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Natalie Chan of PIE Strategy sees a trend towards systems thinking emerging in Hong Kong and mainland China
As I sat down to reflect on the past 12 months, I felt a burden in my heart because 2018 was a year in which sustainability challenges relentlessly rose to the surface: air pollution and its health impacts, waste crises and the shortage of recycling infrastructure, more powerful storms, and so on. On the other hand, I was encouraged to see a growing desire to take action by businesses, and that action seemed to be less about philanthropy, and more about trying to find systemic solutions to important challenges.
Shared value is a very nascent approach here in Hong Kong and mainland China, but I want to share four examples of where I’ve seen it emerging. Together, they demonstrate why I choose to see hope for 2019:
1. A new generation of mindful leaders
Family businesses are a critical pillar of Asian economies, including that of Hong Kong and mainland China. In fact, many listed companies across Asia’s stock exchanges are led by families. By nature, they should be obvious candidates to think ahead to the next generation. However, family rifts and the pressure to measure up to familial expectations often made financial growth the main focus of these business leaders.
In Hong Kong, we have seen new leadership in a number of prominent family businesses in recent years. A key difference is that the next generations see sustainability – in terms of both natural resource management and developing a strong ecosystem of stakeholders and beneficiaries – as the route to a thriving business.
An example in Hong Kong is the Lawsgroup, which started out as an apparel manufacturer in 1975, with a property investment subsidiary, and has been recognised as a “caring company” by the local non-profit Hong Kong Council of Social Service for over 15 years.
In 2010 the founder’s grandson, Bosco Law, took over as CEO while still in his 30s. In 2013, the group turned two industrial buildings in Lai Chi Kok into an innovative mixed-use development called D2 Place.
This new model aims to lower the risks and start-up costs for young fashion and lifestyle entrepreneurs by offering profit-sharing schemes and flexible use of space, ranging from weekend markets to pop-up stores to short-term leases.
Profitability of D2 Place in its early days was questionable, but over the years this unbeaten path for creating shared value has paid off. D2 Place has nurtured an ecosystem of new business and helped to attract and develop creativity in neighbouring communities and further afield.
2. The dawn of circular thinking
2018 saw some clear regulatory moves to change the game on waste. Most importantly, in January, China began enforcing new rules that ban the importation of 24 grades of solid waste, including mixed paper and plastics. No longer can businesses in Hong Kong (and elsewhere in the world) mindlessly ship it off to China, highlighting the limitations of waste processing facilities here, and signalling the eventual end of waste-heavy business models. Regulation and infrastructure is now playing catch-up. Awareness of the impacts of waste, particularly ocean plastics, on both ecosystem and human health also surged, and so businesses face pressure to act from consumers and stakeholders.
One cross-sector collaboration in Hong Kong is the Drink Without Waste initiative, which brings businesses and environmental groups together to tackle the impact of the beverage sector, with a focus on single-use packaging. Group members include major beverage producers, including Swire Beverages, Vitasoy and A.S. Watson, and non-profit organisations such as Designing Hong Kong and environmental thinktank Civic Exchange.
While circular economy is still a very niche concept here, we are beginning to see some innovation in the textile industry using waste as a resource. A leader is the Hong Kong Research Institute of Textiles and Apparel (HKRITA), which aims to foster research, development and technology transfer in textiles and apparel. It released a breathable waterproof windbreaker jacket using recycled coffee grounds, followed by developing a novel biological process to transform food waste into raw material for producing PLA (plant-derived thermoplastic) fibre.
3. China’s commitment to environmental leadership
China’s new regulation on waste management didn’t come out of the blue: it is one aspect of China’s 13th Five-Year Plan, 2016-2020, and demonstrates the plan’s widespread repercussions. Under the seven “major objectives” for the country’s social and economic development there are 32 proposals for actions, of which six specifically relate to environmental and ecosystem conservation. This includes the intention to “fully participate in global climate governance”, to develop low-carbon transport and move to a “clean, low-carbon, safe and efficient” energy system.
The plan is also one for medium-high growth, including making China into a manufacturing powerhouse, offering ubiquitous data connections, developing the blue economy, an intensive approach to agriculture, and moving forward with the Belt and Road Initiative. Will it be possible for the commitment to the environment to be exemplified in these other areas in the plan, for example through full consideration of impacts on habitats, air and water quality in infrastructure development along the Belt and Road economies? This remains to be seen. If it can, then we can expect to see China’s government and businesses to rise in global prominence as environmental stewards.
4. Tangible action to tackle wealth inequalities
Polarity of wealth is increasingly recognised as a challenge for longer-term social and economic sustainability. Poverty also increases vulnerability to environmental crises, from access to food and water to the health impacts of pollutants, to the ability to migrate from high-risk areas or to recover from natural disasters. While Hong Kong ranks among the top 20 wealthiest economies, with GDP per capita in the range of €42,500, one in seven Hongkongers lives on less than €500 a month.
More business leaders are stepping up to explore how they can contribute to poverty reduction and build more equitable systems, through collaborations with grassroots communities. These initiatives go beyond traditional giving and volunteering activities to use system-thinking processes to understand the challenges communities face, and devise effective solutions to address them.
For instance, PIE Strategy is supporting Our Hong Kong Foundation’s Business for Social Good (BSG) platform in a new movement called “Big Little Things”, which is piloting a new way for businesses to engage with the community in Hong Kong, and potentially across the region. Led by Bernard Chan, a prominent business leader and convenor of the executive council of Hong Kong SAR, Big Little Things calls on business leaders to use the creativity and pragmatism of the business community to address some pain-in-the-neck issues faced by the grassroots community.
Big Little Things begins with a one-week innovation sprint, designed by PIE Strategy, in which the corporate teams are challenged to create affordable, workable and scalable solutions to issues from bed bugs and rodents in nano-sized subdivided flats in poor conditions, to smart solutions for helping the elderly to overcome flaws in the design of Hong Kong’s public housing.
Natalie Chan is managing director of PIE Strategy, which works with businesses in Hong Kong and across the region to create shared value. To find out more, please contact email@example.com
Hong Kong China plastic waste circular economy renewable energy Wealth inequality