Responsible Investment
We consider ESG and sustainable management in our investment targets, and help to enhance the development of the invested business.
Principles and Policies
CDF aligns with the UN Principals for Responsible Investment (UN PRI). Our major subsidiaries, including China Life Insurance, CDIB Capital Group, KGI Bank, KGI Securities, and KGI SITE are signatories to the "Stewardship Principles" of the Taiwan Stock Exchange Corporation and comply with its six main principles. We pursue ESG protocols and Stewardship Principles to motivate and encourage enterprises to fulfill their fair obligations of CSR. Put simply, an investment portfolio built on the PRI is not only potentially beneficial, but also offers a triple-win opportunity for the good of the environment, society, and corporate governance. In the meantime, to deepen the internal ESG core values, a new "Responsible Finance" working group was established in August 2020, responsible for planning the Group's sustainable financial blueprint and overseeing the implementation of responsible investment strategies and policy directions.
In order to implement the United Nations Sustainable Development Goals (SDGs), China Life Insurance, CDIB Capital Group, KGI Bank and KGI Securities, all subsidiaries of CDF, have formulated a "Policy for Responsible Investment," which includes ESG as an important consideration in investment evaluation and management.
UN PRI CDF's Implementation
Be active owners and incorporate ESG issues into our ownership policies and practices All the major subsidiaries of CDF have signed the "Stewardship Principles" issued by the Taiwan Stock Exchange Corporation, and have formulated relevant protocols and voting policies to actively engage in ESG-themed conversations with investee companies, guiding them to reduce negative environmental and social impacts and explore opportunities for sustainable development.
Each report on our activities and progress towards implementing the Principles In addition to regular disclosures on compliance with stewardship in accordance with "Stewardship Principles," CDF and China Life Insurance share in CSR reports the implementation of responsible investment.
Incorporate ESG issues into investment analysis and decision-making processes All major subsidiaries of CDF have established responsible investment policies, and ESG review conditions and standards (including Exclusion and Sector-Specific Standards), and ESG issues are taken into consideration in investment decisions.
Promote acceptance and implementation of the Principles within the investment industry For private equity funds yet to be the signatories of the Principles for Responsible Investment (PRI), investment teams shall indicate in the side letter that they are advised to refer to the PRI when evaluating potential deals.
Seek appropriate disclosure on ESG issues by the entities in which we invest We review and pay attention to the material ESG issues of investee companies in accordance with local authorities' requirements for the disclosure on ESG issues, including but not limited to CSR reports and ethical corporate management best practice principles.
Work together to enhance our effectiveness in implementing the Principles In order to assist the financial industry to strengthen the risks brought about by climate change, CDF has organized the "Climate Resilience Financial Industry-University Alliance," which is a cross-industry and finance alliance, in line with the "Green Finance Action Plan 2.0" proposed by the FSC, and is committed to exerting financial influence.
CDF's Responsible Investment Policies
We have integrated ESG issues with the Group's investment stewardship governance framework to form a responsible investment risk management framework at CDF. It establishes the six principals of responsible investment, " ESG Inclusion Principle ESG Integration Principles," "Conflict of Interest Management," " Specific Industry Policy Sector Specific RI Guidelines," " Negative Exclusion Policy Exclusion Policy," "Engagement Policy" and "Voting Policy." Further, the principals are launched for responsible investment in four subsidiaries, namely CDIB Capital Group, China Life Insurance, KGI Bank and KGI Securities. In accordance with the asset attributes and investment process of the four subsidiaries, each of them has formulated its own responsible investment policy to directly guide risk management and asset allocation. For different types of assets such as equity, fixed income, and private equity within the Group, shaping the overall process risk control before, during and after investment that suits its business characteristics.
UN PRI RI Guidelines Listed Equity Fixed Income Private Equity Derivative & Alternatives Property
Conflict of Interest Management
Establish mechanisms for information control, firewall design, segregation of duties, supervision and management, and reasonable remuneration to prevent conflicts of interest
Engagement Policy
  1. Target companies / projects with better performance in the ESG appraisal are included in the "Encourage-ment List" and can be given priority for investment under the same financial evaluation.
  2. Actively engage in ESG dialogues with investee companies, and through communica-tion with them, guide them to reduce their negative environmental and social impacts and identify opportunities for sustainable development. Investment teams shall ask the portfolio companies or deals for the cause, development and handling of incidents, if any, where they breach laws, undermine the Company's ESG policy, or damage the Company's long-term investment value.
ESG Integration Principles
Subsidiaries all formulate responsible investment policies, incorporating ESG principles into investment decision-making processes and fulfill stewardship objectives
Exclusion Policy
  1. There are specific evidence to prove that industries involving pornography, drugs, money laundering, financing of terrorist activities, slave labor, child labor, or human rights violations
  2. Specific evidence to prove that the Board of Directors has violated laws, articles of association, resolutions of the shareholders' meeting and those who have a significant influence on the rights and interests of shareholders or investors.
Sector Specific RI Guidelines
Coal-mining or coal/thermal power plants that have been punished by competent authorities in the previous year for environmental pollution penalties should propose plans or improvement proofs
Voting Policy
In-principle disapproval for the proposals that impede the portfolio companies' sustainable development or corporate governance or violate ESG standards.
Assets Managed By Third Parties: Responsible Investment Approach
CDF requires outsourcing institutions to follow the guidelines framework of each subsidiary's responsible investment policy, and to provide a complete description on the principles and implementation status of important ESG items such as environmental, social and corporate governance, and to regularly disclose the fulfillment of stewardship governance. In the meantime, confirm whether the companies of the invested bond funds and ETFs in which the subsidiaries invest are PRI signatories, or confirm their execution in ESG.
China Life Insurance asks third-party asset owners to comply with the Company’s responsible investment policies and confirm if the bond funds and ETF constituents are signatories to PRI or consider ESG principles in managing assets among investment companies.
CDIB Capital Group Policy for Responsible Investment
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China Life Insurance Policy for Responsible Investment
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Process and Mechanism
Incorporating ESG criteria into investment analysis and decision-making processes
While investing, the Group takes into account ESG factors in target selection for management to make decisions and takes over stewardship to improve investment value and for sound development of both the Group and investee companies.
Responsible Investment Process
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Steps and Process
Process
Step 1-Screening
Screening
• Comply with the Principles for Responsible Investment (PRI) as the Group's responsible investment policy framework
• Create an exclusion list
• Review and assess sector-specific requirements
Step 2-Examination
Examination
• Incorporate financial and ESG criteria into the examination
• Conduct ESG due diligence on investment targets in dispute
• Hold investment review meetings
• Decide on the investment amount
Step 3-Management
Management
• Analyze/review the gap during the investment
• Keep track of proposals that could adversely affect the sustainable development of investment targets or ESG principles
• Exercise the right to vote and disclose the votes at a shareholders' meeting
Step 4-Engagement
Engagement
• Communicate with investment targets to assist them in reducing negative impacts on the environment and society and exploring opportunities for sustainable development
Stewardship Principles
CDF LIFE 2020
CDF will maintain long-term focus on the companies and is committed to enhancing the value of its investments. The companies CDF has invested in are urged to improve their corporate governance, resulting in favorable development of the industry, economy, and society.
CDF’s subsidiaries KGI Bank, KGI Securities, KGI SITE and CDIB Capital Group have all signed the “Stewardship Principles for Institutional Investors” and periodically disclose compliance report on TWSE’s and the Company’s websites.
SDGs Portfolio
To fulfill our Group’s social responsibility as part of the capital supply chain, we not only look at creating wealth for our shareholders from our portfolio investments, but also strive to follow the UN Global Compact and support the cause of the 17 SDGs as the basis of our long-term development and goals. Our Group's portfolio performances all correspond to the UN’s SDGs.
Percentage of Balance Weight (%)
Percentage of Total Portfolio Companies (%)
SDG Theme
7. Affordable and Clean Energy
6. Clean Water and Sanitation
8. Decent Work and Economic Growth
1. Eliminate Poverty
3. Good Health and Well-Being
9. Industry, Innovation and Infrastructure
4. Quality Education
11. Sustainable Cities and Communities
2. Zero Hunger
13. Climate Action
17. Partnerships for the Goals
16. Peace, Justice and Strong Institutions
12. Responsible Consumption and Production
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ESG Activity
Upholding transparent and honest two way communication, we immediately post ESG related activities on the website for all our stakeholders.