Investing responsibly

responsible investing

Socially responsible investing (SRI): noun, or social investment, is sustainable, socially conscious, “green” or ethical investing, an investment strategy which seeks to consider both financial returns and social and/or environmental good to bring about a
positive change.

In April, Canada’s Responsible Investment Association released the findings of its Ipsos survey and found that millennials — whoever that may be — are twice as likely to invest in products, services or other solutions aimed at “solving social or environmental problems,” as boomers and Gen-Xers are (the one that made a mess of the world). Speaking to the Richmond News, University of British Columbia Sauder School of Business Centre for Social Innovation and Impact Investing executive director James Tansey noted that while 38% of the world’s public equity market (US$5 trillion) can be called “screened investing” — a process that pre-filters companies for unsavoury product (guns, cigarettes) — “That’s still a pretty light touch in defining what a company is doing.” Millennials are low-value investors, typically dealing with US$500, $1,000 or $1,500, much less than the 40-plus crowd, but they’re not alone in opting to invest in financial products or increasingly, a property that doesn’t feel “dirty,” selfish or worse, “entitled.”

Admittedly, Ipsos’ research came out of liberal Canada, but Wall Street is seeing the same kind of activity. The buzz these days is all about fattening the bottom line while simultaneously maintaining high levels of environmental responsibility, social fairness and good management or governance — the ESG factor. Socially responsible investing accounted for 20% of all managed assets in 2016, a 33% increase over 2014 totalling nearly US$9 trillion according to CNBC, and Harvard Business School estimated firms with clear, visible social and environmental policy counted higher annualised returns.

solar panels

That’s all fine for stocks, but real estate is a different beast. While there’s no real metric to gauge ESG values for property, Hong Kong’s commercial developers (Swire Properties, Hysan Development and Cheung Kong Holdings have comprehensive, publicly accessible ESG policies) and landlords have slowly come to understand that blue chip MNCs will not rent space in office towers and shopping malls that fail to meet sustainability standards. ESG is most obvious in the hospitality industry, where entire brands and resorts have been built on a sustainable model (Soneva Kiri, Alila Anji, Six Senses), and global brands have followed suit (Accor Hotels, Hyatt, 1 Hotels). ESG can include employing the local population and actively reinvesting in the area, improving educational, health, infrastructure and economic conditions and services. It can also mean reducing carbon footprints, better waste management, sustainable local farming and energy efficient operations. In the (now) era of #MeToo and Time’s Up, it can put pressure on property developers and management to ensure gender equality and living wages for all staff. But will it fly in Hong Kong?

When Song Saa on Cambodia’s Koh Rong first hit the market almost a decade ago, the concept seemed like a long shot to gain traction in dollar-crazed Hong Kong. However, resort investments in Vietnam, Thailand, Indonesia and others (UK projects regularly make sure to point out green features and sustainable elements, Australian developers are legally bound to build sustainably) that followed were all sure to emphasise their sustainable features and the socially conscious policies that would go into effect once the hotels opened — and investors started drawing returns from their investments. Among the brands to loudly bring sustainable, socially conscious properties to Hong Kong after Song Saa: the purpose-built, entirely sustainable resort Villages Nature just outside Paris, winner of the 2017 Worldwide Hospitality Awards’ prize for Best Sustainable Development and Social Responsibility Initiative; Aqua Boracay by yoo in the Philippines; Thailand’s Minor International’s Green Growth 2050-certified Anantara Layan Residences in Phuket; ASEAN Green Hotel Award 2018 winner Six Senses Residences Con Dao, Vietnam; and Alila Koh Russey in Cambodia, available for viewing this spring and whose development footprint comprises of 85% nature, as just a few. The properties that are open for business are having no trouble filling rooms, and though none will refer to official numbers, the trips to Hong Kong were far from a bust. Like millennials, Hongkongers will do the right thing. Healthy returns are a nice bonus though.