How will Hong Kong profit from a purpose-driven economy?

How do we make sure we have an education system that is welcoming for all? Hong Kong’s landfills will be out of space by 2020 – what will we do with all our rubbish? The population is rapidly ageing: do we have enough skilled workers in the pipeline? Hong Kong, like many major cities, has plenty of pressing social problems that need to be addressed.

Who should solve them? It’s not sustainable for governments alone to address social issues – if it was we wouldn’t have so many. If the Hong Kong government was to singlehandedly run a myriad of new or enhanced services, it would no doubt have to impose higher taxation levels which wouldn’t be popular. Perhaps more importantly, governments don’t necessarily have the skills to address the real cause of the problems. Instead they provide services to deal with the fall out, rather than coming up with innovative solutions.

Many of the world’s problems - from income inequality to climate change - are so far-reaching that solutions are virtually impossible without the expertise and scalable business models of the private sector. It’s clear that society needs the help of our community’s best business brains to come up with some fresh ideas and ways of thinking.

A business model, called creating shared value, sees businesses applying their skills and expertise to solve social problems – in a way that is not only profit-driven, but more critically, purpose-driven. Companies that embrace this approach simultaneously deliver social value for the communities where they operate and sustainable economic value for their shareholders in the long run.

A social impact consulting firm surveyed 174 Hong Kong companies on their awareness and adoption of shared value. Initial findings from the survey suggest that many companies are behind the curve in understanding how shared value differs from other forms of corporate social engagement.

In Hong Kong, most companies still think of their social impact primarily in terms of philanthropy or corporate responsibility. Of course, both are important. Many worthy charities count on corporate philanthropy, and some organizations have long advanced prosperity and well-being in Hong Kong. Nowadays, every company is also rightly expected to pay attention to its environmental, social and governance (ESG) performance. But philanthropic funds are limited and ESG in itself doesn’t produce profit. Shared value does, by pushing companies to find new business models that create economic value by meeting the needs of their communities.

Hong Kong is a dynamic regional business hub with critical social problems. The business world in this vibrant market needs to realise the potential in problems. Tackling social issues enables growth and development and so the quality and dedication of the workforce, the mission and engagement of employees, the operating environment and public spending power improves too. It’s more than a win-win, it’s a winning virtuous cycle of development and one Hong Kong should step onto soon - setting an example of a purpose-driven economy to the rest of Asia. This is why we need to bring together people from across all sectors to work together, to strengthen society and the economy of Hong Kong.