In 2016, we launched our impact report, an account of one family office’s journey of embracing sustainability values across its entire investment portfolio. Today I am happy to see the launch of Sustainable Finance Initiative (SFi), which symbolises a growing community of private investors in Hong Kong who care about how they deploy their capital. This growth is encouraging to me, and at the same time, necessary.
A recent scientific study showed that humans represent just 0.01% of all living things, but have destroyed 83% of all wild mammals and half of our plants. Other recent research showed that if we fail to cap the global temperature rise at 2 degrees Celsius or less, 275 million people will find their homes flooded, with four out of five of those affected living in Asia. And by 2050, there will be more plastic than fish in the ocean.
Sustainability and social challenges abound in Hong Kong, ranging from waste disposal to air pollution to lack of affordable housing. In 2017 we recorded the widest wealth gap in history, with the richest household earning 44 times more than the poorest family. One in seven Hong Kongers is living in poverty; with one in three of our elderly struggling to survive.
At the same time, the number of wealthy individuals in Hong Kong is at a historic high. Hong Kong had 1 million millionaires last year, up 15% from a year earlier. And that’s not all: Hong Kong just added more billionaires than any other major city in 2017, bringing its total count to 93, just 10 less than the leading city, New York.
Hong Kong is a financially prosperous society. Just imagine what impact we can achieve if all wealth owners think more about how we can use our wealth to counter or even solve the pressing social and environmental challenges our planet earth, and our city, face this very moment.
To borrow from Charles Dickens: We are living in the best of times. We are living in the worst of times.
There is not enough philanthropic capital in the world to solve our gravest problems. The traditional practice of investing solely for financial gain, and putting some of the profits towards ‘good’ causes, is no longer sufficient. In order to create change at scale, we need to harness the power of the capital markets. We need to change the system so that some of the most powerful change engines the world has known – market forces and the capitalistic impulse – are harnessed to create good.
As a major international financial hub, Hong Kong needs to be a part of this transition towards sustainable finance. As investors living in this city, we can all potentially make a difference by choosing what we invest in, what we divest from, and the advisors we use. Collectively, we can change the financial marketplace to serve us, and our planet, better.
In 2008, I started questioning why my investments were not aligned with my values, and embarked on a journey with my team to transition our whole portfolio into a sustainable one: first by screening out investments that were harmful to environment or society, then gradually moving onto investments that create positive social and environmental impact.
We shared our journey in a 2016 public impact report and our team began to actively advocate by sharing the challenges we faced, the mistakes we made, and the lessons we learned. Eventually we needed a dedicated platform to do this advocacy work in a more structured way: hence the birth of SFi.
I hope that SFi will shorten the time that other interested private investors need to get started on their journeys. SFi will also help bridge Hong Kong’s knowledge gap on sustainable finance and serve as a catalyst to drive investor demand.
Hong Kong, like many parts of the world, is facing growing environmental and other challenges that impact our quality of life and exacerbate social inequality. It is time that we asset owners in Hong Kong take bigger and bolder steps through our investments to ensure sustainability for future generations.
Each of us may occupy different roles in life – parent, child, business owner, employer, investor, philanthropist etc. - but we exist as a whole person. We each have core, personal values that are integral to us, and they should guide our decisions even as we move across these different roles. It was the quest to preserve the integrity of my personal values that led me to question more deeply how my capital was being invested.
No matter how much or how little wealth we own, we are all ‘investors’ in some way, whether it is via our pension, the stocks we buy, or simply where we choose to spend our money. If we can all be more aware of how our money is spent and deployed, change will naturally take place.
Let us collectively work together to make our capital matter.
Chair, RS Group