Stakeholder Engagement

Cathay FHC listens to the needs of stakeholders, makes immediately adjustments to its approaches to achieving corporate sustainability, and takes stakeholders’ opinions into consideration when formulating its corporate sustainability strategy. Cathay identifies 8 groups of stakeholders based on four indicators: “Cathay’s form of business management,” “levels of interaction with stakeholders,” “levels of influence on Cathay,” and “levels of influence by Cathay.” We uphold four principles of engagement: materiality, effectiveness, flexibility, and respect and followed Cathay FHC Stakeholder Engagement Strategy on this basis. We disclose engagement results through a variety of communication channels which from the perspective of issues of concern to stakeholders.

 

 

Engagement methods include: Issuing reports and press releases; holding shareholders' meetings, investor conferences, forums, and charitable events; responding to investor ESG questionnaires and participating in international initiatives; conducting employee and customer satisfaction surveys. Cathay FHC's stakeholder communication channels, engagement frequency, engagement feedback mechanisms, and 2019 communication results are disclosed on the official website of Cathay FHC.

 

We annually report our performance of communication with stakeholders to the Board of Directors. For more information, please refer to Communication Channels and Response Method of Issues of Concern for Stakeholders.

 

Active Engagement to Guide Industrial Development

Cathay FHC has clearly stipulated on its Code of Operation Integrity and Code of Conduct for Employees that participation in public affairs must comply with laws and regulations, and any donations made must be disclosed accordingly. Following the rapid development of digital finance technologies, financial institutions not only face competition from the technology industry or e-commerce platforms, but must also respond to a plethora of emerging risks, such as aging population and climate change. Cathay FHC engages in the affairs of various associations and societies in hopes of building a consensus in the industry and contributing to industrial development. Long time collaborators include the Insurance Society of the R.O.C., International Insurance Society (IIS), and the Bankers Association of the R.O.C. In addition, Chang-Ken Lee, President of Cathay FHC, is the chairperson of the Financial Planning Association of Taiwan; Tiao-Kuei Huang, Chairman of Cathay Life, is the current chairperson of the Life Insurance Association R.O.C.; and Jeff Chang, Chairman of Cathay SITE, is the current chairperson of the Securities Investment Trust & Consulting Association of the R.O.C. All of these leaders actively promote collaboration between industry and government, and formulate related policies for mutual prosperity in the industry.

Cathay Financial Holdings — Explanations for Public Participation and Policy Influence

Identification and Response to Material Sustainability Issues

Cathay FHC conducted the CS Issue Materiality Analysis in 2019, and the process for identifying material sustainability issues is described below.

 

【Identification】

1. Collect information and identify issues

Identify issues that stakeholders are concerned about, and analyze global regulations on CSR disclosures, benchmark companies in the industry, international trend reports, and Cathay FHC's vision for sustainability and organizational development goals.

2. Identify potential issues

Find 9 economic issues, 3 environmental issues, and 8 social issues related to Cathay.

【Prioritize】

3. Understand the materiality of issues

Issued materiality analysis questionnaires in 2017 to survey the level of concern about sustainability issues among 155 stakeholders, and 15 senior executives each year determined the impact of sustainability issues on operations.

4. Prioritize issues

Take stakeholders' opinions into consideration when ranking the material issues by level of concern and analyzing their impact.

5. Adjust the priority of issues

Senior executives and the sustainability team discuss results of the materiality analysis.

【Actions】

6. Draw the matrix

Generate the 2019 Material Issue Matrix.

7. Set sustainability goals

Set short-term, mid-term, and long-term goals for material issues, and actively manage and track the goals to respond to stakeholders’ expectations.

 

Cathay FHC 2019 Material Topic Matrix

 

Description of changes in material issues in 2019:

Note 1: “Human Rights” and “Employee Diversity/ Inclusion” were merged into “Human Rights and Employee Diversity” with consideration to the contents and overlap between the issues, so the number of material issues in 2019 decreased by 1 compared to 2018.

Note 2: “Green Finance” was included as a material issue and “Loss Control” and “Attracting and Retaining Talents” were excluded.

 

The material issues of Cathay FHC includes compliance, digital finance, risk management, green finance, information security, and change in demographic structure etc. Below are the two material issues and risk management strategies:

 

Material Issue	Risk Management Strategy
Digital Finance	Cathay FHC established the Digital, Data & Technology Center (DDT) in 2016. DDT regards “data-driven” as culture. With “Digital, Data, and Technology” as its three pillars, DDT builds the infrastructure for big data analysis and application, utilizes new technologies in financial operations to create a data ecosystem as a basis for business development, risk management, product sales, and business performance related decisions. Besides, we have closely followed regulatory developments and changes to ensure that all operations comply with regulatory requirements.
Compliance	Cathay FHC has closely followed changes in the domestic and overseas financial and regulatory environments to strictly ensure that all operations comply with regulatory requirements. We have built systematic management of compliance risks, including trainings, self-evaluations and self-inspections, quantified compliance risk assessment mechanism, and law amendment management system. We established the External Compliance Incident Reporting and Management Guidelines for the effective supervision of our subsidiaries and to ensure that the Board of Directors and managers rapidly obtain warning information, evaluate, and take improvement measures in response to the group's compliance risks. Furthermore, Cathay FHC adopted the risk-based approach to continue to develop AML/CFT system by establishing the AML/CFT Management Guidelines, group-level risk methodologies, risk factors, and important internal control mechanisms, as well as risk warning mechanisms and monitoring indicators. We also enhanced AML/CFT data sharing and management  mechanisms to deploy a group-wide defense network.

Cathay FHC ‘s business scope includes life insurance, banking, property insurance, securities, securities investment trust and venture capital, corresponding to the type of stakeholders and issues are also very broad. In 2015, we introduced the concept of integrated reporting (IR) by emphasizing opportunities, risks, corporate strategies, and value creation to identify Cathay's five major capitals for the impact evaluation of material issues. When retrieving stakeholders' opinions, we integrated the company's results of Employee Satisfaction and Voice of Customer surveys, substantially increasing feedback scope and representativeness. From among 61 issues, 18 material issues were identified. In 2015, we also clarified the level of impact that each issue has on the company and specifically incorporated interviews with senior executives to identify the counterstrategies that Cathay adopts in response to each material issue. How to achieve sustainable development of enterprises, design and control through the mechanism, effectively supervise their organizational activities, and improve its organizational operation, has become the enterprise can effectively control the risk and the use of capital to create value. The Compliance Department introduced risk-based management practices in 2016 with the view of achieving better control of compliance risks. 

"Talent" is at the core of the financial services industry. Cathay has always viewed the cultivation of talent as its source of corporate competitiveness. In addition to selecting and fostering people to enrich our talent base, we have promoted Industry-academic Cooperation between the digital financial industry and academia and supported projects to uncover talent in the development of FinTech initiatives. We expect these projects to provide integrated resources that create a pool of financial elite with innovative thinking. These measures are described below:

A corporation's quest towards sustainability is a process whereby all stakeholders co-create value. Cathay FHC takes stakeholders’ expectations very seriously and upholds four principles of engagement: Materiality, effectiveness, flexibility, and respect. We established the Cathay FHC Stakeholder Engagement Policy on this basis, as well as engagement goals as the basis and methods for identifying stakeholders. We disclose engagement results through a number of channels, including reports, press releases, our website, investor conferences, shareholders' meetings, forums, charitable events, employee and customer opinion surveys; participating in CSR evaluations, and responding to investor ESG questionnaires. These are all active efforts we make to communicate with stakeholders.

Cathay FHC CS Committee regularly reviews the short-term, medium-term, and long-term goals of issues. We annually report our performance of communication with stakeholders to the Board of Directors. For more information, please refer to Communication Channels and Response Method of Issues of Concern for Stakeholders.

 

Active Engagement to Guide Industrial Development

Cathay FHC has clearly stipulated on its Code of Operation Integrity and Code of Conduct for Employees that participation in public affairs must comply with laws and regulations, and any donations made must be disclosed accordingly. Following the rapid development of digital finance technologies, financial institutions not only face competition from the technology industry or e-commerce platforms, but must also respond to a plethora of emerging risks, such as aging population and climate change. Cathay FHC engages in the affairs of various associations and societies in hopes of building a consensus in the industry and contributing to industrial development. Long time collaborators include the Insurance Society of the R.O.C., International Insurance Society (IIS), and the Bankers Association of the R.O.C. In addition, Chang-Ken Lee, President of Cathay FHC, is the chairperson of the Financial Planning Association of Taiwan; Tiao-Kuei Huang, Chairman of Cathay Life, is the current chairperson of the Life Insurance Association R.O.C.; and Jeff Chang, Chairman of Cathay SITE, is the current chairperson of the Securities Investment Trust & Consulting Association of the R.O.C. All of these leaders actively promote collaboration between industry and government, and formulate related policies for mutual prosperity in the industry.

Cathay Financial Holdings — Explanations for Public Participation and Policy Influence