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2019 ESG REPORT

ESG Policies

Aflac Incorporated ESG Investing Statement

At Aflac Incorporated, we have helped provide financial protection for 65 years to more than 50 million people worldwide. We are dedicated to delivering exemplary service and solutions for businesses and individuals, while staying true to our values and our culture, which embody “The Aflac Way.” The Aflac Way is how we work every day to live up to the commitments we make to our customers, to our fellow employees and to all the people who rely on Aflac. It’s about honesty, integrity, fairness, responsibility, respect and teamwork. We have learned that all things being equal, people would rather work for and do business with a company that is a good corporate citizen.

Aflac has long maintained a strong commitment to diversity and inclusion. Our view is that fostering and welcoming the full range of diversity in our daily operations, throughout our management team and on our board enhance our ability to respond to our constituents the best way we can. As such, we continue to be intensely focused on demonstrating a meaningful commitment to gender diversity, creating more opportunities for minorities and ensuring that our board represents a diverse cross-section of knowledge and experience to help protect Aflac while strategically positioning the company for long-term success.

Navigating the COVID-19 pandemic has demanded our full attention to protect the company and our employees, while ensuring we remain in a position of strength. The safety and health of everyone we do business with is our greatest priority, and we are committed to supporting our policyholders, employees and communities through this challenging time. We will continue to take the steps and measures necessary to adapt to the pandemic environment and emerge from this extraordinary period in a continued position of strength and leadership.

Lastly, our commitment to environmentally friendly and prudent business practices is as strong as ever and serves to enhance our corporate reputation, improve talent recruitment and retention, and reduce business expenses. I believe adhering to a broad array of best-in-class ESG factors must be standard operating procedure for doing business in today’s global environment. We will continue to do our part to be a leader in energy conservation and environmental protection, improve the communities where we work and live, and excel in corporate governance.

As we invest in Aflac’s future, ensuring that the company executes a sustainable approach to driving our business forward and creating shareholder value will be critical to our success.

Dan Amos

Chairman and Chief Executive Officer

Aflac Incorporated


Aflac Global Investments ESG Investing Policy

Aflac Global Investments encompasses Aflac‘s asset management subsidiaries responsible for investing and protecting the policyholder funds entrusted to us by Aflac Incorporated’s insurance subsidiaries.

Our team contributes to Aflac’s long-term success by seeking to maximize long-term returns and preservation of capital based on an investment foundation of strategic asset allocation and a conservative asset and liability management approach that focuses on making investments across a diversified portfolio of high-quality assets. We employ a disciplined investment strategy to evaluate numerous factors when assessing the appropriateness of all new and existing investments. This includes extensive fundamental research on every asset class in which we invest and credit research on every individual investment that we make to thoroughly analyze business and financial risks.

Integrating ESG factors into Aflac Incorporated’s business has been a critical part of our operations for more than 30 years and extends to Global Investments’ core investment philosophy. We believe this leads to better decisions with respect to the sustainability of an investment and its risk and return profile, while helping to make a positive financial and social impact on all of Aflac’s stakeholders.

We leverage our reach and resources to analyze climate-related risks, natural resources, pollution and waste, human capital, product safety, social opportunity, corporate governance and ethics. Our comprehensive process entails assigning a proprietary ESG score as part of our core fundamental analysis that captures our assessment of ESG-related factors to an issuer’s overall business, financial and credit prospects. We also leverage our relationships with companies’ management teams to help us verify and amplify our analysis from our internal scoring. This is a rigorous and thorough underwriting process, but we believe it is the best and right way to invest.

Our ESG investment approach applies to all assets in our portfolio, including assets for which we may employ third-party asset managers. Our external manager relationships span multiple asset classes, including debt and equity positions in public and private companies, as well as real assets such as real estate that may have more direct exposure to climate and other environmental risks. We take great care to ensure that external managers follow the policies and procedures that we have developed and implemented, and we require each to undergo an extensive due diligence process, including an annual review, attestation and assessment of how ESG considerations are integrated into their investment process.

Our work to date has paved the way for what we believe is helping to make a direct and measurable positive impact on society and the environment. As of June 2020, our impact and sustainable investments total over $1.7 billion of private and public investments in:

  • Municipal and other bonds that support affordable housing, education, hospitals, public transit, water facilities and similar investments supporting local communities in the United States, Japan and other markets;
  • Bonds issued in the public markets that qualify as green or sustainable bonds;
  • Infrastructure debt that supports the expansion of renewable energy initiatives, including investments by Aflac Japan for the advancement of solar power in Japan; and
  • Investments in minority- and women-owned private equity funds.

We are committed to enriching our ESG investments as we continue to further review and develop our investment framework. For additional information on our current investment portfolio, please see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ending Dec. 31, 2019.

Eric Kirsch

Executive Vice President and Global Chief Investment Officer

President, Aflac Global Investments


Aflac Incorporated Tax Policy

At Aflac Incorporated, we operate in and are committed to a culture of compliance. We do this through the Aflac Way, which is how we work every day to ensure honesty, integrity, fairness, responsibility and respect for our customers, our fellow employees and all the people who rely on Aflac.

These same principles hold true when it comes to Aflac Incorporated’s tax policy. We have worked hard over the years to enhance our processes and protocols and put the proper controls in place to ensure that our tax policy and associated activities are optimally executed to the letter of the law. To this end, our chief tax officer is responsible for day-to-day management and execution of our tax policy and works closely with our board’s Audit and Risk Committee. We diligently review our tax policy annually to ensure it reflects our standards of excellence and meets the expectations and approval of Aflac’s full board of directors. This framework has served us well and has proven to be effective for ensuring that we manage our tax operations in the best interests of our constituencies.

As a global company, Aflac Incorporated is subject to different tax regulations in the countries where we operate, namely in the United States and Japan. Complying with tax laws in each of these countries, balancing the impacts of tax planning on all stakeholders and aligning tax planning are done in strict compliance with our Code of Conduct. Aflac also seeks external guidance to ensure that all tax positions reported on financial statements or tax returns are more-likely-than-not or higher. Further, all material tax strategies are reviewed by outside advisors and highlighted for review by the company’s external auditors.

We recognize that all tax planning has commercial and economic substance. To this end, we are careful to ensure that Aflac Incorporated does not engage in planning initiatives that are contrived or artificial, and we do not utilize tax havens for tax planning purposes. When tax incentives are offered by governments, Aflac seeks to implement them in the manner intended. In certain instances, operations that Aflac may have in low-tax jurisdictions are purely for business purposes, and any transactions between entities and companies within Aflac Incorporated are conducted at arm’s length in accordance with the guidelines set forth by the Organization for Economic Cooperation and Development.

Identifying and successfully managing an array of tax risks are imperative to operate our company, ensuring that we conduct business in the best way possible. We have made significant investments in developing and implementing robust risk management frameworks that are embedded in all of Aflac’s business activities, functions, processes and systems. We also formally assess known, new and emerging risks on a quarterly basis and report our findings to our board’s Audit and Risk Committee. Finally, we work closely with external advisors, auditors and senior management to actively manage and monitor risks and ensure the effectiveness of our controls. All identified risks are reflected on Aflac’s financial statement based on prescribed accounting standards.

Lastly, as a leading global insurance company, we take seriously our responsibility to engage in and maintain honest, transparent, constructive and ethical relationships with tax authorities. This mindset is paramount to how we do business and to ensuring that we continually do what’s right. We are committed to further enhancing our governance processes and to adhering to industry standards and best practices when it comes to our tax policies.


Aflac Incorporated Carbon Neutrality Statement

Aflac is dedicated to the health and well-being of the people we serve and of the environment. As such, we strive to balance effective and efficient management of our operations with responsible environmental stewardship. We are committed to doing our part to mitigate climate change, conserve natural resources and reduce our carbon footprint to help ensure the long-term value of our company’s operations and investments and preserve the world in which we live.

Aflac’s executive management team and Aflac’s board of director’s Corporate Social Responsibility and Sustainability Committee oversee all climate matters and continue to support the company’s SmartGreen® goals. The initiative focuses on evaluating and embracing the most environmentally responsible policies, procedures and technologies. Its efforts are centered on implementing innovative practices across our company to reduce our carbon footprint, ensuring efficient use of resources and helping our employees be good stewards of our natural surroundings.

The company has achieved carbon neutrality for our Scope 1 and Scope 2 emissions. We attained this by first reducing greenhouse gas emissions from our facilities by almost 60% since 2007 through the installation of on-site solar capacity at limited locations, investments in energy efficiency and other emissions-reduction practices. All residual emissions have been accounted for by buying carbon offsets.

We provide tools for our policyholders to reduce their impact on the environment by going paperless where possible. In recognition of our efforts, Aflac has been included on the Dow Jones Sustainability Index North America list as an honoree seven times.

While we are proud of our progress, there is more to do, as we aspire to lead in energy conservation and environmental protection. Aflac will continue to focus on reducing energy consumption, water and waste; investing in new technologies and approaches that help lower greenhouse gas emissions and make our facilities more sustainable; and employing renewable energy sources. Our goals are as follows:

  • Reduce our Scope 2 emissions by 2% annually;
  • Maintain Energy Star certification for at least 85% of our eligible corporate property;
  • Decrease electricity consumption per square foot by 75% of 2007 usage by fiscal year 2030; and
  • Reduce overall paper consumption, and for items that must be printed, increase the amount of printed materials printed on tree-free paper and Forest Stewardship Council-certified paper.

To be a leading steward of the planet, Aflac is committing to expanding our carbon neutrality goal to include Scope 3 emissions by 2040. This global net-zero climate commitment will demand a comprehensive and transparent approach, and thus we will provide appropriate reporting and hold ourselves accountable along the way.

As a leading insurance company that provides financial protection to more than 50 million people worldwide, we believe that we have a responsibility and an obligation to protect the environment. We are committed to making business decisions that balance the needs of our many constituencies and will continue to make our efforts in these areas more robust and impactful for the greater good of all.


Aflac Incorporated Statement on Human Rights

We stand with all those working to make fairness, respect and dignity a matter of practice for every person.

We are committed and believe the company has a responsibility to uphold and protect human rights. Our commitment guides the way we conduct our business and how we treat everyone we touch, including our policyholders, employees, shareholders, business partners and the communities in which we operate. This commitment reflects the values and ethical standards we have practiced for 65 years, and we believe it continues to make us a better company and corporate citizen. Further, we strive to conduct our business in a manner that is consistent with the fundamental human rights principles outlined in the United Nations’ Universal Declaration of Human Rights.

We take seriously our responsibility to provide our employees with a safe and healthy working environment that is free from discrimination, harassment and retaliation. We have zero tolerance for bullying, violence or intimidation. We promote equal opportunity at every level of the company and do not discriminate based on race, color, national origin, religion, gender, sexual orientation, marital status, medical condition or disability.

We hold everyone we do business with to the highest standards. Aflac expects the partners and suppliers we do business with to respect individual rights and conduct their operations in a manner that is free from child labor, unfair labor practices, human trafficking and slavery. We promptly investigate potential problems that may arise. Those who have concerns about human rights violations can report them to Aflac in a number of ways, including an anonymous reporting option. All complaints are thoroughly examined.

As dedicated corporate citizens, we are committed to following the letter of the law wherever we operate. We oppose child labor, human trafficking, and slavery, and we believe everyone has a role to play in advancing the cause of social justice and creating a more equitable world. This starts with a commitment to promoting diversity in our workforce. We believe diversity makes our company and all the businesses in our network stronger. There is more to be done on this front, and we stand ready to partner with community and philanthropic organizations working toward the same goal.

Support for human rights isn’t an afterthought at Aflac. It has long been an important part of who we are.


Aflac Incorporated Statement on Human Capital Management

At Aflac Incorporated, we strive for a people-first approach where employees feel fulfilled and love coming to work each day. That is the foundation of any good company culture, but it’s a daily effort — one we prioritize. From providing a workplace that encourages diversity, equity and inclusion to offering comprehensive benefits and programs to help protect employee health, we see contributing positively to our employees’ overall well-being as not only good business, but the right thing to do.

Since Aflac’s founding 65 years ago, we have operated with a simple philosophy: If we take excellent care of our employees, our employees will in turn take great care of our customers and our business. This ethos is built on the same values that embody The Aflac Way — honesty, integrity, fairness, responsibility, respect and teamwork.

We understand that life, at times, can be stressful and unpredictable and that individuals have numerous demands to fulfill. As such, Aflac seeks to provide work-life balance and encourages employees to keep a healthy mind and body. As part of our commitment, the company provides numerous tools and resources to help employees stay healthy – for example, best-in-class health care coverage, flexible domestic and parental leave policies, health coaching from industry experts, and an array of educational opportunities and career training for self-development. Aflac is committed to providing continuous developmental opportunities to its employees to continue to grow as the company grows.

Aflac has also long maintained a strong focus on diversity and inclusion. Our view is that fostering and welcoming the full range of diversity in our daily operations enhance our ability to respond to our constituents the best way we can. We continue to demonstrate a meaningful commitment to racial equality and gender diversity, creating more opportunities for ethnic minorities, and to ensuring that our board represents a diverse cross-section of knowledge and experience to help protect Aflac while strategically positioning the company for long-term success.

As a top employer in the insurance industry, we also work hard to cast a wide net to attract and retain top talent spanning a variety of backgrounds and demographics. We recognize that a sound and fair compensation process is an integral part of what makes Aflac an employer of choice and are serious about ensuring equal pay for equal work. In fact, since 2008, the compensation of Aflac’s executives is approved by shareholders through an annual nonbinding shareholder “say on pay” vote, and Aflac was the first publicly traded company in the U.S. to conduct such a vote. Whether our employees are based in the U.S. or Japan, considerations for annual raises and bonuses for all individuals at every level are specifically linked to employee and company performance.

Lastly, in the U.S. and Japan, Aflac Incorporated believes it is imperative that we invest in a greater purpose and help to create a better tomorrow for future generations. Whether it’s Aflac employees helping to make their communities and the lives of others better by volunteering at various organizations, providing supplies for at-risk children, collecting food donations or the company’s initiatives to raise hundreds of millions of dollars over the past 25 years to support a variety of nonprofit causes and charities in support of cancer research and pediatric health care, we are committed to taking action and doing what’s right.

As we work to make Aflac an even better company, continuing to take good care of our people, our culture and our communities will be critical to driving our business forward and creating shareholder value.


Aflac Incorporated Diversity and Inclusion Statement

Aflac was founded in 1955 with a simple philosophy: If we take care of our people, they will take care of the business. Our employees are the bedrock of our company, and we greatly benefit from their diverse backgrounds, experiences and ideas. As such, Aflac does not discriminate based on age, race, color, ethnicity (or national origin), religion, gender, sexual orientation, marital status, medical condition or disability when it comes to pay or opportunity.

With operations in the U.S. and Japan, Aflac recognizes the importance of diversity and inclusion in the board room, in its management team and in its employee population at large. Our commitment goes back to the early days of the company when our principal founder, John Amos, a supporter of the civil rights movement, encouraged dialogue between blacks and whites. Though time has passed, our commitment continues to this day. In 2020, in response to protests for social justice in the U.S., Aflac created the “Our Voices, Our Future” series of webinars in which senior executives spoke about their own experiences with racism.

Over the years, we have brought this same inclusive spirit to Japan, where we have boosted the number of women in leadership positions. At Aflac, our commitment goes beyond talking about diversity to actions that foster inclusion. It is reflected in the makeup of our workforce, our pay policies and the initiatives we continually undertake to make every person feel welcomed and valued. There is no doubt that we are building a stronger company, but we recognize there is more that we can do. Still, we believe we are on the right path.

As a testament to our ongoing journey:

  • In the U.S., almost 50% of our employees are minorities and 66% are women. In 2019, 48% of new hires were minorities and 33% were women from minority groups. Women represented 57% of new hires, 55% of leaders and 30% of senior officers last year;
  • In Japan, the company reached its target to have 30% of leadership roles filled by women a year ahead of schedule, with 17% of senior officer roles held by women. We are aiming to have 30% of line manager positions filled by women by 2025;
  • In both the U.S. and Japan, we have created diversity councils that include employees from various levels of the company that meet regularly to discuss activities and initiatives. The councils are designed to create avenues in which people can communicate and appreciate one another’s cultural differences; and
  • Aflac’s board of directors reflects the company’s commitment to diversity, with 64% of members being women or minorities.

Aflac is mindful of the communities in which we operate — striving to be reflective of the diversity and actively working to mirror it. Aflac regularly partners with civic leaders and other organizations to help develop and inform public policy that assures fair laws and diverse representation that can lead to meaningful change.

We recognize that our success is often defined by what we do each and every day when others aren’t looking. It’s how we treat all people. It’s the opportunity we give to all people. It’s about how we embrace diversity and encourage dialogue and inclusiveness. We are committed to doing even better and to continuing to make a difference.


Aflac Incorporated Supply Chain Approach and Philosophy

A broad array of goods and services are needed to optimally support Aflac Incorporated’s goals and operations, and we take seriously our responsibility to ensure that we partner with the best companies to help achieve our objectives. Our commitment and approach to supply chain diversity are grounded in three key pillars: Act ethically, seek diversity and think environmentally.

Act Ethically

At Aflac, we believe acting ethically and responsibly is integral to our success. We look for suppliers that believe and act the same way; that they treat employees fairly; that they provide a safe place to work, free of harassment and discrimination; and that they follow the laws in their jurisdictions. We continually monitor our engagement with those we do business with to ensure no conflicts of interest and they act ethically and responsibly. We take action as appropriate to ensure our suppliers act in accordance with our values. We are proud of the fact that Aflac is the only insurance company to be named to the Ethisphere Institute’s annual list of the World’s Most Ethical Companies every year since the award was created in 2007.

Seek Diversity

We have long recognized that as the company continues to expand its business into diverse communities, we must expand the business opportunities we offer to diverse suppliers. Therefore, we strive to engage suppliers that reflect the diversity of the communities where we live and work and that of the clients we serve, and we look for businesses that offer a range of perspectives to help us identify new solutions that can make us a better company and corporate citizen.

Likewise, maintaining a diverse workforce is a high priority at Aflac, and it is just as important that our supply chain reflects the changing demographics of the United States. If we want communities to work with us, we must work with them. Aflac is an active participant in initiatives that support the development of minority-, women- and veteran-owned businesses. We maintain corporate memberships and provide sponsorships to a range of organizations, including the National Minority Supplier Development Council, the Georgia Women’s Business Council, the Latin American Chamber of Commerce and the National Veteran-Owned Business Association. In 2019, Aflac spent $24.5 million with diverse suppliers, which reflects increases over the previous year of 5.2% with women-owned businesses, 9.4% with minority-owned businesses and 385.8% with veteran-owned businesses. In 2020, as the nation confronts the issue of racial inequality and justice, we have redoubled our outreach and expect to increase the amount of business we do with diverse suppliers.

Think Environmentally

When we engage in a new relationship or make capital improvements to our office locations, we take into consideration the environmental impact our decisions may have. We are proud to be a founding member of the Sustainable Purchase Leadership Council, a nonprofit that aims to enhance the long-term health and vitality of society, economies and the planet. In fact, Aflac has been named to the Dow Jones Sustainability List North America for seven years. Additionally, our office furniture in the U.S. meets BIFMA’s LEVEL certification system which promotes sustainability throughout the life cycle of commercial furniture. We use the LEED building rating system to make sure our facilities are environmentally friendly, and to preserve the world’s forests, we buy paper made from sugar cane-based natural resources. In Japan, where paper use is heavier than in the U.S., Aflac launched a ¥10 billion program to go paperless in the next three years.

As the demographic nature of the United States and Japan changes over time, Aflac must change with it. We are committed to doing our part and to ensuring that the diversity of our supply chain continues to reflect our principles of acting ethically, seeking diversity and thinking environmentally.


Aflac Incorporated Cybersecurity Disclosure

At Aflac, safeguarding the information collected on the individuals and businesses we serve is of crucial importance. We are committed to the privacy of individuals and the protection of data, and we do this by placing great importance on information security, including cybersecurity, to protect against threats both external and internal.

This commitment begins at the top of Aflac. Our board of directors has an information security policy to ensure the company’s information assets and data — and the data of our customers — are appropriately protected. Aflac has also added a board member with expertise in information technology and cybersecurity to further strengthen this top-down approach. Aflac’s cybersecurity strategy prioritizes detection, analysis and response to known, anticipated or unexpected cyberthreats, effective management of cyber risks and resilience against cyber incidents. We continuously strive to meet or exceed the industry’s information security best practices and apply controls to protect our customers, employees and the company.

Aflac continually invests in best-in-class infrastructures and spends considerable time ensuring that critical information is safe and secure. The company employs highly skilled analysts and forensic experts that work alongside Aflac’s global security officer and chief information security officer. These professionals monitor and address issues as they arise and take the proper steps as needed to mitigate threats. Aflac also maintains a comprehensive set of information and cybersecurity policies and standards structured around the National Institute of Standards and Technology Cybersecurity Frameworks, commonly known as NIST CSF, and employs both System and Organizational Control, specifically SOC 2 reporting. These reports are designed to provide stakeholders a level of assurance when it comes to the company’s security. All of these activities take into consideration data privacy laws and regulations that are applicable to jurisdictions in which Aflac operates.

Aflac’s senior officers, including the global security officer and chief information security officer, are responsible for the operations of the information security program and engaging with Aflac’s Audit and Risk Committee. Senior leadership updates the committee on the state of our information security program, compliance with applicable regulations, current and evolving threats, and recommendations for changes in the program. The committee plays a critical role in assessing the company’s overall control environment; raising awareness of control risk; communicating and reporting on the effectiveness of Aflac’s governance, risk management, and controls that mitigate current and evolving risks; and monitoring the implementation of management’s control measures. Aflac’s information security and cybersecurity policies are reviewed annually. These documents are subject to a predetermined review cycle based on the nature and content of the material.

Training and Education

Aflac maintains a cybersecurity training program designed to help employees and contractors recognize information, cybersecurity, and privacy concerns and respond accordingly. Our program provides all personnel with the knowledge and skills to prevent, identify and escalate cybersecurity risks.

Aflac requires regular information security and data privacy management training for all company employees and contractors at least annually. The company also issues guidance and provides focused training as needed in response to specific events or threats.

Topics in the cybersecurity training curriculum include:

  • Information and cybersecurity essentials.
  • Protecting privacy.
  • Bring-Your-Own-Device fundamentals.
  • Social engineering and phishing.
  • Data risk management.
  • Insider threat awareness and escalation.
  • Application information security.
  • Managing application privileges.
  • Email and other electronic communication security.

Aflac integrates training themes based on regulatory guidance, industry best practices and changes in the risk environment.

While it is impossible to accurately predict or mitigate all possible cyberattacks, Aflac is committed to routinely evaluating its mix of technologies, processes, controls, and threat intelligence to detect and prevent cyberattacks and data security breaches. These measures will evolve based on new threat profiles and the changing operating environment such as the cloud and other external service opportunities.