Written by Yenson She, a graduate of the Cambridge Judge Business School MBA (2014-2015)
The opportunities and challenges
We should ask how the how Hong Kong’s private sector can further their efforts in solving social and environmental challenges, not only as a ‘responsibility’ per se, but as their company vision and strategy. There is much focus on the many CSR initiatives, such as pro-bono training and service, volunteer work; managing a corporate foundation to support community initiatives through grant making. The world’s largest social and environmental challenges require corporations to play a key role in driving solutions with their wealth of resources in capital, talents, expertise, and ability in driving partnerships across regions, industries, and sectors, and we need to more than ever as challenges become increasingly more pressing.
Hong Kong is a unique city with a population of 7.5 million, and a blended culture of the East and the West as it once was a British colony. Now as a Special Administrative Region of China, Hong Kong was considered by many as the most successful ‘laissez faire’ economy and Asia’s world financial centre. However, behind Hong Kong’s iconic Victoria Harbour view it is facing multiple social and environmental challenges despite being known for its business innovation, entrepreneurship, creativity, and a highly talented and agile workforce.
A shift to the private sector as an engine to social innovation
Hong Kong with a Gini coefficient of 0.539 is one of the highest in the world: in comparison to Singapore at 0.458 and the United States at 0.411. The closer the Gini coefficient gets to ‘one’, the higher degree of inequality in wealth distribution of the city or country. A study in 2016 shows that the top 10% of Hong Kongers make 43.9 times more income than the bottom 10%; and within a city with one of the most expensive housing markets in the world, it takes a typical household with medium income 20 years to afford a 60 square metre flat, the average cost of which is $US1.24 million. Additionally, Hong Kong is experiencing a rapidly diminishing landfill space as it throws 4.17 million tonnes of municipal solid waste into the landfill every year. With an overall recycling rate of a relatively low 30% (vs. 61% in Singapore), the city is in desperate need of eco-solutions, a better waste management system, and awareness amongst the society of more sustainable practices.
The Hong Kong government maintains a tight budget for basic social welfare in healthcare, education, and housing etc. and environmental protection; however, as the aforementioned challenges call for more urgent actions, in recent years the private sector has stepped up by driving sustainable innovations and solutions to turn these challenges into opportunities.
Corporate innovation for social impact requires a paradigm shift from top to bottom
For corporations to drive innovation for intentional and lasting social impact, a shift in mindset is required. There must be a clear “why” from senior management that provides a vision beyond profit-making as its only purpose of the business, which will fundamentally lead organisational culture and structure, values, strategy, performance evaluation, decision making and daily processes. Without a socially innovative vision and leadership, impact will be short-sighted and limited as it lacks foresight and conviction. It is crucial for the vision to integrate both business and social and that the two elements hold equal importance, which in essence is what gives the business model its differentiated edge versus its competitors.
An inspiring, socially innovative company vision needs a team that is able to translate it into business strategies, objectives and plans, and that requires a rare breed of individuals; people who are passionate in making positive social and environmental change, who are able to innovate creative solutions to tackle systemic challenges with business acumen, whilst being able to manoeuvre round the corporate hierarchy to channel the right resources with the required business etiquette, communication skills, and understanding of change management. Senior management can help by providing necessary resources and entrust the team with ample room to experiment with new and bold ideas – which is a key driver to any kinds of innovation within the corporate environment.
It is encouraging to see that, increasingly, ESG (Environmental, Social, and Corporate Governance) has become a hot topic amongst the private sector and that more corporations are embedding the UN SDGs into their work. However, the following are some of the commonly seen challenges and watchouts:
- Lacks a clear vision that is short-sighted; unable to leverage strengths of the corporation, which in turn jeopardises business results whilst making limited impact.
- Led by a strong business team but lacks passion in understanding the deeply rooted social and environmental issues; or led by a team passionate about social impact but lacks commercial experience and context. Neither is ideal.
- Green or impact washing conveys misleading marketing or PR for brand building but lacks clear long-term vision and executable strategy, plans and accountability.
In reference to Hong Kong’s past success in business innovation and entrepreneurship, which grew the city’s economy to what it is today, there are tremendous opportunities for the private sector to leverage its resources, talents and creativity to drive sustainable solutions and innovations to tackle social and environmental challenges.
In my next blog for the Cambridge Centre for Social Innovation, I will be interviewing Cintia Nunes, the Director of The Mills Fabrica, the innovation arm of The Mills and an engine to sustainability and social impact of Hong Kong property developer, the Nan Fung Group. Cintia will share how their business creates an ecosystem to accelerate innovation that tackles some of the world’s largest environmental challenges in consumer industries.