Sustainable investing for social impact

Companies can make a larger positive impact on society through both local and global activities when they prioritise human well-being.

From cash donations to philanthropy and corporate social responsibility activities to impact investing, there are many ways in which companies and their employees can make a difference.

That was a key message from a panel discussion at the HSBC Global Investment Summit that highlighted the importance of a collaborative approach in response to challenges including climate change.

“Two things are very important for collaboration. One is speaking a common language, and the other is a focus on a win-win approach,” said Bonnie So, Chief Executive Officer/Secretary General of Hong Kong Red Cross.

A regulatory push to spur companies to do more to improve their Environmental, Social and Governance (ESG) performance and efforts being made to run corporate enterprises better and more sustainably have made the term ESG part of a common language shared by the corporate sector and the social services sector.

Although the Red Cross is not an environmental agency, climate change as a global phenomenon has created a need for it to forge partnerships with companies to provide care and relief to individuals and communities from events including heat waves, shrinking crop yields, and natural disasters.

At the same time, by empowering its staff to engage in community service activities, a company can enrich their lives and differentiate itself from its competitors, Ms. So said.

“We welcome your donations, but we also welcome your volunteering,” she said.

That idea was echoed by Nicole Wong, CEO of WWF Hong Kong, who said that the value of every $1 that is donated to nongovernmental organisations could multiply through collaboration. She called for a mindset change that allows individuals to go beyond just donating money, to making a difference through personal engagement.

Complicated issues such as climate change and the loss of biodiversity require communities to share experiences and address the issues together, she said.

“We are now talking about transformational change,” Wong said.

Ms. Wong also highlighted the potential for returns through investments in environmentally friendly projects. She cited the example of the WWF’s efforts in Sichuan province to protect indigenous communities and prevent deforestation in addition to improving the population of the native pandas.

Eric Ng, CEO of Happiness Capital, discussed the Hong Kong-based venture capital fund’s aim to make long-term investments intended to empower entrepreneurs to create a healthier, happier world.

Happiness Capital uses a metric called “Happiness Return” to evaluate the performance of all companies in its portfolio, in addition to their financial returns. One other feature of this approach is a requirement to measure the impact of investments on the entire ecosystem.

To illustrate this, Mr. Ng cited the case of Happiness Capital’s investment in a company that makes a plant-based alternative to meat, where that entity’s performance also captures progress made to compensate for any job losses caused by its product – such as among animal-breeding farmers.

“New generation entrepreneurs and family offices have actually asked, ‘How do we convince our other family members to invest more into impact?’ Because there is no measurement,” Mr. Ng said.

“So basically we try to make a subjective thing such as happiness into a very objective measurement, and this is done by a third party,” he said.

Happiness Capital plans to host roundtables around the world in the second half of this year to get investors onboard and make attempts to create happiness and generate a positive impact on the world, Mr. Ng said.

Panel moderator Lok Yim, HSBC’s Regional Head of Global Private Banking for Asia Pacific, noted that the investments the current generation makes can influence the lives of future generations.

“If the generation after us hates us because we’ve done something terrible, that is an area of major concern for our own wellness,” he said.

In summary, he underscored the current generation’s need for creating a sustainable future by using its wealth and investments to generate a positive social and environmental impact.