Sustainable Development Framework

PVCFC’s business context

GRI 2-24 / GRI 201-2

In recent years, the global fertilizer industry has faced significant challenges and opportunities due to the impact of major international events, notably the COP26 conference held in 2021, where Vietnam committed to achieving net-zero emissions by 2050.

The COP events serve as crucial forums where nations discuss and reach agreements on climate action, promoting global commitments to reduce emissions and enhance efforts to adapt to climate change. Notably, COP26 in 2021 was a significant event for Vietnam, where the government made several important commitments, including:

a pledge to achieve net-zero emissions by 2050;

an increase in the use of renewable energy;

enhanced investment in green finance and clean technology;

a commitment to reduce methane emissions by 30% by 2030.

Domestically, Vietnam's economic growth in 2024 reached 7.09%, several bright spots will contribute significantly to the growth rate this year, including:

Increasing public investment

Rising FDI inflows

Continued growth in tourism activities

Gradual recovery of trade activities

In 2024, PVCFC continues to enhance its activities in researching new products aimed at improving soil health, reducing losses, and increasing the economic efficiency of fertilizer use; focusing on energy-saving research and practices at its facilities to reduce CO₂ emissions, as well as investigating green hydrogen production technologies for application in fertilizer manufacturing.

Despite facing many challenges, we understand and take pride in being part of this trend, with a strong commitment to a sustainable future for the agricultural sector.

At COP27, countries continued their commitments to reduce carbon emissions and update their national climate plans. At COP28, which took place in November 2023, nations were expected to reaffirm their commitments to emission reductions, update their national climate strategies, and nationally determined contributions (NDCs) to support the implementation of these pledged goals.

The conflict between Russia and Ukraine has lasted since early 2022, and the conflicts in the Middle East have hindered the recovery of the global economy, driving up food and commodity prices, slowing economic growth, and increasing inflationary pressures worldwide. Along with monetary tightening policies to curb inflation, sanctions against Russia, climate change, rising unemployment, etc., a more severe economic recession has occurred globally.

The European Union implemented the Carbon Border Adjustment Mechanism (CBAM) in 2023, establishing carbon taxes on goods exported to this market based on greenhouse gas emissions intensity during production. This regulation requires the fertilizer industry to enhance transparency and reduce CO₂. emissions. Furthermore, guidelines from industry associations such as the International Fertilizer Association (IFA) continuously encourage fertilizer companies worldwide to focus on adopting new fertilizer production technologies aimed at optimizing performance and sustainability.

The trend among fertilizer companies worldwide toward the production and application of green hydrogen, utilizing clean raw materials and energy, focuses on efficient and sustainable fertilizer use, organic fertilizers, and smart fertilization solutions to optimize nutrient supply for crops while minimizing environmental impacts.

Compliance with Environmental and Social regulations

GRI 2-27

Compliance with Environmental regulations
Compliance with Social regulations

We have established a robust risk management framework with multiple layers of controls, ensuring effective identification and response to environmental and social risks. This system helps us strictly comply with current regulations while maintaining sustainable and responsible business operations.

Throughout 2024, PVCFC committed to strictly adhering to the legal regulations related to environmental protection, specifically including:

PVCFC always focuses on maintaining and enhancing the standards that have been achieved while continuously improving to meet the increasingly stringent environmental protection requirements. The spirit, responsibility, and determination for improvement are the guiding principles that help PVCFC achieve its goal of economic development aligning with environmental protection.

In addition, PVCFC has received ISO 14001:2015 certification - Environmental Management System, and PVCFC has established a Quality, Safety, and Environmental Policy, as well as regulations and procedures to guide the implementation of monitoring and testing activities for environmental control in production areas and other locations where the company operates. These policies, regulations, and procedures are widely shared with all employees to enhance their awareness of responsibility towards the community and the living environment.

All emissions from the plant are closely monitored and minimized to the greatest extent possible, ensuring that their quality consistently meets permissible standards before being released into the environment, as detailed below:

In 2024, PVCFC had no records of any violations of legal regulations related to environmental protection.

We are committed to diligently adhering to all legal regulations in Vietnam related to labor, social insurance, and occupational health and safety. These regulations include the 2019 Labor Law, relevant decrees and circulars pertaining to working conditions, labor relations, as well as issues related to retirement age and minimum wage. We ensure full compliance with all provisions regarding employment contracts, working hours, rest periods, and tasks affecting employee health.

In addition, we comply with regulations on social insurance, health insurance, and unemployment insurance to ensure the rights and social welfare of all employees. We implement the provisions of the 2014 Social Insurance Law and its guiding decrees, including requirements for mandatory social insurance, health insurance, and unemployment insurance. Detailed circulars regarding the rights, obligations, and processes related to these types of insurance are strictly applied in the company’s operations.

We also place great emphasis on ensuring occupational safety and hygiene, in compliance with the 2015 Law on Occupational safety and Hygiene and related decrees and circulars. We implement technical safety inspection processes, conduct safety training for employees, and monitor the working environment to ensure a safe workplace. Additionally, we strictly adhere to regulations regarding occupational accident insurance, occupational disease policies, and compensation for employees working in hazardous conditions or environments. All these measures are designed to maximize safety and benefits for employees within the Company.

Stakeholders Engagement

GRI 2-26, 28, 29, 30

PVCFC places a strong emphasis on building and developing cooperative relationships, sharing, and aligning interests with stakeholders. To achieve this, we actively seek to understand the aspirations and concerns of stakeholders through various interaction channels and methods. This approach allows us to identify and assess the priorities of stakeholders and develop plans to implement activities that meet their needs.

Process of Identifying and Assessing stakeholder priorities

Step 1

Identify Key Stakeholders: PVCFC identifies all stakeholders who can be individuals or organizations who have an interest that is affected or could be affected by the PVCFC’s activities. The stakeholders identified by PVCFC include:

Shareholders - Investors
Partners
Customers

Suppliers
Community and Society
Banks/Creditors

Government and State Agencies
Media
Employees

Step 2

Gather Feedback from Stakeholders: PVCFC engages with stakeholders through various methods such as surveys, interviews, periodic dialogues with employees; farmer and distributor workshops; and organizing annual or extraordinary shareholder meetings, either in- person or online via https:// www.pvcfc.com.vn website with full contact information, including the headquarters address, representative office, and phone numbers, to collect feedback, concerns, and expectations. Additionally, the company has other applications such as the 2Nong mobile application (or website 2nong. vn) to provide market information, agricultural input prices, cultivation techniques, fertilizer application guidance, purchasing instructions, and customer care.

Step 3

Prioritize Stakeholder Concerns: We analyze the input information collected from stakeholders to identify common themes, trends, and priorities. Then, we base our priority assessment on factors such as the importance of the issues, their impact on PVCFC and stakeholders, urgency, and feasibility, to determine the level of priority for stakeholder concerns.

Step 4

Develop an Action Plan: After identifying priorities, we implement action plans to address the prioritized concerns. This involves clearly outlining specific objectives, strategies, and timelines to tackle stakeholder issues. Additionally, we assign responsibilities to relevant parties and allocate appropriate resources to ensure effective implementation.

Step 5

Engage and Communicate About Actions and progress: PVCFC transparently and regularly communicates the results of the prioritization process and action plans to stakeholders. This ensures alignment between the prioritized concerns of stakeholders and the organization’s objectives.

Step 6

Monitor and Evaluate: PVCFC continuously monitors and evaluates the effectiveness of stakeholder engagement efforts as well as the progress made in addressing stakeholder priorities.

Approaches to Stakeholder Engagement

Shareholders
– Investors

Partners

Suppliers

Farmers

Distributor and Agency

Community and Society

Government and State Agencies

Media and Communication

Employees

Creditors

Material Topics

GRI 3

Identifying material issues enables PVCFC to optimize resources, focus on the most significant impacts, and enhance the effectiveness of its sustainability efforts. This serves not only as a foundation for risk management but also as a strategic step toward creating long-term value for agriculture and the wider community.

Method for identifying material topics

To ensure that PVCFC’s efforts and resources return the highest results in sustainable development activities, PVCFC conducts evaluations to identify material topics based on GRI Standard 3, GRI 2021 version. Material sustainable development topics are identified through four main steps:

Step 1: Context Analysis

Market and fertilizer industry analysis.
Identification of relevant stakeholders.
Analysis of business operations, products, and markets.
Assessment of contextual factors affecting sustainability activities, both internationally and in Vietnam, and by sector.
Consultation with customers, partners, shareholders, and investors to conduct the analysis.
Seeking expert and consulting firm opinions on specific strategic projects.

Step 2: Identifying actual and potential impacts

Based on the above context, we identify the impacts of the company’s business activities concerning environmental and social dimensions, both positively and negatively. These factors are determined through various information sources, including internal assessment reports and external evaluations. We also consult stakeholders about issues they believe the company should focus on from an environmental and social perspective.

Step 3: Assessing the significance of impacts

For actual negative impacts, their significance is measured based on the severity of both financial and non-financial manners
For potential negative impacts, significance is assessed through two main groups of factors: potential severity and likelihood of occurrence. This evaluation method is similar to our enterprise risk management (ERM) framework.
Positive impacts are measured by the scale and scope of their actual and potential effects.
During the significance assessment, we also consider the perspectives of relevant stakeholders.
Evaluating the significance of impacts helps us focus resources on actions that generate the best outcomes and assists in prioritizing reporting content.

Step 4: Prioritizing key topics for reporting

Based on the significance of impacts from Step 3, we compile a list of material topics from both the company’s and stakeholders’ perspectives.
These material topics will be reviewed and approved by the General Director and the Board of Directors.

Materiality Matrix of Key Areas

Importance of Material Topics

MATERIAL TOPICS	Reference to the 17 United Nations Sustainable Development Goals (SDGs)	IMPORTANCE	KEY MEASUREMENT INDICATORS
Economic Performance		Achieving high efficiency in business operations is a key factor for PVCFC, as it enables the company not only to deliver sustainable value and prosperity to stakeholders but also to make a positive contribution to sustainable development goals.	Total Assets Consolidated Profit Before Tax Consolidated total Revenue Contribution to the State Budget Total Social responsibility budget
Digital Transformation		Digital transformation is not just a trend but a key factor in enabling businesses to achieve sustainable development goals. At PVCFC, the adoption of digital technology has established a solid foundation for effective management, process optimization, improved production governance, enhanced business performance, and better service quality for customers. By collecting and analyzing data on weather, soil conditions, and customer needs, we can provide recommendations on the most suitable fertilizers, helping farmers increase crop yield and quality. Additionally, the development of an e-commerce platform allows us to create direct engagement channels with farmers, offering technical consulting solutions and more effective customer support.	Information about the IT ecosystem at PVCFC and notable digital/AI integration projects

Economic Performance

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Achieving high efficiency in business operations is a key factor for PVCFC, as it enables the company not only to deliver sustainable value and prosperity to stakeholders but also to make a positive contribution to sustainable development goals.
KEY MEASUREMENT INDICATORS
- Total Assets
- Consolidated Profit Before Tax
- Consolidated total Revenue
- Contribution to the State Budge
- Total Social responsibility budget

Digital Transformation

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Digital transformation is not just a trend but a key factor in enabling businesses to achieve sustainable development goals. At PVCFC, the adoption of digital technology has established a solid foundation for effective management, process optimization, improved production governance, enhanced business performance, and better service quality for customers. By collecting and analyzing data on weather, soil conditions, and customer needs, we can provide recommendations on the most suitable fertilizers, helping farmers increase crop yield and quality. Additionally, the development of an e-commerce platform allows us to create direct engagement channels with farmers, offering technical consulting solutions and more effective customer support
KEY MEASUREMENT INDICATORS
- Information about the IT ecosystem at PVCFC and notable digital/AI integration projects

MATERIAL TOPICS	IMPORTANCE	KEY MEASUREMENT INDICATORS
Water consumption and Waste water	Ineffective management of water consumption and wastewater can pose risks to the company’s operations, such as supply chain disruptions or reputational damage from environmental incidents. By implementing measures to reduce water usage and recycle wastewater, PVCFC not only minimizes environmental impact but also demonstrates a strong commitment to sustainable development.	Total wastewater/ water consumption/ water loss Number of non-compliance incidents related to permits, standards, and regulations on water quality Product water consumption per ton of product
Raw materials	PVCFC primarily sources its input materials from natural gas, derived from fossil fuels. The company is continuously improving and optimizing processes to conserve raw materials and minimize risk of gas leakage. Additionally, PVCFC is actively seeking alternative raw material sources to reduce environmental impacts.	Permeate Gas Recovery Rate as a raw fuel
Climate change	Climate change significantly impacts the agricultural sector, leading to changes in crop yields, pest prevalence, and soil fertility. This can reduce agricultural productivity, directly affecting PVCFC’s sales. Moreover, the production and use of fertilizers contribute to releasing greenhouse gas emissions, particularly N₂O and CO₂. This presents both challenges and opportunities for PVCFC to improve products suited to changing climatic conditions while reducing emissions from fertilizer production, thereby promoting safe and sustainable agriculture in Vietnam.	Direct/Indirect Emissions Emissions of Air Pollutants Emission Intensity per Ton of Product
Energy Management	The fertilizer production process requires significant energy, especially for operations such as heating, drying, and chemical reactions. Effective Energy management is essential for minimizing energy costs and maintaining PVCFC’s competitiveness. Additionally, energy production and consumption is a major contributor to greenhouse gas emissions and negative environmental impacts. By reducing energy consumption and transitioning to cleaner energy sources, PVCFC can minimize its environmental impact and contribute to achieving sustainability goals.	Energy Intensity per Ton of Product Energy Sources Consumed
Waste Management	The fertilizer production process generates various types of waste, including solid waste, wastewater, and air emissions. Proper waste management is a crucial factor to minimize environmental impact, prevent air, soil, and water pollution, and protect ecosystems and human health.	Amount of Hazardous Waste Generated Percentage Recycled
Biodiversity	Biodiversity plays a crucial role in maintaining the sustainability and long-term resilience of agricultural systems and fertilizer production. By understanding the importance of biodiversity and integrating its conservation into its operations and business strategy, PVCFC can make significant contributions to environmental protection goals, sustainable development, and food security.	Revenue from slow-release fertilizers, microbial fertilizers, and organic fertilizers, including both self-produced and traded products.

Water consumption and Waste water

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Ineffective management of water consumption and wastewater can pose risks to the company’s operations, such as supply chain disruptions or reputational damage from environmental incidents. By implementing measures to reduce water usage and recycle wastewater, PVCFC not only minimizes environmental impact but also demonstrates a strong commitment to sustainable development.
KEY MEASUREMENT INDICATORS
- Total wastewater/ water consumption/ water loss
- Number of non-compliance incidents related to permits, standards, and regulations on water quality
- Product water consumption per ton of product

Raw materials

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

PVCFC primarily sources its input materials from natural gas, derived from fossil fuels. The company is continuously improving and optimizing processes to conserve raw materials and minimize risk of gas leakage. Additionally, PVCFC is actively seeking alternative raw material sources to reduce environmental impacts.
KEY MEASUREMENT INDICATORS
- Permeate Gas Recovery Rate as a raw fuel

Climate change

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Climate change significantly impacts the agricultural sector, leading to changes in crop yields, pest prevalence, and soil fertility. This can reduce agricultural productivity, directly affecting PVCFC’s sales

Moreover, the production and use of fertilizers contribute to releasing greenhouse gas emissions, particularly N₂O and CO₂. This presents both challenges and opportunities for PVCFC to improve products suited to changing climatic conditions while reducing emissions from fertilizer production, thereby promoting safe and sustainable agriculture in Vietnam.
KEY MEASUREMENT INDICATORS
- Direct/Indirect Emissions
- Emissions of Air Pollutants
- Emission Intensity per Ton of Product

Energy Management

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

The fertilizer production process requires significant energy, especially for operations such as heating, drying, and chemical reactions. Effective Energy management is essential for minimizing energy costs and maintaining PVCFC’s competitiveness. Additionally, energy production and consumption is a major contributor to greenhouse gas emissions and negative environmental impacts. By reducing energy consumption and transitioning to cleaner energy sources, PVCFC can minimize its environmental impact and contribute to achieving sustainability goals.
KEY MEASUREMENT INDICATORS
- Energy Intensity per Ton of Product
- Energy Sources Consumed

Waste Management

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

The fertilizer production process generates various types of waste, including solid waste, wastewater, and air emissions. Proper waste management is a crucial factor to minimize environmental impact, prevent air, soil, and water pollution, and protect ecosystems and human health.
KEY MEASUREMENT INDICATORS
- Amount of Hazardous Waste Generated
- Percentage Recycled

Biodiversity

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Biodiversity plays a crucial role in maintaining the sustainability and long-term resilience of agricultural systems and fertilizer production. By understanding the importance of biodiversity and integrating its conservation into its operations and business strategy, PVCFC can make significant contributions to environmental protection goals, sustainable development, and food security.
KEY MEASUREMENT INDICATORS
- Revenue from slow-release fertilizers, microbial fertilizers, and organic fertilizers, including both self-produced and traded products.

MATERIAL TOPICS	IMPORTANCE	KEY MEASUREMENT INDICATORS
Occupational Health and Safety	PVCFC is committed to prioritizing the health and safety of all individuals. Effective management of occupational health and safety issues protects the company from financial losses, workforce impacts, material damages, and potential legal consequences.	Number of Occupational Accidents Leading to Severe Injury or Fatality Number of Employees Provided with In-House Occupational Safety and Hygiene Training Transport Incidents Number of Process Safety Incidents Frequency of Periodic Health Check-ups for Employees
Training and Development	Human resources are the solid foundation that enables us to implement our strategic plans and goals. Training and developing personnel, along with talent attraction and retention policies, are key to fostering long-term engagement between employees and PVCFC. This, in turn, drives our current success and prepares us to face future challenges and seize emerging opportunities.	Average Training Hours per Employee Percentage of Employees Trained Training Budget Implementation Rate Percentage of Employees with Regular Performance Evaluations
Talent Attraction and Retention		Overall Satisfaction with the Working Environment Average Salary of Employees Total Insurance Contributions Paid to the Social Insurance Agency Turnover Rate
Sustainable Supply Chain	Sustainable supply chain management helps minimize negative environmental impacts, reduce operational costs, and ensure the welfare of workers throughout the supply chain.	Number of Cases of Suppliers' Non-Compliance with the Law
Labor rights	Protecting the legal rights of workers is essential for creating a stable and inclusive work environment not only for PVCFC but also for all stakeholders. This commitment promotes social equity and responsible business practices within the corporate community in Vietnam.	Diversity of Management and Employees
Improved Prosperity for Farmers/ Customers	Caring for the interests of farmers enables PVCFC to gain a deeper understanding of their needs, concerns, and specific challenges. This insight is essential for developing timely products, programs, services, and policies that meet the requirements of farmers and customers. PVCFC is also committed to ensuring the rights and benefits of its customers are well protected.	Number of Workshops on Knowledge updates and Product introduction for Farmers/Customers
Local Community	Community engagement programs foster trust and strengthen the relationship between PVCFC and the community. Additionally, these initiatives are essential for PVCFC to contribute to building a prosperous community and promoting sustainable social development.	Money invested in CSR activities
Customers’ Rights	The company is committed to protecting customers' rights by providing high-quality, safe fertilizers along with additional benefits. All activities are aimed at building transparent, responsible, and sustainable relationships, helping customers enhance productivity, protect soil health, and achieve long-term economic growth.	Number of Customer Complaints Regarding Product Quality Production by reportable segment

Occupational Health and Safety

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

PVCFC is committed to prioritizing the health and safety of all individuals. Effective management of occupational health and safety issues protects the company from financial losses, workforce impacts, material damages, and potential legal consequences
KEY MEASUREMENT INDICATORS
- Number of Occupational Accidents Leading to Severe Injury or Fatality
- Number of Employees Provided with In-House Occupational Safety and Hygiene Training
- Transport Incidents
- Number of Process Safety Incidents
- Frequency of Periodic Health Check-ups for Employees

Training and Development

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Human resources are the solid foundation that enables us to implement our strategic plans and goals. Training and developing personnel, along with talent attraction and retention policies, are key to fostering long-term engagement between employees and PVCFC. This, in turn, drives our current success and prepares us to face future challenges and seize emerging opportunities.
KEY MEASUREMENT INDICATORS
- Average Training Hours per Employee
- Percentage of Employees Trained
- Training Budget Implementation Rate
- Percentage of Employees with Regular Performance Evaluations

Talent Attraction and Retention

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Nguồn nhân lực là nền tảng vững chắc giúp chúng tôi thực hiện các kế hoạch và mục tiêu chiến lược. Việc đào tạo, phát triển nguồn nhân lực cùng với các chính sách thu hút và giữ chân nhân tài là yếu tố quan trọng để tạo sự gắn kết lâu dài giữa CBCNV và PVCFC, qua đó thúc đẩy thành công hiện tại và sẵn sàng đối mặt với những thách thức cũng như nắm bắt cơ hội trong tương lai.
KEY MEASUREMENT INDICATORS
- Overall Satisfaction with the Working Environment
- Average Salary of Employees
- Total Insurance Contributions Paid to the Social Insurance Agency
- Turnover Rate

Sustainable Supply Chain

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Sustainable supply chain management helps minimize negative environmental impacts, reduce operational costs, and ensure the welfare of workers throughout the supply chain.
KEY MEASUREMENT INDICATORS
- Number of Cases of Suppliers' Non-Compliance with the Law

Labor rights

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Protecting the legal rights of workers is essential for creating a stable and inclusive work environment not only for PVCFC but also for all stakeholders. This commitment promotes social equity and responsible business practices within the corporate community in Vietnam.
KEY MEASUREMENT INDICATORS
- Diversity of Management and Employees

Improved Prosperity for Farmers/ Customers

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Caring for the interests of farmers enables PVCFC to gain a deeper understanding of their needs, concerns, and specific challenges. This insight is essential for developing timely products, programs, services, and policies that meet the requirements of farmers and customers. PVCFC is also committed to ensuring the rights and benefits of its customers are well protected.
KEY MEASUREMENT INDICATORS
- Number of Workshops on Knowledge updates and Product introduction for Farmers/Customers

Local Community

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

Community engagement programs foster trust and strengthen the relationship between PVCFC and the community. Additionally, these initiatives are essential for PVCFC to contribute to building a prosperous community and promoting sustainable social development.
KEY MEASUREMENT INDICATORS
- Money invested in CSR activities

Customers’ Rights

Reference to the 17 United Nations Sustainable Development Goals (SDGs)
IMPORTANCE

The company is committed to protecting customers' rights by providing high-quality, safe fertilizers along with additional benefits. All activities are aimed at building transparent, responsible, and sustainable relationships, helping customers enhance productivity, protect soil health, and achieve long-term economic growth.
KEY MEASUREMENT INDICATORS
- Number of Customer Complaints Regarding Product Quality
- Production by reportable segment

Strategic Orientation for Sustainable Development

GRI 2-22

Overview

PVCFC defines its sustainable development (SD) strategy based on the following factors:

The company’s vision and mission
The company’s long-term business strategy
The SD strategic orientation approved by PVCFC’s Board of Directors
Analysis of the SD context at both international and domestic levels, as well as within the fertilizer industry
Analysis of the impact of PVCFC’s activities throughout the company’s value chain
Analysis of the expectations and concerns of stakeholders
Analysis of Vietnamese legal regulations

PVCFC’s Sustainable Development strategy ensures alignment with its vision and overall goals of creating real value for stakeholders while considering industry and global trends, including but not limited to climate change, energy, circular economy, waste management, employee rights and welfare, etc.

Sustainable Development and the Value Chain

GRI 2-6

As a company engaged in the production and trading of fertilizers, PVCFC’s activities have environmental and social impacts throughout the value chain. We recognize the importance of identifying, evaluating, and managing the impacts of PVCFC’s business activities on environmental and social factors throughout our value chain.

R&D

From the research phase, we analyze the effects of our products on factors such as greenhouse gas emissions, water, soil health, and biodiversity. Based on our understanding of these impacts, we create products that are more environmentally friendly and deliver practical benefits for farmers.

RAW MATERIALS – PRODUCTION – DISTRIBUTION

We understand the environmental impact of using raw materials and other effects during production. Our main raw material is natural gas. During production, we use electricity and some natural gas as fuel. The production process generally involves raw material usage and energy consumption, which results in greenhouse gas emissions, production waste, and cooling water usage. Therefore, we set annual targets to save on raw materials and enhance energy efficiency in production. PVCFC implements a series of initiatives to improve raw material efficiency and reduce the average energy consumption per product. Additionally, product distribution generates emissions from transportation, as products are shipped long distances to dealers and farmers by ships and trucks. A small amount of fertilizer may be lost during handling, transportation, and storage, which could lead to leakage and environmental pollution. Consequently, PVCFC has made substantial investments in warehouse systems in key areas and developed secondary distribution systems to reduce the distance to consumers.

USAGE OF FERTILIZER

The use of fertilizers has certain impacts on the environment, water, soil, biodiversity, and particularly climate change. Improper fertilizer use can also produce greenhouse gases that affect the ozone layer. We have implemented and will continue to implement measures to enhance farmers’ understanding and sustainable fertilizer use practices, thereby minimizing environmental impacts.

WASTE MANAGEMENT

We are in the process of analyzing and managing the impacts of waste within our value chain. We have managed and treated waste during production in compliance with legal regulations. We are also studying the environmental impacts of waste generated from fertilizer use, including the effects of fertilizer packaging on the environment and society.

Strategic Orientation

Based on our analyses, we have developed the basic framework for PVCFC’s SD strategic direction as follows:

The SD strategic framework is a set of strategic initiative directions under the pillars of Environment, Social, and Governance, aligned with the company’s overall operational strategy. These pillars are presented as major themes that guide the company’s SD activities to ensure the integration of SD content in the implementation of general strategies and operations. PVCFC’s SD strategic framework, approved by the Board of Directors on June 10, 2024, under Decision 1696/QĐ-PVCFC on the approval of the ESG - Sustainable Development strategic direction. The sustainable development framework was established to ensures the effective implementation of the company’s business strategy while considering four key factors:

Alignment with best practices in the fertilizer industry and in Vietnam
Compliance with legal regulations
Consideration of stakeholder expectations
Alignment with shareholder development orientations

The SD strategic orientation includes groups of strategic initiative orientations under the pillars of Environment, Social, and Governance, aligned with PVCFC’s overall operational strategy. These groups are presented as major themes to guide and shape strategies and activities related to SD content, ensuring the integration of SD content in the implementation of PVCFC’s general strategies and operations.

The following are the sustainable development orientation categories applicable to PVCFC:

Environment Strategic Direction:

Clean Technology: Research and implement the application of technology in production, business, and fertilizer use aimed at reducing emissions and minimizing environmental impact.
Energy: Continue to focus on improving energy use efficiency, exploring renewable energy sources to partially replace fossil fuels, and working towards reducing energy intensity and emissions.
Climate Change: Utilize all available resources to reduce absolute emissions and emission intensity across all three scopes. We also continue to invest in product research to provide farmers with better tools to cope with climate change impacts, such as drought and salinity.
Circular Agriculture: As a closed-loop agricultural production system, waste and by-products are regenerated and used as inputs in the production process, maximizing resource utilization and minimizing waste and negative environmental impacts. We aim to provide activities and products that sustainably supply crops with nutrients, including increasing the proportion of organic and microbial fertilizers and improving soil health.
Water, Air, and Waste: We aim to manage and use water resources responsibly, manage waste during production, and particularly focus on recovering and recycling fertilizer packaging.
Biodiversity: Our activities aim to maintain and protect biodiversity. We achieve this by delivering high-quality products to consumers and training in sustainable fertilizer use practices following the 4R principles of IFA and the 5-Right principles of Vietnam.

Social Strategic Orientation

Protecting and Building Human Capital: People are the key success factor at PVCFC. We focus on creating an environment where employees are ensured health, safety, commensurate benefits for their contributions and experience, and opportunities for skill development and advancement.
Welfare for Farmers/Customers: Farmers play an important role in the agricultural value chain. Through training programs, collaboration with other organizations, and customer/farmer support programs, PVCFC will contribute to improving rural living standards and the sustainable development of agriculture.
Product Safety: Safe fertilizers enhance crop yield, quality, and protect the environment and human health. Fertilizer quality is strictly controlled according to international standards from raw materials to the final product, with periodic inspections throughout the production process, ensuring each batch meets the highest and most consistent quality standards, protecting public health and biodiversity.
Financial inclusion We support farmers in accessing financial resources for their business operations. We also guide the establishment of a green finance framework to ensure environmental and social efficiency in projects.
Community: We continue to support communities through projects that significantly impact social welfare in areas where we operate.
Diversity, Equity, and Inclusion: We encourage and create an environment where employees from different cultures, genders, ages, religions, political views, abilities, and other aspects of diversity are respected and have a voice in the company’s decisions and activities.

Governance Strategic Orientation

PVCFC is committed to practicing corporate governance at the highest level possible, including but not limited to good corporate governance practices in Vietnam and ASEAN. Key governance areas in ESG include:

Business Ethics: Business ethics is the core foundation for all decisions and actions in corporate governance; it encompasses compliance with ethical principles and standards in all business activities, from human resource management, customer and partner relations, to how we treat the environment and the community.
Sustainable Supply Chain: We aim for a sustainable supply chain where input products and goods are also evaluated for environmental and social aspects.
Regulatory Compliance: Fertilizer industry regulations frequently change. We are committed to maintaining a system that ensures compliance with legal regulations as well as the best practices we have committed to follow.
Board Effectiveness: This is a decisive factor in an organization’s success. The Board is responsible for strategic direction, overseeing company operations, and ensuring the company adheres to good corporate governance principles and promotes Sustainable Development in governance.
Conflict of Interest Management: To protect our reputation and transparency, the company has established a strong conflict of interest management policy to identify, prevent, and resolve potential conflicts of interest transparently, fairly, and in a manner that maximizes benefits for the company.
Risk Management: To effectively respond to challenges and risks in the business environment, the company needs to build a comprehensive risk system. This system includes identifying, assessing, and addressing risks that could affect the company’s goals and operations, ranging from financial and legal risks to environmental and social risks.

2. Sustainable Development Framework