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Emily Hung

A Nobel Prize-winning economist has said that impact measurement can play a pivotal role in combating greenwashing in philanthropy, as he addressed hundreds of industry and business representatives at a Hong Kong forum.
Professor Michael Spence made his remarks at the two-day forum held by the Hong Kong Jockey Club on Monday following a question on how to ensure real impacts were made by companies that played an important role in the ecosystem of philanthropy.
“You need real measurement, and you need a credible entity that’s disinterested to undertake the measurement and communicate it. The companies could not do it … The NGOs, you could not count on them to do it,” Spence, also the dean emeritus of Stanford Business School, said.
He said the measurement must be conducted by a “reasonably objective” third party.
“If we do not go down that route, we will have variants of the greenwashing problem forever. And, you know, the good guys and then the other folks, I don’t want to call them bad guys, but the ones who aren’t taking it seriously,” he explained.
The 2001 Nobel laureate was among the nearly 100 speakers at the forum, which was attended by more than 2,000 delegates from 40 countries, including representatives of companies, governments and more than 200 local, regional and global foundations.
The forum aims to serve as a platform for dialogues on translating philanthropic action into tangible and sustainable impact.

Spence warned that if real impacts could not be differentiated from performative ones, it would result in an “adverse selection problem” in economics, which happens when unequal product information between buyers and sellers leads to poor decisions and market distortion.
Another consequence, he said, was taking away the “ability to be recognised”, which he identified as one of the key driving forces behind philanthropic causes.
“The fundamental motivation for philanthropy is the desire to do something good for one’s fellow human beings directly or through institutions that matter, but recognition is a fairly important part of this as well,” he stressed
For example, the Met Gala, the annual fundraising festival in New York for the Metropolitan Museum of Art, has gone beyond a philanthropic activity to become a social phenomenon comparable with the Academy Awards, according to Spence.
“Everybody knows who’s there, and all the media cover it, and you get this amplified recognition,” he added.
“It is easier for certain kinds of philanthropic endeavours to provide this complex of things, the deep reward that comes from having done something good, but also the recognition.”
He said that universities also raised funds by giving naming rights of buildings and laboratories to philanthropists.
But he noted that some initiatives, including giving meals and shelters to the homeless, came with relatively less obvious recognition.
“If there are differential signalling opportunities, then some things are going to be more attractive than others … we need a mechanism.”
He suggested such a gap could be filled with “a new intermediary” that had “longevity and permanence in the market” to connect initiatives and donations.
The Philanthropy for Better Cities Forum was held by the Hong Kong Jockey Club Charities Trust at the West Kowloon Cultural District on Monday and Tuesday.


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Professor Michael Spence says impact measurement must be conducted by a ‘reasonably objective’ third party


Professor Michael Spence says impact measurement must be conducted by a ‘reasonably objective’ third party.
