Sustainable Investment

Responsible Investment Policy

We have aligned with the United Nations Principles for Responsible Investment (PRI) and incorporated factors of ESG into our investment policy, in order to implement sustainable development strategies and realize sustainable finance. We select investment targets with sustainability value by comprehensively evaluating their products, operations, and actions from the perspective of ESG, while pursuing investment profits and growth. Furthermore, we have established exclusion standards to exclude companies involved in environmental pollution, social disputes, or poor corporate governance when evaluating potential investment targets, excluding them from making direct investments.

We continually monitor, analyze, and evaluate information on investment targets after making investments. If any investment target is involved in a matter listed in the exclusion standard, we immediately examine and evaluate if the investment target has made any improvements or plans, and explain the response measures taken in our evaluation report, such as changing investment strategy or lowering the limit.
Going forward, we will persist in adjusting our investment portfolio, with an emphasis on the implementation of initiatives, in hopes of driving carbon reduction in the industry value chain through climate action.

View our Responsible Investment Policies

Responsible Investment Flowchart

We established the Responsible Investment Policy, investment policy, and operating regulations manual for different investment categories, and incorporated ESG issues into the investment analysis and decision-making process. ESG elements are taken into consideration when making investment decisions, and whether investments are increased or decreased is determined based on assessment results. The percentage of individual stock investment reports that included evaluation items reached 100%. An investment evaluation report that references the investment target's ESG report and other information must be prepared before making an investment. The report considers a number of ESG aspects, including environmental protection, labor-management relations, corporate governance, climate action, and other sustainability activities. We also consider the climate transition risks of investment subjects, and use carbon emissions as the standard for determination; higher carbon emissions indicate higher transition risks

We periodically review trends in operations or the industry chain of investees after making an investment, and report investment performance to the highest level supervisor. Investment results are also disclosed in the Sustainability Report. We strictly review reports on use of funds from green, social, and sustainability bonds, and ensure that funds are used to support sustainable development of the environment or society.

Step 1 Screening through negative list
Review investment targets. Any targets that are related to the 11 items of the responsible investment policy list exempt from investment.
Step 2 Selection of investment targets
Responsible investment target: Select investment targets that display CSR by assessing product, business items, or proactive actions in relation to ESG performance.
Step 3 Review of high carbon emission industries
Review whether the investment target is a high carbon emission industry and assess the potential impacts of regulations.
Step 4 ESG evaluation measures
Reference domestic reputable or government recognized exceptional CSR performance as well as relevant indices.
Step 5 Decide on investment
Before investing, review the AML/CFT of the investment target, and assess whether the investment target has conducted AML/CFT measures.
Step 6 Post-investment management
Regularly review carbon emission of investment portfolio, and whether there are major negative news, or produce assessment reports.
Step 7 ESG engagement
The responsible department assesses whether there area material ESG risks and conducts engagement.
Carbon Footprint of Investment Portfolio

We began compiling the carbon footprint of our investment portfolio in 2022 to understand the carbon exposure of our current investment portfolio, and use it as the basis for making low carbon investment transition decisions. We estimate carbon emissions of the six categories of investment assets every six months according to "The Global GHG Accounting and Reporting Standard for the Financial Industry" of the Partnership for Carbon Accounting Financials (PCAF).

We use the group's selection standards for high carbon emission industries, and use the industry classification standard of the Directorate-General of Budget, Accounting and Statistics to calculate the total amount invested, total carbon emissions, and carbon emission density  of each industry in the investment portfolio, in order to analyze high carbon emission industries in the investment position, and comprehensively consider the percentage of investments in each industry, which is used as the basis for subsequent position adjustments.

After compiling the inventory, the total carbon emission from the investment balance at the end of 2022 was approximately 2.52 million metric tons, down by approximately 43.8% compared with the end of baseline year of 2020, and investments in high carbon industries accounted for 18.5% of overall investments, achieving the goal of reducing it to less than 26% of the overall investment position. After taking inventory of carbon emissions from the investment portfolio, We are able to verify the investment limit in key emission targets and high carbon emission industries. We will continue to evaluate the composition of industries and companies in our investment portfolio, and gradually guide the investment portfolio to low carbon industries, in order to achieve the goal of net zero emissions from our asset portfolio by 2045.

Responsible Investment Performance
Evaluate Climate Action Results Based on ISO 14097
We understand that climate change has become a global risk. As an asset owner, we hope to work together with investees and jointly gain influence in climate actions through the guidance of funds. After discussions in cross-departmental meetings, our investment departments propose potential climate actions based on analysis of carbon emissions from our asset portfolio, including: adjusting positions and investment targets, and attending shareholders' meetings, forums, and workshops. After considering feasibility, we have selected three climate actions, "Investment in renewable energy power plants," "Investment in green bonds," and "Engage high carbon emission industries" as our goals in the current stage.
Investment in Renewable Energy Power Plant
To realize the value of corporate sustainability and support the development of Taiwan's renewable energy industry, the investment and sustainability teams of our company carefully evaluate qualifications, risks, and related opportunities of investment targets. As of 2022, we invested in renewable energy power plants expected to have a total installed capacity of 632.63 MW (up 277% compared to the previous year), and electricity generation expected to reach 863 million kWh (up 277% compared to the previous year), achieving the environmental benefit of reducing GHG emissions by a total of 452,600 metric tons (up 310% compared to the previous year). Based on the percentage of funding invested by us, this will reduce GHG emissions by 79,600 metric tons (up 1,067% compared to the previous year). We are actively investing in the renewable energy industry. Besides increasing the investment percentage, we will continue to search for investment opportunities with development potential and substantive environmental benefits.
Investment in Green Bonds
We are actively investing representative green bonds in Taiwan and overseas, and expect the funds to be invested in renewable energy, the improvement of energy efficiency, green transportation, sustainable water resource management, and green buildings. As of 2022, our investments in green bonds and sustainability bonds increased approximately 86% compared to 2021, which is expected to reduce GHG emissions by 317,000 metric tons/year. We support the government's Green Finance Action Plan 3.0, which is a policy that promotes the development of green financial products, and invested in the green bonds issued by TSMC and Orsted to support the development of clean energy in Taiwan. The investment amount reached NT$2.3 billion and shows that we take action to make ESG investments.
Engaging High Carbon Emission Industries
After identifying investment positions with high carbon emissions, we distributed 121 questionnaires to investees with high carbon emissions in 2022. We aim to jointly engage in climate action with investees, and encourage investees through the questionnaires to actively inventorize and manage GHG emissions, set reduction goals, carry out reduction actions, and track reduction results. We understand the carbon emissions, current carbon reduction measures, climate actions, and future carbon reduction goals of investees of different scales and in different industries based on analysis results. We continue to track their carbon emissions and other climate actions to verify if investees are able to achieve the goals they set for each year.
Actively Investing in Six Strategic Industries
After the 5+2 Industrial Innovation Plan, we continued to actively invest in and support natural gas power plants, green energy, and pharmaceutical companies, in compliance with under the government’s policy to invest in six strategic industries. The balance of direct and indirect investments in six strategic industries reached NT$120.405 billion in 2022.