Sustainability Governance

Through the "Sustainable Development Strategy" and "Value Creation Model", China Airlines assists stakeholders to grasp the true corporate value of China Airlines and review China Airlines' promotion of sustainable performance. Combine sustainability strategies to formulate short, medium and long-term goals to implement sustainable development of the company.

Sustainable Development Strategies

We begin by focusing on the four key strategies of "fleet and network", "products and services", "brand awareness", and "group's business operations". By taking into consideration the resources available to the enterprise is limited, we continue to adjust our corporate resource allocation and attempt to create higher values for stakeholders, those values including "trust, human resources, cooperation, environment, and society". By creating values, we aim to fulfill our corporate vision of "becoming the preferred airlines in Taiwan", and upgrade ourselves to become the benchmark for Taiwan's sustainable enterprises.

Value Creation Model

As a leader in Taiwan's aviation industry, in order to make mutual prosperity with stakeholders, move towards sustainability and endeavor to create the sustainable value for all stakeholders, CAL develops Sustainability Strategy Framework to picture the sustainability context of CAL. To help all stakeholders understand the true value of CAL, CAL discloses its six capitals (Financial, Natural, Manufactured, Intellectual, Human, Social and Relationship) publicly.

Capitals Input

Sustainability Strategies

Value Creation

Title Output Outcome
  • Operating revenue (TWD million): 146,372
  • Revenue reduced by 3% Compared to 2018, the EBITA rate increased by 37%
  • Punctuality rate of high-level repair and maintenance service:100%
  • Number of incidents causing casualties or flight crashes: 0
  • Number of existing destinations (including new ones): 77 passenger destinations / 36 freight destinations
  • Number of passengers/freight worldwide: RPK 42,533 (million) / FRTK 5,363 (million)
  • The punctuality rate of high-level repair and maintenance service was above the target (97%)
  • Promote a safety culture based on the spirit of "safety awareness, full participation, active management, and implementation" to achieve zero safety incidents
  • For freighters, two destinations (Nagoya, Japan and Mumbai, India) were added to increase the flexibility of the service network
  • Compared to 2018, the number of passengers grew by 1.89% and the volume of freight reduced by 9.2% worldwide
  • Revenue / number of passengers (seats) created by newly launched products or services: 12,553
  • Number of cost-saving patents: 57
  • Number of patents obtained: 1
  • Number of R&D employees trained: 240
  • Improved quality of cabin equipment and optimized quality of audio-visual programs and system stability on A330
  • Improved comfort of premium economy class seats on Boeing 777
  • Cabin design of the new aircraft A321neo
  • Improved quality of in-flight WiFi on Boeing 777 and A350
  • 63.3 man-month / year was saved
  • The cost of TWD 676.5 million was saved
  • CAL's intellectual property rights were continuously maintained
  • The skills of information employees were enhanced in response to the development of or updates to information systems
  • Number of new employees: 506
  • Retention rate: 96.58%
  • Employee turnover: 5.62%
  • Total number of employee training hours: 300,598
  • Total number of middle or top management training hours 13,754
  • New employees retention rate increased by 5.21%
  • Compared to 2018, the retention rate increased by 0.04%
  • Compared to 2018, employee turnover decreased by 0.26%
  • Related training was organized based on the needs of business operations
  • Job-related training was organized to improve management knowledge and consensus
  • Electricity consumption (kWh): 34,087,981
  • Carbon reduction (tons): 7,082,232.84
  • Waste reduction (kg): 5,123,655
  • Water consumption (thousand tons): 146.49
  • Number and percentage of green buildings: 2 / 66.67%
  • Solar photovoltaic investment (kWh): Power generated: 90,000
  • 928,781 kWh of electricity was saved through a sound energy management system
  • Carbon emission reductions of 124,365 tons were achieved through various carbon reduction measures
  • 136,206 kg of waste was reduced through improved waste management
  • 3,244 liters of water were saved through continuous water management
  • Elevator power recycled:1,423 kWh
  • Cumulative power saved: 216,000kWh
Social and Relationship Capital
  • Number of charitable activities: 13
  • Number of beneficiaries: 800
  • Number of community activities: 49
  • Number of participants: 1264
  • Number of sponsorships: 52
  • Result of brand promotion (TWD million): 48.9
  • Passenger transport customer satisfaction rate: 87.7%
  • Number of passenger transport customer complaints: 2,946
  • Freight customer satisfaction rate: 88.6%
  • Number of freight customer complaints: 0
  • Number of industry-academia partnerships: 32
  • Number of industry-academia partnership projects: 5
  • Number of participants: 99
  • Coverage of sustainable supply chain management: 65.27%
  • Number / proportion of suppliers under sustainability audit: 12.69%
  • Support was provided for the disadvantaged to improve quality of life, level of education, and social balance
  • Students were trained to develop a habit of independent reading
  • Revenue of TWD 27,571,992 was created through improved business development and brand image
  • CAL's promotional video, "What Travel Brings You," was well received and successfully increased the brand favorability, driving the sales to grow by 48%
  • Compared to 2018, the overall passenger satisfaction rate increased by 0.5 points
  • Compared to 2018, passenger satisfaction rate increased by 1.3 points which was 0.6 points beyond the target
  • Compared to 2018, freight customer complaints decreased by 100%
  • The purpose of industry-academia partnerships was to develop national aviation professionals
  • Up 15.74% in 2020 from 2019
  • Up 16.54% in 2020 from 2019

True Value of China Airlines

In order to embrace mutual prosperity along with our stakeholders and endeavoring to create sustainable value for all stakeholders, CAL has integrated six forms of capital (financial, natural, manufactured, intellectual, human, and social) to its corporate vision and strategy, introducing the concepts of true value to monetize the environmental and of social externality’s costs and benefits. This true value is viewed as an important reference point for corporate sustainability, and it helps all stakeholders understand the Company's sustainability performance.

True Value

According to the result of the calculation, CAL's traditional financial performance (earnings before interest, taxes, depreciation, and amortization, EBITA) increased by 37% to TWD 28.37 billion in 2019 from 2018; the true earnings generated in economic, environmental and social aspects came to around TWD 29.45 billion in 2019, reflecting a positive difference of TWD 1.08 billion and TWD 6.29 billion compared to EBITA and true earnings in 2018 respectively due to the positive benefits created by the respective increases of 17.9%, 438.4%, and 481% in "waste recycling," "water recycling," and "green fares." In line with the characteristics of the aviation industry, "greenhouse gas (GHG) emissions" and "noise pollution" were the main sources of external costs. The negative benefits of GHG emissions and noise pollution were reduced by 1.92% and 27.2% respectively in 2019 from 2018, showing CAL's active engagement in environmental sustainability initiatives such as "GHG reduction," "noise pollution prevention," "waste and water recycling," and "green fares." In CAL's true earnings in 2019, environmental external costs totaled TWD 16.6 billion, and positive benefits created by additional economic value and social externalities totaled TWD 17.7 billion.

Sustainable Development Goals

To show its determination to create value for stakeholders, CAL has established a sound sustainable management mechanism in line with 17 Sustainable Development Goals (SDGs) officially launched by the United Nations(UN) in 2016, hoping to maximize the benefits for the country, society, and all stakeholders. As a corporate citizen, CAL supports the UN's SDGs and focuses its sustainable development on nine SDGs in accordance with the SDG Compass and related sustainability reports of the International Civil Aviation Organization (ICAO), the Air Transportation Action Group (ATAG), and the international transportation industry.

Corporate Sustainability Management

Under the challenging and rapid changing environment with the growing trend regarding sustainability, CAL followed by the international trend of sustainability and referred to the experience from the benchmarking companies to establish its Corporate Sustainability Committee in 2014 (see figure below), the highest governing body of sustainability promotion, and set the Corporate Social Responsibility and Sustainable Development Best Practice Principles. The Corporate Sustainability Committee comprises six task forces in all, and they are responsible for setting and implementing short-term, middle-term, and long-term sustainable development goals to enforce the sustainable development.

Sustainability Goals of Each Task Force
Task Force Corresponding Material Issues Short-term Goals (2020) Medium-term Goals (2025) Long-term Goals (2030)
Corporate Governance
  1. ● Governance and Integrity Management
  2. ● Risk and Crisis Management
  3. ● Financial Performance
  4. ● Brand Management
  5. ● Fleet Development and Management
  1. Achieving 100% of sustainability tasks for the year and establishing the employee awareness improvement plan
  2. Implementing operating mechanisms for SDGs
  1. Regularly reporting progress on CSR tasks to the Corporate Sustainability Committee and holding at least two CSR training sessions for affiliates
  2. Assisting industry partners in building up capacity for sustainable development
  1. Disclosing sustainable development of airline transport affiliates
  2. Supporting global sustainability initiatives to expand the industry influence
  1. ● Flight Safety Management
  2. ● Passenger Service Management
  3. ● Freight Service Management
  4. ● Privacy and Information Security
  5. ● Customer Relationship and Satisfaction
  6. ● Sustainable Innovation and Development
  7. ● Market Competitiveness
  1. Implementing personal data management systems, in accordance with GDPR and personal data protection laws
  2. Increasing the freight customer satisfaction rate to 88%
  3. Introducing robotic process automation (RPA) to optimize internal operating procedures and customer service mechanisms, organizing RPA training, and installing chat bots
  4. Continuously participating in aviation associations and increasing influence
  5. Strengthening the promotion of just culture
  1. Received ISO27701 Privacy Information Management certification in the collection, processing, and use of personal data in the Passenger Service Management Procedure (including Taiwan and EU headquarters)
  2. Increasing the freight customer satisfaction rate to 89%
  3. Promoting a smart airport: Establishing a smart airport at Terminal 3 of Taiwan Taoyuan International Airport; improving customer satisfaction through digital innovation initiatives
  4. Publishing aviation study results to improve aviation industry technical capacity
  5. Strengthening safety culture
  1. Maintaining validity of ISO27701 Privacy Information Management certificate; reaching 90 points or more in Dow Jones Sustainability Index (DJSI) Personal Data Protection evaluation criteria
  2. Increasing the freight customer satisfaction rate to 90%
  3. Promoting intelligent tourism: Integrating tourism-related industries (such as transportation, hospitality, insurance, catering, and tourist attractions) to provide a one-stop smart travel eco-system
  4. Developing innovation initiatives with other airlines to drive innovation momentum
  5. Continuously enhancing the safety management system (SMS)
Human Resources
  1. ○ Labor Relations and Management
  2. ○ Human Rights
  3. ○ Sustainable Employment and Talent Attraction
  4. ○ Occupational Safety and Health Management
  1. Organizing eight insider sharing sessions to provide an opportunity for internal cross disciplinary networking
  2. Establishing CAL's aviation management talent pool
  3. Percentage of female manager reaching 24.5%
  1. Completing the establishment of all internal online training materials in various professional fields
  2. Establishing the optimal learning path for CAL's aviation management talent pool
  3. Percentage of female manager reaching 25%
  1. Application to Taiwan's aviation talent development
  2. Promoting Taiwan's aviation talent development
  3. Percentage of female manager reaching 27%
  1. ● Sustainable Supply Chain Management
  1. Maintain SAQ Score at 85 points
  2. Optimize risk management for sustainable supply chain, implement SAQ, and audit 30% of critical tier-1 suppliers by 2020
  1. Maintain SAQ score at 87 points
  2. Expand the scope of supply chain management, implement SAQ audits, and audit 100% of critical tier-1 suppliers by 2025
  1. Maintain SAQ score at 89 points
  2. Providing supply chain training, improve assistance mechanisms, and continuously implement a SAQ
  1. ▲ Climate Change Mitigation and Adaptation
  2. ▲ Environmental Management System Development
  3. ▲ Energy Management
  4. ▲ Resource Management
  5. ▲ Green Service Operations
  1. Improving annual aviation fuel efficiency by 1.5% (flight operations)
  2. Reducing carbon emissions by 38% as compared with 2009 (ground operations)
  3. Implementing TCFD (Taskforce on climate-related financial disclosure) evaluation and disclosure I
  4. Reducing general waste (non recyclable) by 2% compared with 2018
  5. Industrial waste recycling ratio reaching 40%
  6. Reducing water consumption by 1.5% comparedwith 2018 (Ground)
  7. Reducing paper consumption by 5% compared with 2018
  8. Embargoing transport of endangered species and prohibiting use of illegal species as food ingredients
  1. Improving annual aviation fuel efficiency by 1.5% and maintaining carbon-neutral growth from 2020 (flight operations)
  2. Reducing carbon emissions by 40.43% compared with 2009 (ground operations)
  3. Implementing carbon pricing operation
  4. Reducing general waste (non-recyclable) by 7% compared with 2018
  5. Industrial waste recycling ratio reaching 45%
  6. Reducing water consumption by 5% compared with 2018 (Ground)
  7. Reducing paper consumption by 10% compared with 2018
  8. Embargoing transport of endangered species and prohibiting use of illegal species as food ingredients
  1. Improving annual aviation fuel efficiency by 1.5% and maintaining carbon-neutral growth from 2020 (flight operations)
  2. Reducing carbon emissions by 42.34% compared with 2009 (ground operations)
  3. Implementing carbon pricing operation
  4. Reducing general waste (non-recyclable) by 12% compared with 2018
  5. Industrial waste recycling ratio reaching 50%
  6. Reducing water consumption by 7% compared with 2018 (Ground)
  7. Reducing paper consumption by 15% compared with 2018
  8. Embargoing transport of endangered species and prohibiting use of illegal species as food ingredients
  1. ○ Social Feedback and Engagement
  1. Increasing proportion of sponsorship for charity events
  2. Organizing at least one long-term social welfare project
  1. Developing opportunities for students to receive international education
  2. Promoting economic growth and employment assistance in underdeveloped areas / developing countries; improving social well-being
  1. Improving quality of education in underdeveloped areas / developing countries
  2. Enhancing the benefits of sponsorships regarding improving society

●:Economic ○:Social ▲:Environmental

Note: The importance of material issues to CAL may correspond to more than one task force; table lists only most relevant task force.

Governance Structure

Board of Directors

As the highest governing organization at CAL, the Board of Directors is responsible for supervising, resolving on crucial issues, and guiding management, in addition to formulating and complying with policies and rules, in accordance with both laws and regulations, and with the powers granted by the shareholders' meetings. The composition of the Board of Directors is diverse; it is based on talent, regardless of gender, nationality, or race. A total of eleven directors have been elected to the 21st term Board of Directors, including three independent directors, two of whom are female, with good qualities and expertise or experience in management of international companies. The tenure of the 21st term Board of Directors is three years (from June 27, 2018 to June 26, 2021). CAL convenes Board meetings at least five times every year and may convene extraordinary meetings for important or urgent business needs.

Note: For experience / education, concurrent posts, expertise, field of experience, compliance of independence, and the operations of the Board of Directors, refer to the CAL's Annual Report.

Personal Data of Directors of the Board

Board Diversity

Diversity Policy

China Airlines advocates and respects the director diversity policy, and is convinced that diversity can improve the overall performance of the Company. Members of the Board of Directors shall be based on personal capability and the diversification from different aspects shall also be taken into consideration, including basic characteristics (e.g., age, gender and nationality, etc.), experience and skills (e.g., aviation, sea freight, transportation, finance and accounting, law and insurance, academia, electricity, technology, and public utilities, etc.), operation and management, leadership and decision-making, and crisis management ability. In order to strengthen the Board's functions to achieve the ideal goals of corporate governance, the Company has established the“Corporate Governance Principles,” Article 20 of which specifies the overall abilities the Board of Directors shall be equipped with, which are as follows:

  • The ability to make operational judgment.
  • The ability to perform accounting and financial analysis.
  • The ability to conduct management administration.
  • The ability to conduct crisis management.
  • Industrial knowledge.
  • Perspective of the international market.
  • The ability to lead.
  • The ability to make decisions.

The diversification policies of the current executives of the Company and its progress are as follows:

Status of diversity among the Company's current Board members
Name of Board Member Gender Operations Management Perform Accounting And Financial Analysis Conduct Management Administration Conduct Crisis Management Industrial Knowledge Perspective Of The International Market Lead Make Decisions
Hsieh, Su-chien Male
Charles C.Y. ,Chen Male
Ting, Kwang-hung Male
Chen, Han-ming Male
Ko, Sun-ta Male
Wei, Yung-yeh Male
Lin, Su-ming Male
Wang, Shih-szu Female
Chung, Lo-min Male
Chang, Hsieh Gen-sen Female
Shen, Hui-ya Female

Note: ✓Indicates the director has the capability. ○ indicates the director has some capability.

Functional Committees of the Board

The Board of Directors has three functional committees: the Remuneration Committee, Audit Committee, and Risk Management Committee. These help the Board of Directors with its supervision and guidance when meetings are convened; in accordance with the respective organizational regulations adopted by the Board of Directors, these committees exercise the powers granted them by law to review and discuss relevant issues, then regularly submit their conclusions and recommendations to the Board of Directors for resolution. Based on the powers specified in the CAL's Remuneration Committee Charter, the Remuneration Committee periodically reviews performance evaluations and remuneration policies, systems, standards, and structures for directors and managerial officers.

General Audit Office

To enforce corporate sustainability, the General Audit Office is responsible for auditing the corporate governance system to prevent fraudulent activities and corruption. The results of audits are continually followed and required to be corrected by the given time limit. The audited cases in 2019 are summarized below by category. All of the cases have been corrected and reported to the General Audit Office for approval.

The General Audit Office has also established a whistle-blowing mechanism to report fraudulent activities and unethical conduct. If it is found that an employee of CAL or its affiliates is misusing his / her position to take bribes or behave in violation of his / her duties for the purpose of obtaining unlawful benefits for himself / herself or others, thereby causing losses to CAL's property or reputation, an employee or an external partner (e.g., a supplier) is encouraged to report this matter through the management mechanism or through the independent mailbox ( published on the website (Stakeholder Contact-Business Conduct) and in the Annual Report (Corporate Governance Report-Corporate Governance).

Audited Cases in 2019

Type of Cases Number of Cases Audited Number of Comments Number of Corrections
Head Office 15 97 97
Branch 51 260 260
Subsidiary 10 61 61
Transaction in Derivative Products 12 None,all complying with regulations -
Procedures for Lending Funds and Making Endorsements / Guarantees 4 1 1

CAL Group's Operation Achievements

CAL's management and employees continuously work to strengthen its operational structure through a variety of improvement strategies and integration of Group businesses. The aviation market encountered extreme stress in 2019; the Anti-Extradition Bill movement in Hong Kong and curbs on China's group tours took a toll on passenger transport; freight transport was affected by the global trade slowdown caused by the Chinese-US trade war, resulting in negative growth as a whole. Consolidated operating revenue totaled TWD 168.44 billion, comprising TWD 111.41 billion from passenger transport, TWD 43.79 billion from freight transport, and TWD 13.24 billion from other segments. Consolidated net loss before tax was TWD 97 million. For more information, refer to the "Financial Performance" in the Appendix.

Historical Financial Performance

  2016 2017 2018 2019
Passenger revenue
95.28 102.22 108.35 111.41
Cargo revenue
35.72 43.34 49.85 43.79
Other revenue
10.08 10.57 12.52 13.24
Consolidated operating Revenue
141.08 156.12 170.71 168.44
Pretax profit
1.88 3.52 3.08 -0.097
Operating revenue
127.52 139.82 150.26 146.37
Operating cost
112.25 121.85 137.62 135.01
Operating expense
10.80 10.61 10.80 11.28
Income Tax Expense (Interest)
0.97 0.88 0.53 0.01
Salary expenses
14.18 15.18 15.01 14.48
An Analysis of Employee Benefits Expense by Function
19.72 21.22 21.55 21.97
Post-employment benefits
1.05 1.24 1.69 1.62

Unit: TWD billion