Cissy Chen (MBA 2019) reflects on her how experience at HBS shaped her career and inspired her to make a difference in her home region of Asia through impact investing.

How has your education at HBS helped to shape your career in impact and ESG investing?

Though I worked in financial services prior to going to HBS, it wasn’t until I took “Investing in the 21st Century: Return, Risk and Impact,” taught by Professors Shawn Cole and Vikram Gandhi, that I had a chance to learn about what impact investing was and understand how big the opportunities are. After taking this class, I decided that I wanted to leverage my knowledge & experience in finance to focus on making a difference in my home region of Asia through impact investing. In China, for example, the sector lacks quite a bit with regards to human capital and government support. I saw incredible potential for impact there and throughout the region.

I’m a huge believer in responsible capitalism and hope I can become one of the people who can push this forward. The "Reimagining Capitalism" course convinced me that business leaders have a responsibility to lead their companies to do business decently and that profit, purpose, and social return can be aligned to drive positive change. The mentality that Professor Rebecca Henderson shared was something new and fresh and quite exciting for me. After graduation, I chose to join a firm that shares a similar belief. Through my work, I have been able to put what I learned in “Reimaging Capitalism” into practice by helping funds build investing strategies and philosophy around how they evaluate potential investments via a series of ESG ratings. I’m currently organizing a teach-in for the company management to build on these ideals and we will be actively promoting the values taught in this class within the firm.

In these HBS courses and in the work you have pursued, you have gained perspective on ESG frameworks and their application to the markets in Asia. Can you provide an example of how you’ve applied ESG frameworks to evaluate the environmental impact of Asian equities? What were some challenging or surprising aspects?

After graduation, I returned to Singapore and the finance industry and I’m currently working for Nomura Securities. Since my time back I had a chance to do work on the side with an ESG Fund, which was the first Asia based fund established in this sector.

Part of my responsibility at the fund was to review the ESG ratings of companies in Asia that were potential investment targets of this new strategy. Once I was told who the target company was, I collected their current ESG ratings from a handful of ratings agencies (although we generally used one in particular), and I reviewed the ratings that were given. More often than not, the ratings would give very limited information on what needed to be done to improve the overall rating, but rather would talk about deficiencies. I took that data, did a deep dive into the company’s organization, and then wrote reports that our team would provide to the target company. Much of what I wrote about dealt with issues that are common in Asia, from a lack of governance that met global standards, human capital resource issues (including diversity and or board make up), to issues focused on environmental concerns (for example, water treatment and usage) that a company needed to pay more attention to. The goal was to work with portfolio companies to improve their ESG ratings. By doing so we believe they could potentially improve valuations over time.

Another focus of mine was ESG Integration on Stock Valuations. One example of this was when I was asked to evaluate a large OEM company based in Asia. I evaluated the company’s ESG performance by applying the Sustainability Accounting Board’s (SASB) ESG Integration framework and compared the company based on an industry related materiality map. Once I did that, I was able to come to the conclusion that acquiring a leading ESG position would potentially help this company gain market share during an upcoming industry consolidation post the Covid-19 crisis. I evaluated the company’s utility efficiency data as well as the same across similar companies in their industry and recommended areas of expense adjustments that would be of help. I also quantified the environmental impact on the company’s supply chain with a proposal that they make certain adjustments that would positively affect their expense forecast and cost of capital. In order to do all of this, certainly my background in finance helped, but I also earned the FSA credential levels I and II that is issued by the SASB and this allowed me to apply their framework when evaluating public equities in Asia.

Impact investing and ESG are evolving quickly. What are some challenging aspects of your job?

One challenge is that global standards, like SASB, which were originally designed for US markets, may not perfectly fit in an Asia context; e.g. SASB’s industrial categorization may not fit for Asian companies. One example of this is that Asia has a lot of OEM companies while US doesn’t have these types of companies and therefore the industry-specific materiality map may not be applicable. Another challenge is the lack of data and company disclosure in Asia makes quantitative analysis very difficult. However, we are starting to see a change for the better with more tech companies getting into this sector using AI/ML to extract ESG data as well as mandatory reporting requirements from Asian regulatory bodies in Hong Kong and Japan.

How do you plan on continuing to leverage the HBS network going forward to continue to deepen your knowledge of climate & impact and where do you see some of the most exciting potential ways to deepen your connection to HBS, BEI, and SEI?

The HBS alumni clubs and both the network and the programming that can come out of them is really extraordinary. Having been active in putting together a number of large events for HBS alumni over the past few years, I have been fortunate to meet quite a few of the pioneers in the impact industry in the region and I see the clubs' platform as a powerful way to leverage the voices of and connect those pioneers.

For example, as a member of the HBS Singapore Clubs activities committee, I had the pleasure of setting up a truly meaningful event with Professor Rebecca Henderson and Sir Ronald Cohen, who discussed their new books, Reimagining Capitalism in a World on Fire and IMPACT: Reshaping capitalism to drive real change, respectively. And we were lucky enough to have Professor Vikram Gandhi moderate. The conversation allowed the participants the opportunity to compare and contrast the authors’ ground-breaking approaches to rethinking business—one through the lens of purpose-driven companies and the other through the lens of impact investing as the path to impact economies. Based on the overwhelming success of our event, which was a great example of collaboration with Alumni Relations and the Club of London, and BEI and SEI, it is clear that the topics of climate and impact will be a central, recurring theme for our programming. It is exciting to be a part of developing these conversations, and I am happy to be able to do more of these types of events within the HBS, BEI, and SEI communities.