The corporation towards to sustainable development is the process of creating value for all stakeholders. Furthermore, Cathay has transformed the idea of “corporate social responsibility ” into “corporate sustainability ” to elevate our vision. Cathay expect to become a backup for society and to create long-term value through the core abilities of financing and risk prevention.
Cathay's Sustainable Value Creation Process
Cathay FHC aims to become “a leading financial institution in the Asia-Pacific region” and will actively implement the ESG Four Focus Areas: Renewable Energy and Infrastructure, Aging Society and Health, Women Empowerment, and Community and Financial Inclusion.
We focused on 10 SDGs, gathered together 15 senior executives and held over 20 strategy advancement meetings, which were attended by over 15 departments across our subsidiaries to engage eight major stakeholders. Through this process we established the long-term direction for Cathay’s sustainable development.
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Cathay FHC understands that in addition to pursuing business growth, a company must also consider the positive and negative effects of its business activities on the environment and society. In order to create sustainable value in the long term, we collaborated with academic institutions in developing the 5 Capital Profit & Loss (5C P&L) evaluation method based on the triple bottom line (TBL) of economy, environment, and society. We used 2017 as the baseline year and outlined the value chain's effect on sustainability in monetary terms, driving more effective management decisions. This also allows stakeholders to more easily understand the real value we create on the path to corporate sustainability.
We further applied the evaluation of natural resource capital in 2019 to make our analysis results more complete and reasonable. This included taking the damage to the ecosystem into consideration in externality evaluations, and developing localized factors suitable for business locations in Taiwan. We also began developing valuation factors suitable for each region based on local economic conditions and environmental characteristics to evaluate the impact of our investments all over the world. Furthermore, we covered all of our investments in 2019 instead of only the 10 major industries selected in 2017.
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The externality impact pathway of Cathay's value chain activities is determined based on ESG and the 5 capitals
Analysis results show that the positive effects created by Cathay FHC in 2019 were worth approximately NT$9 trillion, in which 98% were from investments in downstream industries in our value chain. This also shows the importance of positive and negative effects that industrial chain development driven by investments has on the environment and society. We established a strict ESG risk supervision mechanism through the Responsible Investment Working Group, and continued to increase our investments in low carbon industries, which is estimated to have generated carbon reduction benefits worth over NT$20 billion in 2019. Cathay FHC hopes to achieve more comprehensive corporate sustainability management through its tireless efforts, and prepare for the risks and opportunities brought by the macro environment in advance, in order to gain the trust of stakeholders and achieve shared values.
Cathay FHC's 5C P&L (Unit: NT$100 million)
Note: The figures for 2017 were changed due to revision of factors used in calculations. Entries marked with a “+” in the figure represent a positive financial impact; entries marked with a “-” represent a negative financial impact.
Description of calculation basis:
1.Social and economic contributions from procurements are calculated based on the 2011 Input-Output Table of the Directorate-General of Budget, Accounting and Statistics.
2.We referenced the 2018 Green National Income and Energy Balances in Taiwan, R.O.C. when calculating external environmental costs from procurements.
3.Social and economic contributions from industry investments are calculated based on the Input-Output Table of the OECD.
4.We referenced data in Exiobase2 when calculating the external environmental costs from industry investments.
5.Economic contribution of business activities, employee remuneration and benefits, and depreciation and amortization data are from the Annual Report.
6.Natural resource capital related coefficients reference US EPA (2016), LC-Impact (2016), OECD (2012), and Eco-indicator 2010 Database, and are estimated by this study.
7.We referenced Jiune-Jye Ho (2005) and the Journal of Occupational Safety and Health (2013) when calculating the social cost of occupational accidents involving employees.
8.We referenced Chieh-Hsien Lee (2009) and the WHO (2008) when calculating the benefits of health promotion activities.
9.The calculations of AkzoNobel (2017) were referenced for economic benefits of career development.
10.The economic value of insurance claims is the economic value created by the claims for the policy holder.
11.When calculating the social value of volunteer services, the number of service hours is converted into employee salary amounts.
12.The contribution of lifting the pressure on social enterprises to repay loans is the difference in the amount paid by the borrower, which is calculated using the difference in preferential
rates and regular rates.
13.Monetary value conversion takes into consideration inflation and exchange rates of the NTD in 2017.