Green Finance

To respond to climate change and strengthen organisational resilience, we implement sustainable financial development strategies.

Green Finance Products

Green Investment

The general public is increasingly concerned with economic activities and the associated risks on the environment and natural resources as global climate change intensifies, giving rise to the concept of a low-carbon economy, which is considered to play a key role in maximizing long-term economic growth. Meanwhile, green investment has also emerged as a popular theme. CDF mainly invests in green industries with its two major subsidiaries, CDIB Capital and China Life, and actively responds to government policies. The total investment of CDF assets in the six core strategic industries of National Development Council amounted to NT$123.1 billion, of which nearly 60% of the investments are in green power and renewable energy.

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KGI Securities organized 41 equity capital raising cases in the capital market in 2021, raising around NT$35 billion. These included 15 environmental protection and green energy cases, accounting for about 36.5% of the number of cases organized in the year. The environmental protection and green energy funds raised more than NT$18 billion, accounting for about 52% of the funds raised in the current year.

According to the provisions outlined in Taipei Exchange Operation Directions for Sustainable Bonds, the scopes for sustainable bonds include the green bonds, social responsibility bonds and sustainable development bonds accredited by Taiwan Exchange. KGI Securities participated in 12 ESG-related underwriting cases in 2022 (including 8 green bonds, 2 social bonds, 1 sustainable development bond, and 1 sustainable development linked bond), with a total of NT$8.28 billion, up 124% compared with the NT$3.7 billion issued in 2021. China Life responded to the government's green finance action plan 3.0 policy to promote green financial product development and invested in green bonds issued by TSMC and Ørsted to support the development of clean energy in Taiwan, with an investment amount of NT$2.3 billion. A total of NT$2.3 billion was investment to implement the ESG investment spirit through action. Apart from investing in domestic green bonds, China Life has invested NT$18.5 billion in foreign green bonds and NT$9.1 billion in sustainable bonds.

KGI Securities organized 34 equity capital raising cases in the capital market in 2022, raising around NT$38 billion. These included 18 environmental protection and green energy cases, accounting for about 53% of the number of cases organized in the year. The environmental protection and green energy funds raised more than NT$29 billion, accounting for about 77% of the funds raised in the current year.

Green Credit

While considering large credit applications of over US$10 million in water-intensive and highly polluting industries, credit analysis has to consider various aspects of technology, market, finance, and environmental protection. Depending upon individual cases, additional conditions will be laid for loan sanction.

Incorporating the Equator Principle into "Credit Rating Checklist." If there is any dispute regarding environmental and labor-management issues, etc., the applicants will be deducted points under the operations/management categories, such as risk management, corporate governance, etc., in the Credit Rating Checklist, so as to reflect the operating risks involved.

Loans will not be granted to applicants who do not comply with environmental protection guidelines and have no concrete plans for making improvements. For existing clients, corrective actions are required to undertake. To help and encourage enterprises to strengthen environmental initiatives and fulfill their corporate social responsibilities, non-compliant companies deemed to have a serious impact on company operations and KGI Bank’s obligations will have their credit capped or progressively reduced.

Policy and Goal

To ensure that the organizational goals and key decisions in terms of environmental, social, and governance (ESG) practices are consistent with the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement, CDF adopts a top-down corporate governance structure. With effective policies, management systems, and controls in place, CDF integrates SDGs into the decision-making process to create a responsible banking business model in line with the Principles for Responsible Banking (PRB). CDF is also committed to promoting green finance through green project financing, green lending, and green bond underwriting in hopes of speeding up the transformation and sustainable development of the renewable energy industry in Taiwan.

Performance and Goal 2022

Action Plan	2022 Progress	Short-term Goals 2023
Promoting green industry investments	Nearly 60% of the investment in principal investments is invested in the green energy and renewable energy fields of the six core strategic industries. Life invested in green bonds issued by TSMC and Ørsted to support the development of clean energy in Taiwan, with an investment amount of NT$2.3 billion. China Life invested NT$18.5 billion in foreign green bonds and NT$9.1 billion in sustainable bonds	Investment in high carbon emission industries lower than 26%
Support smart technologies or environmental innovation industries Responding to the problem of an aging population Support culture and innovation industry developments Support innovative industries	Asset management operations The Advantage Fund raised NT$4.54 billion Raised two biomedical funds in Taiwan with a total amount of NT$4.86 billion, and raised biomedical funds totaling RMB420 million in China The scale of the cultural and innovation fund is NT$1.5 billion CDIB Capital Innovation Fund raised NT$1.29 billion	Continue to develop smart technologies, environmental protection innovations, potential healthcare, cultural innovations, and investments in startups.
Implement responsible investment and green finance, and incorporate ESG into investment decisions	China Life's 100% of relevant investment decision research reports have included ESG assessments. China Life's 100% of foreign funds companies have signed PRI. China Life participated in the shareholders' meetings of listed investee companies, with a participation rate of more than 100%. KGI Securities participated in 12 ESG-related bonds, underwriting the total amount of NT$8.28 billion, up 124% compared with the NT$3.7 billion in 2021. Among the equity capital raising cases organized by KGI Securities in in the capital market, 18 cases were environmental protection and green energy related, accounting for about 53% of the number of cases organized in 2022. The environmental protection and green energy funds raised more than NT$29.0 billion, accounting for about 77% of the funds raised in 2022. Factor pool entry assessment procedure incorporates ESG scores. According to the target of factor model entry, factor models are reviewed quarterly, and due diligence scores provided by professional institutions are included to evaluate the business operations of investee companies that violate ESG or those with unfavorable sustainable operation risks. We use the ESG database to regularly review the disputed event scores and ESG issues of Taiwanese stocks. When the disputed event scores of Taiwanese stocks decrease or are lower than a certain standard, the related matters shall be tracked and monitored	Deepen sustainable investment management, regularly carry out carbon inventory of investment portfolios and formulate carbon reduction targets, and deepen discussions with investment targets. Establish an ESG watch list for investee companies that involve environmental pollution, social disputes and corporate governance concerns, etc., and evaluate the relevant risks before investing in the targets on the watch list.
Issue ESG Products - KGI Sustainability Series Funds	KGI SITE offers one ESG bond ETF and three active sustainability bond funds that have been approved by the competent authority for ESG review. KGI SITE is the investment security trust company acquiring most ESG fund certifications in 2022. KGI SITE issued the first Taiwan ETF adopting Bloomberg MSCI ESG bond index – KGI 15 YR+ USD Grade BBB ESG Sustainable Corporate Bond ETF Funds in May 2021. As of the end of 2022, the fund scale reached 427 million. With regards to the three active sustainable bond funds, as of the end of 2022, the fund scale reached 3,991 million.	Continuous issuance of sustainability series funds Strengthen the promotion of ESG and sustainable development related products to investors
Issue ESG related products – KGI Bank green deposit	Leading in the domestic banking industry, KGI Bank launched the "green deposit" in May 2022 to use project funds on renewable energy and energy technology, pollution prevention and control, water resource energy conservation and cleaning, or recycling and reuse, as well as other fields of green financing demand.	Continue to promote ESG and sustainable development related products.
Through the encouragement of green energy upgrades and fund-raising assistance to the green energy industry, the compound annual growth rate of the overall green credit amount is expected to reach 5% in the next two years	KGI Bank adopted the green credit standard marked by Taiwan Joint Credit Information Center and statistics show that the balance of 11 green credit notes reached NT$16.06 billion, substantially up 39.5% compared with previous year.	Inventory of ESG risks in credit facilities, deepen the introduction of the spirit of the Equator Principles, evaluate the establishment of exclusion industries, and strengthen negotiation with customers

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Society

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