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.



Process of Creating Value for Sustainable Development

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.

(Click on the picture to zoom in) 

  


Impact Measurement and Valuation

5 Capital Profit & Loss

Cathay assesses 5C P&L based on impact valuation to enhance the effectiveness of our management decision-making. We use the impact pathway approach to analyze the impact of outputs from over 20 activities in our value chain on the externality of society, economy, physical health, ecosystem, and natural resources. This includes the economic value and environmental impact created by upstream procurements and downstream investments along the industry chain, GHG emissions from company operations, air pollution, water resource use, waste incineration and landfill, social cost of occupational accidents involving employees, and the social benefits brought by tax payment, rental, employee salaries, career development, health promotion activities, insurance claims, and preferential loans. Level of impact is converted into a consistent and comparable monetary value to identify the interdependence between different activities, increase positive effects, and minimize negative risks. In the future, we will continue to take part in methodology development, expand the scope of assessment, and strive to create long-term sustainability value.

Methodology description:
1. Social and economic contribution from procurements and industry investments is calculated based on the 2011 Input- Output Table of the Directorate-General of Budget, Accounting and Statistics.
2. Finance and integrity capital, depreciation/amortization amount, employee remuneration and benefits, and penalties for violations related to operations are from the Company's annual report.
3. Natural resource capital related value coefficients are calculated based on USEPA (2016), UNEP (2016), PWC (2015), and estimated by this study.
4. Human capital related value coefficients are calculated based on Jiune-Jye Ho (2005), Chieh-Hsien Lee (2009), and estimated by this study.
5. The economic value created by the policy holder is taken into consideration for determining the claims amount.
6. When calculating the social value of volunteer services, the number of service hours is converted into employee salary amounts.
7. The value of lifting the pressure on repaying loans is the difference in the amount paid by the borrower, which is calculated using the difference in preferential rates and regular rates.
8. Monetary value conversion takes into consideration inflation and exchange rates of the NTD in 2017.

(Click on the picture to zoom in) 

(Click on the picture to zoom in) 

 


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.




Cathay Life PSI Disclosure Reports

Cathay Century PSI Disclosure Reports

(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.

 

       
 
Cathay FHC's ESG 4 Focus Areas Trend Report
 

Cathay's Declaration of Sustainability Values

Cathay's Declaration of Sustainability Values declares how Cathay will comply with professional ethics, lawfully and reasonably engage in business, and also dedicate efforts to lower Environmental, Social and Governance (ESG) risks. It is our goal to create benefits for the economy, society and environment, and we invite partners in our value chain, such as suppliers and joint ventures, to comply as well. We hope that our efforts under the Values Declaration will enable us to take strides towards corporate sustainability.

 

Corporate Sustainability Principles and Corporate Governance Best Practice Principles

After the establishment, the Cathay FHC Corporate Sustainability Committee then formulated “Cathay FHC Corporate Sustainability Principles” and “Cathay Financial Holdings Corporate Governance Best Practice Principles” with reference to "Corporate Social Responsibility Best Practice Principles for TWSE / GTSM Listed Companies" to allow colleagues to follow and manage practical behaviors on the economic, environmental and social aspects. Moreover, we also pay attention to the development of domestic and international corporate social responsibility system and corporate environmental changes, according to the review to improve the company's corporate social responsibility system and norms.

 

Organization of Cathay FHC CS Committee

 

 

Milestones of Cathay FHC Corporate Sustainability Committee

Cathay FHC's CS Committee is subordinate to the Board of Directors and is the core unit for promoting corporate sustainability. The CS Committee is supervised by independent directors, and chaired by the President of Cathay FHC. The committee comprises 6 main working groups, each headed by a senior executive. The CS Committee began making advancements every year since 2011 in order to achieve breakthroughs. Our milestones over the years are as follows:

 2011
  • Founded “Cathay FHC CSR Committee” and assembled five main working groups
 2012
  • Established Corporate Social Responsibility Code of Practice
  • Published a CSR Report for the first time
  • Signed the U.K.'s Carbon Disclosure Project (CDP)
 2013
  • Developed CSR rewarding mechanism
  • Included corporate sustainability in training programs for new employees
  • Refined the response to ESG messages from international institutional investors
 2014
  • Restructured into the Cathay FHC CS Committee at the Board of Directors level supervised by an independent director
  • Assembled the Responsible Investment Working Group
 2015
  • Responded to and was selected into the DJSI for the first time
  • Signed the Equator Principles (EPs) and became Taiwan's first Equator Principles Financial Institution
  • Acquired Conning, Inc., which adopted UN’s Principles for Responsible Investment (PRI) initiatives
 2016
  • Cathay Life committed to complying with the UN Principles of Sustainable Insurance (PSI)
  • Convened a strategy advancement meeting with the six working groups and established the four focus areas of sustainable development
  • Introduced the Social Return on Investment (SROI)
  • Signed the Taiwan Stewardship Principles for Institutional Investors
 2017
  • Cathay Century committed to complying with the UNEP FI's Principles for Sustainable Insurance (PSI)
  • The six working groups were restructured into a dual secretary system
  • Strengthened Cathay's materiality analysis
 2018
  • CUB committed to complying with the UN Principles for Responsible Banking (PRB)
  • Selected into the Dow Jones Sustainability Index (DJSI) World Index
  • Cathay Life disclosed the first Stewardship Report in Taiwan
  • 2018 Cathay FHC CS Report is assured


Feedback

Please let us know your precious opinions.

Contact US

Video

Happiness is how you think of what you have.

More

News Center

For more information, please visit our News Center.

More