From constructed wetlands in mainland China and coral reefs in Hong Kong to solar powered hospitals in Sri Lanka, philanthropists are embracing ESG for a sustainable future.
by HSBC Global Private Banking
As the increasing impact of climate change has been felt around the global, sustainability has become a greater priority globally. This positive change in approach is supported by the UN Sustainable Development Goals1 which provide a rubric that countries, companies and philanthropists are aligning their activities towards in order to take action to protect the planet and people.
Companies and investors are looking at ways of meeting the needs of the present without affecting the ability of future generations to do the same. They do this by embedding environmental, social and governance (ESG) factors into their core operation, and supporting a global transition to a net zero carbon economy as HSBC have done with a USD100 million philanthropic capital investment in climate solutions.
For philanthropists, ESG provides a more specific and measurable framework by which to qualify their giving and identify the most pressing needs for their community and the planet, and ensure their activities are managed in a responsible way.
“Historically philanthropists in Asia have focused on education, medical support or poverty relief, but there’s been a shift in focus to sustainability and protecting the environment for the next generation,” says Christina Lee, Managing Director, Hong Kong Team Head and Head of Charitable Services, Trust and Fiduciary Services at HSBC Global Private Banking. “They are also more interested in understanding what the needs and gaps are, engaging different NGOs to make a bigger and sustainable impact through innovative means.”
Considering ESG factors provides a structure and process to take Asian philanthropy forward. Striking a good balance amongst the “E”, “S” and “G” pillars is pivotal to securing long-term impacts in philanthropic initiatives that solve problems not only for the present, but the future as well.
By 2100, it is projected that over 1 billion people will be living in low-lying areas subjected to frequent flooding – 70 per cent of these in Southeast Asia2. Potential future health and societal implications range from increased vector-borne disease transmission to poverty due to seasonal crop failures.
While concrete actions to combat climate change are much needed, primary research helps scientists better understand the consequences of a changing climate on natural and built environments. This is an area where philanthropy has a meaningful role to play.
“We have a client who has managed to establish a very personal relationship with researchers in Hong Kong and Asia,” says Lee. “He has the vision to support scientific research so that future generations will still be able to enjoy the species and biodiversity that we see today.”
His philanthropic foundation funds research that a local university is conducting on how rising sea water temperatures are affecting marine cnidarians such as coral, sea anemone and jellyfish in Hong Kong. This work will help conservationists develop strategies to protect the biosphere over the coming decades.
One key dilemma that philanthropists face is how to balance meeting the immediate needs of the present with those of future generations. But this doesn’t always need to be a binary choice.
A client’s foundation is funding a project initiated by a student in Sri Lanka who is looking at how solar energy can help develop rural communities. He identified a local hospital that suffers from frequent power shortages and partnered with NGOs and foundations to build a self-sustaining solar panel system that reduced the hospital’s dependency on fossil fuels for power generation and solving power shortage.
“Some of our key stakeholders and partners are the NGOs themselves, because they are the ones who actually go out to the field and understand the issues first hand,” notes Lee. “They help us identify what are the gaps that our philanthropic foundations can fund.”
One such initiative that we were able to identify for a client was an NGO-run water stewardship project in the Dongjiang Basin in China where a constructed wetland was built in a small village to solve sewage and organic pollution issues.
A portion of the funding by way of micro-financing went to the local community to educate local residents on how to maintain the wetland and preserve the beautiful scenery as an eco-tourism location to enhance the economic development of that region.
This project empowered the community as well as solving environmental pollution to improve the hygiene and well-being of the villagers, while careful governance by the NGO meant that the initiative was self-sustaining and responsibly managed.
“Governance is not just about legal compliance and anti-corruption but running organisations in a transparent and accountable way,” says Lee. “As it has evolved within the ESG scope, it includes ideas like responsible investing, emergency preparedness, employee welfare, and even diversity and inclusion.”
Proper governance of philanthropic activities is fundamental to creating a balance between the financial and social goals of the project, from efficient use of capital and responsible allocation of resources through to risk management and checking the validity of the causes being supported.
One of our philanthropy clients who saw the long-term value of great governance set up scholarships for NGO leaders to pursue education at leading institutions abroad and bring the knowledge back to Hong Kong. This initiative empowered NGO leaders to run their projects and organisations professionally, but also with a charitable heart. Better and more holistic planning also allows NGOs to grow sustainably.
Climate change is just one of the many challenges facing the planet. As a partner, HSBC Global Private Banking works with our clients to embrace ESG elements through the philanthropic activities they support, or the investments they make.
“Modern philanthropists are no longer armchair philanthropists just cutting cheques for charitable causes. They are eager to join hands with us and participate in project identification to ensure their philanthropic funds really create sustainable impacts on society,” Lee comments. “Our charitable trust team work with NGOs and with families to create a real legacy that benefits family members as well as the world.”
With our global footprint and expertise, we support our clients throughout their philanthropic journey, making the right connections and enabling positive changes to the world.
As we celebrate 75 years, HSBC Trustee is partnering with The South East Asia Rainforest Research Partnership to conduct a research programme focusing on rainforest restoration, tree planting and climate change in Sabah, Malaysian Borneo over a 5-year period. For more information, contact us or your Relationship Manager.
The use of the label ‘HSBC Private Banking’, ‘HSBC Private Bank’, ‘we’, or ‘us’ refers to HSBC’s worldwide private banking business, and is not indicative of any legal entity or relationship.
This information is entirely qualified by reference to the terms and conditions of the specific service, if any, provided by the relevant HSBC company.
Nothing here is to be deemed an offer, solicitation, endorsement, or recommendation to buy or sell any general or specific product, service or security and should not be considered to constitute investment advice.
Please note that HSBC Private Banking does not provide Legal and Tax Advice.
Before proceeding, please refer to the full Disclaimer and the Terms and Conditions.