Developing Corporate Social Responsibility for a Sustainable Food

System in Hong Kong

Connie Lee 2011533181

August 12, 2013

FOSS0018 Social Innovation Internship

Category: Corporate Social Responsibility

Community Partner: PwC Hong Kong

       

I. INTRODUCTION

As the world population grows, sustainable food systems are becoming

more crucial in maintaining the world’s environment for future generations.

Hong Kong faces a rapidly growing population, diminishing resources and

increasing reliance on imports and thus, the unsustainable development of the

city’s food system is becoming increasingly threatening. (Yang, S.P., 2008).

Management of the system requires a high input of resources that go beyond

the ability of the government and civil society (Lam, Y., 2012). Corporations

have the capacity to provide these resources; however, CSR in HK is still

underdeveloped and unresponsive. (Williams 2011). For corporations to

maximize their input of resources into co-creating a sustainable food system,

HK corporations should communicate and cooperate with stakeholders to

develop long-term partnerships, adopt a strategic, long-term CSR strategy that

would give a direction for company’s CSR initiatives, and carry out and

encourage more innovation on developing sustainable production processes

and technology.

II. LITERATURE REVIEW

2.1 Sustainable Food Production and Consumption World-wide

In 1976, the world’s ecological footprint exceeded the earth’s

biocapacity and by 2007, it would have taken 1.5 years for the world to absorb

the CO2 emitted and regenerate the used resources. (WWF-Hong Kong, 2011).

Out of all the contributors to the ecological footprint, agriculture and food

       

consumption are the most significant “drivers of environmental pressures,

especially habitat change, climate change, water use and toxic emissions.”

(Hertwich, E., van der Voet, E., Suh, S., Tukker, A., Huijbregts M.,

Kazmierczyk, P., Lenzen, M., McNeely, J., Moriguchi, Y., 2010). According

to the UNEP report, 14% of the world’s greenhouse gas (GHG) emissions are

created by the agricultural sector and 13% by transport, which includes the

transport of food. (2010). However, GHG emissions and land use changes are

in fact caused mostly by “energy conversion, agriculture and industrial

production”. (Herwich, E., et. al. 2010). Based on the figures, one may take

the perspective that most of the damage resulted from production activities.

However, from a consumption perspective, these consequences are in response

to the demands of final consumers.

2.2 Environmental Sustainability in Hong Kong

HK has the 45th largest ecological footprint compared to other

countries with populations over one million. (WWF-Hong Kong, 2011). HK

has a large population of over seven million in 2012 and is one of the most

affluent regions in Asia, with the 37th highest GDP in the world and a GDP

growth rate of 2.8% in the first quarter of 2013. (World Bank, 2013). Its

average citizen has a footprint of about 4.0 gha, which is more than double the

available biocapacity per person globally. (WWF-Hong Kong, 2011). If the

world’s population were to live like an average Hong Kong citizen, the world

would need 2.2 planets to survive. (WWF-Hong Kong, 2011). Most of this

       

impact results from HK’s heavy reliance on imports and exports for food due

to the growing population and globalization that led to resource restraints,

changes in diet and food security concerns, growing wealth, and the

unsustainable consumption and production behavior.

There are increasingly more initiatives addressing this issue. Green

NGOs run programs and campaigns to raise awareness to the public about the

importance of the sustainability of our food; food banks are becoming more

common, redistributing the food to those in need to prevent waste; and green

social enterprises such as organic farms are filling the gaps between supply of

and demand for local, more environmentally friendly, and healthier produce.

HK’s first organic supermarket, ThreeSixty, opened in in 2006 and the number

of organic farms in HK have grown from 204 in 2012 to 464 in June 2013.

(Hong Kong, 2013). Ultimately, this would not only reduce the CO2 emission

emitted from N-fertilization, but also reduce the CO2 emitted from long-

distance transportation of organic goods. (Yang, S.P., 2008). Although

corporations are often backing these initiatives, the partnerships are often

short-term and unengaging such as one-off volunteering and/or financial

capital (D. Johnson, personal communication, August 1, 2013). To better

understand how to improve CSR efforts, this study serves to identify the major

drivers of the unsustainable food system, the gaps in CSR initiatives, and

possible amendments of the role corporations can play.

III. METHODOLOGY

       

3.1 Objective

There is little attention given to the sustainability of the food system in

Hong Kong. Thus, the objective of this study is to: identify the drivers of the

problem; and provide recommendations for corporations in how to play a

larger, more effective role in creating a sustainable food system.

3.1 Methodology

To achieve the objectives, this study utilizes research from newspaper and

magazine articles, books, and academic papers on the factors that shaped the

food system. Further, two interviews with CR professionals and one with the

project coordinator of the YMCA’s subsidiary SE, Green Organic Farm were

conducted for on their perspectives of CSR in HK.

IV. FINDINGS

There are many factors that shaped HK’s food system to the state it is

in today; however, three categories of contributors that are significantly tied to

the actions of corporations are globalization, increase in wealth, and

consumer-corporate engagement.

4.1 Global Trade and Limitation of Resources

In 2008, HK’s total value of food imports has steadily increased 39%

due to the population growth and the “rugged uplands” that makes most land

unsuitable for agriculture. (World Bank, 2011; Yang, S.P., 2008). As the food

       

system is progressively shaped by globalization and technological

advancement, more food is being transported from farther away, exacerbating

issues of global warming, acid rain, pollution and more. (Yang, S.P., 2008). In

2004, transport in general was found to be one of the biggest emitters of GHG

emissions, accounting for 13.1%. (Yang, S.P., 2008). While many of HK’s

food imports are from China, which reduces the food miles, other factors

including the amount of meat consumed, food safety factors, increasing wealth

and changing diet patterns offsets much of the miles saved. (Yang, S.P., 2008)

4.1.1 China Food Safety and Sustainable Food

Although importing food from China reduces GHG emissions, recent

food security issues have raised concerns about Chinese imports, leading

people to seek alternatives that are transported from farther away (Yang, S.P.,

2008). In 2008, 76,500 fake food cases were discovered in China, one of

which was the baby formula scandal. (Mu, X., 2009). With low consumer

confidence of Chinese goods, more goods must be imported from farther

countries to compensate, raising the amount of carbon emissions generated.

4.2.2 Limited Space and Food Waste

One of the major problems in HK is the lack of space, which results in

another problem of managing waste, 1/3 of which is food. (UNEP, 2013).

About 3,2000 tons of food waste is produced per day in HK, a rate that will

eventually exhaust all three landfills in HK within five years (Feeding Hong

       

Kong, n.d.). In 2012, domestic food waste accounted for 39.1% of the total

domestic waste weight with commercial and industrial food waste accounting

for 28.2%. (Lam, Y., 2012). The 28.2% includes waste from restaurants, shops,

offices, shops, markets and hotels. (Lam, Y., 2012). The growing economic

activities in these two sectors resulted in a doubling of amount of waste within

the past five years. (Lam, Y., 2012). This amount of waste will have severe

environmental costs that range from overuse of chemicals such as pesticides to

the increase in the GHG, Methane, coming from the rotting food, which will

further accelerate global climate change. (UNEP, 2013).

There are no regulations for managing food waste in HK; instead, the

government and civil society holds programs and campaigns to raise

awareness and build a source waste separation system. One such program is

the “Food Waste Recycling Partnership Scheme” where participating

companies from various private sectors must categorize and separate the food

waste that would then be composted. (Lam, Y., 2012).

However, this “voluntary” system has several faults. One is that the

workers hired to separate the waste are rarely educated on how to do so

correctly, which ultimately results in higher costs for all stakeholders. To

avoid such costs, it is in businesses’ interests to start taking certain measures

to avoid having to take on such costs before it these actions become obligatory.

(A. Wood, personal communication, July 31, 2013).

4.3 Increasing Wealth and Sustainable Food

       

Industrialized and developing countries differ in the amount of energy

used, carbon emissions emitted and other environmental impacts of household

consumption of different categories. In most industrialized countries, the

impact of household consumption is higher than that of government

consumption and their investment in infrastructure and capital goods.

Hertwich, E., et. al. 2010). Additionally, researchers calculated an overall

elasticity of carbon dioxide of 0.81, meaning when income doubles, 81% more

carbon dioxide is emitted globally. (Hertwich, E., et. al, 2010). Thus, as HK’s

GDP per capita increases, certain changes in consumption behaviour occur

including the consumption of meat and luxury items.

4.3.1 Meat

Average food consumption per person in Hong Kong grew 52% from

1971 to 1997. (Adamo, B., Foley, M., Graef, J., Stone, K., 2002). Out of the

entire East Asia region, HK has the most westernized diet, characterized by

“larger portions and higher protein and fat intake” (Adamo, B., et. al., 2002),

especially from beef and seafood that is often produced unsustainably. As

Hong Kong grows wealthier, people start to eat more meat (Yang, S.P., 2008).

HK has one of the highest beef consumption per capita rates in the world.

(Yang, S.P., 2008). In terms of consumption, beef is much less energy

efficient, taking about 40 calories of fossil fuel energy to make one calorie

worth of beef compared to the 2.2 calories used per plant-based protein.

(Gidon E., Martin, P. A., 2005). In terms of transportation, although the more

       

energy-efficient railway transports 77% of the imported meat for HK

consumption, the long refrigeration of meat burns more fossil fuel. (Yang, S.P.,

2008). Most of the environmental costs come from the production stage,

where producing one kilogram of beef emits 36 kilos of CO2-e. (WWF-Hong

Kong). However by eating one meatless meal a week, 213 kg of carbon – or

86,000 cars – can be saved. (Green Monday, 2013).

4.3.2 Dietary Patterns and Shift to Exotic Tastes

As wealth increased, more HK people started to consume more

“luxurious” types of foods from far-away countries. (Yang, S.P., 2008). As

traditional Chinese believe that animals such as snakes and some protected

animals are high in nutrition and have healing functions, many Cantonese

import these rare products from the Guangdong province, decreasing

biodiversity. (Qifeng, Z., Gan., J., Xun., L., 2012). HK supermarkets also

unsustainably import a variety of out-of-season fruits and vegetables from

overseas to sell them at a higher price, which increases food miles. (Yang, S.P.,

2008). These shifts towards more extravagant foods are proof of unsustainable

consumption behavior caused by not only cultural and economic factors but

also by corporate marketing efforts, appealing to people’s desire for status and

superior quality. Changing consumption patterns would require a change in

consumer perception and values of food. (Moomaw, W., Griffin, T., Kurczak,

K., Lomax, J., 2012).

4.4 Consumers and Corporate Engagement

       

Aside from the economic trends mentioned, lack consumer and

corporate understanding and participation in this issue are also a key reason

for the current state of affairs.

4.4.1 Low Consumer Awareness and Perception

Despite increasing awareness on this issue, based on studies of HK’s

food consumption patterns, people are not changing their consumption

behaviour. (Yang, S.P., 2008). As quoted from my supervisor, “waste is a big

thing in HK but people are not particularly aware”. This is because of the lack

of knowledge and “remoteness between producers and consumers” (Yang,

S.P., 2008). Studies have shown that improving the links between producer

and consumer can encourage consumers to change their behavior. An example

is having more local farmer’s markets or community supported schemes,

which has been successful in western countries. (Yang, S.P., 2008).

People are not only under-exposed to the matter, they also participate

little in programs. In HK, people think CR activities should be “fun” and less

focused on how “we should help the community” (D. Johnson, personal

communication, August 1, 2013). During the internship, even though we sent

out information on the NGO and our service targets to participants, often times

the volunteers were still not knowledgeable of the target of our activity. Extra

measures should be taken to involve the thousands of company employees in

CSR planning and activities.

       

4.4.2 Low Corporate Responsibility Involvement

According to Walker, Welford and Kwok, companies in HK do not

contribute much to society either in cash or non-cash forms. (2008).

Businesses are not doing enough in “product design, life cycle and consumer

communication strategies” in regards to sustainability and disconnects CSR

from its profit-making activities. (Walker, Welford, Kwok, 2008). Based on

their survey, businesses as well as SMEs view CSR as “expensive and not

central to profit-oriented strategy” (Walker, R. M., Welford, R.J., Kwok,

W.W.C., 2008). Therefore, unless it is to comply with regulations or is

demanded by consumers, companies are unlikely to work towards change in

any environmental issue. (Walker, R. M., et. al., 2008)

Conversely, based on my internship research, many companies,

especially larger ones, are beginning to adopt CSR goals into their core

businesses although still imperfect. (Browne, J., Nuttall, R., 2013). Because of

the nascent stages, the initiatives are often ad hoc, project-based, and loosely

tied to their company mission and goals. The companies usually rely on three

tools when engaging with the outside world: a CR team based in company

headquarters, a few “high-profile (but relatively cheap) initiatives”, and an

annual report to highlight the progress of these initiatives. (Browne, J., Nuttall,

R., 2013). Because of this narrow approach, businesses often run on the

“whim of senior executives” rather than the impact and are thus “short-lived”.

(Browne, J., Nuttall, R., 2013).

       

Most Asian companies are more disconnected from NGOs than

companies overseas, which is why communication between corporations and

stakeholders is still disorganized. (Williams, G., 2011). This is partly a cultural

issue, as HK’s hierarchical social structure often prevents organization

representatives from reaching others directly or speaking straightforwardly.

This was supported by a statement in the McKinsey article that stated how

NGOs want businesses to do more on “external aspects” including

“communication and cooperation with other parties, management of supply

chains, adherence to international standards” (Walker, R.M, et. al., 2008).

Although HK is one of Asia’s innovation hubs, having ranked 4th in

INSEAD’s Global Innovation Index 2011, several experts have stated a

different view, saying Hong Kong’s innovation is still “immature” since only

1% of the city’s GDP is invested in technological innovation (2011; Perez, B.,

2013). Therefore, corporations should carry out and support more innovation

to discover new and improved products, services, environmental technology or

processes, to fill gaps in the food system.

There is growing development in innovation amongst social enterprises

(SE) however. Green Monday, a new, local SE that promotes green eating, is

the first to target the issue of sustainable food consumption. (Green Monday,

2013). However, many small SEs still struggle as most social workers

managing the SEs have limited business acumen and training, thus examples

       

of SEs with both social and economic success is difficult to find. (Yuen, T.,

Lee, J., 2004).

V. DISCUSSION

5.1 Recommendations for CSR Improvements

With knowledge on the drivers of this unsustainable food system and

the gaps of CSR strategy in Hong Kong, corporations can be more efficient in

reducing environmental costs of unsustainable consumption by adopting both

internally and externally-oriented changes. To help resolve the food

sustainability issue, companies must communicate and cooperate with other

stakeholders.

5.1.1 Communication with Employees

To raise awareness and participation of people’s consumption behavior,

companies should communicate more internally about the importance of the

issue. HK has a large banking sector, employing 80,000 people in 2008, so the

reach of the message is broader. (Williams, G., 2011). Companies have

increased their efforts in skilled-volunteering, as the proportion of companies

with formal employee volunteer programs has risen to 94% in 2009 from 84%.

(Williams, G., 2011). In order to improve on these programs and create a

larger impact, the company CSR team needs to involve “big-spending

functions” like production or marketing. Although the norm for companies

now is to avoid high costs for CSR, the CSR team must engage all internal

       

stakeholders in order move people to change their consumption patterns,

within and outside of the office. (Browne, J., Nuttall, R., 2013).

There are various tools companies could use to encourage sustainable

behavior or increase volunteering such as giving cash bonuses. A way to raise

awareness would be through internal “green marketing”. We adopted this

technique to encourage colleagues in PwC HK to join the green-eating

workshop we organized via the company’s internal social media site, internal

email. Our marketing strategy was to showcase the impact that the event will

have on the target group while educating employees on low-carbon living. For

other events, PwC’s CR team also writes CR excerpts that highlight key CR

projects in weekly and monthly newsletters, TV screens throughout the office

and computer pop-up notifications. By making the problem more “visible” to

present in their surroundings, employees can be more aware of the sustainable

consumption issue and become more conscious of their consumption choices.

When people feel that the problem is more related to their lives, such as to

their individual health, the bigger the chance their behaviours will change and

be imitated by cohorts. (Williams, G., 2011).

5.1.2 Communication with NGOs

Because findings have shown ineffective communication between

corporates and external stakeholders, corporations should develop more

efficient communication networks amongst those dealing with the issue. CSR

teams contact NGOs frequently; however, there are expected challenges in

       

aligning both sides’ missions and expectations whilst forming any kind of

partnership. (A. Wood, personal communication, August 1, 2013). This was

the case between PwC HK and WWF. While PwC was looking towards

making tangible environmental changes, WWF’s approach leaned towards

attracting extensive media attention for PwC’s CR. Also, although PwC

wished to engage more in skilled volunteering and provide their environmental

services such as sustainability accounting services to community partners,

WWF did not need their services; therefore again, there was misalignment

between the partners. (D. Johnson, personal communication, August 1, 2013).

Thus, companies must clearly lay out their objectives, needs, and services to

the community partners so as to be able to discuss more effective ways that the

company can contribute.

There are setbacks to communicating across all sectors, one of which is

culture. As previously mentioned, HK organizations are more hierarchical

than that of Australia, which makes communication less efficient. Moreover,

people in Australia are more communicative in general compared to people in

HK, which is reflected in the company culture. These are issues that

companies have to take into account before establishing communication

systems in order to encourage more cross-sector collaboration.

5.1.2 Communication within the Private Sector

Multinational corporations (MNC) are closely connected throughout

the supply chain; therefore they have significant influence each other’s actions.

       

In one of my CSR courses, I learned about the “Walmart Effect” which

describes the ripple effect MNCs have on the community. As leaders, MNCs

should utilize their influence by communicating their environmental concerns

and needs to partners such as requesting the use of locally grown, organic

produce or green catering for events. By taking assertive action, other market

leaders will be forced respond with other sustainable actions in order to

compete. Companies should also include supplier conduct into the company’s

purchasing policies while monitoring and verifying the suppliers’ compliance

to these policies. (CSR Asia, Oxfam, 2008). Since many of the companies in

HK are working with suppliers from China, HK companies can ensure stricter

food safety policies and encourage more transparency in order to reduce the

number of health incidences, progressively improve consumer confidence in

Chinese goods, and thus be able to import more foods from China rather than

from faraway countries.

Since policy plays a large part in improving the sustainability of the

food system, it would be beneficial if companies could work more closely

with the government on the issue. Environmental politics started evolving

rapidly since the 1980s and government-business relations have shifted from

“cooperation to accommodation” or even to confrontation in certain industries

contributing to climate change. (Lee, H., 2004). Some officials have felt that

corporations’ approach with the government has been “reactive, conservative

and behind-the-scenes” (Loh, C., 2004), which suggest that companies should

       

invest in being more involved political planning. In the long run, it will be “in

the interest of businesses to help customers adopt to sustainable lifestyles and

behaviour” (Williams, G., 2011); thus, by taking the initiative to speak with

the government on making the supply chain more sustainable and delineating

why fulfilling certain business needs would benefit society as a whole, the

company can create a win-win situation for all. (Loh, C., 2004).

In all, because the issue of food sustainability requires complex

infrastructure and special knowledge, all stakeholders should be

knowledgeable on the happenings within the network so as to not have too

many overlapping projects and be more efficient in filling the gaps.

5.1.2 Strategic CSR

CSR in Asia is developing quickly, however management of CSR

activities is often “unstructured or piecemeal” (Williams, G., 2011). The CSR

strategy is meant to give focus to the ventures and partners the company

chooses to get involved with based on its resources, core business,

environmental mission and objectives. These were the factors I had to take

into account when selecting compatible long-term NGO partners for PwC.

Companies should be clear on the business value of CR and how it

ties into the core business when forming a strategy (D. Johnson, personal

communication, August 1, 2013). When CR is just considered as “an add-on”,

companies pursue more low-cost, project-based initiatives to take on such as

       

one-time employee volunteering activities or community event sponsorships.

(Williams, G., 2011). Whatever the focus is, the company should aim to create

long-term, sustainable relationships and impact. For example, CLP Power

Hong Kong Limited, an energy company, runs a very successful skilled-

volunteering program called “Rewiring for the Elderly” where CLP’s

engineers help low-income, single elderly living to “conduct rewiring,

electricity safety inspections and maintenance of electrical appliances service”

(CLP, 2010). The project is voluntarily continued by engineers in the company

and has been running steadily for many years. The success of the project lies

in its leveraging of engineering expertise of the employees, its long-term

commitment to the cause and the alignment of the project’s objectives with

that of the company’s overall.

5.1.3 Innovation

The process of shaping a sustainable food production and consumption

system is highly technical. Thus, society would significantly benefit from

further innovation all along the supply chain focusing on creating sustainable

food. No matter in which stage or of what function of the process that the

business chooses to innovate, companies should be responsible of taking into

account of the product or service’s entire life cycle even after consumption.

For example, in 2012, Starbucks Hong Kong invested in a study that

developed biorefinery technology that could convert food waste into plastic

       

used in certain products. (Bladon, A., 2012). If the pilot plant is successful,

long supply chains and transportation can be reduced.

VI. CONCLUSION

In conclusion, the overarching driver of the issue of unsustainable food

is globalization, which includes the increase in trade, an increase in wealth and

the lack of stakeholder engagement. To maximize impact, businesses should

not only consume and produce sustainably but also increase stakeholder

dialogue and form long-term, high-engagement partnerships to create long-

lasting impact, develop a overarching CSR strategy that clearly defines the

company’s CSR objectives and leverages on the resources that company has,

and to innovate or support innovation in environmental sustainability.

However, with limited studies on these topics that are written from an Asian

perspective, more research on best practices for HK companies when targeting

environmental systems is needed. The key to sustainable food in HK is

changing consumption patterns and behaviour; therefore, corporations must

collaborate with all stakeholders to create a sustainable future. (Word count:

3993)

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