"E.SUN Sustainable Finance Policy" illustrated that E.SUN will consider the ESG performance of investee
companies. Referencing the Principles for Responsible Investment (PRI), E.SUN incorporated ESG issues into investment analyses and decision-making processes, signifying the importance the bank attaches
to the corporate social responsibility performance of the invested target. The "Securities Sustainable Investment Management Principles" states that a negative list must be made for industries or enterprises that are potentially controversial, such as the adult entertainment, controversial weapons, illegal logging, endangerment of rare species, creation of new coal mine, or establishment of new coal-fired power station. About Businesses involved in commercial activities such as coal-fired power, tobacco, gambling, mining, leather and fur production etc. shall undergo rigorous assessments and monitored on a regular basis. E.SUN also incorporates ESG indicators of impartial institutions at home and abroad into investment review standards, such as DJSI, MSCI ESG rating, DJSI ESG scores, Bloomberg ESG score, Taiwan Enterprise Sustainability Award, Sustainalytics ESG risk rating, Taiwan Sustainability Index constituent stocks, Taiwan companies Governance evaluation, etc., preferentially selecting medium and low ESG risk companies as investment targets. As of December 2021, E.SUN Bank's bond investments categorized as low-to-medium ESG risk occupied a ratio of 99.42%, and equity investments categorized as low-to-medium ESG risk occupied a ratio of 100%.
Furthermore, through shareholder activism, E.SUN promotes the sustainable development of invested companies through communication with investee companies, participation in shareholder meetings,
and exercise of voting rights. For example, in 2021, E.SUN sent emails to more than 70% of its investee companies, expressing that E.SUN not only pays attention to the company's financial performance but also ESG performance, and that the bank hopes to connect business partners in the value chain to work together on climate change, environmental protection and social welfare.
■ 2021 Results
E.SUN continued to invest in environment- and community-friendly industries in 2021 and issued two sustainable development bonds (worth NT$1.6 billion in total) for the first time. Following the issuance of the country's first green bonds in 2017 with a total of 5 New Taiwan Dollar and 1 US Dollar green and sustainable development bonds, E.SUN issues the most sustainability bonds among Taiwan's domestic banks, in New Taiwan Dollars as well as foreign currencies. Currently, sustainability bonds amount to 12.53% of E.SUN's total bonds issued. Because E.SUN adopts a financial management strategy that integrates the concept of sustainable development, the funds raised are lent to support green investment plans involving renewable energy, greenhouse gas reduction, and water resource conservation, as well as socially beneficial investment plans such as basic service requirements, affordable housing, socioeconomic advancement, and protection of interests and rights.
E.SUN is committed to becoming the top brand in sustainable bond market. In recent years, E.SUN has acted as the underwriter of 11 green bonds, 2 sustainability bonds, and 1 social bond, with a total underwriting amount of more than NT$13.7 billion, including serving as the underwriter for the first green bond issued by
a foreign issuer (Crédit Agricole CIB), the first NTD green bond issued by a foreign corporate (Orsted), the first sustainability bond of a foreign financial institution (Goldman Sachs) and acting as liquidity provider for the first sustainability bond issued by sovereign (Chile government bond). E.Sun is also the first financial institution acted as the underwriter of NT $1.5 billion "perpetual index linked commercial promissory note" in Taiwan (Far EasTone telecommunications) following the issuance of perpetual index linked loan. Through
our competence in the financial industry, E.SUN helps companies fulfill their needs in ESG and make our contribution to Taiwan's sustainable development. These efforts made over the years have been continuously recognized by professional institutions and, in 2021, enabled E.SUN to win the title of Best Bond house in Formosa awarded by The Asset for the sixth year consecutively.
E.SUN provided advisory services through underwriting sustainability bond process. On the other hand, green energy is key to net zero transition and also a new engine for future economic development. The development of zero-carbon energy sources such as offshore wind power and solar power can promote
the transformation of energy and power supply structures to low-carbon or zerocarbon structures. E.SUN Bank actively finances offshore wind power and solar power projects, providing sustainability related project hedging services as well as financial services to support environmentally friendly projects. We provided Interest Rate Swap (IRS) hedging services for 4 new offshore wind power and solar energy project finance, worth NT$4.8 billion, in 2021, accumulating a total of approximately NT$11.7 billion by the end of 2021. E.SUN will continue to unleash its financial expertise to exert its influence and assist enterprises in implementing environmentally friendly projects and giving their full support to government policies.
■ Responsible Products
Our wealth management practice is integrated with our core competencies and employs the cash flow-oriented characteristics of the financial industry to fulfill our responsibilities to business partners and pre-market launch product reviews. Customers are provided with diverse investment products and services related to sustainable finance to reduce the social and environmental impact and increase the economic and social benefits thereby helping customers and investors pursue sustainable returns.
Management of External Partners
(1) All insurance companies that cooperate with the Bank for wealth management business have signed the Compliance Statement of the "Stewardship Principles for Institutional Investors"
(2) All onshore fund institutions that cooperate with the Bank in wealth management business have signed the Compliance Statement of the "Stewardship Principles for Institutional Investors"
(3) All offshore fund institutions that cooperate with the Bank in wealth management business have signed the "Principles for Responsible Investment (PRI)"
■ Wealth Management Customer Due Diligence (CDD)
When E.SUN provides services to wealth management customers, Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures have been implemented. The methodology includes customer identity, source of fund, transaction activities, purpose of accounts, etc., and implements the anti-money laundering and countering the financing of terrorism management mechanism.
The membership application processes of private banking includes ESG factors such as violation of environmental protection regulations, failure to conduct business with integrity or social responsibility, in order to guide customers to pay attention to ESG issues through due diligence and continue to exert positive social influence.
■ Product Management
(1) E.SUN established the E.SUN Bank ESG Wealth Management Product Review Policy to implement the review of business partners and selection of wealth management products. ESG ratings from impartial third parties (e.g., MSCI, DJSI, Bloomberg, Morningstar, etc.) to assess onshore and offshore mutual funds, overseas bonds, overseas ETFs, overseas stocks, special stocks, and other wealth management products.
(2) Wealth management business partners are invited to sign the "E.SUN Bank Wealth Management Service Commitment to Sustainable Development for Partners." As of December 2021, three business partners have signed the commitment, and we continue to invite more business partners to join the rank, hoping to gather the forces of our business partners to exert their sustainability influence and collectively promote ESG- related financial products to practice sustainable finance.
(3) E.SUN implements "product review", "interim management" and applies exclusions in our advisory business, taking into consideration the ESG implementation status of its business partners or whether they are involved in major ESG disputes to carefully consider the extent of business dealings with them. The degree to which an existing investment product is promoted will be adjusted if there are any changes to the product's ESG rating. Exclusion cases in 2021 are below, one product didn't launch because it was associated with businesses that have direct or potential impact on the environment or the society. We keep track of any changes to the ESG ratings of offered investment products each month. Six investment products have been classified as a "not proactively recommended investment option" after issues with human rights controversies and arms production have been discovered.
■ ESG Rating Management for Wealth Management Products
Positive, average, negative, no data
ESG ratings (by impartial third-party agency)
- Products with positive and average ESG ratings may be launched and included in marketing campaigns or project events.
- Products with negative ESG ratings may be launched only after careful evaluation and approval, but they may not be included in marketing campaigns or project events.
- Products with no ESG ratings may be launched for customers to purchase or subscribe. These products may be recommended for investments or included in marketing campaigns or project events only after careful evaluation and approval or after a comprehensive consideration of the business partner's ESG implementation status.
■ Interim management
- For partners who have material negative ESG issues, we will carefully examine the extent of our business relationship with them.
- The degree to which an existing investment product is promoted will be adjusted if there are any changes to the product's ESG rating.
■ Marketing promotion
(1) We offered the "TCB Environmental & Socially Responsible Multi-Asset Fund," which is the first ESG multi-asset fund reviewed through the FSC's Disclosure Rule for ESG funds. The fund focuses on environmental opportunity stocks and social responsibility bonds, and helps customers seize sustainable investment opportunities, while lowering the fluctuation of their investment portfolio.
(2) The ESG themed fund investment activity, "E.SUN ESG Fund," allows customers to plan for financial management while doing their bit in sustainability. In 2021, accumulated sales reached NT$24.76 million, and the number of transactions (including renewal deductions) reached 2,644. In response to "Earth Day", we also selected ESG- themed funds such as climate change and sustainability to launch project activities on digital channels.
■ Advisory Services on ESG Topics
(1) We established an ESG investment research team to promote investments in topics related to environmental sustainability such as wind power, electric vehicles, carbon neutrality, and water resources. In 2022, we began planning the publication of quarterly ESG-related market research reports as an investment research resource aimed at promoting ESG-related wealth management businesses to accelerate the process of ESG popularization.
(2)With the global rise of sustainable investing, E.SUN Investment Consulting included the sustainability evaluation system into the reports of individual stocks, helping investors from E.SUN Bank and E.SUN Securities understand the ESG performance of Taiwanese companies.
(3)Starting in 2022, E.SUN will provide modularized ESG issues and provide training regularly to deepen marketers' awareness on sustainable finance.