Asia Community Ventures, a non-profit organisation based in Hong Kong, published “Adopting the London Principles: Policy Considerations to Grow Impact Investing in Hong Kong” in July 2014, supported by the Rockefeller Foundation. The report explores how the successful growth of social investment in the UK can be replicated in other countries. Although its authors focus on Hong Kong, a key financial centre that was formerly under the British rule, its insights are relevant to many other cities looking to grow impact investing.
While impact investing has grown rapidly in the UK since 2000 when the Government’s Social Investment Taskforce was established, Hong Kong and many parts of Asia have lagged behind. According to Ming Wong, the Co-founder and CEO of Asia Community Ventures who co-authored the report, a major reason for the lag is that there has not been the need for government to innovate in the public sector in Hong Kong to the degree that has been required in austerity-hit UK. Governments often encourage social innovation in order to diversify sources of funding and providers for public goods. Except for a relatively brief period during the 2008 financial crisis, Hong Kong has enjoyed annual budget surpluses every year, hence there has been little to no pressure for Hong Kong to innovate its public sector.
However, in 2012, the Hong Kong government launched US$65 million Social Innovation and Entrepreneurship Development Fund (SIE Fund) as part of its plan to alleviate poverty in the city. The first of its kind in Hong Kong, the SIE Fund is rather ambitious: compared to social funds of other governments, on a per capita basis, the size of SIE Fund ranks only behind the UK; and in front of the US and Australia (Asia Community Ventures, 2014, p.29). Why this sudden turn in policy?
One reason cited by the report is the emergence of a global movement for impact investing, of which the UK takes a leading role. Ming observed that this has propelled the Hong Kong government’s political will to grow impact investing at home. Earlier this month, the British Council organized a 4-day social innovation experience trip for leaders in Hong Kong to visit the UK, as it is recognized as a global leader in social entrepreneurship.
Following the UK’s example, leaders in Hong Kong, including the Asia Community Ventures and the Good Lab, are actively encouraging cross-sector collaboration in order to build the ecosystem for social entrepreneurship. One initiative is to adopt international standards to assist policy makers, like the London Principles. The Impact Investing Policy Collaborative (IIPC) London Principles were launched at an international conference in London in July 2013, as a result of deliberation by 30 public officials and researchers from 15 countries. Another initiative is the establishment of UnLtd Hong Kong. It is organising its first ever live crowdfunding event for 3 social enterprises in Hong Kong and is already recognised as one of the intermediaries of the SIE Fund.
The two initiatives mentioned above speak to the UK’s central and catalytic role in growing the global impact investing community. For social entrepreneurs, policy-makers, impact investors and intermediaries in the UK, it is interesting to know what inspirations the UK is offering to the rest of the world, and to see what lessons they take from the experience here in growing their own social investment eco-systems.