Organization and
External Influences

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.

Sustainability Value Creation

Policy and Organizational Structure

Sustainable Impact

Cathay FHC has a profound understanding that creating long-term value for stakeholders is the foundation for corporate sustainability. As we pursue business growth, we not only create employment opportunities, increase the output value of the industry chain, and support the government in expanding development and benefits, but also create higher returns for investors. However, this may also result in an increase in our environmental footprint or natural resource consumption, and incur a social cost. Cathay FHC began working with the Center for Corporate Sustainability Impact of Tunghai University in 2018, and developed a 5C P&L assessment method based on the triple bottom line (TBL). The method assesses the social impact derived from Company's value chain activities from an outside in approach every two years, in hopes of minimizing the negative impact and maximizing the positive impact of its operations.

Furthermore, Cathay FHC continues to increase the depth and breadth of the overall methodology, so that the analysis results are more complete and reasonable. We extended considerations of value chain activities from environment externalities to biodiversity issues in 2019 based on the concept of life cycle assessment (LCA). With regard to downstream investments, we expanded the scope of survey in 2019 from investments in only the top ten industries to all industries. We also began developing localized coefficients suitable for each region of investment in order to accurately reflect local economic conditions and environment features. As for the upstream supply chain, starting in 2021, we began using the Input-Output Table announced by the Directorate-General of Budget, Accounting and Statistics in 2016, and retroactively updated historical calculation results. We began further assessing the employment opportunities created by procurements, and the compensation received by employees in our supply chain.

Milestones

2011

Established Cathay FHC Corporate Social Responsibility (CSR) Committee with five task forces

2012

Set forth the Corporate Social Responsibility Code of Practice
Published the first CSR Report
Joined the Carbon Disclosure Project (CDP)

2013

Established the CSR rewarding mechanism
Corporate sustainability training incorporated into new employee orientation
Responded to ESG messages from institutional investors

2014

The CSR Committee was reestablished as the Corporate Sustainability (CS) Committee under the board and supervised by an independent director
Established the Responsible Investment Working Group

2015

Responded to and was selected for the Dow Jones Sustainability Index (DJSI)
Became Taiwan's first signatory to the Equator Principles (EPs)
Acquired Conning, Inc., a PRI signatory

2016

Cathay Life pledges to comply with the UN's Principles for Sustainable Insurance (PSI)
Convened a strategy advancement meeting with the six task forces and defined the four focus areas of sustainable development
Incorporated Social Return on Investment (SROI)
Became a signatory to Taiwan's Stewardship Principles for Institutional Investors

2017

Cathay Century pledges to comply with the UN's Principles for Sustainable Insurance (PSI)
Dual secretaries instituted for the six task forces
Investigated the causality between sustainability and business performance

2018

CUB pledges to comply with the UN's Principles for Responsible Banking (PRB)
Selected for the DJSI World Index
Cathay Life releases the first Stewardship Report in Taiwan
Audited all indexes within the CSR Report

2019

Established the Corporate Sustainability Division
Updated the 2016 four focus areas of sustainable development
Began to follow the TCFD in 2017. The TCFD task force, led by the Chief Risk Officer, began to monitor climate-related risks in 2018.

2020

Established the Corporate Sustainability Office under the Cathay FHC President's management
Reexamined the four focus areas and established "Climate, Health, and Empowerment" as the three new focus areas for strategic sustainable development
Investigated the link between sustainability actions and brand perception

2021

Tied Cathay FHC President's remuneration package to sustainability performance
Pledged to comply with RE100. Aiming to achieve 100% use of renewable energy at our Taiwan facilities by 2030 and net-zero carbon emissions by 2050.
Releases Cathay's first ESG Integration Report

2022

CS Committee finalizes sustainability blueprint detailing the strategy and implementation of the three focus areas
Tied remuneration packages for presidents and senior executives to sustainability performance
Emission reduction targets officially verified by SBTi
Releases Cathay's first TCFD Report

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.

Cathay Financial Holdings Sustainability Governance Framework

To align with the company's ESG policy, Cathay FHC established the Corporate Social Responsibility Committee in 2011, which was renamed the Corporate Sustainability (CS) Committee in 2014. This committee serves as the highest-level decision-making unit for sustainability development within the company and is directly under the Board of Directors(BoD). It is supervised by an independent director and chaired by the company’s president (who is also a board member). Committee members consist of the presidents of the company’s subsidiaries, and its members are senior executives from various departments across the organization. Together, they formulate and implement the group's sustainability development plans and conduct periodic reviews. Committee meetings are held quarterly, during which the independent director works with committee members to guide the company’s sustainability efforts.

The company has established a Corporate Sustainability Office under the president’s supervision, dedicated to promoting sustainability within the group. The office identifies stakeholders relevant to the company's operations, assesses their sustainability concerns, and evaluates the impact and risks of these issues on the company’s core business. Using the principle of materiality, an annual analysis of material issues is conducted, based on which short-, medium-, and long-term goals are set.

The company leverages its core financial and risk management functions to focus on 10 Sustainable Development Goals (SDGs). It has formulated the Cathay Sustainability Strategy under three pillars—Climate, Health, and Empowerment—along with strategic objectives, action plans, and effectiveness reviews. The Corporate Sustainability Office also acts as the secretariat of the Corporate Sustainability Committee, reporting resolutions, progress on sustainability strategies, implementation of major projects, and achievement of sustainability goals to the BoD every six months.

In 2024, reports to the Board included updates on sustainability policy reviews and revisions, stakeholder engagement and communication outcomes, progress on the three sustainability strategy pillars, advancement in the Science-Based Targets initiative (SBTi), the zero-carbon operations transformation plan, and the implementation of sustainability-related tasks.

To enhance corporate sustainability governance and improve the effectiveness of the BoD, the company established a Corporate Sustainability Committee as a functional committee on January 1, 2025. This committee consists of at least three directors appointed by the Board, including at least one independent director. At least one member must possess relevant management capabilities or experience. Following the establishment of the functional committee, the existing Corporate Sustainability Committee will continue to convene under its supervision and be renamed the ESG Strategy Committee.

The BoD regularly monitors the progress of sustainability initiatives, with independent directors involved in supervision to support adjustments and improvements by the Management. To ensure the Board and functional committees fulfill their responsibilities in governance, the company has established Regulations Governing the Evaluation of the Board and Functional Committee’s Performance. The evaluation incorporates sustainability indicators such as compliance, corporate governance, risk management, and corporate sustainability and social responsibility. In 2023, the internal performance evaluation of the company’s Board of Directors and functional committees resulted in a rating of “Exceeds Expectations.”