Why is business sustainability important?

Sustainable practices are becoming imperatives for many people, especially in the business world. Making business sustainable refers to doing business without negatively impacting the environment, community, or society. As a business approach, business sustainability considers more than just profits; it takes into consideration a wide range of environmental and social factors when making business decisions[1]. The overarching goal of business sustainability thus lies in making positive impacts on the environment, society, or both.

Business sustainability is important since it can drive business success and foster company longevity. For example, a study done by McKinsey shows that companies with better performance in the environmental, social, and governance (ESG) spheres, a metric employed to analyze organizations’ sustainability practices, consistently outperform the market in both the medium and long term[2]. Meanwhile, sustainable business practices can benefit company longevity by helping construct a healthy environment in which the business thrives[3].

Community engagement as a practice of business sustainability

While consensus has been reached concerning the importance of business sustainability, no two sustainable practices are the same. Community engagement has been widely adopted by companies as a way of having positive impacts on society. However, at the same time, companies differ greatly in the ways they perform community responsibility and exert community impact. Findings and results from the Greater Bay Area Business Sustainability Index (GBABSI) offer a good opportunity for us to delineate how listed companies in the new economic zone have conducted their community engagement practices as a part of pursuing the ultimate business sustainability goal. Launched in 2019 by the Center for Business Sustainability (CBS) at The Chinese University of Hong Kong, the GBABSI expands the original Hong Kong Business Sustainability Index (HKBSI, since 2015) to include around 60 listed companies in the Greater Bay Area and assesses these companies’ sustainability performance.

Community engagement in Greater Bay Area companies

The newly published GBABSI  evaluated the sustainable practices of 63 listed companies in the Guangdong-Hong Kong-Macao Greater Bay Area. Of these, 33 are Hong Kong companies. Almost all the GBABSI companies (56 out of 63) mention community as a stakeholder in their sustainability statement or policy and have pledged to actively engage themselves in community development. Among the seven exceptions, four are Hong Kong companies and three are mainland companies.

A closer look at corporate community engagement reveals that companies exert a positive impact on the community in three main ways—charitable donation, supporting local employment and conducting volunteer work.

Charitable donation

All the GBABSI companies make charitable donations, and for the 52 companies that disclose their donation details, the annual donation amount ranges from 710,000 to 5,200,000 HKD. Most companies’ donation amount is less than one percent of their revenue, while four companies donate more than one percent of their corporate revenue.

In terms of the donation focus, education and community development are the two preferred areas for the GBABSI companies, with 51 and 47 companies documenting donations to these two areas.

Generally, HK companies’ charitable donation practice exhibits a higher level of diversity, embodied in larger percentages of engagement in all the six major donation focuses. As shown in Chart 2, more than 50% of the 33 HK companies have donated to community development (91%), education (90%), health (67%), art and culture (61%), and disaster relief (55%). However, for the 30 mainland companies, only two focus areas, community development (57%) and education (70%), have received donations from half of the companies. The largest difference in donation focus choice between HK and mainland companies occurs in the focus of art and culture. While 61% of HK companies have donated to activities related to art and culture, only 23% of their mainland counterparts make similar donations.

Apart from the six donation focuses, GBABSI companies also documented donations to a range of other community-related activities or projects, such as environmental protection, poverty alleviation, youth care, helping the disabled, healthy living, etc.

Support local employment

Compared with charitable donations, a smaller percentage of companies (59%) stated that they support and encourage employment of local citizens in their CSR or sustainability reports. Specifically, 64% of HK companies have made relevant pledges, which is a larger number than for mainland companies (53%).

Volunteer work

All the GBABSI companies, with four mainland companies as exceptions, have organized or participated in volunteer activities. To be specific, 49 companies have conducted volunteer work in elderly care, while 43 have engaged in volunteer activities to protect the environment.

Similar to the findings with regard to charitable donations, HK companies outperform their mainland counterparts in terms of their volunteer work engagement rate (see Chart 3). Examples of environmental protection volunteering activities include organizing corporate staff to clean the coastal areas, joining a plastics-free campaign, participating in the WWF’s annual “Earth Hour” event, recycling staff’s old clothes, launching environmental education lectures, etc. Concerning elderly care, most engaged companies organized volunteers to visit local nursing homes and provide help to the elderly, such as teaching them how to use smart phones, improving their living space, accompanying them to medical examinations, etc.

Apart from environmental protection and elderly care, the two major focuses of corporate volunteer work, GBABSI companies also conducted a wide array of volunteer activities, such as organizing staff volunteers to provide job skill training lectures for disadvantaged groups, holding charity bazaars, initiating safety education training programs in local communities, and encouraging staff volunteers to participate in disaster relief, to name just a few.

Despite the fact that GBABSI companies have initiated or participated in a diversity of volunteering activities, it is worth mentioning that only 22, or around one-third, allow their employees to use their work time to volunteer. For business leaders, there is plenty of room for improvement in terms of how to motivate their employees to participate in volunteer work. Thirty-one companies provided detailed information of their average volunteer service hours. Of these, 18 companies offered less than two hours of volunteer service per employee and 10 companies offered average volunteer service time of two to 10 hours.

A general view of community projects

Among the 60 companies that provided detailed information about their community projects, more than half (53%) organized 10 or fewer than 10 community projects in a year. Meanwhile, seven companies greatly outperformed the average, launching more than 100 community projects within one year.

Another indicator of companies’ endeavors in community projects is whether they have more long-term projects that need continuous financial and manpower investment. A further examination of GBABSI companies’ community projects shows that 30 companies have launched more long-term projects than one-time ones, while 26 companies have organized community projects in the opposite way.

Collaboration with NGOs

Among all the 63 GBABSI companies, 43 stated that they have collaborations with local NGOs, be it by joining NGO-initiated activities, supporting NGO projects, or launching projects together with NGOs. While seven companies (16% of the 43 companies) had an extensive collaboration with more than 50 local NGOs, the majority (63%) cooperated with a limited number of local NGOs (within 10).

Insights for future community engagement

A brief overview of GBABSI companies’ community engagement reveals that making charitable donations remains the most common way for companies to exert a positive impact on society. Organizing volunteer work is also adopted by the majority of companies to contribute to community development, even though the average number of volunteer service hours remains low at around four hours per employee per year. In the future, companies that have committed themselves to community engagement could create more opportunities for local employment, initiate more long-term community projects, and collaborate more with local NGOs.

More about GBABSI and the results

[1] https://online.hbs.edu/blog/post/what-is-sustainability-in-business

[2] https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Sustainability/Our%20Insights/Profits%20with%20purpose/Profits%20with%20Purpose.ashx

[3] https://online.maryville.edu/blog/importance-of-environmental-awareness-when-running-a-business/

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