Sustainable Investment
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
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.
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.