Taiwanese Cathay Financial Holdings (Cathay United Bank and Cathay Life Insurance) has adopted its first coal sector restriction policy. While the policy is insufficient to prevent the risks linked with this dirty energy and does not compare to global policies emerging in Europe and particularly in France, it is an extremely positive signal from Asia, where coal continues to grow.
These are the measures adopted:
- Cathay United Bank will no longer provide loans to any coal-fired power plants.
- Cathay Life Insurance’s investment and lending exclusion list now includes coal-fired power plants that are not actively transitioning to renewable energy.
- Cathay Financial Holdings is the second Taiwanese financial institution to stop financing thermal coal plants following E. Sun Commercial Bank. Other Asian financial institutions, notably in Japan and Singapore, have also pledged to stop financing coal-fired power plants. However, these engagements often concern future contracts and do not affect existing financing. Several examples show that nothing prevents a bank from withdrawing support from projects before finalizing financing contracts. We call on Cathay Financial Holdings to apply its policy to future contracts and those under negotiation.
- Cathay Life Insurance’s pledge is unprecedented in Asia. It is too early to assess its direct impact. Financial research from several NGOs including urgewald and Friends of the Earth France reveals that only Cathay Financial Holdings appears to be investing in new thermal coal plants. Cathay Financial Holdings’ Corporate Sustainability Report does not set forth a timeline for when the policy will enter into effect and does not elaborate on their expectations from corporations in their portfolio. Nevertheless, this policy sends a positive signal to Asian corporations that remain heavily involved in the development of new thermal coal plants.
Cathay Financial Holdings published the measures in their 2019 Corporate Sustainability Report, released in late July 2020. 350.org Taiwan, a partner of Reclaim Finance, has published an open letter in response.