Hong Kong business should care about creating value for society
Paul Yip says new thinking about philanthropy suggests – and examples have shown – that companies should not only focus on shareholder interests, as doing good is ultimately good for profit
Last month, I attended a Hong Kong Jockey Club forum on “Philanthropy for Better Cities”, which was all about creating shared value. It provided some excellent examples of how business can do well by doing good, a deeper and wider type of corporate social responsibility that involves more than just donating money to charities after making a profit. It is about how businesses can respond to the challenging needs of society and do it together by creating shared values with non-governmental organisations and the community at large. It pushes the boundaries and expands horizons.
There are a number of successful overseas examples of businesses providing support to disadvantaged groups in the community, which in turn can improve the business as well.
For instance, instead of charging a minimum-balance fee, the National Australia Bank is engaging disadvantaged clients and tailor-making banking services and advice for them. As a result, an additional one million clients, out of a national population of 23 million, are provided with banking services. The banking sector naturally welcomes big clients and rich customers but the National Australia Bank has not lost sight of the community at large. By expanding its client base, it has managed to make a profit and make the community a better place; a win-win situation. This is more a corporate strategy than an act of corporate social responsibility.
This kind of a mindset of running a business has yet to become commonplace in Hong Kong. Sharing value should be incorporated and practised for the betterment of the city.
To take one example, the government’s scheme to allow the elderly and those with disabilities to travel on public transport at any time for HK$2 a trip aims to help build an inclusive society by encouraging these groups to take part in community activities.
The scheme has been warmly received by beneficiaries. An average of more than a million passenger trips occur daily under the scheme: 884,000 senior citizens and 140,000 people with disabilities. The government reimbursement to the public transport operators is expected to rise from HK$900 million in 2015-16 to HK$1.2 billion this financial year. The government bears fully the cost of the subsidy.
Though they don’t contribute to fund the scheme, the transport operators certainly profit from it – there would be far fewer trips without the subsidy. Under the shared value concept, shouldn’t transport operators contribute to the programme? Furthermore, the subsidy costs will escalate at a faster rate in future as Hong Kong society ages, and it can perhaps only be met at the expense of other welfare expenditure.
I hope transport operators will start to do their fair share, and not use the excuse of having to put shareholder interests first as a reason not to contribute. Sometimes, it is this profit-driven mindset that is a major barrier to Hong Kong developing into a more inclusive, cohesive and empathetic society.
The recent discussion on the minimum wage, currently set at HK$32.50 per hour is another example. The wage is simply too low for workers to have a decent life in Hong Kong. Australia, which has a gross domestic product similar to ours, has a much higher minimum wage at A$17.70 (HK$105) an hour. However, the cost of a latte in both places is about the same (HK$30). Where has the profit gone?
Usually, it is the workers who suffer during an economic downturn but even in good times, the benefits of economic growth are not shared by the community. The response from the business sector to raising the minimum wage has been disappointing. Yes, there could be economic uncertainty in the future, but it is certain now that workers are having a difficult time.
If the idea of creating shared value can be fully embraced by the business community, ways can be found to improve workers’ wages and also maintain long-term financial sustainability and profitability.
Today, every stakeholder seeks to maximise their own gains but, at the same time, it is the government and the community at large that pay the cost of any social ills.
There are many global companies that pay attention to investing in human capital, reducing carbon emissions and tackling deforestation, ensuring materials are sourced responsibly, empowering the career mobility of workers and boosting chances for the poor. Such companies genuinely believe that if they don’t try to fix these issues, they will create problems for the company, if not now then at a future date.
We should all be looking for sustainable growth and not short-term gain.
In Hong Kong, we have problems finding space to house the living and the dead. A common problem is opposition from some community stakeholders because of, for example, disruption to the present environment. However, if the community cannot be more empathetic to those experiencing housing problems, Hong Kong will never move forward. With a change of mindset to embrace shared values, concerns can be dealt with through better design and planning.
Hong Kong is blessed with so many charities and foundations that are willing to provide support to those in need. However, most survive on donations from the business sector. If business can begin to create shared value, with support from the government, we can see a fundamental change in Hong Kong, enabling us to strategically and effectively address the metropolitan issues of the 21st century.
We need to raise the bar so that all in the community understand and implement sharing practices. The Philanthropy for Better Cities Forum provided an excellent opportunity for dialogue and to initiate a new movement to make Hong Kong a better place for everyone.
Paul Yip is a professor of social work and social administration at the University of Hong Kong