“Sustainability” is a widely discussed topic among domestic and international corporations and is also a commitment that a company makes in its pursuit of corporate social responsibility (CSR). When Cathay FHC contemplated the word “sustainability”, Cathay Dupont Award initiated a process of self-reflection. Cathay's development started at the family level: one out of every two people in Taiwan is a Cathay FHC customer, and over 12 million clients have entrusted their precious assets to Cathay. The current state and scale of our group is a sign of approval by families in Taiwan. Apart from building a sustainable and outstanding enterprise that gives back to society and fosters stability, Cathay should strive to broaden our Asia market to becoming the top financial corporation in Asia.

In the past, the concept of CSR might have left the impression that corporations only need to manage issues such as charities and environmental protection. However, the underlying connotation of corporate sustainability (CS) further encourages corporations to embrace environmental, social, and governance (ESG) issues as a strategic tool to modify corporate management system and operation model while seeking profits. Cathay FHC recognizes that “sustainability in the macro-environment” is the foundation of corporate sustainability. Being entrusted with the responsibility of managing important money flow, we hope to simultaneously increase asset value for clients, create additional bonuses for the environment and the society, and reduce unnecessary risks. Hence, in 2013, we updated the report title from “Corporate Social Responsibility Report” to “Corporate Sustainability Report”, internalizing the concept of sustainability to all levels of the corporation. Through rigorous risk analysis, we defined three major risk factors: business changes, climate changes, and social changes. In order to implement the principles of sustainability, coping mechanisms were devised to master both external and internal risks in order to bring Cathay FHC even more business development opportunities.

In the face of all kinds of market changes and risks, many industries have been redefined and start to take another step further. Cathay FHC is no exception. In coping with changes in business conditions, we are committed to strengthening corporate governance structure: to increase independence of board members, in 2013, in addition to the 3 existing independent board members, Cathay FHC hired 2 external board members who are very experienced in the finance industry. So, the proportion of neutral board members increased from 23% in 2012 to 39%. To understand the possibility of improving the current corporate governance status, Cathay Life Insurance has taken the initiative to join the Corporate Governance Assessment Scheme by Taiwan Corporate Governance Association (TCGA) and will continue to fulfill any corporate governance related functions. At the same time, Cathay is also committed to implementing the promise of integrity in business dealings and will increase our transparency. In 2013, we were awarded an Information Disclosure and Transparency Ranking of "A" by the Taiwanese government and our CDP ranking was the first in the finance industry in Taiwan. Furthermore, we have become a CDP signatory in anticipation of our gradual shift from risk control to responsible investment.

Confronted by climate changes and risks related to resource allocation, we are tightening the rein on monitoring business operations. Moreover, Cathay FHC hopes to leverage the impact of money flow to motivate Taiwan to adopt low-carbon transformation. In 2013, Cathay United Bank provided over 30 billion in loans to companies pertaining to environmentalcauses, of which solar power project financing received the most funding from Cathay. Cathay Life Insurance has invested over 110 billion in environmental related industry. At the same time, while customer service has been migrated from a physical presence to online platforms, Cathay has also been developing various digital systems using digital technology to upgrade real-time financial services provided by our subsidiary companies. Moreover, Cathay has successfully introduced mobile insurance. By the end of 2013, 76.9% of all new contracts came from our mobile platform,leading the way among industry contemporaries. This enabled us to generate huge savings from reducing paper consumption and improve overall efficiency.

Changes in population dynamics and disparity between the rich and the poor are inevitably on the rise. In an effort to retain financial autonomy of different social demographics, Cathay has improved its financial inclusion of products and services: Cathay Life Insurance began offering long-term care coverage in 1998,and in 2009 we introduced our microinsurance series of products designed especially for disadvantaged families. These two products have secured top market share, and micro-insurance provides over 10,000 disadvantaged families with coverage.Cathay United Bank is also issuing several trust products,including charity trust, disability trust, the baseball player’s antigambling trust, etc. Offering the lowest entry levels to set up a trust supervisor system, these trust schemes offer protection to many disadvantaged individuals. Furthermore, Cathay Century Insurance created the “Accident-Free School” program for primary schools based on statistics gathered from previous accidents. Over 40 schools have undergone on-site inspection and safety testing, which is a prime example of tapping into the core functions of the financial industry to derive mutual benefits for social causes.

When it comes to how to best run a company, I believe that each corporation has its own experiences and philosophy. A successful management model is often replicated and the subject of many case studies. The Cathay was founded over fifty years ago. Our success is not the result of following such operation models. Instead, we achieved success through implementing management tools and from the feedback we acquire by interacting with customers, which enabled us to discover the core values of corporate sustainability: integrity, accountability, and creativity. We also recognize the crucial need for realizing corporate sustainability in order to co-exist with the people, the environment, and society as a whole in order to prosper.

Cathay FHC is proactively expanding its overseas locations and sales presence in order to fully embrace new market opportunities in emerging Asian countries. In China, Cathay United Bank in Shanghai achieved record high profits in 2013. In Southeast Asia, apart from existing locations set up in Vietnam and Cambodia, when the locations in Indonesia, Myanmar and Laos are completed, Cathay FHC will have bases in 9 out of the 10 ASEAN countries excluding China. We will continue to strive toward our goal of becoming the leading financial institution in the Asia-Pacific region, and it is our sincere hope to one day not only forge alliances with families in Taiwan, but throughout the entire Asia Pacific region. At the same time, we will ensure that the principles of sustainability form the bedrock of our ESG efforts in our overseas locations. In doing so, Cathay will be a truly sustainable corporation that remains committed to families everywhere.

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