In order to implement the "Sustainable Development Goals" (SDGs) of the United Nations, CDF's subsidiaries, KGI Life, CDIB Capital, KGI Bank and KGI Securities, have stipulated their "Responsible Investment Policy," promulgated and implemented after the adoption by the Board of Directors in 2020 and 2021 (The highest governance unit for responsible investment policy is the board of directors). The ESG is incorporated as an important consideration in investment evaluation and management.
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.
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.
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 ESG reports and ethical corporate management best practice principles.
Promote acceptance and implementation of the PRI 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.
Work together to enhance our effectiveness in implementing the PRI
|In order to assist the financial industry to strengthen the risks brought about by climate change, CDF joined the Partnership for Carbon Accounting Financials (PCAF) in June 2023 to apply its financial asset carbon emission calculation methodology and database and assist corporate clients to promote low carbon transformation, in line with the “Green Finance Action Plan 3.0” proposed by the FSC and is committed to exerting financial influence.
Each report on our activities and progress towards implementing the PRI
In addition to regular disclosures on compliance with stewardship in accordance with “Stewardship Principles,” CDF and KGI Life Insurance share in ESG reports the implementation of responsible investment.
|Assets managed by third parties
|CDF and its subsidiaries 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.
|Derivative & Alternatives
|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
|ESG Incorporation Principles
Subsidiaries all formulate responsible investment policies, incorporating the investment-making decision procedures in ESG (environmental, social and corporate governance) sustainable management evaluation factors, and fulfill stewardship actions. Moreover, CDF and its subsidiaries have adopted via the Board of Directors in June 2022 and formulated the “Sustainable Finance Commitment”. The ESG issues have been incorporated as the key consideration factors of operations, evaluation and management. These consideration factors include:
|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
In-principle disapproval for the proposals that impede the portfolio companies' sustainable development or corporate governance or violate ESG standards.
KGI 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.
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.
• Create an exclusion list
• Review and assess sector-specific requirements
• Conduct ESG due diligence on investment targets in dispute
• Hold investment review meetings
• Decide on the investment amount
• 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
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 subsidiaries, KGI Life, 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 and the Company websites.