APSIPA 2022 Award Recipients On How Inclusive Business Practices Can Generate Positive Social Outcomes
With the gradual increase of global risks, how can we develop innovative practices to ensure a future where sustainability will become mainstream? The Asia Pacific Social Innovation Partnership Award (APSIPA) is established to explore dynamic social innovation models in the Asia Pacific and to motivate more change-makers to contribute to social innovation, discovering and celebrating social innovation partnerships that connect diverse stakeholders and make significant social impacts. Partnership cases are required to set the United Nations Sustainable Development Goals (the SDGs) as their core value.
The award sets motivating social innovation partnerships as its purpose, integrating 17 SDGs sorted into three categories, Biosphere Sustainability, Inclusive Business and Social Prosperity. Three winners were chosen from each category and there was one Special Jury Prize chosen by the judging panel.
The Inclusive Business Award values socially innovative approaches to economic activities and commerce. Innovation, in terms of economics, does not only imply increase in income or employment, but also decrease in inequality and negative impacts, as well responsible measures to forward economic growth and cycle. The highly related corresponding SDGs are SDG8: Decent Work and Economic Growth, SDG9: Industry, Innovation and Infrastructure, SDG10: Reduced Inequality and SDG12: Responsible Consumption and Production.
APSIPA Inclusive Business Winners
Edward H. Chow
Social Enterprise Revolving Trust
SERT and KPMG Sustainability Consulting have jointly designed the “Social Impact Preferred Stock (SIPS)”. The investment method, which is the first of its kind in the Asia-Pacific region, takes advantage of the nature of preferred stocks to negotiate investment conditions and helps investors and investees manage social impact more efficiently.
SERT has successfully made its first “Social Impact Preferred Stock” investment. The investee, Mediot Co. Ltd is a tele-health innovative company. As of December 2021, the indicators set to monitor impact generated through the investment were all on track.
Uyen Le
Viet Trang Handicrafts
Uyen Le has been the Strategy Director of Viet Trang Handicrafts since 2016. She has a strong background in social entrepreneurship, international business as well as Strategy and Marketing and a great passion in Handicrafts products. Since that, Viet Trang has changed its vision and mission of enhancing Vietnamese craftsmanship in the global market with sustainability values and scaled many times in all economic, social and environmental impacts. One of her main strategic objectives in the next 3 years is to integrate sustainability values into the business more vividly.
Sean Chang
Cathay United Bank (CUB)
Sean Chang was appointed Chief Risk Officer of Cathay United Bank (CUB) on July 1, 2020. He is also currently a Deputy Division Head of Risk Management Division at Cathay Financial Holdings (CFH). Previously, he served as Chief Risk Officer in Consumer Banking of CUB from January 2019 to June 2020. From 2013 to 2018, Mr. Chang worked in various positions in CUB and CFH. Prior to joining CUB, Mr. Chang worked with different banks such as CDIB, DBS, Citi and HSBC from 1997 to 2013. Mr. Chang holds a Bachelor’s degree in Economics from National Taiwan University and a Master’s degree in Finance from New York University.
CUB adopted the Equator Principles and became the very first and leading signatory in Taiwan to minimize ESG risks and seize opportunities derived from the action. CUB’s commitment to CSR is to consistently improve the internal loan approval process as well as our products and services, which CUB firmly believes it will bring the bank and the society to a more sustainable future.
Highlights from the Panel
(listen to the podcast for full details)
[Tom Allen] - Sean Chang from Cathay United Bank, can you please tell us about your inclusive business and how it’s generating social impact?
[Sean Chang] - Cathay United Bank, also known as CUB, was initiated by the government and the Credit Guarantee Fund of Taiwan. In the beginning, the Taiwan Government coached social enterprises for about six months. Then CUB helped them improve their finances by providing them with financial management, advice and planning to assist them in growing their business. With a credit guarantee providing from the SME Credit Guarantee Fund of Taiwan, CUB also provides short, mid or long-term loans for capital needs and easier loan application processes. We assist social enterprises to gradually improve their business models and make their operations more sustainable. The social enterprises that qualify for the project adopt SDGs as their core values, and we help them overcome the great difficulty of applying for corporate loans due to their profit margins and insufficient repayment ability.
We are dedicated to environmental sustainability and providing low interest rate loans to help them grow. Our customer operates businesses successfully while both their stakeholders and stockholders benefit from it.
We also help our customers promote their products. The project has been widely known among social enterprises and we hope we can shift our economic activities to a new business model. First of all, we do have some influence and impact on the banking community, and I'm very glad some local Taiwanese banks follow our staff and joined the Alliance in 2019. ESG is embedded into our banks DNA, and in recent years environmental protection, human rights, and corporate social responsibility are receiving more attention in global society. Sustainable management has become a widely discussed topic among leading companies in Taiwan. Cathay United Bank's sustainability means to implement CSR to their very core overall basis financing. This drives us to adopt equator principles and become the very first signature business in Taiwan to minimise ESG risk and assist opportunities derived from action and commitment of CSR to improve the internal loan approval process as well as our products and services which we firmly believe will bring us and society to a more sustainable future.
Viet Trang at tradeshow.
Uyen Le let's cross to you and hear a little bit more about Viet Trang Handicrafts, the impact you're creating and what led to your passion in social innovation?
[Uyen Le] - Viet Trang Handicrafts is a 20 year old manufacturing exporter of Vietnamese handicrafts, specialising in natural fibres and hand woven products. Since 2015, we have changed our strategic direction to the mission of enhancing Vietnamese craftmanship in the global market using sustainability values. Since then, we have spread to more than 20 countries and work with about 600 local weaving artisans, most of whom are women living in rural areas, especially traditional crafting villages. We've also focused on product development and production enhancement to make our products more sustainable. For example, we have strongly reduced chemical dyeing, as it may cause river pollution. Instead, we try to combine various natural fibres with different original colours to create our designs. We are passionate about seeking new materials from leftover materials, like corn husk leaves which farmers used to burn away. Now we can buy and reuse them to make our products and create value.
Last but not least, we are quite happy that our business can also inspire more and more young Vietnamese people to care and know more about sustainability philosophy in business and life, as well as promote cultural heritage on the world map.
What led me to social innovation I think can be attributed to my cultural exchange internship in The Philippines in 2009 when I worked for Gawad Kalinga. This is one of the biggest organisations supporting social entrepreneurship in the Philippines. But, in Vietnam, we had no idea about the terms social enterprise or social entrepreneurship. Therefore, after coming back, I still worked for some corporates and start-ups to prepare to create my own business, but I still couldn't fulfil myself doing business just for a financial return. That's why I came to the UK, to learn about social entrepreneurship through a Master’s degree. I decided that is what I wanted to pursue for my career. I figured out I'd love to create a business that can generate impacts for society, the environment and especially for Vietnamese culture besides financial growth. This is what led me to my passion in social innovation.
Edward Chow let's pass the conversation on to you. Please tell us a little bit more about SERT, the Social Enterprise Revolving Trust?
[Edward Chow] - SERT was initiated in 2016 and is the first charitable trust to benefit society by impact investing in Taiwan. The trust is governed by a board of eight members spanning different professions such as finance, law, social work and so on. During the regular board meetings, I enjoy not only offering advice based on my knowledge of financial management, but also getting to know innovative ideas and young people that are attempting to change the world. Now, I would like to introduce Social Impact Preferred stocks, SIPS.
The aim of SERT is more than simply investing in social enterprises and helping them scale. We hope that these pilots convey a clear message to all investors; investing can bring a positive financial and social return at the same time.
Therefore, together with KPMG Taiwan, we developed the first Social Impact Preferred Stock in the Asia Pacific, taking advantage of the nature of Preferred Stocks. SIPS assist investors and investees to manage social impact more efficiently with the S-E-E-D mechanism. S stands for scoping the potential investee’s social mission and goals. The two E's are for engaging in the investee's impact investment and to evaluate its impact results quarterly. Finally, the D is to review the final delivery and decide the purchase price of the stocks. The fund will then reinvest capital to support other social enterprises. Now, I would like to present the first successful investment made with SIPS. In mid-2021 SERT successfully made our first investment with SIPS to support Mediot, the pioneer of telehealth in Taiwan. We assisted them in setting up a clear impact plan and picking four indexes to demonstrate their impact on making mental health resources more accessible to those in need. Mediot reached all four targets last year.
Cathay United Bank.
What are all your observations of the social innovation movement in your respective countries and where do you see key opportunities?
[Sean Chang] - Our government has introduced a Social Innovation Action Plan that creates links within the international community and brings Taiwan along with United Nations Sustainable Development Goals.
On the domestic front, the plan encourages inclusive development of the economy, society, environment and creates a new growth model based on the core values of innovation, employment and equity distribution.
At Cathay Financial Holdings, we built some successful social innovation projects. One example at Cathay Financial Holdings is we entered into the first renewable energy purchase collaboration project in Taiwan. We slingshot the LOHAS Development Association in 2019 with a noted $2 million from the employee Comcast to install solar rooftops in the Ding Xiang Campus and Elementary School in Taiwan. The solar panels generate 90,000 kilowatt hours of electricity each year, which is purchased, and the proceeds are used as a fund for elderly activities, creating a cycle of happiness and renewable energy. In December 2021, the solar power plant in the Ding Xiang Campus and community in Thailand was completed. The green electricity will be purchased by CUB for its own use to create maximised environmental benefits. The money from purchasing electricity will also be paid back to the elderly people living in the Ding Xiang community to provide community meals, activities and enhance prosperity. This is a rare initiative in the green energy public welfare model, and in the first case of a collaboration project for The Financial Industry Renewable Power Purchase Agreement.
[Uyen Le] - I think it's quite positive nowadays as sustainability is more acknowledged in a quite strong movement including both the public and private sectors specifically. Vietnam has a National Green Growth Strategy with a vision by 2050 targeting to accomplish green growth and achieve economic prosperity, environmental sustainability and social equality. Although it's quite recent, the good news for us is we have the national orientation and support from the government. I believe the government can implement strong motivation for social innovation in this country. For the private sector, more and more companies are integrating sustainability into their business model strategies, in big companies and also small companies. Many conferences and NGO programs keep raising awareness as well as foster social innovation in the private sector. I have even started venture capital here in Vietnam and seek start-ups and accelerators for start-ups that they have the initiatives and ideas that are good for the earth and society. We still have many challenges for social innovation, but I think we are still on track in the social innovation movement.
Cathay United Bank.
Some of the challenges can be tough. We are still lacking some key stakeholders for the social innovation ecosystem for impact investors and the awareness of social and environmental outcomes. Then, the environmental impacts are quite limited in the general population. However, I'm still quite optimistic. For key opportunities and next steps, I'm really hopeful for the young leaders in Vietnam, because they will be the ones who initiate social innovation. Therefore, I'm looking forward to seeing more social innovation and entrepreneurship courses, classes and leadership programs not just in the business field, but in others like engineering, science and high schools. Considering innovation in the business world, I hope I can see more stakeholders join hands with us, especially supporting factors like investor accelerators, governments and banks. I hope I can see here more of this in Vietnam
[Edward Chow] - My observations regarding the development of social innovation in Taiwan are as follows. Since 2014, the central government has been very supportive and offers free courses, concessionary loans, free promotions etc. As a result, more socially innovative organisations are coming up with business models to solve social or environmental challenges. Currently, there are more than 700 such organisations on this small island. We are identifying key issues and are calling for more people to join. From our point of view, there are three key factors needed to further grow social innovation in Taiwan.
The first is to identify key social and or environmental issues that are crucial and urgent to the future of Taiwan. These issues should be those that managers, owners and social innovators find they are eager to solve.
The second opportunity is to bridge investors and socially innovative organisation providers with a well-designed mechanism. It is crucial for the tool to work hand in hand to scale innovative solutions to the challenges. SIPS are a vehicle we believe can make this possible. The third idea is to set examples that boost confidence in investors. Only by doing so will investors be willing and excited to take action with social innovators. This is also what SERT aims to do in the long term.
What are the key learnings you have come up with whilst working on your initiatives, and one piece of advice you'd give to businesspeople who'd like to implement a more inclusive approach?
[Sean Chang] – Firstly, you should create a new path for socially positive economic flow and allow everyone to have an equitable start on their path to success. Secondly, ensure everyone has equal development opportunities. Cathay Financial Holdings have formed alliances with multiple strategic partners in sustainability actions and support both underprivileged people and women in gaining knowledge and skills. They can gain confidence, become independent and realise their potential when facing a rapidly changing social environment.
We have three goals; one is to realise financial inclusion by providing innovative financial products and master the needs of the under-privileged. That's helping customers enjoy basic coverage whilst accumulating assets.
Goal two is leading digital services, tools that expand into finance, have increased acceptance and the usage of digital finance. Goal three is to expand financial education tools and channels to instil citizens with the right financial and investment concepts and raise their living standards.
[Uyen Le] - From the point of view of people doing impact business, I think many of them hear about famous quotes like "business cannot succeed in a society that fails.” We saw that quite clearly during the COVID pandemic. Therefore, I believe the sustainability PR inclusive approach is not just a separate activity or one of our directions in doing business, but it should be woven into our core models and strategy. It should be started from the organisation leaders thinking about inclusion, sustainability, and then they may look into the business model and value chain to see where we can embed that inclusive approach. For example, we can see how we can provide good services for the people living at the base of the pyramid. They can be woven into our value chain, they can be our suppliers, distributors, or consumers.
[Edward Chow] - First of all, people need to see impact investing as a solution. Impact investing has become a global trend. According to an impact investor survey by the Global Impact Investing Network published in 2020, there are about 1,720 impact investment institutions in the world managing $715 billion USD in assets with an annual growth rate of as high as 42%. This clearly shows the world sees the potential of impact investing to bring positive financial returns and social impact simultaneously.
SERT.
With opportunities, there are challenges faced by impact investors. Social enterprises often face the dilemma of sticking to their social purpose or following investor suggestions, which mostly stresses financial gains.
As for investors, not being able to track and measure impact results clearly is their biggest fear when doing impact investing, which makes them hesitate before making such investments. Under such circumstances, impact investing struggles to gain momentum. This is exactly why SERT came up with SIPS, and we hope as SIPS has been proven feasible with its first investments, more and more businesspeople will join us.
To finish off, what books or resources would you recommend to our global listeners?
[Sean Chang] - Actually, there are so many books in Taiwan. Especially, I would recommend one. There's a published in Taiwan called Investing In The Future of the Earth: ESG Navigation Map. It was published in April 2022 in line with the theme of 2022 World Earth Day investing in our planet. The Taiwanese Academy of Banking and Finance compiled past research results for this book in hopes of inspiring the financial industry in Taiwan. This book calls for contributions from business and individuals for more prosperity and an equitable future through collective action for social change. ESG has become a universal value to be pursued, and the key to future transformation in financial institutions. These authors use actual cases in their statistical data to show key issues financial institutions have been facing recently, including how to address ESG risk and why it is so critical, integrating bank credit practice with ESG, how ESG investment addresses market attention, and how to cope with climate change and net zero emissions in 2050. It can serve as a guide to Taiwan's financial industry and plays an important role in society.
[Uyen Le] - It's not a book, but it's my most recent inspiring resource; The Sustainability Strategy and Report of IKEA. It's a very big company, and they are very famous for their ambition and sustainability strategy. I can learn a lot from their case study, strategy and report. We can learn about how they view, plan and execute their sustainability strategy and specific activities to achieve their ambition and become a positive climate business by 2030.
Also, we can learn about how they are shifting their business model into a circular business model, how they inspire people to live a sustainable lifestyle and how they can generate positive social impacts across their value chain.
From their resources, I was also very inspired, and now our product development team can apply their circular design method in our development process. We are planning to explore and set up a new business life for sustainable materials like recycled plastic and traditional natural fibres. If you want to learn what other businesses are doing to help the earth and society you can search and see more through their sustainability report.
Viet Trang founding team.
[Edward Chow] - The first reading I would recommend is the Taiwan Sustainability Risk Survey Report. It was jointly published by KPMG, SERT and several other supporting organisations. For listeners in Taiwan, SERT and KPMG Taiwan recently launched the Taiwan Sustainability Risk Survey Report, which is the first that digs into the social, environmental and economic risks in Taiwan. I encourage everyone to read the report and precisely identify the risks that might pose a threat to our everyday lives and business operations. From that, try to create new ideas to change the status quo. As for listeners from all around the world, I would recommend reading publications related to impact investing from the Global Impact Investing Network, Asia Venture Philanthropy Network, and European Venture Philanthropy Network. These organisation's provide insightful articles that help readers better understand the advantage and challenges of impact investing.
This content is sponsored by Small and Medium Enterprise Administration, Ministry of Economic Affairs, Taiwan.
