The rise of impact investing in the past 20 years represents a shift in investors’ approach to balancing profit with purpose. It is gradually becoming a fundamental part of the broader investment landscape, driven by stakeholders’ concerns, social considerations, and economic opportunities. Impact investing involves investing in businesses that pursue strategies that create positive social and environmental impact through innovative and sustainable solutions.
A great example of impact investing is Grameen Danone Foods in Bangladesh. Combining Danone’s expertise in dairy with Grameen’s micro-credit experience and community access, it provides nutritional yogurt drinks to malnourished children while creating employment opportunities in vulnerable communities. Local farmers sell their milk to Grameen Danone, and local villagers generate income by selling and distributing their products through word of mouth.
M-PESA was developed to address the problem of financial insecurity in Nigeria. It provides affordable financial services to the unbanked and underbanked. It has affected 60 million customers and 5 million businesses across eight African countries, contributing up to 60 percent growth in formal financial inclusion and achieving an impressive 84 percent population access to formal financial services.
An exemplary organization tackling the pressing issue of inadequate basic sanitation, the World Toilet Organization works tirelessly to alleviate the plight faced by over a quarter of the world’s population and resolve myriad problems associated with poor sanitation.
There are many other excellent examples of the private sector supporting crucial initiatives and demonstrating vital collaborations to meet community needs worldwide.
To some degree, the United Nations 2030 Agenda for Sustainable Development and advocacy of the sustainable development goals has catalyzed a growing trend in impact investment, with an increasing focus on green technologies, carbon reduction initiatives and climate-related businesses.
Greater transparency, regulation and improvements in tools and frameworks for measuring social and environmental impact have made it easier for investors to assess and manage their impact investments. Organizations like the Global Impact Investing Network provide guidelines and resources for impact measurement.
Impact investing may not be a mainstream topic in Hong Kong, but it is gaining momentum on the Chinese mainland.
For example, a friend established a social venture after participating in the Social Enterprise Summit, an event I founded in 2008. After drawing lessons from similar business models elsewhere, this social venture has invested in a mainland-based company called HotMaxx. The company collects products nearing their sell-by dates and sells them at significantly reduced prices through its grocery chain. Its objective is to minimize waste profitably.
It is becoming increasingly clear that the concepts of impact investing, “business for good” and “creating shared value”, which call for integrating business and social good, will play an important role in achieving sustainable businesses and success
Likewise, FlashGreen is a local social enterprise founded by a group of university students from Lingnan University and the Hong Kong University of Science and Technology in 2022. Using the same business model, it operates four retail outlets in Hong Kong.
Another friend of mine, George Hara, a Japanese venture capitalist and former intergovernmental ambassador to the United Nations, has long championed the concept of public interest capitalism, which calls for satisfying the interests of multiple stakeholders. He takes a medium- to long-term view and is prepared to adopt a patient capital approach to properly support research and development, particularly from the proof-of-concept stage.
In Bangladesh, Hara developed the local communications infrastructure, promoting high-quality and low-cost internet broadband and transforming the lives of many, particularly in poor rural areas. More recently, he has turned his attention to developing the biotechnology sector in Hong Kong.
The National Academy of Governance has translated a book by Hara that outlines the concept of public interest capitalism, which is believed to have attracted the attention of senior central government officials in Beijing.
Under the leadership of industrialist Alan Cheung, the Hong Kong Social Entrepreneurship Forum (HKSEF) has long advocated “business for good”, whereby companies implement strategies and practices to generate value for all stakeholders, including customers, employees, suppliers, and community. They also advocate “creating shared value”, emphasizing the interconnection between economic and social progress.
On April 30, HKSEF announced the results of a research study highlighting new strategies adopted by small and medium-sized enterprises (SMEs) as Hong Kong grapples with a slow post-pandemic economic recovery.
Research findings suggest that SMEs can establish relationships catering to consumer demand that benefit their stakeholders by integrating shared value practices into strategies and operations to ensure survival, sustainability, and profitability. The research was funded by the Social Innovation and Entrepreneurship Development Fund and conducted by the HKSEF alongside other partner organizations.
It is becoming increasingly clear that the concepts of impact investing, “business for good” and “creating shared value”, which call for integrating business and social good, will play an important role in achieving sustainable businesses and success.
When I established the Social Enterprise Summit in 2008, we encouraged all businesses to embrace social objectives. Sixteen years later, technological progress, environmental issues and regulatory changes have increasingly become the driving force that merges traditional businesses and social enterprises.
Capitalist business models have traditionally prioritized shareholder interests over all other stakeholders. However, perspectives are slowly changing, and a trend toward balancing stakeholders’ interests and social objectives with financial returns signals the emergence of a new business paradigm.
The author is president of the Our Hong Kong Foundation.
The views do not necessarily reflect those of China Daily.
