One of the key spirits of responsible investment is to engage investees and encourage them to pursue profit and growth with social and environmental sustainability. Cathay is an active participant in investor engagement actions with the aim of setting a benchmark for peers in Taiwan. Cathay has participated in multiple international organizations and initiatives since 2017, and has actively followed up on sustainability issues of critical importance to the international community, such as climate change. Cathay has established the engagement policy in 2018. We also identified "climate change" and "ESG Disclosure" as key engagement strategies in 2019, and initiated more intensified engagements with investee companies.
Cathay has gained international recognition for our efforts over the years. The Investor Agenda announced the Investor Climate Action Plans (ICAP)in 2021, and Cathay FHC was the only asset owner in Asia to be included in the world's top ten best practice for our corporate engagement and policy advocacy performance.
In 2021, Cathay Life engaged 80 companies directly on 17 material ESG issues in 160 cases through telephone meetings and in-person meetings. The main targets for engagement were companies in the "information technology" and "raw materials" industries, and the main communication issues were "adaptation to climate change" and "carbon emissions".
Asia Investor Group on Climate Change (AIGCC)
Cathay has become a founding member of the Asia Investor Group on Climate Change (AIGCC) and actively contributed to international climate initiatives since 2016. Cathay has received international recognition for its ESG achievements. Sophia Cheng, Chief Investment Officer of Cathay FHC, was appointed AIGCC Chair in 2018 to help the AIGCC increase awareness towards climate risks/opportunities among investors in Asia, and encourage them to take actions.
Cathay became part of multiple AIGCC working groups in 2020 to provide recommendations for related topics and study feasible tools and solutions.
Cathay FHC and Cathay Life participated in the Asian Utilities Engagement Program launched by the AIGCC in 2021. The program engages Asian utilities that account for 23% of global carbon emissions, and encourages companies to implement carbon reduction mechanisms to achieve net zero emissions as described in the Paris Agreement. A company engaged by Cathay Life have committed to phasing out their coal-fired power generation assets before the end of 2040.
Ceres Valuing Water Finance Task Force
Climate change has indirectly changed the water cycle and precipitation patterns in recent years. Taiwan has faced water shortage crises in recent years, which have affected the operations of certain industries that rely heavily on water resources.
Cathay Life and Cathay FHC joined the Ceres Valuing Water Finance Task Force in 2019 as the only participating financial group in Taiwan. We obtained information on forecasts of global water resources and learned about the risks and opportunities of water resources in different sectors. The participation has helped Cathay ward off related risks and increased investment resilience when faced with challenges in water resources.
CDP Non-Disclosure Campaign
The CDP's "Non-Disclosure Campaign" invited investors to ask investees to disclose environmental information. Cathay has participated in the initiative for four consecutive years since 2017 and was the only financial institution in Taiwan to have participated in the campaign. Cathay uses one-on-one communication to explain the material impact of climate change, forest, and water resource issues on companies and encourages them to disclose related data and management measures for investors to evaluate related risks
The success rate of engagement was 25%, which is higher than the global average, after engaging 40 companies in 2021. Cathay has successfully engaged 35 companies since 2017 and 52% of the companies improved their CDP scores in the following year, which demonstrated the long-term positive impact of successful engagement.
Climate Action 100+
Climate Action 100+ (CA100+), the world largest-ever investor engagement initiative on climate, was launched in 2017. The goal is to urge companies to take actions to reduce GHG emissions consistent with the Paris Agreement. More than 700 institutional investors, responsible for over $68 trillion in assets under management, have joined the CA100+ initiative.
Cathay Life and Cathay SITE represented Cathay FHC being the signatories of CA100+ initiative and have been actively participating in CA100+ since 2017. As the first financial group in Taiwan joining in CA100+, Cathay engages individually with all the three Taiwanese focus companies - Formosa Petrochemical Corporation, Foxconn, and China Steel. In addition, Cathay proactively participates in numerous events and progress meetings organized by CA100+, and provides feedback and suggestions for the reports and guidelines published by CA100+. To help Taiwanese focus companies easily access CA100+ related information and progress, Cathay reviews and provides feedback on the Chinese translations of CA100+ reports. Ms. Sophia Cheng, Chief Investment Officer of Cathay FHC, has been invited to act as the member of CA100+ Asia Advisory Group since 2018 and actively participates in the quarterly meetings to provide suggestions for strategic plans of the initiative.
In 2021, all the three Taiwanese companies engaged by Cathay have all pledged net zero emissions or carbon neutrality.
Case Studies
Formosa Petrochemical Corporation (FPCC) is one of CA100+ focus companies. In October 2021, Formosa Plastics Group and FPCC announced"striving to achieve carbon neutrality by 2050". Cathay FHC appreciates and highly recognizes FPCC's ambition on carbon reduction.
Cathay has been engaging with FPCC since 2018, which started with introducing the goals of CA100+, the importance of ESG issues, and international trends in responsible investment. This information would help the company understand the CA100+ and why investors request the companies reducing carbon emissions. Cathay also provided an overview of the climate change responding strategies implemented by international oil & gas companies, and invited experts and academia to share their knowledge on biofuel technologies. By adopting a variety of approaches, Cathay hopes to help the company save the time it would have spent conducting research on its own as well as facilitate the implementation of its carbon reduction plans.
Cathay FHC has the dedicated team being responsible for conducting frequent communications with FPCC via telephone or e-mail, and also has numerous in-person or online meetings with the company every year.
Furthermore, Cathay works with several international institutional investors to urge the company to take carbon reduction actions according to the Paris Agreement. Cathay's management team attaches great importance to corporate engagement. Mr. Chang-Ken Lee, President of Cathay FHC, personally participated in many engagement meetings and led Sophia Cheng, Chief Investment Officer of Cathay FHC, and senior executives from Cathay Life and Cathay SITE to visit the senior executives at the Group Administration Office at Formosa Plastics Group, as well as the chairperson and president of FPCC. The leaders of Cathay and the company actively explores the feasibility of carbon reduction plans in the engagement meetings.
Led by the Group Administration Office under Formosa Plastics Group and senior executives of FPCC, FPCC has annually disclosed climate-related information in line with the TCFD framework since 2020, including physical/transformation risk management plans and climate risk scenario analysis. The management team at FPCC also looked into the feasibility of many carbon reduction options, such as biofuel and carbon capture technologies. In October 2021, the Formosa Plastics Group and FPCC announced "striving to achieve carbon neutrality by 2050".
Cathay Sustainable Finance and Climate Change Summit
Cathay FHC has organized the Climate Change Forum in Taiwan for five consecutive years, as a method of encouraging investee enterprises to pay attention to climate change issues and take action. We invited experts from deffirent areas such as former U.S. Vice President Al Gore, CDP and PwC since 2017. We also worked with Taiwan Stock Exchange and AIGCC. This forum is a platform to share experience and perspectives and bring international trends to Taiwan.
Cathay invited key figures from Taiwan's industry, government, and academia, and also major investors and international experts from America, Europe, and Oceania, sharing the global market and policy trends, and communicating the mindset and experience of corporate’s ESG implementation and zero carbon transformation, thereby helping Taiwanese corporates accelerate low carbon transformation and find the development chance in the net-zero future. Enterprises that registered accounted for 76% of the total market value of TWSE and 51% of Taiwan’s total carbon emissions in 2021. Over 1,000 people were online at the same time and over 240 directors, supervisors and corporate governance officers participated in the forum.
Taiwan Stewardship Principles for Institutional Investors
Cathay FHC's subsidiaries, including Cathay Life, Cathay SITE, Cathay Century, CUB and Cathay Securities, have all signed the Taiwan Stewardship Principles for Institutional Investors. Cathay Life and CUB were the only insurance company and bank selected as part of Taiwan Stock Exchange Corporation's "Recommendations for Disclosure Based on Stewardship Principles for Institutional Investors and Case Studies of Companies with Superior Disclosure" in 2021.
The international community has recognized Cathay SITE’s stwardship performance. It received the 2021 Benchmark Stewardship Award.
In 2021, Cathay attended a total of 1,669 shareholders' meetings and voted on 9,173 proposals. Cathay voted in favor of 8,914 proposals, against 116 proposals, and abstained from voting on 113 proposals (Note). Cathay Life Insurance actively votes in shareholder meetings and supports climate resolutions aligned with the carbon reduction goals of Paris Agreement. The aim is to guide the companies to take more concrete climate actions. In 2021, Cathay Life supported 100% change-related resolutions.
Cathay also communicates with the management team of investee companies in the forms of telephone conferences, forums, investor seminars, or attending shareholders' meetings. In 2021, a total of 5,750 delegates from Cathay Life, CUB, Cathay Century and Cathay SITE visited 1,798 companies.
Note: According to Article 146-1 of the Insurance Act, insurance companies may not vote in director and supervisor elections of domestic companies they have invested in, hence the abstention votes for proposals related to the appointment of directors and supervisors.
Compliance Statement-Stewardship Principles for Institutional Investors
Cathay Life
Cathay Century
Cathay SITE
Cathay United Bank
Cathay Securities
Stewardship Report (including investment ESG management and engagement)
Cathay Life
Cathay Century (Chinese only)
Cathay SITE (Chinese only)
Cathay United Bank (Chinese only)
Cathay Securities (Chinese only)
Voting Disclosure
Cathay Life
Cathay Century (Chinese only)
Cathay SITE (Chinese only)
Cathay United Bank (Chinese only)
Cathay Securities (Chinese only)