■ Responsible Lending
E.SUN carefully selects its corporate credit counterparts, applies resources in
areas that benefit the economy, environment, and society, and has established
various internal policies and
regulations for management. The E.SUN Bank Lending Policy clearly specifies its
support for green energy industries, such as alternative energies, water
resources, and environmental
pollution control. Companies that are committed to reducing energy consumption
and pollution or installing environmentally-friendly facilities should be given
suitable financing. The
E.SUN Bank Green Energy Lending Principles and Key Points for Undertaking
Project Financing based on Equator Principles are adopted to direct resources
toward investments in green
energy, and review and monitoring on cases above a certain scale shall be
conducted in accordance with the Equator Principles. The E.SUN Financial Holding
Sustainable Lending Policy
incorporates ESG-related considerations into the lending process, and requires
monitoring and due diligence review for ESG high-risk industries or
applications, so as to prevent impacting
the sustainability of the society and environment.
(1) Equator Principles
E.SUN has long supported large-scale projects that contribute to sustainable
development. Since it became the one of the first domestic financial
institutions to become a signatory to
the Equator Principles in 2015, it has participated in a number of large-scale
project financings, including those for electric power and infrastructure at
home and abroad. Furthermore, in
accordance with the international standards of the Equator Principles
Association, E.SUN manages project financing risks in a hierarchical manner,
carefully assesses whether the project
development process fulfills environmental and social responsibilities, and
properly formulates environmental and social impact monitoring system and
improvement plans.
2020 Results
- In October 2020, we adopted the fourth edition of the Equator Principles (EP
IV) framework and continued to refine the control process. In addition to
expanding the scope of application of
the Equator Principles and including more project financing into the
evaluation criteria, E.SUN also pays great attention to risks related to
climate change, human rights, and biodiversity,
thus improving its environmental and social risk management capabilities.
- In 2020, a total of 7 project financing cases to which the Equator
Principles apply were approved, and 1 case was declined.
- As of December 2020, a total of 26 cases have been approved. In response to
the development of renewable energy, 16 of the cases were related to green
energy.
Cumulative number of
approved cases under the Equator Principles
The Equator Principles At ESUN 2020
(2) ESG Sustainable Industries
In 2020, E.SUN continued to invest resources in industries that are friendly to
the environment and society and support industries such as green power, energy
conservation and environmental
protection, circular economy, medical care and education, while also giving full
play to the spirit of responsible lending regarding industries with
environmental risks (such as pulp/paper
making, leather, dyeing and finishing, oil and gas, mining) and industries with
higher to social risks (such as gambling, munitions, tobacco and alcohol) by
exercising control through a stricter
credit review process.
Percentage of the
outstanding balance of sustainable industries in 2020
Percentage of the
outstanding balance of industries with environmental and social risks in 2020
E.SUN also carefully evaluates the ESG risks of each corporate loan. Even in
regard to companies that aren't members of high-risk industries, E.SUN would
check on every loan applicant to
see whether they're involved in major environmental and social concerns. In
2020, 4 loan cases, with 3 domestic applicants and 1 from overseas, were
declined due to high ESG risks and
their failure to propose specific mitigation measures, totaling at NT$1.83
billion in the rejected amount.
|
Company |
A |
B |
C |
D |
|
Risk |
Environment
|
Corporate governance |
Society
|
Environment
|
|
Reason
|
Violation of E.SUN's coal ban policy |
Parent company and top management
were involved in scandals |
Business model is prone to
consumer disputes |
Environmental protection concerns |
■ Supporting green finance and
responding to the call for low-carbon homes
E.SUN has long attached great importance to environmental sustainability and
actively responded to international trends and industrial policies. It therefore
continues to develop special
products such as green finance and green energy project financing to help
increase the proportion of the power generated from renewable energy and promote
energy conservation and
carbon reduction.
(1) Green energy project financing
Starting from small and medium-sized solar rooftops, E.SUN has recently been
actively involved in project financings for large-scale power plants such as
offshore wind power and groundbased solar power plants. In recent years, we have
successively established offshore wind power and green energy expert in the
headquarter to participate in important domestic wind power and solar projects.
In the future, E.SUN will continue to invest resources to master new trends of
green energy.
| Green energy
project financing |
Outstanding
balance as of 2020
(NT$M) |
Total amount of loans
in project financing
position |
Percentage of green /
sustainable
infrastructure finance vs. total value
of infrastructure finance |
・Domestic solar photovoltaic project financing
・Domestic onshore wind power project financing
・Overseas offshore wind power project financing
|
・Domestic offshore wind power project financing
・Overseas solar photovoltaic project financing
|
11,106 |
16,510 |
67.27% |
・Solar photovoltaic
E.SUN incorporates inclusive financing with project financing and provided the
Solar Panel Rooftop
project in 2014 to encourage small and medium enterprises and regional
developers in promoting
rooftop solar power stations. In recent years, it has leveraged its project
financing evaluation experience
to successively invest in large-scale ground-mounted and floating solar power
plants. According to the
carbon emission per kilowatt-hour of electricity of 0.509 kilograms per
kilowatt-hour announced by the
Bureau of Energy, the results are as follows.
In 2020, E.SUN supported domestic solar photovoltaic plants, resulting in 360MW
of power generation,
which was 3.3 times more than 109MV in 2019, with one of the contributors being
a large-scale project
in the Changbin Intertidal Zone. In addition to the challenging construction
technology, E.SUN's internal
assessment process also pays attention to local biodiversity to confirm that the
development process
will not have a significant impact on the wetland ecology.
・Wind power generation
Taiwan Straits has abundant wind farm resources, and offshore wind power has
been listed as a key energy development goal in the country, thereby attracting
many major international
developers to invest in the Taiwanese market. To enhance the evaluation
capabilities of offshore wind power lending projects, E.SUN set up an
inter-departmental project task force in 2017
to study and gain professional knowledge of the offshore wind power industry and
supply chain, technologies, and finance, so as to better assess the risk of
these industries. Through actual
participation in outstanding projects with long-term stable cash flow, we
continue to accumulate experience in projects relating to financing and the
Equator Principles.
2020 Results
- Domestic offshore wind power: E.SUN participated in large-scale domestic
syndicated loans and served as joint mandated lead arranger.
- Onshore wind power: Served as the lead bank of an international syndicated
loan and the domestic collateral management bank. This case is also the
first case of onshore wind power
evaluated in accordance with the Equator Principles in Taiwan.
- The cumulative installed capacity of wind power projects at home and abroad
that E.SUN has participated in is 3,746MW, including 2,210MW from offshore
wind power and 1,536MW
from onshore wind power. According to the electric carbon emission
coefficient announced by the Bureau of Energy stating that domestic carbon
emissions per kilowatt-hour of
electricity is 0.509 kg, the United Nations International Financial
Institution (IFI) greenhouse gas accounting guidelines which discloses the
energy emission coefficients of various
countries, as well as the proportion of loan balances, it was estimated that
the carbon reduction benefits of wind power project financing was about
193,000 tons of carbon emissions.
(2) Sustainability-linked Loans
To encourage companies to set up their own ESG development goals and continue to
invest in sustainability-related activities, referencing the LMA Sustainability
Linked Loan Principles, E.SUN
plans related regulations and operating methods, and negotiates and agrees on
the establishment of sustainability development goals with the companies it
finances. If an enterprise achieves
its goals, E.SUN will offer financial service discounts. In September 2020,
E.SUN undertook the bank's first sustainability-linked loan. By 2020, a total of
4 cases had been evaluated and 1
case approved, and the current balance is NT$290 million. In the future, E.SUN
will continue to refine its operating procedures and plan to incorporate the
performance of related products
into the assessment of business units, guide business units to grasp the
sustainable development process of customers through incentive mechanisms, and
actively promote sustainabilitylinked
financial products to enhance the bank's influence in the environmental and
social aspects.
