Taishin FHC Corporate Social Responsibility Report 2019

65 Sustainable Finance By referencing some important global principles, such as the International Finance Corporation (IFC) Exclusion List and the UN Global Compact and formulated Taishin FHC’s Green Finance Principles in 2018, it applied to all subsidiaries and businesses in the group, to specify the industries should be supported or the controversial corporates may be avoided, and emphasize that ESG risk manage- ment must be included in transaction reviews and post-transaction management. Presently, the Company and subsidiaries have adjusted policies and procedures in accordance with the Green Finance Principles, which covers 13 policies and 17 business review processes involving retail business, wholesale business, securities, venture capital, and investment trust. Routine or non-rou- tine training sessions are organized to enforce the implementation of the Principles among frontline employees making ESG related daily or short-term investment. Taishin hopes to enhance the investment of the supported industries, financing and product design, and turn more business focus towards social and environmental risks. Moving forward, the proportion of ESG-related products and services will be more actively raised to respond to the expectations of investors and customers. We continued to implement the “Taishin FHC Green Finance Principles” into business in 2019, which covered all subsidiaries and conducted 100% ESG risk assessments of all trading/transaction activities and financial products. The total number of assessments using the “Green Finance Assessment Worksheet” or similar methods reached total of 7,016 cases, covering financial holdings, bank, investment trust, investment advisory, venture capital, and other businesses. Among these, 40 cases were determined to be avoided (including tobacco & alcohol, coal business), while 6 cases were declined after comprehensive assessment, mainly due to finding higher risks after more evaluations. In order to encourage invested companies to pay attention to environmental protection, corporate social responsibility and corporate governance practices, as well as our own emphasis on responsible investment, Taishin FHC actively adheres to the six Principles for Responsible Investment (PRI) of the United Nations, as a basis for conducting business and making disclosures. Taishin Bank also adheres to the PRI to initiate it s “Stewardship Principles for Institutional Investors”. W ith regard to management, a clear voting policy has been established . Every year we disclose our participations for the invested companies’ shareholders’ meeting and the voting records of the companies and due diligence report . We continue to pay attention to our invested companies, including through monitoring the news, financial performance, environmental protection actions, social responsibility, labor rights and the corporate governance and other issues. We pursue appropriate dialogue and interactions with the invested companies through various channels. In 2016 and 2018 , Taishin Securities Investment Trust and Taishin Securities released a commitment to the “Stewardship Principles for Institutional Investors”, and they will contin- ue to regularly or occasionally disclose to the customers or beneficiaries the situation of their due diligence implementation (such as: voting in shareholders’ meetings of the invest- ed companies, due diligence execution reports), and will continue to pay attention to the communication, management, and disclosure of due diligence governance related to the invested companies in the future. 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 Financing Application Social/Environmental Risk Inves - tigation and Disclosure Worksheet” (also known as “CSR Worksheet”) to check if the application satisfies the criteria. For those satisfy the criteria of Project Finance, Taishin Bank needs to investigate and make sure the disclosure on environmental and social risk details, including environmental pollution, not correct use of raw materials, false advertis- ing, and violation against labor laws/regulations with penalty records or major announce - ments. The above process will be the factors to evaluate the application cases. In Nov. 2019, Taishin Bank officially became the signatory of Equator Principles and the member of Equator Principles Association, .therefore a more comprehensive mechanismwill be estab- lished soon for the Project Finance credit application review (for details, see 3-2 Project Finance) In response to the trend of development for sustainable finance, Taishin FHC is committed to imple - menting corporate sustainable development into its strategies and business activities. To deepen the understanding and management of ESG risks in important industries by its business depart- ments, Taishin has comprehensively assessed the environmental and social risk levels of the investment and financing industries and selected five industries: “Manufacture of Basic Metals,” “Power Supply,” “Chemical Materials Manufacturing,” “Manufacture of Electronic Parts and Compo- nents,” and “Manufacture of Electric Equipment” in the end of 2019 and expects to announce our “Environmental and Social Risk Management Sector Guidelines” (“Guidelines”) in 2020. The content of the Guidelines is on the basis of “Green Finance Principles” formulated in 2018, integrating the expectations and requirements of human rights protection and climate change of Taishin Financial Holdings, identifying major environmental and social risk items in accordance with industry charac - teristics, and providing best management practices to evaluate the structures. By understanding the appropriateness of our partner’s management of major environmental and social issues to improve our decision-making foundation, we look forward to minimizing the loan and investment transaction risk, enhancing and protecting the rights of customers, and maximizing the efficacy of sustainable finance. Establishment of Green Finance Principles The Company’s Investment Strategy follows the “UN Principles for Responsible Investment” and the Taiwan’s “Stewardship Principles” Taishin Bank has become the signatory of “Equator Principles” and conducted project finance review process in accordance with its spirit Environmental and Social Risk Management Sector Guidelines