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The Chinese University of Hong Kong (CUHK) Business School’s Centre for Business Sustainability (CBS) announced results of the 5^th Hong Kong SME Business Sustainability Index (HKSMEBSI) today, where small and medium enterprises (SMEs) in Hong Kong have shown growing concerns for corporate social responsibility (CSR) and business sustainability.

The overall average score of the 26 index companies  in the 5^th HKSMEBSI is 77.69 (out of 100 points), a significant increase of 18 percent compared with that of the 4^th HKSMEBSI announced in 2017, and up by a staggering 33 percent  in comparison with the average score of the 1^st HKSMEBSI launched in 2012. 

Compiled and announced biannually, HKSMEBSI aims at inspiring the SMEs to adopt corporate social responsibility (CSR) as a management model to achieve business sustainability. For the compilation of HKSMEBSI since its inauguration in 2012, SMEs with proven track record in CSR performance (e.g. winners of major CSR related awards) were invited to complete an assessment questionnaire pertaining to their CSR performance for the preceding year. For the 5^th HKSMEBSI, the assessment was based on the 2017 data provided by the companies. 

The unique “Value – Process – Impact” (VPI) model developed by CBS is used in the assessment scheme, which assesses the performance of each index company in three major  domains, namely CSR values, CSR process (comprising CSR management and practices) and CSR impact, as  indication of the companies’ contributions to economic, social and environmental sustainability.

While the overall average score of the 5^th HKSMEBSI was 77.69 points, the standard deviation was 16.05, reflecting a huge gap between the top and bottom performers. A total of eight companies scored over 90 points, reaching the “Pace-setter” level, whereas only three companies achieved this similar rank in the last round. Analysis of company data for the five rounds from 2011 to 2017 shows an improvement of 33 percent in the overall average score. This indicates that local SMEs have continued to progress from the “Beginner” stage to the “Follower” stage of business sustainability performance over the past seven years. As for the top 10 HKSMEBSI companies, the mean score was 92.83 in this compilation, reaching the “Pace-setter” level in business sustainability for the first time.

Among the assessment aspects of VPI, in comparison with the results of the 4^th HKSMEBSI, all the four aspects (Value, Management, Practice and Impact) have seen improvement. “Practice” had the highest mean score of 96.55 points with an increase of 16 percent. “Process – Value” (80.40 points) and “Process – Management” (83.68 points) recorded 14 percent and 19 percent rise respectively. The average score of “Impact” (70.03 points) has chalked up an impressive increase of 22 percent; yet, it has remained as the weakest aspect across the board. As for the top 10 HKSMEBSI companies, their scores in all the four aspects have increased steadily to above 90 points in the latest round.

Prof. Carlos Lo, Director of CBS, said that the progressive improvement of SMEs in CSR and business sustainability as reflected in the index over the past seven years has been encouraging although the gap between the top and bottom performers remained huge. He further pointed out that given the total number of SMEs in Hong Kong exceeds 340,000, the number of SMEs that are active in CSR is still limited, and the top CSR and business sustainability performers are still confined to a small pool. It is necessary for SMEs to undergo a long journey in sustaining their effort to promote CSR and achieving business sustainability. Individual SMEs must not only continuously improve their knowledge and understanding of CSR management and practice, but also maintain long-term dedication and commitment to CSR. The compilation and announcement of the HKSMEBSI serves to encourage the entire SME sector to pay serious attention to the commercial and social benefits of CSR. 

Based on experience from the five rounds, CBS is introducing three major new initiatives to enhance its effort in promoting CSR and sustainability. Firstly, instead of inviting only award-winning SMEs to participate in the assessment, CBS will open the entry to all SMEs in town in the 6^th HKSEMBSI to be announced in 2021 with the aim to increase its representativeness by including SMEs with outstanding CSR performance. Secondly, the SME Sustainability Society will be established under the aegis of CBS with index companies as core members to undertake leading and organised effort to support the paradigm shift among SMEs toward CSR and business sustainability. Thirdly, executive knowledge sharing and training programmes on CSR management will be provided to the SME management executives to cultivate business sustainability leaders. CBS envisions that these new initiatives will effectively engage SMEs in gradually building a caring and responsibility business as the core values of SME sustainability.