Three pillars of sustainability, namely economy, environment and society, are recognized and promoted in the United Nations’ 2030 Agenda for Sustainable Development. Sustainable development encompasses the conservation and development of different types of capital, including capital for production, natural capital, and social capital.
Weak social capital impedes sustainable development
Without social cohesion, it would be difficult to attain sustainable development goals (SDGs). The philosophy behind sustainable development is based on certain basic concepts like mobilization of resources, decentralization, delegation of power, and maximum participation of the community. When launched in an environment with strong social cohesion, initiatives to improve the community will yield good results. Similarly, when the people manage to organize themselves into committees, associations or communities with a high level of trust and strong bonding, such activities will result in the development of social solutions that will help improve the quality of living in the community. By contrast, the living quality will be adversely affected when the quality of social capital goes down.
Furthermore, low social capital will push up the financial cost, which is also one of the factors dampening the living quality. In economics, the interest rate mirrors the capital cost. And, constituents in the interest rate include the profit margin, inflation, and risk. Low social capital prompts one to mistrust another, or in other words, the lack of trust in the society drives up the cost to cover risks, which is factored into the interest rate (and thus the capital cost). Conversely, transaction costs will be lower when the trust stays high and the cooperation culture develops.
Poor social capital hinders human capital
According to Fukuyama (1995), it is vital to grow social capital so as to have competitive capital because connections across borders and platforms will be made possible owing to a wider radius of trust. Academically, there remains disagreement in defining social capital, but all scholars share the point that trust is the important pillar for the formation of social capital.
Therefore, in an environment with low social capital, i.e. low trust in humans, talented people tend to distance themselves from unhealthy social networks, and as such, it is impossible to tap their human capital (skills and knowledge) for the common development goal. When human capital is under-utilized, it will be a big waste for the society.
Apart from human capital, the institutional regime and social resources are also very important for economic growth and the sustainability of development. Social capital stems not from personal goodwill, but social norms. A weak and inequitable law system will diminish social capital and increase suspicion among citizens, and between citizens and the State.
Diversity, integration and equitability improve social capital for business
In today’s knowledge-based digital economy, the outstanding difference stems from an environment that nurtures autonomy, encourages diversity, and advocates creativity. It is in stark contrast to the mentality of the industrial age whose development rested on resources, processes, and leaders concentrating on job standards.
The knowledge-based economy does not mean recruiting and paying high salaries to the people with good knowledge, but it means creating conditions for knowledge to be shared and multiplied from inside. Talented people, regardless of age or gender, are identified, nurtured and developed from inside an organization. Knowledge is the constant crystallation and sublimation in an environment that encourages the synergy of diversity, autonomy, healthy creativity, and delegation of power. Investing in humans and developing the organization is an integral part of doing business today.
The term “corporate social responsibility” (CSR) refers to different activities related to the creation and utilization of social capital in a business. For example, the brand development of the recruiter and its constituents are all related to social capital, and leadership capital that is created by the trust of members in the value system and vision of an enterprise.
Policies that support initiatives of employees in learning and career development, facilitate their working and working relationship, and promote the interaction between work and life can make a difference in competitive advantage and reduction of waste stemming from labor changes.
Those enterprises with high social and leadership capital can strengthen the cohesion in actions owing to the common understanding, which enhances the organization’s stability and business efficiency in the long term.
Social capital for a sharing city
Cities are facing concerns about sustainability due to the rising urbanization and the deteriorating living quality. According to the SDGs approved by the international community in 2015 (Paris Agreement), addressing urban sustainability requires the fulfillment of other important goals including biodiversity protection, reduction of environmental pollution, and promotion of social equitability. These problems can be lessened when the sharing economy is prioritized for development, leading to the creation of the sharing city.
A sharing economy provides creative solutions to share, lease and replace less-used assets, frequently using digital platforms to provide information on demand and supply.
Major sharing platforms like Airbnb, Uber and TaskRabbit originated in San Francisco Bay Area, which is considered the craddle of the sharing economy and cooperative consumption. Both local residents and visitors to San Francisco often use sharing platforms like Airbnb and VRBO as well as transport network companies like Lyft and Uber. Similarly, the co-working space has also become popular.
Another example is the first library of toys in Sweden named Leksaksbiblioteket, which was launched in Göteborg in 2018, where members can borrow toys for their children and newborns.
Or a digital platform and database for the regional sharing economy in Göteborg named Smarta Kartan (smart map) introduced in 2016 was the brainchild of cooperation between the city of Göteborg and the civil society organization Kollaborativ Ekonomi Göteborg. Other cities wishing to create smart map versions of their own adjustment are welcome to use the open-source code free of charge.
Stockholm and Gothenburg, which are Sweden’s sharing cities, are launching on a trial basis the world’s best versions for sharing services and digital solutions. The sharing services under trial now include: 1/ use of space (buildings, houses, green infrastructure, co-using public spaces, etc., and 2/ use of products and services (tools, clothes, toys, handicraft items, etc.). Public transport and sharing bicycles are encouraged.
Sharing services help reduce the use of energy, protect the environment, and promote sustainable growth, and sharing creative services will help develop other services in the economy.
To build a sharing city – one of the vital factor for the formation of the sustainable city, there must be strong social capital. It is because if the social confidence is low, the people shall not share with one another for the common good. Sharing with other people those things we may not use frequently will be helpful in reducing wastes and reducing the exploitation of natural resources. The sharing economy, the peer-to-peer economy, or cooperative consumption can apply effectively to the public-private partnership, trade alliance and other programs of the local government.
During tough times like during the pandemic, the people in Vietnam in general and HCMC in particular have shown their spirit of sharing, which needs to be promoted in a professionally-organized style instead of spontaneity. The State and the urban administration can exert strong impacts on the sharing economy, sharing city and sharing community by making favorable policies for the people, or joining forces with the people. Further, the sharing city model will develop rapidly and thrive strongly when the social confidence is consolidated, the quality of human relationships is attended to and nurtured, and business networks strengthen increasingly effective cooperation for the common welfare and community benefits.