SOCIAL IMPACT ACCELERATION

[SBC – Round 4] SOCIAL IMPACT ACCELERATION

PITCHING VIDEO

A. Social business description

A1. Social mantra one-liner

“Local organic cleaners, global better life”

At FUWA, our mission is to create products that not only benefit our customers but also contribute positively to the world around us. Our products, made from locally sourced pineapple peels using Eco Enzyme technology, are 100% safe and healing for sensitive skin, including eczema. By recycling agricultural waste, we reduce negative impacts on the ecosystem and support a circular economy. Moreover, by sourcing locally in Thanh Hoa, Vietnam, we create jobs and support the local economy, making a tangible difference in the lives of those around us.

A2. Social Impact Clarity and Significance

TARGET ISSUE

Target issue	Scale & Scope	Stakeholders affected
Environmental pollution from local excessive waste of pineapple peels	Local scale: In Thanh Hoa ( Vietnam) with 300 tons of pineapple peel waste annually, causing: Water pollution: 100 litres of harmful substances per ton of pineapple peel. Soil erosion: with 3 tons of nitrogen & 1.2 tons of phosphorus into the soil annually (Le Cuong, 2021).	Local people & farmers in Thanh Hoa
Negative impact of chemical cleaning products on Human Health	Global Scale: the USA, Germany, China, etc. 70,000 chemicals used in household cleaning causes 10+ health issues from mild to severe (Van Hien, 2015) 193 hazardous volatile organic compounds in the 30+ chemical products cause health harms (Temkin et al, 2023)	Household consumers in Vietnam & worldwide (mainly women)

ROOT CAUSE

5-why model is used to figure out the root causes

Alignment with UN Sustainable Development Goals

A3. Solution effectiveness and ESG integration

POSITIONING 

CURRENT SOLUTION

Nature – Based Cleaners on the market

=> Shortcomings: 

• Harmful chemicals (Benzalkonium Chloride, Sodium Laureth Sulfate, etc) are still included.

 

• Large amount of plastic waste is discharged into the environment

FUWA’S SOLUTIONS

• 100% natural ingredients & essentials

• Safe for individuals with eczema, demonstrating no potential for skin irritation

• Minimize plastic waste with 200+ refill stations

CIRCULAR ECONOMY MODEL

1.Sourcing

Resource Extractions: 

• 300+ tons of by-products & waste materials from a local canned pineapple factory annually.
• Local sourcing minimizes transportation emissions by 20 -30% & supports jobs for locals (70% female). 

Materials: 

• Sustainable year-round raw materials & sourcing from the largest pineapple orchards in Vietnam, reaching 35 – 40 tons/hectare annually.

2. Manufacture

Production: Eco Enzyme technology & closed-loop processes 

• Minimizing energy & water consumption
• 0% post-production wastes as they are used as fertiliser

3. Distribution

• 1000+ worldwide retailers to prominently make eco-friendly cleaning products available across the world. 
• 6+ E-commerce platforms save mobilization costs & transportation emissions of ~0.184 kg CO2/km.

4. Use

Customers: 1+ million customers worldwide, reduce 54000 litres of toxic waste.

5. Recovery

REFILL STATION (200+ nationwide): 

• Decrease 150,000 plastic bottles/year
• Save 18+ grams of CO2/bottle, 27.000.000+ grams of CO2 in total
• Save 20-30% packaging costs for each customer
• Reduce resources used in production of new packages. 
• Automatic Refill Machine is being launched next year. 

B. Social impact acceleration

B1. Mechanisms to accelerate impacts

Roadmap to increase impacts in terms of geographical reach and impact depth: 

Expansion Strategy: 

• • Diversifying product line: We are expanding the product line to include body care products, aiming to recycle 1200 tons of pineapple peels by 2030. We have conducted research about the increasing consumer demand for personal care items and the increasing urge to recycle agricultural waste (pineapple peels).
  • Refill stations: Currently FUWA has 200+ refill stations nationwide that save 150.000 plastic bottles. We are testing a new Automatic Refill Machine in supermarkets in Ho Chi Minh City, Vietnam. This automatic refill model, when widely adopted, will provide convenient access for customers and significantly reduce plastic waste.
  • Building 2 more factories to accommodate the growing demand
  • Expanding e-commerce platforms: Amazon store
  • Expanding offline distribution channels: We are collaborating with large supermarket chains and organic stores worldwide focusing on eco-friendly and safe-for-skin products. As a B2B business, 80% of our revenue comes from our distribution channels, with $880.000 of revenue for the first half of 2024. Our goal is to reach $2 million by the end of the year.
  • Boosting exports: We are partnering with well-established local companies of other countries, specifically targeting the US and Germany market. Notably, we secured an export contract of 250.000 EUR in 2024 and another 750.000 EUR contract in 2025. Additionally, we are planning to license our brand to local businesses in the EU to ensure effective market entry and representation while maintaining brand standards.

Expected outcomes:

Outcomes	Individual	Enterprise	Community	Region
Direct economic	Increase average employee income of 8M/month	Reach 8000 employees Achieve revenue of $20 million USD	3 new factories erected in provinces 1500 jobs created	3 new factories erected in provinces 1000 jobs created
Indirect economic	Improved personal skills, employment prospects	Increased money flows Increased exporting and technology transfer	10 additional jobs created for suppliers Additional money flows local taxation	3 new factories nationwide
Direct social	Increased access to FUWA’s products	Creation of cultural identity of the enterprise	Provision of FUWA’s products to social capital	Provision of FUWA’s products
Indirect social	Increased employability, satisfaction, empowerment, self-esteem, networks	Expand networks of social Organization Build trustworthy relationships	Promote cooperation,  social interaction, involvement of community in activities	Increased attractiveness as a place to live, work and visit
Direct environmental	More attractive place to work	Renovation of existing factories	Regeneration of physical factories to community	Regeneration of physical factories to region
Indirect environmental	More attractive place to live and visit	More attractive place to live and visit	Enhanced attractiveness as a place to live, work and visit	Enhanced attractiveness as a place to live, work and visit

B2. Financial Stability and Profitability.

B2.1. Economic Model

PAST PERFORMANCE

FUWA has achieved remarkable financial growth, with revenues increasing from $208K in 2020 to approximately $1.5 million in 2023, and targeting $2 million by the end of 2024. Our impressive sales metrics show a 40% increase in sales, rising from 91,500 units in 2022 to 124,700 units in 2023. 

REVENUE STREAM & COST STRUCTURE OVERVIEW

Our revenue streams are diversified across several key areas, ensuring a stable and growing income. Our primary sources include the sales of Eco-Enzyme products through direct distribution channels, manufacturing for other brands, strategic partnerships and technology transfer. Our goal is to reach $2 million by the end of 2024.

• Product sales: As a B2B business, 80% of our revenue comes from our distribution channels. We collaborate with 100+ reputable supermarket chains and organic stores from big-scale to small-scale that focus on eco-friendly and safe-for-skin products. This strategic partnership has been pivotal in our growth and market penetration, ensuring our products reach a broad and eco-conscious customer base.
• Export contracts: We are partnering with well-established local companies in other countries, specifically targeting the US and European markets. Notably, we secured an export contract worth 250,000 EUR in 2024 and another contract worth 750,000 EUR for 2025. 
• Franchising: Additionally, we plan to license our brand to local businesses in the EU market to ensure effective market entry and representation while maintaining our brand standards. We have succeeded in a brand transfer agreement in Europe. The conditions are that we will transfer 70% of our brand in exchange for a €2 million contract for the first two years and another €3 million contract for the next three years.
• OEM: Throughout our development, we position ourselves as a reliable partner for companies seeking to enhance their own brand image through sustainable products. Currently we are co-branding our products with several partner companies (Enzyco), offering them access to our innovative, green technologies and materials.

B2.2. Financial Projections

MARKET RESEARCH OVERVIEW

Summary:

• In Vietnam, the revenue generated in the Household Cleaners market is estimated to reach US$0.61 billion in 2024.
• It is projected to experience an annual growth rate of 3.94% (CAGR 2024-2029).
• The trend for eco-friendly cleaners is on the rise in Vietnam as consumers become more conscious about environmental sustainability. This trend can also be witnessed in the beauty and personal care market, a steadily growing market with an estimated CAGR of 9.57% (2024 – 2029) and market revenue of nearly $1.082 billion in 2024.

→ Having recognised the growing trend for organic and eco-friendly products, FUWA is also targeting the potential beauty and personal care market, focusing on affordable and low-end products. 

Customer insights:

Survey conducted by the Business Association of High Quality Vietnamese Products has pointed out that:

• 69% of consumers prefer products that are beneficial to their health or meet quality standards.
• 45% prefer products with traceable origins.
• 25% willing to pay more for certified organic products.

Market Size:

FINANCIAL PROJECTIONS

Following the market research overview, we anticipate significant growth over the period of 2024 – 2030. To forecast the revenue, cost and gross profit for the period, we projected the new revenue stream cost structure as follow:

Projected revenue streams (2026 – 2030)

The revenue from technology transfer, OEM and exportation are expected to increase to 6%, 12% and 12% respectively in the period of 2026 – 2030. This is because our plan for the period 2026 – 2030 is to increase export volumes, establish international partnerships as well as increasing OEM contracts.

Projected cost structure (2026 – 2030)

As shown in the pie chart, the R&D cost slightly decreases by 2.1%, indicating a potential shift in focus from heavy R&D investment to other areas, specifically the distribution stage, as the company scales. With the new body care line launching at the end of 2024, it is expected that increased production volumes and changes in material sourcing strategies could lead to higher costs in distribution as well as raw materials and packaging.

Sales forecast (2024 – 2030)

Unit: USD

(For detailed calculation, see more in confidential info)

Then we have the forecasted revenue, costs and profit for the period 2024 – 2030 as below:

Unit: USD

B2.3. Returns on Investment

From the revenue and costs above, we have calculated the Economic Return on investment of 2023, which is approximately 15.26%. This means that for every 1.000 VND invested, FUWA generates a return of about 15.260 VND in profit.

B2.4. Risks Management

Risk Portfolio Assessment

B3. Team and leadership

B3.1. Team’s expertise and leadership capability

Research & Development: Under the leadership of Dr. PhD. Đặng Đức Long, who has over 10 years of experience in enzyme research, our R&D team has successfully developed 4 production lines with 15+ different product functions. The team is working for 2 more new product lines with 4 more new products functions in the future. 

Marketing Departments: Our marketing team has successfully launched 20+ campaigns, significantly raised brand awareness & approached 10+ million people nationwide and worldwide. 

Sales Departments: Our sales team has achieved a significant increase of sales from $208,333 to $1,458,333 in 3 years (2020-2023). Our strategic vision & strong leadership skills have expanded our distribution network to 1000+ retail chains & stores. 

Production Team: Our production team has implemented lean manufacturing principles that have reduced waste by 30% & improved production efficiency with 4.9/5.0 stars on almost all e-commerce platforms. Under his leadership, the team managed to produce 200.000 products/months. 

B3.2. The human resource management strategy

B4. Partnership and collaboration

FUWA3e fosters strong, mutually beneficial relationships with a diverse group of stakeholders. Our suppliers ensure a reliable product supply and receive technical support and quality standards. Distributors and sale agents benefit from in-demand, eco-friendly products, while export partners gain access to other markets. Customers provide valuable feedback, driving product improvements. Investors receive financial returns and strategic oversight. Non-profit partners connect us to the community through donations and support, and FUWA team members are at the heart of our growth and innovation, enjoying stable employment opportunities. Together, these relationships drive FUWA’s mission forward.

FUWA adopts a proactive approach to stakeholder engagement, consistently seeking opportunities to collaborate, gather feedback, and implement improvements in their operations. For example, from the start of 2024: 

• FUWA partners with companies like Muji, inviting them to visit their production facilities to ensure transparency and strengthen partnerships. 
• Collaborating with organizations such as UNDP and Green Building, FUWA organizes social projects, like events where elementary students make Eco Enzyme from pineapple peels, to raise environmental awareness. 
• FUWA also tailors cleaning products, such as a car care line specifically designed for Toyota cars in Vietnam, showcasing our constant responsiveness to partner needs. 
• FUWA regularly seeks professional advice and updates knowledge. For example, to update knowledge about impact measurement, in July, a team in FUWA participated in training provided by Global Affairs Canada and CSIP Vietnam to integrate valuable insights into their business strategy.

Capacity of Committed Partners to Enhance Project Performance

 C. ESG reporting 

C1. Measurement and reporting  

IMPACT REPORT

1. Environmental Responsibility

Sustainable Sourcing:

• Raw Materials: We use pineapple peels, a waste product from one of the largest pineapple-growing regions in Thanh Hoa, Vietnam. We save 300 tons of pineapple trash annually and contribute to a circular economy.
• Eco Enzymes: Our eco enzymes make our products biodegradable and environmentally friendly.

Green Supply Chain:

• Waste Reduction: Our production process uses pineapple peel as the input. After fermenting, the liquid is used to make our products and the residue is used as fertilizer for local farms. 
• Low Carbon Footprint: We employ energy-efficient processes and prioritize local sourcing to reduce our carbon emissions throughout the supply chain.

Product Sustainability:

• Zero Harmful Chemicals: Our commitment to 0% colorants, 0% artificial fragrances, and 0% harmful chemicals ensures that our products are safe for both users and the environment.
• Eco-Friendly Packaging: We use recyclable and biodegradable packaging materials to minimize our environmental impact.

-> Area for improvement:

• Enhance Packaging Innovations: Research fully compostable packaging solutions, especially packaging from agricultural waste.
• Certify Sustainable Practices: Obtain certifications like Fair Trade or Rainforest Alliance to enhance credibility and ensure that all raw materials are sourced sustainably.
• Optimize Transportation Logistics: Explore using electric vehicles for local deliveries and optimize routes to reduce emissions associated with transportation.

2. Social Responsibility

Community Engagement:

• Local Partnerships: By sourcing pineapple peels from local factories, we support the local economy and create additional income streams for locals in Thanh Hoa and 1000 women in Vietnam.
• Education and Awareness: We actively engage with the local authority and use social platforms to educate customers about the benefits of eco-friendly products and sustainable lifestyles.

Health and Safety:

• Safe Products: Our products are designed to be gentle on all skin types, including sensitive skin and babies, reducing health concerns for users.
• Healing Properties: Eco Enzymes in our products can soothe wounds, burns, and inflammation.

-> Area for improvement: 

• Expand Community Training Programs: Offer workshops to local farmers on sustainable farming techniques and waste management to improve their practices and increase the quality of raw materials.
• Scale Up Local Impact: Collaborate with local schools and NGOs to spread awareness about sustainability, creating more community-driven environmental initiatives.

3. Governance

Ethical Business Practices:

• Supportive Workforce: 90% of our workforce comprises women and ethnic minorities, FUWA promotes DEI in the working environment. 
• Transparency: We maintain transparency in our sourcing, production processes, and product ingredients on all social platforms, ensuring that our customers are fully informed about what they are buying.

Continuous Improvement:

• Innovation: We continuously invest in research and development (over 31% of cost structure) to improve our products and processes, ensuring that we remain at the forefront of sustainability and efficiency.
• Stakeholder Engagement: We regularly seek feedback from our stakeholders, including customers, employees, and community members, to ensure that we are meeting their needs and expectations.

-> Area for improvement:

• Institute a Code of Ethics: Develop and publish a comprehensive code of ethics that covers sourcing, production, and marketing practices.

C2. Compliance with ESG standards and frameworks 

1. Relevance of Chosen ESG Standards and Frameworks

FUWA Biotech’s ESG measurement framework aligns with the Global Reporting Initiative (GRI) standards, which cover key aspects relevant to FUWA’s operations, such as materials used, energy consumption, waste management, and community engagement. The specific disclosures under GRI 102, 301, 302, 303, 305, 306, 401, and 413 reflect a comprehensive approach that addresses environmental impact, resource management, and social responsibilities, which are all critical to the eco-friendly production and community-oriented mission of FUWA Biotech.

• Environmental Impact: FUWA’s focus on reducing agricultural waste, using renewable energy, and managing water resources ties directly to the environmental footprint of a company in the biotech industry, particularly producing eco-friendly products. GRI 301, 302, 303, and 305 standards allow FUWA to report on the environmental impact of our production process so that stakeholders can easily understand and benchmark against industry peers.

• Social Responsibility: Given FUWA’s emphasis on community engagement and employee well-being, the GRI 401 and 413 standards provide a solid framework for reporting on employment practices and community impact. These standards are particularly relevant in regions like Vietnam, where there is a strong emphasis on local community development and fair labor practices.

• Zero-Waste Production and Sustainable Sourcing: FUWA’s goal of achieving 0% waste by 2025 is directly aligned with the GRI 306 standards on waste management. Our use of recycled input and biodegradable packaging under GRI 301 reflects a deep understanding of sustainable sourcing and production within operational footprint.

• Energy Management: FUWA’s commitment to energy efficiency and the use of renewable energy sources is in line with GRI 302, which is crucial for a company operating in an industry with significant energy consumption.

2. Understanding of Legal and Regulatory ESG Reporting Requirements

a. Current Regulatory Environment:

• Vietnam’s Emerging ESG Landscape: Vietnam is increasingly integrating ESG factors into its regulatory framework, particularly in sectors like manufacturing and agriculture, where environmental and social impacts are significant. FUWA Biotech’s adherence to GRI standards demonstrates a proactive approach to meeting current and future regulatory requirements, as these standards are often used as a basis for national reporting requirements.

• Compliance with Local Regulations: The company’s focus on reducing carbon emissions and agricultural waste, as well as managing water resources, aligns with Vietnam’s national environmental regulations, including the Law on Environmental Protection. By adhering to these standards, FUWA is ensuring that our operations are compliant with existing regulations and are well-positioned to adapt to any future changes in the legal landscape.

b. Future Trends and Global Alignment:

As global ESG reporting requirements evolve, companies in emerging markets like Vietnam are increasingly expected to meet international standards. FUWA’s use of GRI standards positions it ahead of the curve, anticipating future legal requirements that may arise as Vietnam aligns more closely with international ESG expectations.

Investors, customers, and other stakeholders are increasingly demanding transparency in ESG reporting. By adopting GRI standards, FUWA is not only complying with potential future regulations but also meeting the expectations of global investors who prioritize ESG performance.

D. Learning curve

During each round of SBC, we learned the importance of measuring the social and environmental impact in our operations more effectively. We realized that simply having a positive impact was not enough; we needed to quantify and communicate these results clearly to our stakeholders. To address this, we have been actively participating in courses and programs focused on impact measurement, ensuring that our team is well-equipped with the latest methodologies and tools. 

Additionally, we have sought professional advice from our network to refine our approach further. This transformation has led to a more structured and credible way of evaluating our impact, allowing us to align with global best practices.