Cathay FHC and its subsidiaries implemented the ISO 20400: 2017 Sustainable Procurement Guidelines in 2018 to influence its upstream suppliers by incorporating concepts of sustainability into its procurement practices, and became the first financial institution worldwide to obtain the certification. We established the Cathay FHC Sustainable Procurement Policy and a complete sustainable procurement procedure based on risks identified in the procurement process and the seven core principles of sustainable procurement. We are systematically working with our suppliers in corporate sustainability via an online procurement platform, self-assessment and management of sustainability by suppliers, the Sustainability Value Declaration signed by 100% of suppliers, fulfillment on sustainability related education and training, and annual supplier conferences, emphasizing the regulatory compliance of suppliers, protection of human rights, and creation of local employment opportunities.
Cathay FHC added a CSR clause to the supplier contract in 2012 which explicitly requires suppliers to comply with regulations regarding employment conditions, workers' health and safety, environmental protection, and labor rights.
Supply Chain Management
We categorized 100% of our suppliers by procurement amount, and evaluated their ESG measures. If those suppliers with great amount or specific merchandise, we will conduct due diligence, like on-site audit or interview. We also reviewed current procurement items and contents and used them as indicators for evaluating suppliers. The procurement contract we sign with suppliers requires suppliers to fulfill their corporate social responsibility and comply with regulatory requirements. Furthermore, we engage our supply chain through holding Supplier Conference.
Supply Chain Performance
With ISO 20400 sustainable procurement process, we have performance as below:
Periodic Communication with Suppliers
Cathay provides suppliers with human rights and environmental protection training each year. Cathay also convenes a general meeting with all types of suppliers every three years, and meetings with 1-2 types of suppliers every year, communicating corporate sustainability issues, based on procurement amount and materiality.
In 2016, Cathay held a general meeting with all types of suppliers. More than 200 suppliers responded enthusiastically. Moreover, 26 green product supplier were awarded by Cathay for their service.
In 2017, Cathay FHC held workshop for 35 Printing suppliers to share cooperate sustainability ideas and to introduce PAS7000 (supply chain risk management system).
Insurance Brokers and Agencies Management
Cathay Life has a set of “Performance Appraisal and Remuneration Guidelines for Insurance Sales Force, Brokers and Agencies” in place to ensure the level of services provided by distribution channels it works with. The Guidelines serve to maintain the quality of new insurance contracts made by insurance brokers and agencies and control the number of improper sales. In 2017, 57,431 sales cases were reviewed during regular inspections. If the contracts fail to meet the established standards, the company has a set of mechanisms in place to determine the necessity of renewing such contracts.