Stakeholder Engagement

Cathay FHC engages with stakeholders in accordance with the four fundamental principles outlined in AA1000 Stakeholder Engagement Standard (AA1000 SES): Materiality, Inclusivity, Responsiveness, and Impact. In the meantime, we identified nine major stakeholder groups with our sustainability blueprint designed to hone in on our sustainability strategies. We subsequently compiled the "Cathay FHC Stakeholder Engagement Strategies" to listen to, understand, and respond to stakeholder voices and concerns through multiple channels/mechanisms. We aim to establish mutual benefit and trust through continued communication and engagement.

 

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. For example, Chang-Ken Lee, President of Cathay FHC, is the chairperson of the Financial Planning Association of Taiwan. 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

CS Issue Materiality Analysis

Cathay FHC not only takes stakeholder concerns into consideration when conducting materiality analysis, but we also refer to the Double Materiality concept advocated by the European Union. It adopts the impact-based methodology for materiality analysis, based on the latest general guidelines published by the Global Reporting Initiative (GRI), specifically GRI 3: Material Topics 2021. This methodology is used to identify material topics by analyzing the impacts of the company's operations on the environment and society, and determining which issues are most significant. Furthermore, Cathay FHC utilizes the Impact Valuation methodology to evaluate the impact of its operations on the economy, environment, and society, including actual and potential impacts, long- and short-term impacts, positive and negative impacts, and reparable or irreparable impacts. The company identifies significant impacts using monetary and quantitative indicators, and prioritizes ESG issues based on the significance of their impacts. This approach responds to stakeholder demands for transparency and allows Cathay Financial Holdings to develop a sustainable development direction and strategy blueprint.

 

2022 Goals Attainment of Material Issues


Cathay FHC 2022 Material Topic Matrix

With the results of identification and impact assessment, we further deliberate our sustainability strategy with senior managers and the sustainability team. Based on double materiality, we confirm and prioritize 19 material CS issues according to "Level of Operational Impact," "Level of Stakeholder Concern," and "Level of Sustainable Development Impact.".

 

 

Ethics and Compliance, risk management, and information security were some of the material issues highlighted by Cathay FHC in 2022. Below are the risk control strategies implemented for the two material issues listed:

Material Issue Topic Risk Management Strategy Material Issue Topic Risk Management Strategy  Material Issue Topic Risk Management Strategy
Governance  Ethics and Compliance 1. Cathay FHC values the corporate culture of ethical corporate management. We established the Policy and Code of Operation Integrity, the Procedures and Guidelines of Integrity Management Operation, and the Code of Conduct for Employee to require employees to comply with internal regulations when performing their duties. In 2021, all of our employees completed our annual training on the Code of Conduct for Employees with a completion rate of 100%.
2. The group’s compliance and AML/CFT is managed as a whole on the g implemented by level and region. The Chief Compliance Officer holding concurrent post as the Chief AML Compliance Officer appointed by the Board of Directors is in charge of the management of group compliance. The company takes compliance as one of the key points of internal control. We manage compliance risks systematically, including annual compliance evaluation, semiannual compliance self-assessment and self-inspections, trainings, compliance risk incidents, etc.  
 
Environmental Responsible Finance Cathay has established a Responsible Investment Working Group in 2014, which supervises Cathay FHC's responsible investment strategies and sets up policies. The working group continuously learns the best international practices, trends and methodologies to establish action plans to refine and improve the ESG integration process. We also provide teams with ESG analysis tools and deliver ESG trainings to strengthen capability of ESG risks management.

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Cathay has established Responsible Investment and Lending Policy, Investment and Lending Exclusion Policy and Engagement Policy. We incorporate ESG into the existing investment and lending procedures. Therefore, we have implemented exclusion screening, and more crucial, integrated ESG factors into comprehensive investment decisions in daily operations. We also managed businesses based on the risk level, and actively implemented post-investment/post-loan management after the investment and lending to reduce risks. In addition to proprietary assets, Cathay also incorporated mandate assets into the scope of responsible investment management..

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We will keep improving our ability to manage ESG risks of investment and lending through enhancing carbon reduction management of our financial assets and strengthening shareholders' activism..

" The policy clearly outlines the focus areas, including controversial sectors and countries. Cathay's Responsible Investment Working Group screens companies and countries by focus area based on specific screening guidelines and updates the "Investment and Lending Exclusion List." Furthermore, Cathay's subsidiaries must update their respective exclusion lists based on the working group's findings.
 Social Customer Relationship Management The Company has held the business philosophy of being "customer-centric." The risk management mechanism for customer relationship management is as below.  

customer relations management as follows:

1. Cathay FHC has a Service Quality Committee that sets the Group's service policy based on the principles of protecting customer rights and treating customers fairly. The committee periodically reviews service strategies and projects together with each subsidiary. Meanwhile, the Service Quality Team assembled by each subsidiary plans, implements, and follows up on service quality improvement plans.
2. Cathay values customers' opinions. We have a number of customer complaint channels and dedicated units. We also established regulations and the highest principle of "actively handling issues and actively showing concern" that requires our staff to immediately contact customers and propose solutions.”
3. Each subsidiary has certain mechanisms in place to execute the principles of treating customers fairly. We hold internal training courses for responsible persons on a regular basis; include the principles of treating customers fairly into compliance evaluation process; convene meetings to discuss the implementation and improvement plans, and report the implementation status to the Board of Directors.


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

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