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Instead of being driven just by profit motives, attention is now turning to green investing in Hong Kong's lively, yet volatile stock markets.
In the face of market volatility, ethical controversies associated with business practices of tobacco and alcohol companies, online gambling enterprises, polluting industries such as coal mining and oil companies are rapidly becoming a target of concern.
Rumblings, in the financial and social sense, are moving towards alternative investments centered upon corporate social responsibility (CSR), socially responsible investing (SRI) and green investing as investors increasingly want to put their money in a place that not only pads their wallets but also gives them peace of mind.
What is green investing?
Despite green funds growing subtly on the edges of the stock market for several years, Hong Kong investors are moving steadily towards profit-motivated investment that grows with increasing concern for the environment.
CSR Asia is a group founded in 2004 that promotes corporate social responsibility in the Asia Pacific region by providing information, training, research and consultant services on sustainable business practices through its three main offices in Hong Kong, Shenzhen and Singapore.
In defining the key concepts of green investing, Richard Welford, director of CSR Asia, said: "CSR is a company's commitment to operating in an economically, socially and environmentally sustainable manner whilst balancing the interests of diverse stakeholders."
"SRI is about investing in companies that have sound environmental, social and governance practices to ensure that returns are earned in sustainable and ethical ways," he said.
"Green investing focuses mainly on the environmental aspects of SRI but emphasis is now expanding to include policies on climate change, mitigation measures and carbon foot printing," said Welford.
Like many residents in the city, he acknowledges that "the top priority remains air quality in Hong Kong".
According to the SAR government's Environmental Protection Department, major air pollutants in the city include suspended particulate matters in the air such as sulphur dioxide, nitrogen dioxide, non-methane volatile organic compounds, carbon monoxide and greenhouse gas - most of which come from industrial factories in the Pearl River Delta region.
However, HSBC's 2007 Climate Index Report indicated a great deal of optimism in the mainland and Hong Kong community.
Surprisingly enough, the report underscored the highest confidence rating in the mainland (46 percent) and Hong Kong (38 percent) where one in three people agree with the statement that "the people and organizations who should be doing something about climate change are doing what is needed". This is above other surveyed countries - India, Mexico, Brazil, UK, Germany and France.
"The important point is that issues and concerns change over time... Other issues include health and safety (including community health), good governance (including anti-corruption measures), supply chain standards (especially labour standards), human rights and community engagement," said Welford.
Green is gold
In early 2008, HSBC launched the GIF Climate Change Fund "to turn environmental challenges into investment opportunities", said the bank's press release.
According to the statement, the fund is a part of HSBC Global Climate Change Benchmark Index representing 19 themes and three key sectors, namely Low Carbon Energy Production, Energy Efficiency and Energy Management, and Waste, Water and Pollution Control.
Bonnie Lam, director and head of Fund Marketing at HSBC Investments, cited "investments in low-carbon energy technologies are expected to grow to US$13 trillion by 2050".
Welford said that green is profitable: "In the future they are likely to perform even better because of the rising costs associated with not being green."
Other green investment activities include P2E2 (Pollution Prevention and Energy Efficiency) or Emissions Trading, that move towards convincing factories on the mainland to invest in themselves to become environmentally friendly.
As a form of creative financing, P2E2 involves factory owners agreeing to switch to energy efficient, up-to-date grade machinery, or using power-saving lighting inside the factory.
Savings are made to the advantage of both the P2E2 project managers and the factory itself.
The issue is about investing in the quality of life in the future while making money.
Who's buying?
Melissa Brown, executive director of ASrIA (the Association for Sustainable & Responsible Investment in Asia) identified the larger trend in which, "on a global basis, green funds tend to attract more highly educated investors with higher disposable incomes".
Particularly in Hong Kong, many of these investors also include baby boomers now entering retirement without a cushy pension funds as Chinese families are no longer relying upon children for retirement care and professional women are looking for alternative investments.
There is a concern, however, that "some sort of green screening will become the norm for most funds (even regular ones) in the future", said Brown.
HK lags behind Japan and S. Korea
Nevertheless, Brown underscored that "Hong Kong investors have lagged behind their global and regional counterparts in understanding the importance of investment trends related to environmental issues".
"Until the past year, (Hong Kong investors) have not shown great interest in understanding environmental risks. Japanese and South Korean investors have been the pioneers in this field in Asia," she said.
"The big change in Hong Kong has been the new interest in companies which offer products or services which respond to environmental themes. This explains the interest in a growing array of Chinese solar, wind, and clean-tech companies," said Brown.
Despite the common perception that turning green is needlessly expensive and full of lofty social ideals incompatible with profit-driven business, awareness is growing that going green increases profitability by reducing costs.
Green information glut
Perhaps getting investors to take risks on Green Funds might prove to be a difficult project.
HSBC's Climate Index Report expresses concern for the future generation, the "post green generation" who will experience reactions ranging from "green fatigue" to "green rejection".
Environmental advertising appears to have been done-to-death, creating an information glut of green ideology. Cynical individuals might dismiss it as all talk.
Nevertheless, statistics show that the Chinese mainland and Hong Kong are optimistic and attitudes are changing. The "I am Not a Plastic Bag" eco-fashion trend is a step away from plastic bag usage. Hong Kong children are finally being exposed to environmentalism and the three R's of reduce, reuse, and recycle as well as the possibility that greener skies exist elsewhere.
Shifting attitudes towards money
Green investing represents a growing shift in Hong Kong's intensely money-driven culture. In a market where money talks, there is an equilibrium between profits reigning supreme and honoring the environment for its own sake.
Investment money today is not used solely for making profits, but for promoting socially responsible businesses that benefit society.
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