Wheels In Motion
Driving Social Impact – An Interview with Mr Lam
Mr Lam Nguyen Phuong
Retired Co-Founder &
Senior Managing Partner
Private Markets, Capital Group
Having made private equity investments totalling USD 6 billion in emerging markets around the world, Mr Lam Nguyen Phuong addresses scepticism on social financing and the importance of enabling social entrepreneurs in their impact and growth. We had an opportunity to speak to this well-travelled, finance-savvy mentor on what motivates him in his area of work in philanthropy, and he shares how he continues to push ahead his passion for social impact activities with DBS Foundation (DBSF), and how he gets the gears of social impact turning.
Inspired To Create Change
You have been a strong supporter of social enterprises, what is your motivation behind supporting social enterprises?
“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.” The term “social enterprise” has served its purpose, but I believe that in the future, every enterprise – small and large – should be a social enterprise. We should not have a false separation between the “social” and the “commercial”, “this is where we make money, and this is where we do good”.
We must change the way we do business, because we will not survive as a society or a planet if we do not bring down the walls that compartmentalise economic, social and environmental activity. Social inequality and climate change will only increase to catastrophic proportions. The current Covid-19 pandemic is a warning of things that might happen if we allow the profit motive to continue to reign supreme.
The Future Ahead
How do you think more people/organisations could be involved in driving social impact and what advice can you give them?
Our worldview has to change. Even at the World Economic Forum in Davos last year, people talked about the stakeholder economy or even the moral economy, as opposed to just shareholder capitalism. All businesses should be mindful to serve the needs of society, and at the minimum not to cause damages. Maximising profit or shareholders’ wealth should not be the main objective of companies. At the same time, the so-called social enterprises should have a sustainable source of income, so that they do not rely purely on donations. The level of profit requirement is different, but these social enterprises would be for-profit businesses. It’s just that they also have measurable social outcomes that intentionally and primarily address the needs of the underprivileged.
Are there certain areas that the second generation are more aware of, and what are they pushing their parents to do? What kind of change do they want to see in the older generation?
By and large, the majority of the next gen have the values and focus which are “right”, namely, (1) being environmentally friendly, (2) more empathy/less discrimination or racism, (3) more philanthropic work. Our younger generation can influence their parents/grandparents via their social work in giving back to the community. Better still if these young people work in the companies that their parents/grandparents founded!
Do you think it’s a western-driven kind of mindset change, or what do you see in Asia here?
Asia lags behind in terms of philanthropic giving when compared to our western counterparts, partly because the traditional Confucian mentality is ingrained in us: “I take care of my family, you take care of yours”. But mindsets are changing. Definitely change is afoot especially among the younger generation who are spurred to look after some of society’s problems.
Besides the push from the second generation, what are some other ways you think the older generation can start to think about?
Well, they also see that unless we change, things like social injustice and ecological collapse will only worsen. The damages caused by Covid-19 are nothing compared to what might happen in the future. Technological progress like AI bring benefits, but also increase inequalities at an accelerating pace. Extreme inequalities bring social and political unrest. Changing course is also a matter of self-defense.
How do you see social enterprises playing a role in the current pandemic, especially with a growing number of marginalised groups in Asia?
While the pandemic rages on, the work carried on by social enterprises only gets more difficult. It’s also harder to get donations. This is because donors are re-directing their attention to more immediate issues. The more visionary ones re-focus on strategic system changes, while normal folks become more prudent. The pandemic could serve as a catalyst for social enterprises to rethink and change their business model to become less reliant on donations, and become more sustainable in the long run.
What are the needs from social enterprises that you see are more pertinent to support?
I think for social enterprises to stay afloat, governance is a key factor. Poor governance hurts these companies and should be improved. Next is improve efficiency, including making firm and timely decisions. It also pays to get organised and collaborate with other companies in the social sector, or even economic enterprises, in order to gain economies of scale and synergy.
Are there any ways that investors or HNWI (High Net Worth Individuals) can help these social enterprises?
While giving and financing is important, there are other key considerations in keeping a social enterprise going. These can be through emotional support, wisdom, and guidance on business aspects. Several genuine impact investors do fulfil that role remarkably. HNWIs who are not in a position to do it themselves can act through impact funds, but be careful in selecting the authentic ones!