The responsible investment and lending is a stabilizing force with positive impact on society, and it is also one of the core competencies to increase long-term value for the assets. Cathay has established responsible investment/lending policies and management procedures and actively developed its capacity for ESG analysis to assist investment and lending decisions. Cathay aims to use ESG to provide broader and more profound perspectives for decision-making.


Establish a leading responsible/lending team in Taiwan

Cathay fully recognized the impact financial sector can bring through responsible investment/lending. Cathay has established a Responsible Investment Working Group in 2014, which supervises Cathay FHC's responsible investment strategies and sets up policies. Cathay Life and Cathay SITE have also respectively established their Responsible Investment Task Force, which comprises the front/mid/back-offices of the investment team. The task force continuously learns the best international practices, trends and methodologies to establish action plans to refine and improve the ESG integration process. Cathay Life has established responsible investment department to further improve the responsible investment management. As of the end of 2021, the task force of Cathay Life and Cathay SITE had around 47 and 12 members, in which 3 and 2 members are dedicated to responsible investment.


CUB established the Sustainable Finance Loan Management Section in 2016, which is responsible for reviewing EPs-related cases, and has renamed it as the Sustainable Finance Section in 2017. The Section is now the dedicated unit in charge of promoting corporate sustainability and ESG risks management within the bank.


Delivering ESG training to strengthen capability of ESG risks management

Cathay is active in its exchanges with external industrial, governmental and academic institutions and invited foreign experts to bring ESG analysis education and training at least twice a year for investment team to learn global trends and RI practices. In addition, we also provided training materials for EPs project financing management regulations and ESG Regulations for Corporate Loans, which are updated on management demand. In 2021, a total of 2502 employees from Cathay FHC, Cathay Life, CUB, Cathay SITE, and Cathay Century participated in Cathay's courses as well as external conferences; the average training hours per participant was 1.13 hours.


Provide investment teams the ESG analysis tools to build comprehensive ESG Investment environment

Sufficient ESG information and data is the basis for strong ESG management. Cathay thus purchased access to several international ESG databases to provide teams with comprehensive ESG data and analysis information, and created related tools to provide teams with a comprehensive ESG investment environment.

Principles for Responsible Investment, PRI

Principles for Responsible Investment (PRI) is an international framework launched by UN, requiring investors to integrate ESG into investing process. Cathay believes institutional investors have responsibility to exercise its positive influence to investee companies. Cathay was the first Taiwanese financial institution establishing the Responsible Investment Working Group in 2014. The Working Group is led by the Chief Investment Officer of the Cathay FHC and it works together with senior investment executives of subsidiaries. Cathay Life and Cathay SITE have also respectively established their Responsible Investment Task Force with total of 51 members and 3 dedicated employees. Cathay Life have voluntarily adopted PRI in 2015. 


Cathay PRI Implement Status  


Cathay FHC investment and lending ESG integration procedures


Scope of Responsible Investment/Lending

The scope of Cathay’s responsible investment/lending merely excludes the assets (e.g., cash) that are not applicable for responsible investment/lending approaches. Considering the characteristics of the assets, we apply different policies such as exclusion, ESG integration, and themed investment to manage responsibly.


Investment and Lending Exclusion Policy of the Group

Cathay screens high-risk industries (e.g., controversial weapons and pornography) and countries (e.g., countries that severely violate human rights or are sanctioned) for the establishment of the Investment and Lending Exclusion Policy of the Group. The Responsible Investment Working Group reviews the l each year and subsidiaries can expand the list as required.


ESG Integration under Responsible Investment Management Mechanisms

Cathay incorporated ESG factors into existing investment procedures to manage the ESG risks. For example, subsidiaries have all compiled a list of industries/business of concern to strengthen their management. Cathay Life created the first ESG risk review procedures in Taiwan and established a watchlist of investment targets with potential ESG risks (e.g., low ESG ratings or sensitive industries). All new and existing investment targets must undergo review. Investment teams in Cathay Life have to include ESG assessment in their stock research reports. 1,662 reports have been done in 2020. Cathay SITE established the ESG research information system and regularly provides ESG investment portfolio analysis reports to help the investment team integrate ESG into investment procedures. Cathay United Bank established ESG risk review regulations for financial transactions and investment and incorporated ESG risks into the investment evaluation process.



2021 results of ESG risk review for investee companies

Cathay Life has reviewed all listed equity and fixed income (non-corporate bonds & corporate bonds) and 288 cases with potential risks have been reviewed through the ESG review procedure. Furthermore, 11 investment targets were excluded from investment buylist after considering their fundamentals and ESG performance.

Cathay United Bank reviewed the potential ESG risk of its investment positions in equity, corporate bonds, and non-corporate bonds in 2021. Continued monitoring will be conducted for 37 cases.


Strengthen the climate management and transition to zero carbon

Cathay is actively promoting the zero carbon transformation of financial assets for better climate risk management of investment positions. Cathay follow the TCFD recommendation, conducting climate risk scenario analysis, and becoming the first financial institution in Taiwan to calculate the investment carbon footprint in 2018. Since 2020, Cathay has been using the methodology of the Partnership for Carbon Accounting Financials (PCAF) to calculate invesetment carbon footprint, so that we could better track and manage them. The total investment carbon footprint is 11million CO2e in 2021 and 11% lower than 2020.


Cathay has strengthened the management of climate factors in its integrated ESG management mechanism, and has enhanced risk assessment and review of sensitive industries. As a leader of climate engagement in Taiwan, Cathay engages investees in the hopes that they will commit to climate goals and strengthen their climate management. We further established the transformative goal of zero carbon for financial assets according by officially committing Science-Based Targets (SBT) in 2022 to comply with the Paris Agreement.


An analysis of the carbon footprint of Cathay's investment portfolio shows that the top three industries in terms of carbon emissions contributions—energy, materials, and utilities—account for less than 18% of the overall position, but over 85% of the investment portfolio's carbon footprint. Cathay's climate actions correspond to this situation. For example, Cathay Life listed coal-power plants that are not actively transitioning to renewable energy as exclusion list, and also participated in the Asian Utilities Engagement Program to encourage companies to implement carbon reduction mechanisms, so as to achieve the net zero emissions scenario of the Paris Agreement.

Cathay Investment Carbon Footprint 


Themed Investing

Cathay Leverages the experience of participating international initiatives such as Low Carbon Investment Registry to define Low Carbon Investing, and further defines other foru themed investing in the following years. Therefore, Cathay could track sustainability and industry trends to invest in sustainable targets, pursuing long-term return and flourishing the sustainable future with our core competencies. The data has external assurance.

Note 1: "-" means that the data were not collect for the current year.

Note 2: All the number is rounded to the nearest integer.


Impact Investing

In 2021, Cathay Life invested US$5 million for solutions for social inclusion and education, environmental resource requirements, and medical and quality of life issues.


Asset Manager Mandating and Monitoring

Cathay Life and Cathay Century have included ESG into consideration when signing contracts with mandate partners to ensure the companies fulfill their duties as asset managers. Of the mandate investment positions of Cathay Life and Cathay Century in 2020, 100% are managed by signatories to the PRI or local stewardship principles.


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)



PE Fund for Sustainable Industries

Cathay SITE became the first investment trust company in Taiwan approved to set up a subsidiary to issue private equity funds. 100% of the "Cathay Sustainability Private Equity Fund" is invested in key industries of sustainable development in Taiwan, including highlighted industries such as circular economy (e.g., sewage treatment and waste processing and reuse), renewable energy (e.g., solar energy, geothermal energy, hydropower, and energy storage), as well as the"5 + 2" innovative industries promoted by the government (e.g., Internet of Things, smart machinery, new agriculture, and long-term care). The total promised investment totaled NT$8 billion and the total investment of the fund in 2021 totaled NT$4.8 billion. We currently have investments in 4 solar power plants, 1 wind farm, 2 circular economy companies, and 1 IoT company.


Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF

ESG is an indicator for assessing the quality of long-term corporate management. The COVID-19 epidemic in 2020 demonstrated the importance of companies' care for employees and supply chain management. Cathay SITE worked with MSCI to provide investors with the opportunity to use international ESG services for sustainable investment. We also used weighted dividend yields to select shares in sequence and help investors stabilize profits and meet their requirements. The ETF set multiple new records on the Taiwan Stock Exchange after its IPO and its scale has expanded to NT$35 billion as of the end of 2021.


Cathay Securities ESG research reports for individual stocks

Cathay Securities began working with Cathay Futures and National Taipei University in 2020 to build the first professional ESG analysis team in Cathay Futures and provide ESG analysis service to institutional investors. We utilized the SEED rating framework, which was developed by the Corporate Sustainability Research Team of National Taipei University, to establish the first ESG rating mechanism aligned with international methodologies in Taiwan. It greatly extend the coverage of ESG Rating on Taiwan’s listed companies. It provides responsible investors with the latest ESG research reports, and also urges Taiwanese companies to take sustainable development seriously through communicating with rated companies. As of December 2021, the team has organized 30 ESG research presentations for corporate customers, and jointly completed 200 ESG research reports on individual stocks together with the team of National Taipei University. We selected individual stocks with a sustainability rating of BBB or better for inclusion in the concept-based stock selection area of Cathay Securities' stock selection app, thereby providing general investors with a channel for selecting good ESG stocks, in order to expand the influence of this ESG research service. This industry-academia collaboration not only helps Taiwanese companies strengthen their ESG disclosures and management, but also hopes that companies will become more responsible in improving their ESG performance through the disclosure of companies with a good ESG rating, and thereby make the world a better place.

Note: SEED stands for social, economic, and environmental disclosure.


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