Hong Kong SAR – ESG and sustainability issues alike have been moving up the corporate agenda in recent years. According to Google Search Trend, the keyword ‘ESG’ search popularity in Hong Kong has been soaring and surpassed ‘Sustainability’ in May this year; however, public curiosity about the topic doesn’t seem to convert into actual practice, according to the territory-wide SME sustainability survey conducted by the Centre for Civil Society and Governance (CCSG) at The University of Hong Kong.
According to the findings, slightly over one-third (36.7%) of SMEs rated themselves as effective at advancing sustainability goals compared to only 4.4% of SMEs rated ineffective. Among the 24 practices across five dimensions, namely governance, workplace culture, customer-supplier relationships, resource management and innovation, the study reveals that the average number of sustainability practices adopted was 7.7 across all industries.
SMEs were quick to be honest that they are encountering several dilemmas in achieving sustainable practices. Amongst such challenges, economic and financial instability comes out on top (65.4%), followed by global health crisis (53.8%), and consumer expectations (22.9%), which suggest that SMEs are struggling to stay resilient and recover from the unstable economic environment.
In contrast, long-term social-ecological risks such as climate change, human rights, and inequality only received 6.3%, 4.8%, and 3% of respondents identified them as a challenge. This might suggest that SMEs are less concerned about the potential risks induced by climate change, or not aware enough of social challenges such as inequalities in the workplace that could cause serious implications for their businesses in the long run.
Furthermore, the study found that the most needed support for integrating sustainability into the SMEs’ business operations, strategies and business models are namely financial support (47.7%), and marketing support (41.2%), whilst such support is ideally provided by the government (69%), followed by business associations, and banks and financial institutions, both receiving 30.8% of the response. This implies that the most effective way to encourage SMEs to integrate sustainability is to offer financial incentives.
Professor Wai-Fung Lam, director of CCSG, and professor of Politics and Public Administration at the University of Hong Kong, remarked, “The business sustainability agenda has been steadily gaining momentum. However, the spotlight remains on the role of multinational corporations and listed companies. As the engine of economic progress, SMEs have made diverse contributions to social and environmental well-being. Yet, their unique challenges and constraints have not been widely studied. This points to the need to understand the role and positioning of SMEs in creating the impulse to achieve widespread positive, social, environmental and economic change for a more sustainable future.”
The Survey was based on the views of 1,400 SMEs in Hong Kong within the period of November 2021 to April 2022.
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