World Climate Foundation
Interview with Mr Hong-Tu Tsai, Chairman of Cathay Financial Holdings
As the largest financial group in Taiwan with over US$400 billion, Cathay Financial Holdings’ (Cathay FHC) customers represent 63% of Taiwan’s population. Cathay FHC became a Planet A Partner of World Climate Summit - The Investment COP in 2022. Mr Hong-Tu Tsai, Chairman of Cathay Financial Holdings was the keynote speaker at Investment Session 1B “Financial Transformation-Investor Innovation on Real Economic Impact” on 13 November.
In this interview, Mr Hong-Tu Tsai shares Cathay FHC’s insights on sustainable finance and financial institutions’ role in the net-zero transition.
- What was your goal in joining World Climate Summit in Sharm el-Sheikh, Egypt?
In recent years, extreme weather has caused serious problems from natural disasters, the decrease in biocapacity, food insecurity and even impacted international peace. Escalating climate impacts and related environmental risks may cause significant damage to the economy and financial stability of many societies. Therefore, financial institutions may suffer losses from exposure to corporates that depend on natural resources without transition plans. Cathay Financial Holdings places significant emphasis on corporate engagement, as we believe our role as a financial service provider goes beyond being a responsible institution, and we proactively engage our investee companies to drive various sectors towards a net-zero economy.
Cathay FHC is the first partner of the World Climate Foundation (WCF) from Taiwan. I was honoured to make the opening keynote speech and share my thoughts on the importance of corporate purpose, climate actions and how financial institutions can play an important role in the net-zero transition. In addition, Cathay FHC broadcast several panel and keynote sessions of WCF’s World Climate Summit during the Cathay Sustainable Finance and Climate Change Summit in Taiwan.
Cathay FHC has organised Cathay Sustainable Finance and Climate Change Summit since 2017 to discuss global trends and low-carbon transition strategies. In 2022, the summit was dedicated to climate policy advocacy by building capacity and having an influential impact on NGOs, corporates and the government.
- As one of the largest financial conglomerates in Asia, could you share Cathay FHC’s insights on leveraging engagement with investee companies to achieve net-zero transition collaboratively?
Cathay FHC positions itself as an enabler of a comprehensive value chain. As mentioned previously, we place significant emphasis on corporate engagement, as we believe our role as a financial service provider goes beyond being a responsible institution, and we proactively engage our investee companies to drive various sectors towards a net-zero economy.
Cathay Financial Holdings has committed to many global climate-related initiatives. We are the chair of the Asia Investor Group on Climate Change, and we participate in investor engagement programs including Climate Action 100+, Asia Utilities Engagement Program and Valuing Water Financial Initiatives. We are also approved by the Science Based Target initiative and adjust the allocation of our bank and investment portfolios to fulfil a higher standard of responsible investment.
Our definition of corporate sustainability is to value the long-term interests of key stakeholders while maintaining accountability for our business decisions, therefore, it is important to think “on clients’ behalf, who should we support?”.
“Cathay FHC regards corporate sustainability and ESG as crucial missions and promotes the concepts of “No ESG, No Business” in the global supply chain as well as “No ESG, No Money” in financial institutions”.
– Hong-Tu Tsai, Chairman, Cathay FHC
Cathay FHC has participated in multiple international climate initiatives to leverage our fellow institutional investors to collaborate with different sectors to take on further commitments to net-zero business models. As the current Chair of the Asia Investor Group on Climate Change (AIGCC), our purpose of engagement is to allow international investors to gain forward-looking insights into climate change and help the Asian market to prioritise mitigating climate change risk. As a financial institution, it is vital to foresee the future needs of clients, and it is the financial institution’s role to empower clients with resilience to expedite a sustainable value chain.
- What challenges are you observing on the way to a net-zero transition in emerging markets that World Climate Summit could help to overcome?
In Asia, 15 countries have committed or announced plans to achieve carbon neutrality or net-zero emissions by 2050. Notably, it is a challenging trade-off between economic growth and net-zero transition in emerging markets. Here, I would like to share with you that Asian countries and many enterprises have initiated a net-zero transition process to deliver opportunities and innovative solutions with determination and ambitions. Many SMEs in Asia have been in decarbonisation transformation with flexible strategies and agile actions, financial impacts are key to expediting the progress of the net-zero transition.
The theme of COP26 in 2021 was finance, and global leaders agreed to assist emerging countries with their projects related to climate resilience; however, the budget gap is still large. The importance of climate finance was emphasised at COP27; financial institutions play critical roles in the global net-zero transition. Besides public-private partnerships, blended finance may become a mainstream solution. Leveraging credit enhancement from development banks and development funds could strengthen commercial terms, which allows climate transition or social development projects to be more investable and bankable.
It is great to see stakeholders around the world devote efforts to methodology and financial measurements of climate issues. World Climate Summit is great for stakeholders and experts around the world to share climate-issue efforts and insights and, more importantly, to generate solid action plans towards sustainability.
About Cathay Financial Holdings
Cathay Financial Holding Co., Ltd. (Cathay FHC) is the largest financial group in Taiwan, with total assets of over US$400 billion. The group includes leading players in life insurance, banking, P&C insurance, asset management, securities and venture capital. Cathay FHC has a presence in 12 markets in Asia and aims to become a leading financial institution in the region. Serving as the fiduciary to our clients, Cathay FHC upholds its mission to become the most trusted financial group and help clients plan for a better financial life by leveraging technology innovation and offering state-of-the-art services.
Learn more: www.cathayholdings.com
About Mr Hong-Tu Tsai, Chairman of Cathay Financial Holdings
Mr Hong-Tu Tsai is the Chairman of Cathay Financial Holdings (Cathay FHC). Under his leadership, Cathay FHC has grown into the largest Taiwanese financial group, with total managed assets amounting to US$400 billion. The group includes leading players in life insurance, banking, P&C insurance, asset management, securities, and venture capital in Taiwan. Mr Tsai highly regards the influence of sustainability created by the financial institution. He has been recognized for his leadership and management with the Asian Corporate Director Recognition Award by Corporate Governance Asia for two consecutive years (2020-2021) and with the Asia Responsible Enterprise Awards for “Responsible Business Leadership” in 2022.