Solving social problems can be profitable: Promoting shared value in Hong Kong

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In face of acute social problems such as ageing population and dire need for waste treatment, the government encourages shared value practices in Hong Kong companies: let companies solve social problems.

(Photo: (From left) Helge Mahne, Associate Director of FSG, Professor Mark Kramer, Co-founder and Managing Director of FSG and Kim A Salkeld, JP, Head of Efficiency Unit, HKSAR Government, Secretary-General of the SIE Fund Task Force Secretariat at SIE Fund’s 2017 Shared Value Forum media roundtable. (Provided))

The Social Innovation and Entrepreneurship Development Fund (SIE Fund), a HK$500 million government initiatives that provides funding support to social entrepreneurs and social innovation projects, organised the second “Shared Value: Creating Competitive Advantage” forum earlier today (21 September). First held in 2015, the forum promotes shared value in Hong Kong.

Shared value refers to business practices that can help solve social problems such as ageing population, need for waste treatment and poverty. It enables businesses to make profit while solving social problems.

“Shared values says that companies can become more profitable and more successful if they actually look for business opportunities in solving social problems – ways to make money by solving social problems,” explains Professor Mark Kramer, thought leader of the shared value concept.

According to Kramer, there are several successful shared value initiatives in Hong Kong. Towngas, for example, has an project that converts food waste to biogas. PCCW-HKT also has a digital health monitoring service that helps elderly users to keep track of their well-being.

“[Shared value] is different from philanthropy or corporate social responsibility, which are important things companies do. Shared value does not replace philanthropy or corporate social responsibility,” he says. “[It] is really about recognising the fact that social issues affect the success of companies.”

Kramer also notes that shared value practices by corporations sometimes could provide more effective ways of solving social problems than non-government and non-profit organisations.

“What we find is, when companies begin to address social problems as part of their business rather than just philanthropy or corporate social responsibility, they bring many more resources and many more capabilities, and they can really achieve real innovation and a scale of impact that often NGOs and nonprofits cannot achieve, and often even the government.

“We’ve had strong interest in a number of regions in the world to develop local shared values projects and partnerships,” Kramer elaborates. “There’s one in Australia, there’s one in India, and there’s one getting off the ground here [in Hong Kong].”

This year’s forum marks a shift of focus from social entreprises to private corporations. According to Kim Salkeld, Secretary-General of the SIE Fund task force secretariat and Head of the Hong Kong government’s Efficiency Unit, the SIE fund is planning to diversify its investments and operations.

“The usual understanding of social entreprises in Hong Kong is that […] quite a bit of their incomes comes from government grants or philanthropic foundations. They recover little income from the services they provide,” Salkeld explains. “But what we’re trying to do with the SIE Fund is also to create a greater diversity of social ventures, and addressing the social need that they are sustainable businesses in their own right. We’re trying to do this through not direct funding to these organisations, but by creating a network of support and mentoring organisations.”