On our path to achieving sustainable development goals (SDGs) and building more liveable cities, what is the real estate industry’s role and how can technology enable transformations?
On July 8th, we invited a panel of seasoned industry professionals from a variety of backgrounds for a discussion on the multi-stakeholders’ approach to make Hong Kong’s built environment sustainable as part of the global PropTech for Good series. Click here for the recording, and the panel discussion starts around 5:25.
Taking the Financial Industry as a Reference
Hong Kong is known as a global financial centre, and our financial industry has been going through a significant transformation in digitalisation and sustainable development in recent years. One key observation through her long banking career is that there is a significant knowledge gap when it comes to sustainable finance or how the industry can work toward achieving SDGs in general, according to Helene Li, who currently heads the Hong Kong FinTech Association and runs an impact investing platform.
“Sustainability is standing at the intersection of 3 things: Managing Risks, Managing Profits and Managing Purposes. This intersection determines the financial returns and reach of impacts, whereas capital and technology are the enablers. ” — Helene Li
Helene made a note that technology is a key enabler to achieve purposes, whether it is productivity, profitability or sustainability. She mentioned that Fintech companies are working on areas such as using data to drive more credibility around analyzing the inputs from ESG funds, green financing and nature-based solutions. Some of the solutions in fact can also be tailored to fit into real estate use cases such as calculating carbon footprint or analyzing energy efficiency.
The finance industry and the real estate industry are also well connected on this topic due to the strong regulatory tailwinds. For instance, the HKMA and the HKEx are now asking for more disclosure and transparency on corporate and social responsibility as well as ESG matters, which are applicable to the listed real estate companies as well.
Sustainability is Increasingly Becoming a Priority for Businesses
“You can, when you are determined to find a way to drive profit and impact together.”——Natalie
Natalie Chan, a serial sustainability strategy intrapreneur turned independent consultant and certified B-corp owner, stressed that it is never an easy job to balance profits and impacts, Nevertheless, the business world is transforming according to Natalie. The infamous Friedman quote “The business of business is business” is no longer true as corporations start to explore ways to drive for growth, quality of life and economic prosperity beyond profit maximization. In today’s world, people want a sustainable world, a sustainable market for sustainable businesses - running their businesses in a way that doesn't squeeze out other players, exploit the laborers and destroy the natural environment, but increasingly looking for a path to run business models that drive prosperity and sustainability together.
“We are moving from shareholder capitalism to stakeholder capitalism.”——Helene
Helene echoed Natalie’s point that business managers today no longer merely addresses shareholders’ needs, but all stakeholders involved from the employees’ wellness to the environment and other players in the ecosystem.
Leading sustainability initiatives at ChinaChem Group, Andy Wang also shared his first-hand experience from working at the leading real estate company in Hong Kong: “We are now shifting toward a triple bottom line approach.” This new decision-making process aims to bring branding, people, prosperity and the planet together. One of the most important part of the triple bottom line approach is the governance structure which now has a steering committee on sustainability and puts the UN sustainable development goals as KPIs from the group level. For instance, there are sustainable action guidelines on for project executions in hotel and property management businesses. The vendor selection process has also added sustainability requirement to the suppliers, consultants or contractors, for example requiring zero usage of diesel generators to reduce the carbon from the constructions.
Transformation Takes Time, But Mindset is Key and Every Small Step Counts
We have seen an increasing number of leading property developers setting up innovation labs, incubators, and accelerators for PropTech; however, the amount of application to the businesses is still limited and most are in proof-of-concept pilots. Natalie raised the concern that the journey for PropTech startups getting into the traditional real estate players has been slow and hard as different departments have different reactions to the adoption of new technology and many would question the credibility of new technology solutions and ask for track record, but that is a chicken-and-egg issue for young startups.
“Keep on trying and don't be afraid to be a pioneer.”—— Andy
In response to Natalie’s concern, Andy mentioned that it takes time for awareness building and requires top management commitment to embrace digital transformation at a large company. ChinaChem has been among the frontrunners in the technology adoption path, digitised a lot of their workflows for improved quality management and better operational productivity. They also created lots of “first-moves” in the industry, including being the first local developer adopting Modular Integrated Construction (MIC)and using the battery generator to replace traditional diesel generators. With group strategic direction toward being a PropTech pioneer, ChinaChem has been one of the leading influencers in the industry, letting more people know “this technology works!”
Rainie Pan, Managing Director of the Hong Kong PropTech Association (HKPTA), also added that the HKPTA was founded indeed with the mission to create a collaborative Proptech ecosystem, whereby the leading players can share knowledge and successful use cases to the industry, and an increasing number of traditional players will be willing to technology solutions starting with POC projects. On one hand, this creates a collaborative pool to help dilute and diversify the single sponsor risks for the developers and landlords; and on the other hand, it could also help shorten the product optimisation period for startups to collect feedback from more developers while reducing the costs and achieving better economies of scale. Eventually, startup investors will also have more confidence in providing capital to help these well-proven startups to grow, thereby creating a healthy collaborative ecosystem.
Sustainable Development as a Corporate Culture
“It’s important to realize that sustainability is being silhouetted at many organization, it is not just the business of sustainability managers or certain departments driving it.”—— Helene
Although many corporations now have an ESG strategic department targeting sustainability issues, Helene stated that the problem we are dealing with is not the responsibility of a single department or personnel, but a holistic knowledge system that everybody should be onboarded. From the top-down perspective, company leaders and executives need to be actively onboarded instead of delegating it to the department head or functional head. From the bottom-up perspective, the organisation needs to be more inclusive and making sure the whole corporate culture is embracing sustainability. Staffs don’t need to be experts on everything, but aligning with this agenda culturally in the mindset.
Final words on “PropTech for Good”
“Sustainability is not the effort from one party. Organizations like PropTech for Good allow us to show our experience and trails to different stakeholders”—— Andy
“PropTech for Good is the hope we have - In cities, buildings account for 40% of carbon emissions and almost 30% of the energy use. How can we manage the climate challenge? PropTech gives us hope for a more sustainable future, creating shared values for property operators to do things efficiently and effectively.” — Natalie
“PropTech for Good means collective actions - Take action, move agenda. We are running out of time, so let's mobilise all the capitals, resources and technologies we have and translate them from intention to action.” — Helene
“It’s for purpose - When we decompose ‘PropTech for Good’, I interpret it as enabling Property, with Technology, for Good. Technology solutions are enablers, and we hope to advocate innovation and technology adoption in the property sector ultimately for the greater good of the society and well-beings.” — Rainie