Cathay FHC services half of the population in Taiwan. Our flagship subsidiary Cathay Life’s total assets amounted to more than over NT$6 trillion, which accounts for one-fourth of Taiwan life insurance industry’s total assets. As of December 2018, CUB’s loan balance ranked top 2 among Taiwanese private banks. Cathay SITE is the largest Taiwanese asset management company in terms of assets under management. Cathay believes our sustainability efforts will create a virtuous cycle for society. We have continuously committed to focus on long-term values and follow international standards to strengthen the spirit of sustainable finance.
Cathay's Sustainability Framework
Sustainable development is inseparable from a company's core competencies. Hence, Cathay's three engines of growth correspond to international sustainability frameworks: the PSI, EP, PRB and PRI, while ESG is incorporated into our core operations. Cathay strengthens its core competitiveness through emphasis on sustainability and grasp on trends, opportunities and risks. This creates an all-winning situation for company profitability, mutual prosperity with society, and environmental sustainability.
(1) Principles for Sustainable Insurance (PSI)
In 2016, Cathay Life became the first life insurance company in Asia self-complying with the PSI. Cathay Life has also set up the Corporate Sustainability (CS) Team to incorporate ESG issues into daily operations. It conducts regular meetings to monitor the implementation progress of each working group, and reports the achievements to the board of directors every six months.
In 2018, Cathay Life set its CS Strategy Blueprint underpinned by strategy focus (CARE). It also established short/medium/long-term goals to define the implementation direction, manage performance, and
demonstrate its long-term commitment to corporate sustainability.
Cathay Century announced self-compliance with PSI in 2017, and adopted the slogan “establish universal care and co-create holistic happiness” as its ultimate vision for the realization of sustainability, continuing to fully utilize its core competencies in insurance to prevent, alleviate and share losses.
(2) Equator principles (EPs)
As the leading financial institution in the field of renewable energy in Taiwan, Cathay United Bank (CUB) has invested considerable resources over the years into the development and research on green energy themes such as solar power and wind power. CUB adopted the Equator Principles in 2015 to examine its project financing processes with even higher standards, and became the first Equator Principles Financial Institution in Taiwan.
CUB also issues ESG guidelines for corporate lending “Principles Governing Corporate Loans by Environmental, Social, and Governance (ESG) Criteria” in 2017 to extend scope for "responsible lending" to all corporate borrowers. CUB integrates ESG risk management and corporate governance into the credit lending procedures to achieve the objectives of business growth and sustainable development.
Cathay United Bank's dedicated units
Corporate loan application & review process
(3) Principles for Responsible Banking (PRB)
Following the achievement of becoming the first bank in Taiwan to adopt the Equator Principles (EPs) in 2015, Cathay United Bank (CUB) committed to self-comply with the United Nations’ Principles for Responsible Banking (PRB) in December 2018, and became the first bank to implement PRB on a voluntary basis in Taiwan. Furthermore, CUB established a task force to define the implementation plan in line with PRB’s relevant rules and goals. The PRB comprises of six major principles: alignment, impact, clients and customers, stakeholders, governance and target setting, and transparency and accountability. By committing to this new framework, the banking industry shall ensure its operating strategies meet the requirements of the UN Sustainable Development Goals (SDGs) and the Paris Agreement.
(4)Principles for Responsible Investment (PRI)
Cathay FHC was the first Taiwan financial institution having the responsible investment team in 2014. This team is under Cathay FHC CS committee, and led by Chief Investment Officer of Cathay FHC. We formalized our responsible investment and lending process, and established the Responsible Investment and Lending Policy, Investment and Lending Exclusion Policy, and Engagement Policy.
Cathay FHC has established a top-down supervisory mechanism as well as a bottom-up analysis & review process for responsible investment and lending to mitigate ESG risks. Cathay aims to strengthen Cathay’s long-term investment/lending value and protect the rights of our clients and shareholders.
Cathay FHC 2018 Responsible Investment and Lending Progress Repor
Conning Inc.’s PRI transparency report
ESG Risk Detection System for Product Development
Cathay FHC & its subsidiaries conducted early warning process for ESG risks identification through the following three major activities. Cathay FHC’s subsidiaries take ESG risks into consideration while developing products.
1. Detecting ESG Trends:
Cathay FHC CS Committee will regularly consult the external experts to collect the latest ESG trends. The executive and management of Cathay FHC and its subsidiaries and all employees including those in charge of product development can involve in the process of detecting ESG issues.
2. Assessing ESG Risks:
After discussion by all six Working Groups of the CS Committee with various specialties in 2016, Cathay FHC set up four Focus Areas on ESG as the primary development plan for the product R&D departments of its subsidiaries.
3. Incorporating ESG into Company Policies and Training:
Set up stakeholder engagement policies to review Cathay FHC’s main focus annually. Provide education and training on ESG issues to all employees through regular CS committees, ESG training courses, sales meetings and employee communication platform, etc.
Considering ESG Issues in Insurance Product Design and After-Sales Management
The early warning of ESG risks is built into consideration for product development of Cathay FHC’s subsidiaries. After a product is launched, the "Insurance Management Team" will convene every six months to present the feedback on ESG-related issues, which is then used as reference for the development of further new products.Below is the Insurance Product Design and After-Sales Management Flow Chart.
Cathay FHC Insurance Product Development and After-Sale Management Process
SDGs that Cathay is Focused on
Cathay is focused on achieving sustainability through 10 of the 17 SDGs through the process below.
1. Identifying risks and focusing on development:
Cathay established the Cathay ESG Four Focus Areas in 2016: Renewable Energy and Infrastructure, Aging Society and Health, Women Empowerment, and Community and Financial Inclusion. We analyzed international trends and Taiwan’s priorities, and convened a strategy advancement meeting, which was attended by over 15 departments across our subsidiaries. Over 20 discussions were held to identify key risks, trends, and business opportunities, and to establish the long-term direction for Cathay’s sustainable development.
2. Complying with international standards and responding to the SDGs:
Cathay evaluated the risks and opportunities derived from its core business activities to the SDGs, and focused on implementing 10 SDGs in daily operations under the Four Focus Areas.
3. Setting goals and creating value:
Cathay has set short-term, mid-term, and long-term goals for sustainability issues, establishing the foundation for sustainable management. We strengthen our constitution and have made sustainability a part of our DNA through periodic assessments, which create benefits and long-term value for stakeholders.