Before terms like “conscious capitalism”, “philanthro-capitalism”, or “blended values” began floating around in conversation in Asia, Annie Chen was developing a new strategy that has broken the mold in the industry.
Impact investing is about providing the support for others’ endeavors, backing a powerful cause, concept, or innovation. It’s requires the ability and willingness to look beyond short-term growth for a better long-term future.
However, the realm of impact investing opens up another, socially minded approach to business. These investors don’t stop at donations, charities, and fundraising – and especially in China, this kind of outright philanthropy carries a unique set of connotations.
“If enough people actually engage in thinking about how, through conscious and intentional placement of their capital, they can invest in the future that they create… it’s only when more people do it that we have a chance of transforming the system.”
– Annie Chen, RS Group
HER JOURNEY IS ONE OF CONSTANT LEARNING, PATIENCE, AND COMMITMENT TO VISION.
About The Entrepreneurs For Good Series
Through this series, we speak with Asia based entrepreneurs whose mission it is to bring solutions to the environmental, social, and economic challenges that are faced within the region to learn more about their vision, the opportunities they see, and challenges that they have had to overcome. It is a series that we hope will not only engage and inspire you, but catalyze you and your organziations into action. To identify a challenge that is tangible, and build a business model (profit or non) that brings a solution to the market.
About Annie Chen
Ms. Annie Chen is the Chair of RS Group, a family office with a focus on sustainability. RS Group makes investments and grants following a “blended value” approach that ensures its total portfolio can make a lasting and positive impact for future generations.
Ms. Chen believes that one of the most pressing challenges of our time is moving the planet and its inhabitants towards sustainability. To align her values with her investments, she has committed her financial resources to socially and environmentally responsible investing. She also dedicates her time and resources toward social and environmental causes with the potential for generating positive systemic change and sustainable development. Believing the potential for change through social entrepreneurship, she is working to enhance the development of social entrepreneurship in Hong Kong and Asia.
Born and raised in Hong Kong, Ms. Chen obtained her BA from Brown University and her LLB from Columbia Law School.
Follow Annie and RS Group
Driven by the belief that change begins with a single step, Richard Brubaker has spent the last 15 years in Asia working to engage, inspire, and equip those around him to take their first step. Acting as a catalyst to driving sustainability, Brubaker works with government, corporate, academic and non-profit stakeholders to bring together knowledge, teams, and tools that develop and execute their business case for sustainability.
Full Interview Transcript
Annie: My name is Annie Chen. I am the principal of a mid-sized family office that’s based in Hong Kong, called RS Group.
For the last six years, we have been on a mission and on a journey. And our hope is to become a catalytic force in transforming our economic system so that it doesn’t jeopardize the well-being of the planet or the people, but will actually us towards a path of sustainable development.
Annie: I did have a prior career in life as a tax lawyer. That translated very well when I moved into the family office that my parents set up. And so I was actually bringing my skill set into play by helping my own family create the appropriate legal structures to do a wealth-management setup that would achieve all the goals that family offices are supposed to achieve. A preservation of capital, and good, smooth transition – or smooth succession – plan, and also to do philanthropy.
Six years ago, I think I realized out of many years of working in that larger family office that we never asked ourself the question of “why we were doing it.” We were working under the assumption that “Well, that’s what family offices do.” And I decided that there has got to be something more. And I was trying to find the meaning and the values behind doing it.
And so when the opportunity came, and I had to take responsibility for my own portfolio, I wanted to try to come up with a way of managing my capital that is in alignment with my own values.
Annie: In one respect, I was very lucky, because my my parents are actually very unusual in the sense that they’re very democratic. And they have never interfered – I had to take responsibility for my own pool of assets, and I had relative freedom to develop it how I wanted. The challenges really came from not having the – not being able to find people with the right expertise to help me in Asia.
We started with going to the banks, which is typically where you go out in Asia when you say “Well, I want to invest responsibly. So help me find the solutions.” And six, seven years ago, I have to say: Banks didn’t understand. They didn’t know what the principles of responsible investing meant, let alone be signatories.
They had some product offerings that they were trying to sell – like, “Oh, we have water fund,” or “We have a solar fund.” But I was looking for a more holistic approach to investing. And it wasn’t until I found an advisor based out of Europe that we actually start making progress towards building a sustainable portfolio.
All right, because we take a portfolio approach, we actually invest a lot through funds as opposed to directly into projects. The space where we did the most in terms of direct investments would be in Hong Kong, where we obviously are more familiar with the landscape, we are more familiar with the players. And what we decided to do there was, we wanted to encourage the building of the field or ecosystem for impact investing.
And for investors to be able to impact investing, obviously you need the projects. You need the social enterprises to invest in. And so we did a few things. We invested in some new initiatives that had no track record – for example, Social Ventures Hong Kong. I think we were one of the first batch of investors into their efforts, knowing that it would be high-risk.
So what they brought were a number of social enterprises that they incubated – but at the same time, we weren’t simply investing through them into these social enterprises. We were also investing in the team at the SVHK who were trying to promote this idea of social investing, social innovation.
And even though they didn’t have a track record, we were hoping that these projects eventually would be self-sustaining and might even return some capital that you can then re-invest – this whole idea of patient capital, but then recycling your dollars. We were hoping that would happen, but there was no guarantee. But we felt that in order – if nobody played, if nobody took the first step, you would not have a pipeline.
So we tried to invest strategically in a few places to start creating that ecosystem and community. Another example on this theme would be – we contributed to the creation of The Good Lab, which created a space for social entrepreneurs to exchange ideas, and to just come together.
And it’s hard to say exactly what the impact of that was, but we felt that with some of the players who were supported during those early years so that they could actually grow team, grow talent, and grow projects. I think there is a lot more experiences being created out of them that would enable more people to experience what it means to invest in a social enterprise.
Well, it actually – there are numbers. I’m just not a numbers person, so I tend not to talk about them. But in our report – the impact report that we put out a few months ago – we actually try to be quite transparent about not only our journey, but the projects we invested in, and how we invest in those projects.
I know the report isn’t for everyone, because the way that we look at our investments in taking a portfolio-level lens, rather than an individual investment lens, you tend to lose people because they’re not all in that situation of looking at their entire capital that way. But we do share, in that report, our financial performance.
Maybe the differences in the way that we set our target – most people would say, “Oh, well we want to maximize our financial return, the highest that we can get.” How we started by looking at what we want to earn on a financial level is: How much do we need to sustain ourselves? How much do we need to generate to sustain our team, our activities, so that we aren’t going to run ourselves into the ground?
So we set ourselves a relatively modest target that would be sufficient to cover our expenses, if you will. And our expenses would include our own activities, our team, as well as our grant-making. And we’ve achieved that objective.
I don’t think my job is to tell other people how to do it because I haven’t gotten my own learning journey in this. I think the strongest motivation has to come from within, not from what other people tell you you should do. If they don’t find that interest, they don’t find that passion, they don’t find that motivation within themselves, they’ll find it very easy to give up – or just stop doing it.
And I think the reason why we’ve been at it for so long is because we truly believe in it. And not only that, but we feel that if enough people actually engage in thinking about how, through conscious and intentional placement of their capital, they can invest in the future that they create – it’s only when more people do it that we have a chance of transforming the system.
I think it has to – the conversation has to start from, if not values, then the question of what it is that you’re trying to achieve. What is the problem that bugs you that you want to solve through impact investing? Get to, really, the issue that that motivates them, and then start building up from there.
So if this is the problem, let’s look at the problem. What are the – are you trying to just treat the symptoms of the problem, or are you interested in the root cause? And then you start looking at – well, if that’s the root cause, what are some of the possible solutions? And how does impact investing play into this, versus the philanthropic route, for example? Or, does it take both?
Whoever is interested in this space really have to ask themselves the hard question, which is “How much do I want to invest myself into learning about this?” We didn’t – we started from scratch. But I did a lot of research and educating myself.
Whether it was through just Google searching stuff, “what impact investing was”, reading all sorts of reports that other people generate, the research that they’ve done, feeling overwhelmed – but still intrigued enough to want to wrap my head around that. Did trips, went to conferences, met people, made visits, so that I can see – really understand different viewpoints and what other people are doing.
So you’ve got to invest time into the learning, and not expect that, “Oh, I just make an investment, and we’ll deal with that problem.” A lot of times, I think in the impact investing space, what has made it less robust than it could be is simply the fact that people are too busy to invest a lot of time.
Fear and Inspiration
Annie: I’m actually very much motivated by fear! Yeah, so of course there are the inspirational elements, but I think I’m first motivated by “fear”, in terms of really not knowing where climate change will lead us. I think we as a human race, as clever and intelligent as we think we are, we haven’t really evolved to be able to really do – make very smart choices. And so I’m fairly pessimistic about where the world is headed.
I worry a lot about the future that my kids will face, and the problems that they will face. But that said, I think one has to have hope. We wouldn’t be doing this if we didn’t at least have some hope that, well, we can still change things for the better. So I think that’s where the inspiration comes in. But no, first and foremost, I think I’m motivated by fear, unfortunately!
We are trying – we haven’t perfected anything yet, but we are trying to invest – see, the phrase that I use was “We’re trying to invest in the future we want to see, or create.” Because every one of us can only do so much, right?
We see the problems with capitalism in the way that it has been operating for the last 50 years. We know that it’s a very powerful system, but it’s broken in places. And what we’re trying to get people to see is that capital markets are still the most powerful force around if you are looking for big-scale transformation.
So the challenge, then, is how to shift the capitalistic system so that it actually works towards making progress and making the world a better place, rather than contributing to problems. So, I mean, that really to me is the beginning and the end of our quest.
Finding the Transformative
Annie: I think we do look for the transformative factor in what that proposal is. We are less interested in enterprises that produce some useful results, but are limited in terms of scale. If it’s simply about – it’s something that other people have tried, it’s just about doing it “better”, executing it “better” – we’re less interested.
We’re interested in bigger ideas, but done strategically and in a way that eventually could bring very significant changes – either in behavior or in the markets. So those are few and far in between.
And that’s also part of the reason why we don’t do a lot of direct investment, because you could – it calls for a lot of resources, from the due diligence to the monitoring, and there are a lot of things really with not within your control, and you have very concentrated risk. So we prefer to diversify through investing funds. But we are interested if the right opportunities come along. But like I said – for some reason in Hong Kong, we find very few ideas that are truly transformative.
Well, I think we need everything to change, right? Entrepreneurs may eventually become the multinationals. It might take time, but even the multinationals now started somewhere, right? So we don’t say, “Oh, it’s only the really determined, passionate, creative social entrepreneurs that can make change.”
No, I think we need all kinds of change, we need change to happen at a much quicker pace if we’re going to make enough progress. So we need the multinationals to play a la “shared value”. If they really transform themselves into businesses that put squarely the question of “value” – and not shareholder value, but value to society first – well, we need those, too. And small/medium businesses – they actually form the majority of our communities, so we need them to play as well. So we need everyone to pitch in.
Everyone is a Change Agent
Annie: I think different impact investors – that’s just one hat that they wear. They could be a business owner. They could be an employee somewhere, but they have some money to invest, and they want to invest it for impact. They could be large corporates wanting to start a new business line.
So it doesn’t – so “impact investor” doesn’t describe just one type of animal. They can come from everywhere, they can come from any different type of background. So I think it’s really the mindset, is that if you truly believe that you can invest to generate values – and by “values”, I mean not only financial value, but social value and environmental value.
If you believe in that fact, then there’s no reason why you wouldn’t question, say, if you’re a business owner, then “How do I create value – social, environmental, and financial value – through my own business?” Or if I’m an employee, I would ask, “So how is the company that I work in generate all those values? And if it’s not, and if they only think about the financial value, am I in a position to also be a change agent? To start asking questions, like ‘Where is the environmental value that we’re creating? Where is the social value that we’re creating as a business?’”
So I find it interesting that people try to pigeonhole impact investing as just this one thing and kind of miss that, if you buy into impact investing, then you’re, by definition, buying into the fact that investing generates not simply financial returns – but that it could have possible positive social and environmental value generation. And if that’s the case, then why shouldn’t that apply across the board to all kinds of businesses?
I think, probably, younger people get it more easily – especially if they have not been already brainwashed into thinking that, while you really can’t jive financial value generation with the social and environmental value generation, there’s still some of those around. But by and large, I think a younger people either get it or want it to be true.
But not a lot of them are in positions of authority or power in order to do enough impact investing to make significant change. This is an overgeneralization. I think in different places, the transitions – or the succession – is happening at a different pace.
And I’m not – and I don’t think that age or what generation you come from defines you in the sense that you really can’t see outside of your own experience. I think everybody has the potential to look beyond that. It’s a question of: Do they have the motivation? Do they have the time? Do they have the interest in looking beyond that?
If you want change to happen quickly, then obviously, those who are in positions of power are the people that you want to influence and change. But by definition, they are also the most difficult group to change, because they are in those positions because they benefited from the way the current systems work. So why would they want to dismantle that? It takes some courage, and take some, I think, insight to want to do that. So I don’t have a good answer!
Some Parting Advice
Annie: I think, first of all is: Be honest with yourself as to how committed you are to get on this path. Because if you want to follow through, it will take a lot of effort, and it will take a lot of time on your own part – and resources, if you want to do it properly.
The second thing would be: Find others. There’s no need to do it by yourself and reinvent the wheel. Read our report – we do share our entire journey there, so maybe there’s some bits of information there that could help make that transition easier for you. And find not only examples, but people who can actually go on the journey with you. It makes it a lot more fun.
And I guess the third thing is: Develop a sense of urgency. I think, by far, the biggest difference between people who’ve gone down this path much faster and further are the people who feel that there’s an urgency to do so. If you think that, “Oh, this is a nice thing to do, but we have plenty of time,” that’s your choice. But I don’t think the world can wait.
For more interviews from the “Entrepreneurs for Good” series, check out the playlist here.
Stay tuned for more clips and full interviews in the coming weeks.