensuring that the company meets global sustainability standards and aligns with stakeholder expectations.

D. Learning curve  

Sokfarm has successfully achieved its fundamental economic objectives by producing and marketing organic coconut nectar products. Not stopping there, the business has also made profound contributions to other aspects. 

In terms of the environment, Sokfarm has provided environmental protection, using sustainable methods to mitigate the impacts of climate change. In addition, the business has placed an emphasis on enhancing community health, striving towards safe production processes and organic consuming trends. More notably, by creating livelihoods for local farmers, Sokfarm clearly demonstrates its commitment to social responsibilities. 

AREAS FOR IMPROVEMENT

Sokfarm has several key areas for improvement to enhance its overall effectiveness and reach. Firstly, in the third round: Principles of social business execution, we have learnt how lack of continual learning and adaptation can hinder business’ growth. Therefore, the business has placed an emphasis on this particular aspect, offering opportunities for employees to learn and develop. Workers do not only gain knowledge from leaders, but they are also given chances to attend conferences or go on business trips. 

Additionally, in the previous round, Sokfarm has also been aware of the importance of promoting diverse marketing strategies. Sokfarm has made concerted efforts to leverage its marketing strategies by employing specialized staff across various domains such as content creation, sales, and digital marketing, each assigned to manage distinct regional markets like the North and South. Furthermore, Sokfarm has made significant strides in branding through e-commerce platforms, enhancing visibility and engagement with distributors. Its commitment to building a strong social media presence is evident in their successful creation of a Facebook fanpage with over 20,000 followers and a dynamic TikTok channel boasting more than 50,000 followers.