Setting a Course for Sustainability

Cathay Financial Holding Company CIO Sophia Cheng bubbles with energy as she talks with us about climate proposals and international trends in sustainable finance. Her warm, sunny disposition shines brightly too when she chats about her background and her philo­sophy of life, filling us with positive energy.

The rashness of a romantic child

Cheng was born in Huwei Township, Yunlin County. Though her family was not well to do, her parents’ love and support gave her a happy childhood. She tells us that her father did everything he could to support her studies, including borrowing money to pay for them, because he well knew the frustration of being unable to pursue an education.

Cheng says she wasn’t especially smart, but she had a strong sense of self respect and a never-say-die attitude. Loath to disappoint her teachers, she studied hard and earned admission first to Taipei First Girls High School and then to National Taiwan University.

Cheng grew up in the years before Taiwan implemented its National Health Insurance system, a time when rural residents had a hard time accessing and paying for healthcare. Her father hoped she would train to become a doctor, and treat poor people for free. But Cheng failed to gain admission to the prestigious NTU School of Medicine. Deter­mined to attend NTU nonetheless (she wanted to join its drama club), she chose to enroll in its atmospheric sciences department rather than attend a different medical school.

Everything about Cheng says “literata.” She could find tragedy in the death of a Chinese fringetree, but could never understand why she should waste her time explaining a cloud in terms of atmospheric physics. “Clouds are for dreaming about!” After graduating from university, she returned to her junior high school to teach STEM classes, where she was assigned to the school’s poorest-performing class. Temperamentally driven to always do her best, Cheng helped her class achieve the best STEM scores in their grade.

After completing a master’s degree in finance in the US, she stayed there and applied for what she thought was an academic research position. It wasn’t until she turned up for the interview that she discovered that the job was with a securities firm. Cheng says that she had had classmates at NTU who bought a succession of new motorcycles with their profits from stock trading. These classmates had offered her investment advice, but she rejected it because she didn’t like playing “money games.” She never imagined that she would bumble her way into the securities industry just a few years later.

Sophia Cheng frequently takes part in international climate change conferences, where she speaks with other investors about what they can do to achieve global sustainability.

After coming to know former US Vice President Al Gore (front row, sixth from left) through international conferences, Cheng (front row, left) invited him to Taiwan to speak with business leaders about addressing climate change.

A top analyst heats up a cold sector

Even after going into the securities business, Cheng had little interest in the pursuit of fame and fortune. Perhaps that was why at a time when all her colleagues were vying to research hot tech-sector stocks, she instead put her nose to the grindstone analyzing the construction-­sector shares her boss assigned her. She jokes that the good thing about researching companies no one is interested in is that their management have plenty of time to talk to you. She took advantage of that by knocking on their doors and picking their brains, honing her understanding of the industry. Two years later investors rediscovered their interest in construction shares, making Cheng’s accurate and incisive reports a hot commodity with foreign institutional investors. In fact, her research was so exceptional that Asiamoney magazine named her Taiwan’s top construction-industry analyst in 1997.

Cheng was equally diligent when she branched out into researching the financial sector. Her continued production of outstanding work earned her “Best Analyst – Taiwan” honors from both Asiamoney and Institutional Investor, as well as the nickname “The Empress of Finance.”

Although she didn’t go into medicine as her father had hoped, she did internalize the values of helping and caring for others. Those values and her own passionate nature foreshadowed her later involvement with public policy.

During Taiwan’s 2005 credit-card debt crisis, Cheng worried more about people who were genuinely in urgent need, such as parents lacking funds for their children’s school fees who were forced to turn to loan sharks. She therefore regularly attended press conferences, public hearings and seminars organized by the Judicial Yuan, tirelessly advocating for careful consideration of amendments to bankruptcy law to ensure they did not harm the innocent by cutting off lending channels to those in need. “That was when I began to pay more attention to public policy,” says Cheng.

No ESG, no money

A long-time observer of global investment trends, Cheng was quick to recognize the growing international focus on responsible investing, and well aware of its impact on promoting sustainability. As CIO of Cathay Holdings, Cheng formed a responsible investing group in 2014 to spur Taiwanese businesses to transition to low-carbon operations.

When the international conversation turned from corpor­ate social responsibility to quantifiable environmental, social and governance (ESG) measures of sustainability, Taiwan had to follow suit. As Cheng often reminds companies, “No ESG, no money.”

She explains that when Apple and TSMC speak about transitioning to “net zero,” their suppliers have to do likewise. “For companies, ‘sustainability’ means working out how to survive for another 100 years. But if the world itself doesn’t become sustainable, if people aren’t willing to trans­ition to low-carbon lifestyles, then any talk of other aspects of sustainability is just wasted breath.”

Worried that a lack of information would cause Taiwan’s small and medium-sized enterprises to lag behind, Cheng began actively participating in executive forums and in organ­iza­tions such as the Kaohsiung Entrepreneur Association and the Entrepreneurs’ Club to meet with business leaders. Her goal has been to make them understand that transitioning to low carbon is an investment, not a cost. “In any case, I’m a busybody who will take every opportunity to go talk to companies about these issues. After all, every company added to the ranks of those using ESG benefits the world.”

Reducing carbon emissions and getting to net zero are absolute necessities. Cheng is using the power of money to encourage companies to make the low-carbon transition. (photo by Kent Chuang)

A global bright spot

An individual may move fast, but a group travels far. Cathay Holdings is more than just a pioneer in Taiwanese responsible investing. Under Cheng’s guidance, Cathay has also joined Climate Action 100+, where it works with 700 global investors seeking to further their influence on sustainability issues. And Cathay’s and international investors’ engagement with Foxconn, China Steel, Taiwan Cement and Formosa Plastics has led to these companies pledging to achieve net zero or carbon neutrality by 2050.

In addition to influencing Taiwanese companies, as the chair of the Asia Investment Group on Climate Change Cheng has been involved in engagement and activism abroad, including on issues like power plants in Hong Kong and Indonesia. She believes that as climate change garners more attention, biodiversity and access to water resources will become the next big issues for business. Cathay Holdings has therefore joined the Valuing Water Finance Task Force assembled by the NGO Ceres and the Dutch government to urge large-scale corporate users and polluters of water to address water issues.

photo by Kent Chuang

Defining success for oneself

Cheng is regularly invited to speak in various forums about climate governance, sustainable finance, education and policy, but what she cares most about is the situation of students and women.

Cheng is calm and collected on stage. While she speaks with great poise and self-assurance, she tells us she lacked confidence when she was young. She explains that her deeply ingrained conscientiousness grew from fear of being doubted and scolded. “When women run into difficulties, we tend not to speak up for ourselves. Instead, we do more while asking for less. We grin and bear it, telling ourselves it doesn’t matter if we’re wronged so long as everyone’s ok.” Taiwanese society expected this of women when Cheng was growing up, and she internalized these expectations. When she later realized that allowing herself to be repeatedly wronged would never lead to happiness, she began looking inward and slowly developed confidence in herself.

When Cheng speaks on the power of women, she is typically asked to share the story of her success. She explains that her personal definition of success doesn’t involve wealth or status, but turns on whether someone has become the person they should be. She says that like the English word “success,” the Latin roots of which are sub (“next to”) and cedere (“go, move”), success to her means coming closer and closer to your ideal self. She reminds women not to let the achievements of those around them define their personal success. Instead, they should focus on continuing to get better at whatever they do. “If you’re a bus driver, be the most interesting one. If you’re a road sweeper, make your patch of road the cleanest. Each of us should do the best we possibly can at the things we do. That’s success.” Cheng adds, gentle and resolute as always, “Know yourself, accept yourself, love yourself. That’s how you become yourself.”

Cheng encourages women to define success for themselves, and to be self-confident in doing their best in a field that they like.