In year where global companies have made formal commitments towards implementing more sustainable practices, China Development Financial (“hereinafter referred to as “CDF”) has announced net zero carbon emissions by 2045. This will make CDF the first financial holding company in Taiwan to make this commitment. CDF believes that the financial sector has to become a key contributor toward this long term global.
CDF stated that committing towards this important goal demonstrates its aggressive undertaking for global sustainability to positively impact climate change. CDF has participated in several developments in Taiwan since 1959, after China Development Industrial Bank was founded. It has been exerting its influence to lead sector transition through financial investment. While most countries have already started engaging in sustainable transitions to reach the goal of net zero carbon emissions by 2050, CDF has committed to lead in Taiwan by adopting a more proactive approach to become the first financial holding company to reach net zero carbon emissions for its total portfolio by 2045.
Last year, CDF closely cooperated with National Taiwan University via“RICE” (Resilience of Industries on Climate Change Enhancement) and initiated an international-standard assessment program to evaluate physical risks and transition risks caused by climate change for all positions on a scientific basis. In order to achieve net zero carbon emissions by 2045, CDF has established five concrete strategies:
- Voluntarily adhere to the regulations stipulated by the U.N.-Convened Net Zero Banking Alliance and the U.N.-Convened Net Zero Asset Owner Alliance to present within 18 months a comprehensive low-carbon transition roadmap for 2045 net zero carbon emissions;
- Establish engagement targets. CDF will discuss with specific customers annually to set engagement targets and coverage ratios, thereby aggressively directing them to march toward sustainability and net zero carbon emissions and providing sustainability-linked financial services to lift Taiwan’s overall sustainable competitiveness;
- Establish sector objectives. Having understood the volume of a sector’s carbon emissions and its impact on the environment, CDF will establish investment and financing strategies and carbon intensity objectives for the sector based on the premise of a sustainable future;
- Establish investment portfolio objectives. CDF will align all investment portfolios with the Paris Agreement and maximize the contribution of the investment portfolios to the sustainable development objectives; and
- Establish transition objectives. CDF’s operations will achieve net zero carbon emissions by 2030 and significantly increase the weightings of green lending and green investment by aggressively engaging in sustainability-linked loan (SLL) development.
The CDF group’s green sector investments stand at around NT$110bn at present, with China Life investing a combined NT$1.5bn in green bonds issued by TSMC and Ørste in response to the government’s Green Finance Action Plan 2.0, which promotes the development of green financial products, to support clean energy development.
CDF has launched over NT$60bn in green financial products, including green loans, green bonds and green fundraising. In line with the government’s policy, it promotes energy transition covering energy conservation, energy development, energy storage, and intelligent system integration. To encourage independent energy development and accelerate the development of renewable energy enterprises, the government aims to build a renewable energy ecosystem based on strong research and development capacity prompted by industrial needs. The research and development of next-generation renewable energy technologies will drive the development of renewable energy enterprises specializing in solar and wind power and smart meters to further create job opportunities. KGI Bank has proactively been financing alternative energy generation (such as solar power and offshore wind power) programs by taking part in eight project financings to reduce carbon emissions by an estimated 14.97mn metric tons per annum.
Based on this green sustainability spirit, CDF will soon move into an environmentally-friendly new building this year. This new building is based on the concept of sustainable development. Its extensive retention reservoir system will regulate the microclimate, recycle rainwater and establish a rain-sewage diversion system in order to reduce water pollution. In addition, the building is equipped with an automatic lighting control system, double-skin electric blinds and many other devices to achieve the purposes of daily energy savings. It’s worth mentioning that our new building has achieved 7 guiding principles: greenery, soil water retention, daily energy savings, CO2 reduction, indoor environment, water resources, and sewage and garbage improvement. Therefore, the building has been awarded the gold level of "Green Building Labels Certificate". Moreover, starting in 2018 CDF has included ESG in the annual employee and manager performance evaluation, i.e. aside from financial-related indicators, the evaluation encompasses the company’s business sustainability indicators. This illustrates CDF has extended ESG to important decisions and businesses undertaken by each employee.
CDF stresses that the recent Leaders Summit on Climate has indeed become a stage where country leaders demonstrate their determination and strengths. The EU is considering the introduction of a carbon border adjustment mechanism (CBAM) no later than 2023. The European Commission is expected to present a proposal in the second quarter of 2021. Germany discussed a carbon pricing push; France talked about the importance of setting targets for 2030 (2030 is the new 2050); Australia discussed new energy development plans; US discussed significant emission cuts; and Russia discussed carbon sequestration. All of this will help lead the world to move toward sustainability. Therefore, CDF believes that, as a sustainable finance leader, it must proactively face the climate issue and lead the way forward in financial services in Taiwan as well as in our overseas subsidiaries in Hong Kong, Singapore, China, Thailand, Indonesia and USA.