Hong Kong SMEs show signs of embracing sustainability and ESG, despite limited risk awareness
Left: Mr. Darwin Leung, Assistant Project Manager of the Center for Civil Society and Governance (CCSG) at the University of Hong Kong
Right: Professor Wai-Fung Lam, Director of the Center for Civil Society and Governance (CCSG) and Professor of Politics and Public Administration at the University of Hong Kong » href=”https://www.miragenews. com/hong-kong-smes-show-signs-of-uptake-of-827583/#” dhref=”https://www.hku.hk/f/news/24857/900p600/The report photo.jpg” data -origin=” /f/news/24857/The photo report.jpg”>
HKU survey sheds light on how to make sustainability and ESG more accessible to SMEs in Hong Kong,
enabling the sector to become more involved and have a real impact
In recent years, ESG and sustainability issues have moved up the corporate agenda. According to Google Search Trend, the popularity of the keyword “ESG” in Hong Kong skyrocketed and surpassed “Sustainability” in May this year. However, public curiosity about the topic does not appear to be translating into practice, according to the Territory-Wide Small and Medium Enterprise (SME) Sustainability Survey (the Survey) conducted by the Center for Society Civil and Governance (CCSG) at the University of Hong Kong. From November 2021 to April 2022, the survey solicited the opinions of 1,400 SMEs (SMEs) in Hong Kong to understand their perceptions, practices and readiness for achieving sustainability.
Supported by the Hongkong Bank Foundation, University of Hong Kong CCSG’s Partnership for Sustainability Leadership in Business (PSLB) program today organized the third Knowledge Primer (KP) on the theme “Rethinking Sustainability for SMEs: Go Circular and Build”. Resilience’. The event brought together over 120 sustainability experts and industry practitioners. The KP began by publishing the findings of the “Diagnostic Study for the SME Sustainability Survey”, which provides an analysis of the landscape of ESG and sustainability adoption by Hong Kong SMEs, and identifies weak points that impede their ability to take further action. The study also provides a baseline for future research and market analysis on SME sustainability efforts and achievements.
SMEs tend to perform better in resource management
According to the results, just over a third (36.7%) of SMEs rated themselves as effective in advancing sustainability goals, compared to just 4.4% of SMEs rated ineffective. Among the 24 practices spread over five dimensions, namely governance, corporate culture, customer-supplier relations, resource management and innovation, the study reveals that the average number of sustainable development practices adopted was 7.7 in all sectors. No single sector performs impressively in all five dimensions, but SMEs tend to perform better in resource management while there appears to be considerable room for improvement in innovation and corporate governance.
The three most pressing sustainability challenges for SMEs
The majority of SMEs (98.3%) indicated that they are currently facing sustainability challenges and the top three sustainability challenges are namely economic and financial instability (65.4%), crisis global health (e.g. COVID-19) (53.8%) and consumer expectations (22.9%), suggesting that SMEs are struggling to stay resilient and recover from an unstable economic environment. In contrast, long-term socio-ecological risks such as climate change, human rights and inequality received only 6.3%, 4.8% and 3% of respondents identifying them as a challenge. This could suggest that SMEs are less concerned about the potential risks induced by climate change, or not sufficiently aware of social challenges such as inequalities in the workplace that could have serious consequences for their long-term activities. This implies the need to educate SMEs on the importance of integrating the ESG framework as a business risk management practice so that they can realize potential risks early on and mitigate their impact.
Government and industry support to accelerate the advancement of sustainability
According to the results, the support most needed to embed sustainability in SME business operations, strategies and business models is namely financial support (47.7%) and marketing support (41.2%), while that this support is ideally provided by government (69%), followed by business associations and banks and financial institutions, both of which received 30.8% of responses. This implies that the most effective way to encourage SMEs to integrate sustainability is to offer financial incentives. It urges the government to accelerate the development of green and sustainable finance and come up with an achievable timeline and policy framework for financial institutions and business organizations to follow.
Professor Wai-Fung Lam, Director of the Center for Civil Society and Governance (CCSG) and Professor of Politics and Public Administration at the University of Hong Kong, said: “The corporate sustainability agenda continues to gain momentum. However, the spotlight remains on the role of multinationals and listed companies. As the engine of economic progress, SMEs have made various contributions to social and environmental well-being. Yet their unique challenges and constraints have not been widely studied. This highlights the need to understand the role and positioning of SMEs in creating the momentum to achieve widespread positive, social, environmental and economic change for a more sustainable future.
SVC Commitment and SME Sustainability Leadership Recognition Program Award Ceremony
The release of the report’s findings was followed by the award ceremony for the SVC Commitment and SME Sustainability Leadership Recognition Programs (the Program), for recognition of the achievements and support received from businesses and SMEs participants from the 2021 cohort. A total of seven corporate SVC signatories, including Japan Airlines Company Limited, LH Group, Nan Fung Development Limited, New World Development Company Limited, Rosewood Hotel Group, Starbucks Coffee Asia Pacific Limited and The Hong Kong and China Gas Company Limited, as well as 16 SMEs from different sectors received merit recognitions.
During the business dialogue session, representatives of participating companies and SMEs from the 2022 cohort shared their views on the merits of collaborating with value chain stakeholders to advance sustainability goals. .
Mr. Him Lo, Senior Manager, Culture and Community Engagement, Nan Fung Development Ltd, said, “Achieving sustainability such as the transition to circular economy and an inclusive society has become increasingly dependent on partnerships with various stakeholders along the value chain and in different sectors. . Businesses and organizations, including large corporations, SMEs, start-ups, social enterprises and NGOs, should pool their resources, knowledge and skills with the aim of accelerating sustainability innovations and achieve better social and environmental outcomes.
Ms Vickie Au, Founder of V Visionary Limited added: “The SVC Commitment and SME Sustainability Leadership Recognition Programs provide a useful platform to connect like-minded businesses to act on specific sustainability issues through collaboration, innovation and creativity.
Finally, details of the 2022 Cohort of Programs regarding the “Circularity and Resilience” theme and the “Restoration” industry focus have been announced with an official call for applications. The PSLB team is also pleased to announce that New World Development Company Limited and Sino Land Company Limited have expressed their interest in participating in carrying out the action of the program, with the aim of stimulating circular economy practices and build resilient value chains.