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. 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.

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.

  • 《Cathay FHC RI Leading Teams and Sufficient Resources》

  • Equator Principles (EPs)

    The “Equator Principles” (EPs) is an international risk management framework for financial industry. It categorises risks in large project finance based on their potential environmental and social impact and initiates varying levels of review for different categories. It requires lenders to include human rights and engagement mechanisms, establish an environmental and social management system, and establish action plans in accordance with risks disclosed in environmental assessments. These items are listed in credit contracts for compliance and execution. Banks shall implement continuous monitoring of project construction and operations after funding loans and regularly disclose information on the implementation status.

    Cathay United Bank Equator Principles Disclosure Website

    United Nations Principles for Responsible Banking (PRB)

    After becoming the first EPFI bank in Taiwan, CUB announced its voluntary adoption of the United Nations Principles for Responsible Banking (PRB) in December 2018, and became the first PRB bank in Taiwan. CUB established a task force in early 2019 to inventory its core competencies and plan to gradually implement the six major PRB principles: “alignment, impact and target setting, clients and customers, stakeholders, governance and culture, and transparency and accountability”. Through the implementation of the aforementioned principles, the Bank will integrate its own business strategies with the UN Sustainable Development Goals (SDGs) and the Paris Agreement.

    Cathay United Bank declared its voluntary compliance with the United Nations' Principles for Responsible Banking (PRB) at the end of 2018 to line up with international sustainability frameworks and set an example for the industry. CUB became the first bank in Taiwan to obtain PRB compliance assurance from a CPA firm in February 2021, and takes concrete actions to fulfill the corporate social responsibility of a financial institution. CUB continues to promote the PRB and maximize financial influence based on its banking core competencies to facilitate the prosperity of companies, society, and the environment.

    CUB Progress Report on the Implementation of the PRB


    Cathay United Bank has adopted the Guidelines Governing ESG and Climate Risk Management and is committed to addressing climate change and mitigating environmental, social, and governance risks. We also incorporate responsible lending into our core competencies and operations. As staunch supporters of the spirit enshrined in the Paris Climate Agreement and TCFD, we specify climate risks (including transition risks and physical risks) to be included into lending procedures and ESG management mechanisms. We constantly seek ways to enhance risk management for responsible lending and strengthen our capacity for responding to ESG and climate-related risks.

    Cathay United Bank leverages its financial influence to motivate partners in the value chain to jointly bring about economic, social, and environmental benefits, foster sustainable development of the environment and society, fulfill corporate social responsibilities, and make active contributions to sustainability.

    《Cathay United Bank ESG Management of Lending》

    Cathay United Bank Equator Principles Disclosure Website

     

     

    Strengthen the climate management and transition to zero carbon

    Using science-based quantification, Cathay FHC has developed a carbon reduction pathway for investment and lending portfolios with emission-based and impact-based approaches. Cathay FHC has committed to achieving long-term goals for net zero emissions in financial assets by 2050 as well as the short- and mid-term goals. Cathay FHC will adjust carbon reduction goals every five years to ensure that the company's goals are in line with 2050 financial assets net zero pathway. The short- and mid-term carbon reduction goals set forth by Cathay FHC have been approved by the Science Based Targets initiative (SBTi) in 2022.

    To achieve the long-term goal of net zero emissions in financial assets by 2050, Cathay FHC continues to calculate the Weighted Average Carbon Intensity (WACI) of investment portfolios with the Task Force on Climate-Related Financial Disclosures' (TCFD) methodology as well as total carbon emissions and intensity from financial assets with the Partnership for Carbon Accounting Financial (PCAF) methodology. For lending, Cathay FHC has been conducting carbon accounting of lending portfolios using SBTi and PCAF methodologies since 2021. Carbon accounting was conducted for the following assets: listed equity, corporate bonds, electricity generation project finance, commercial real estate mortgage loan, and long-term corporate loans. In cases where carbon emissions data was missing, Cathay FHC estimated carbon emissions using the PCAF methodology.

    《Cathay FHC Monitoring Financed Emissions》

    《Cathay FHC Coal Phase-Out Strategy》

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