Cathay Summit on Sustainable Finance and Climate Change calls on Taiwan’s sustainability efforts to align with international standards
The chairman of Cathay Financial Holding Co., Ltd. (Cathay FHC) Hong-Tu TSAI noted at the summit that 2022 will mark Cathay’s 60th birthday, and said he has gained a deep understanding that to ensure long-term survival, a company must achieve success. both durability and profitability. Organizing the Summit for the fifth consecutive year is one of Cathay’s sustainability efforts. Cathay has turned the influence of its assets into a force to push companies to respond to CDP, the world’s largest carbon emissions disclosure platform. By the end of 2020, Cathay had implemented 670 in-depth engagements with companies, and 65% of companies successfully engaged by Cathay, with the lead investor improving their CDP score the following year.
âThrough this summit as well as Cathay’s commitments, we called for immediate sustainable actions on the part of investors and borrowers. We hope that Taiwan can work well and it will be recognized by the international community, âsaid Hong-Tu TSAI.
Cathay herself has passed a number of ESG milestones in Taiwan. Cathay Life Insurance, Cathay United Bank and Cathay Century Insurance have led the way in voluntary compliance with sustainability standards such as the Principles for Responsible Investment (PRI), Principles for Responsible Banking (PRB) and Principles for United Nations Sustainable Insurance (PSI). Cathay is also the only Taiwanese finance company to participate in a number of international climate-related initiatives, including Climate Action 100+ and the Asian Utilities Engagement Program. Cathay also applied to join RE100, and is committed to all of its operating sites in Taiwan use 100% renewable energy by 2030 and achieve net zero activities by 2050.
The Summit was received with enthusiasm, and the reason was the same as Cathay’s for proactively promoting sustainability: For businesses, climate change has become a matter of survival. From the Carbon Frontier Adjustment Mechanism (CBAM) to COP26 resolutions, this environmental issue has already metamorphosed into an economic, political and societal issue, and has shifted the ESG (environmental, social and corporate governance) strategies of companies from a strategy limited to the CSR domain to the whole of their operations.
Five keys to implementing a sustainable development strategy
In his opening remarks, the Chairman of the Financial Supervisory Commission (FSC), Tien-Mu HUANG, stressed that the implementation of policies is essential for climate change mitigation and sustainable finance, saying that attention should be given to five key points. First, coherent goals; second, adjustments must be made in response to the change underway; third, government policy must adhere to the principles of fairness and proportionality as companies differ in size; fourth, support must be given to disadvantaged groups and to businesses with fewer resources; and fifth, the goals must be achievable. Companies must come up with viable strategies and become responsible participants in sustainable finance and climate change mitigation.
âClimate change mitigation or sustainable finance is a high level political aspiration, but for individual companies it is an important opportunity for organizational reform. For example, carrying out a carbon footprint inventory is an important decision for a board of directors, âsaid Tien-Mu HUANG.
Managing Director Brenda HU of the FSC Planning Department said that in order to firmly establish sustainable finance practices, the FSC is studying the EU approach and developing a standardized taxonomy of sustainable activities. It will first be tested in three major industries – manufacturing, construction and real estate, and shipping and warehousing – providing the financial sector with a basis for evaluating investment and financing opportunities. The taxonomy encompasses six major environmental goals – climate change mitigation, climate change adaptation, aquatic and marine resources, circular economy, pollution prevention and biodiversity – as well as social protections (human rights, workers’ rights and social development). Business activities must meet at least one environmental objective and not interfere with other objectives, while also ensuring social protection – only then are they consistent with sustainability.
Climate action strategies to leverage companies’ transition to green operations
Vice Minister of Economic Affairs Wen-Sheng TSENG said the Ministry of Economic Affairs will help companies reduce their carbon emissions by designating carbon footprint verification tools first. Second, it will formulate regulations on wholesale purchases of commercial renewable energy, currently limited to from Taiwan state-owned power company, so more businesses can buy low-carbon energy. Lin-Yi TSAI, director of the Environmental Protection Administration’s (EPA) Climate Change Office, said that in response to the European Union’s CBAM, the EPA will streamline administrative procedures to help small and medium-sized businesses to carry out inventories of their carbon footprint. The climate change response law being drafted will include a carbon tax, the rates of which will take into account the level of national economic development and use a phased approach to implementation.
International sustainability standards are gradually taking shape. Robert G. ECCLES, Visiting Professor of Management Practice at the University Oxford University, noted that the International Sustainability Standard Board (ISSB) was established during COP26, and define ESG information disclosure standards for global financial markets, providing a framework for corporate sustainability reporting. Rebecca Mikula-WRIGHT, CEO of the Asia Investor Group on Climate Change (AIGCC), said companies need to establish a timeline and approach to achieve net zero emissions. Of the 33 companies with the highest carbon emissions in Asia followed by Climate Action 100+, 14 have pledged to achieve net zero / carbon neutral emissions by 2050. These companies include Hon Hai Technology Group (Foxconn), Formosa Petrochemical Corporation and China Steel Corporation, all of whom have shared their approaches during the summit.
From âthree leaksâ to âthree carbonsâ, major carbon emitters are accelerating reduction efforts
This year, Taiwan announced that it will reach net zero emissions by 2050, which means companies must act at an accelerated pace. China Steel Corporation President Shyi-Chin WANG reports that since the end of last year, he has been aware of the “three carbon” pressure: carbon neutrality, carbon taxes and the adjustment of the EU’s carbon borders. As a result, he gave greater strength to efforts to reduce carbon emissions. Short term, China steel plans to reduce carbon emissions by 1% each year by 2030. To achieve carbon neutrality by 2050, it will work with academia to research and develop the necessary technologies, and plan the allocation of resources to adopt the hydrogen as a source of energy. Formosa Plastics Group President Sang-Chih LIN said that as early as the 1990s, Formosa adopted the 5S methodology for workplace organization (sort, tidy, shine, standardize, perpetuate) and has implemented a policy to eliminate three types of leaks (oil, water and gas). In addition, it has pursued circular economy practices which encompass the recycling of water, energy, raw materials and waste in the Group’s companies and production sites. Its carbon emissions in 2020 were a reduction of 15.7% from the 2007 peak, and using 2007 levels as a benchmark, Formosa aims to reduce carbon emissions by 20% and 35% respectively by 2025 and 2030, before reaching carbon neutrality by 2050.
Representatives of Taiwanese companies that attended the Summit also shared their experiences in promoting ESG and a transition to low-carbon operations. Chun-Chi CHOU, Founder of Sinyi Realty Inc., said that in addition to continuing to build sustainable real estate offices, Sinyi has purchased a small Malaysian island where they are planting trees and seaweed and restoring coral reefs. to create a zero emission island. . It provides exceptional carbon credits to the parent company to help achieve net zero emissions by 2030. TSMC is the first semiconductor company in the world to join RE100, and has set a 2050 target of achieve net zero emissions and create a sustainable supply chain. Hon Hai also set 2050 to achieve net zero emissions, and also made ESG a key performance indicator for internal performance reviews and supplier reviews.
No ESG, no company. No ESG, no money.
As a key player in the global supply chain, the Taiwanese industry sensed the high ESG expectations of customers early on. With regulatory levers, the transition to sustainable development is no longer a choice that companies can make, but an inevitability. Hong-Tu TSAI described the global supply chain as saying “No ESG, no business”, while the financial industry calls for “No ESG, no money,” both saying that it is no longer enough that companies succeed themselves, but that all stakeholders must also be able to progress together.
Hong-Tu TSAI provided the best summary of the spirit of the event, âNo ESG, no Taiwan“.
SOURCE Cathay Financial Holdings