Responsible Investment and Lending
Taishin’s responsible investment and lending in sustainable finance are implemented mainly in six pillars: “Corporate Banking”, “Consumer Banking”, “Project Finance”, “Advisory Business”, “Asset Management”, and “Insurance”.
In 2022, consumer banking has the highest ratio at 36.35% of Taishin FHC's consolidated net revenue and gains, followed by 33.78% and 19.66% in insurance business and corporate banking business respectively. The proportion of net revenue and gains of asset management 1.18%, project financing less than 1%; among the others with 8.97%, which consisted of a number of subcategories including Taishin FHC long-term investment income, other banking businesses, and other subsidiaries, etc. We will then state these ESG products by five major categories "Investment and Wholesale Banking", "Consumer Banking", "Project Finance", "Advisory Business", "Asset Management", and "Insurance" with the descriptions of the products and the proportions one by one.
Investment and Wholesale Banking Business
In the evaluation and review of wholesale banking loans, all applied loans are checked against the ESG Industry Checklist to determine whether applicant's business should be avoided or can be actively supported. For climate or socially/environmentally sensitive industries (six categories: Real Estate Development Activities, Electronic Parts and Components Manufacturing, Electricity Supply, Manufacture of Electrical Equipment, Manufacture of Basic Metals, and Manufacture of Chemical Materials), a review of specific social and environmental issues is required. In addition, in line with the decarbonization strategy for climate change, those whose business operations involve specific coal-related industries or unconditional oil & gas should be carefully evaluated.
Process of Wholesale Banking Loan Application
Corporate loans from Taishin Bank are subject to Know Your Customer (KYC), due diligence (DD) credit review, and post-loan early warning system control procedures in order to implement quality control, maintain both quality and quantity in characteristic development, and fulfill the bank’s social responsibility. In engaging with customers on ESG-related risks and opportunities, all cases are assessed for risks with reference to JCIC credit reports. Apart from the above process, customer engagement or evaluation is also based on research reports published by Taishin Securities Investment Advisory. Before compiling a report, the research team will inspect a company’s factory on-site or attend the company’s meeting to establish a general assessment of the company’s business status and industry dynamics, including sustainability-related issues, ethical management, social responsibilities, and the environmental impact of the company’s operating activities. For example, a credit evaluation report for a chemical industry will consider several factors when assessing a company's future operational risks and profit estimation. These factors include the soundness and compliance of pollution monitoring/treatment facilities, whether long-term capital expenditures are planned after taking into account future amendments to domestic/foreign environmental regulations, and how the above issues affect the business' operating costs over the long-term, and the company’s past integrity performance (including individual management behavior, records of violation).
With respect to sustainable lending, Taishin observes international trends and government policies, offering a variety of ESG-related products in wholesale banking, such as loans for electricity generation from renewable energy, sustainability-linked loans, loans for sustainable infrastructure, and loans for ESG industries, all of which support green and sustainability-related industries. By offering ESG-related products, we hope to exert the influence of the financial industry and contribute to sustainability.
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Loans on Renewable Energy for power generation
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Loans for power generation from renewable energy
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0.85
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Loans for sustainable infrastructure
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Based on financing related to environmental or social friendliness, such as public
transportation, waste water/waste treatment, health care, and urban developemnt, etc.
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4.75
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Loans for ESG industries
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Lending to ESG-related industries as part of the Program for Promoting Six Core Strategic Industries.
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7.32
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Sustainable-linked loans
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Loans in which credit conditions are linked to sustainability indicators.
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2.97
Retail Banking Business
In terms of Retail Banking for Sustainable Finance, The major ESG-related products and services include "online consumer lending" and "investment products that meet the spirit of ESG such as funds, stocks and offshore ETF", etc. At the same time, Taishin established the credit guidelines for unsecured credit loans, and lists the ESG risk factors that personal lending should exclude or not understake; In the process of investigating ESG related risks and opportunities with customers, 100% of all lending customers are required to be checked ESG risk factors, credit report and due diligence to fully understand the ESG risk status of customers. Therefore, when offering retail lending products, Taishin Bank conducts detailed assessments on the needs and financial capabilities, of each customer, and approves appropriate credit lines accordingly. With regards to personal planning and consulting services, all investment products recommended by financial advisors have been reviewed in accordance with product management principles prior to being launched. Information from independent, third-party sources such as Bloomberg, Morningstar etc. is also referenced to perform ESG assessments on the products evaluation.
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Low-Carbon Transportation
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Encompassing loans for purchasing energy-efficient transportation vehicles (including electric vehicles and hybrid vehicles) and electric scooters to reduce carbon emissions
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2.12
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Personal loan
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Online personal loan application services are provided using digital technology so that customers are able to access funds, including mortgage, car, and personal loans, at any time and anywhere.
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44.60
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Green Buildings
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These loans are provided to recipients of Green Building Label or Green Building Candidate Certificate from Taiwan Architecture & Building Center.
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0.40
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ESG-related credit card transaction amount
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Specific portion of bike-sharing rental fees and credit card Transaction amount are donated to support organic farms or social welfare organizations
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0.66
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Funds, stocks, and offshore ETF
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ESG-aligned investment products such green energy and water resources are provided.
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4.90
Project Finance
Taishin Bank has been adopting the spirit of Equator Principles since 2015. All new loan applications and all existing credit cases requesting for limit increase or change of terms are required to complete a "Project Finance Application Social/Environmental Risk Investigation and Disclosure Worksheet" (also known as "CSR Worksheet") to verify if it is in line with the project finance. Later in Nov. 2019, Taishin Bank officially announced being the signatory of Equator Principles and initiated the Task force by Wholesale Credit Administration Division and also cooperated with the independent advisory institution to complete standards for inspection process and related documents for Project Finance. In the meantime the sufficient training sessions are delivered to business and review units in order to do reliable implementation.
All loan applications must be assessed for compliance with the Equator Principles, and if listed in Level A or B then additionally, the independent third-party's environmental and social evaluation report need to be provided for review by responsible unit; If the cases are approved, routine review for items should be tracked and monitored, for those clients who do not meet the requirements of monitoring condition, the improvement plan should be provided or the Bank can request clients to pay up the loan.
In 2022, 10 cases were with Project Finance of Equator Principles and the application loan amount is approximately NT$6.4 billion. Review results: 2 cases were approved, 6 cases were conditionally approved, and 2 cases were rejected. The rejected cases were Renting and Leasing of Storage Equipment Industry and Electricity Supply Industry . The total application amount was NT$0.6 billion. The reason for rejection was that the risk was too high after evaluation.
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2022
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2
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6
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2
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10
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6.4
Sustainability advisory products and services
The sustainable advisory business of Taishin is focused on the underwriting ESG bonds issued by the financial industry and enterprises (including green bonds, sustainable bonds).
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Green bonds
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Underwriting of financial institution/company-issued green bonds
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13.77
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Sustainable bonds
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Underwriting of financial institution/company-issued sustainability bonds
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1.64
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ESG-related industries fundraising
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Evaluation corporates to be categorized as sustainability-related industries and provide fundraising assistance
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64.02
Asset Management
As an asset manager, Taishin Securities Investment Trust (TSIT) enforces responsible investment practices by following Taishin FHC' s "Green Finance Principles" and applying "Taishin Securities Investment Trust Green Finance Assessment Worksheet" as a supporting tool to reduce ESG risks of all-targeted investments. The TSIT has also designed its own documents to facilitate review of risks associated with different assets and industries. This particularly involved in the businesses of: (1)tobacco, alcoholic beverage or gambling (including unlicensed and online operators), or confirmed to have caused harm to human health as a result of food safety incident, radioactive substance, or genetic engineering; (2)generating high levels of pollution, failure to comply with local environmental regulations, and are unable to propose feasible improvements solutions; (3) illegal activities; (4)violations of human rights; and (5)controversial nature, which the company will avoid direct engagement. In addition, to meet with Socially Responsible Investment(SRI), TSIT operates a discretionary account under a government fund, it first includes outstanding enterprises that meet ESG conditions into the Main list(stock pool), and then prioritizes good ESG performance companies from the stock pool as the investment targets.
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ESG Fund Portfolio
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Compliant with SRI investment (including public and private equity funds, discretionary agency operations, etc.)
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16.81
Sustainable Insurance
After Taishin Life Insurance joined Taishin FHC in June 2021, it has adjusted its ESG review procedures to align with the ESG rules prescribed in the Taishin FHC Green Finance Principles. In planning insurance products/services (including discretionary investment account and mutual funds), all products have been reviewed through pre-sale procedures before launch for sale, with ESG implementation practices being one of the items reviewed. Information from independent, third-party sources such as Morningstar as well as ESG scores are referenced to perform product screening and evaluation. In 2022, 128 funds launched throughout the year, ESG policies for each fund have been certified and
explained by their respective fund management company, and reviewed and approved by Taishin Life Insurance’s Product Evaluation Team (PET).