Sustainable Investment

Realizing the Value of Sustainable Investment

Following the development of global capital markets, the power of capital flow in shapingthe globe has gradually increased. As a life insurance company with a considerable amount of assets, KGI Life continues to make good use of investment strategies, in hopes of achieving the vision of a sustainable ecosystem through financial support for industries.

From socially responsible investments (SRI) to ESG investments, KGI Life actively aligns with international development trends by continuing to engage in sustainable investment, this includes the initial adoption of the responsible investment policy for negative filtering of investment target, as well as incorporating ESG factors into the investment process for positive filtering of investment targets. At the same time, we exercise shareholders' rights to comply with the Stewardship Principles for Institutional Investors, implement climate actions, and support the development of renewable energy with theme-based investments. While exerting the investment influence, we also create stable investment returns and continue to realize the value of sustainable investment.

View our Responsible Investment Policies

Investment Evaluation Principles

The Company formulates responsible investment policies for different types of investments, and incorporates ESG issues into the investment analysis and decision-making process. We set clear "investment exclusion criteria" and comprehensively evaluate the development, profit performance and sustainability actions of the target industry, increasing the value of investment assets and actively developing climate risk and carbon emission management mechanisms. If the main business items of a company involve environmental pollution, social disputes, or poor corporate governance, the company is excluded from KGI Life's direct investment. We also consider lists or indexes of companies with excellent sustainable development performance selected by well-known or credible domestic and foreign institutions or government agencies.

Responsible Investment Process

KGI Life established the Responsible Investment Policy, investment policy, and operating guidelines after referencing the United Nations' Principles for Responsible Investment (PRI). We incorporated ESG issues into the investment analysis and decision-making process for different asset categories. We take into account ESG factors when making investment decisions, and use the MSCI and Bloomberg databases to assess the ESG and financial performance of investment targets. Whether investments are increased or decreased is determined based on assessment results. The percentage of individual stock investment reports that include ESG evaluation 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 targets, and use carbon emissions as the standard for determination; higher carbon emissions indicate higher transition risks. By compiling a list of high-carbon emission industries, we can further examine whether investment targets have implemented or prepared transition plans for climate risks.

Step 1 Negative List Filtering

After compiling a negative list, the first step is to check whether the investment target meets any of the criteria. If there are any negative items listed in the responsible investment policy, the investment target will be directly excluded from investment.

Step 2 Investment Target Selection

Responsible investment target: Assess the investment target's products, business items, or actions for the three aspects of ESG, and select investment targets with corporate social responsibility.

Step 3 Check for Highly Sensitive (High Carbon) Industries

Compile a list of high carbon emission industries when assessing investments, check if the investment target is in a high-pollution (high-carbon-emission) industry and assess the probability of being affected by regulatory controls. Also check for involvement in environmental pollution or improper waste disposal.

Step 4 ESG Assessment Mechanism

Reference lists or indexes of companies with excellent social responsibility performance selected by well-known or credible domestic and foreign institutions or government agencies when conducting the assessment.

Step 5 Investment Decision-making

Before the Company makes an investment, use the name and country or region of the investment target and counterparty for AML/CFT filtering, and check if the investment target implements AML/CFT.

Step 6 Post-investment Management

Regularly compile a carbon inventory for the investment portfolio, monitor the carbon emissions of the investment portfolio, and disclose it in the monthly strategy report. If there is any major negative ESG news, actively look into the situation or issue an assessment report.

Step 7 ESG Engagement and Communication

Achieve 100% attendance in shareholders' meetings of domestic investee companies. If there are major ESG risks, do not vote in favor of the agenda item, or engage and communicate with the investee company. The negative list is also applicable to contractors and evaluate their ESG policies. For private equity funds, whether the fund management company is a signatory to the PRI is used as the selection standard.

Climate Actions

Investment in Renewable Energy Power Plant

To realize the value of corporate sustainability and support the development of Taiwan's renewable energy industry, KGI Life's Investment and Sustainability Team carefully evaluates qualifications, risks, and related opportunities of investment targets. KGI Life has invested approximately NT$1.508 billion in renewable energy power plants (up 9% compared to the previous year) as of 2023. Renewable energy from the power plants helped reduce carbon emissions by approximately 338,000 tons in 2023. Based on the proportion of KGI Life's expected investment amount, the investments will reduce carbon emissions by approximately 107,000 tons. As of 2023, the renewable energy power plants the Company invested in are expected to have a total installed capacity of
774 MW (up 20% compared to the previous year), and electricity generation is expected to reach 1.03 billion kWh (up 20% compared to the previous year).

Green and Sustainable Investment

KGI Life actively invests in iconic green bonds, sustainability-related funds, and ETFs in Taiwan and overseas, and expects the funds to be invested in renewable energy, the improvement of energy efficiency, green transportation, sustainable water resource management, and green buildings. As of 2023, KGI Life's green and sustainability investment amount was approximately NT$34.17 billion, up approximately 11% compared to 2022. Investment items include green bonds, sustainability bonds, renewable energy, sustainability themed funds, and green energy technology.
The amount invested in green bonds and sustainability bonds increased by approximately 5% compared to 2022. This is expected to reduce GHG emissions by 436,000 metric tons per year.
KGI Life supports the government's Green Finance Action Plan 3.0, a policy that promotes the development of green financial products, and invested approximately 2.3 billion in green bonds recognized by the Taipei Exchange and approximately NT$740 million in ESG ETFs to support the development of clean energy in Taiwan, putting ESG investment into practice through financial actions.

Engaging High Carbon Emission Industries

After identifying high carbon emission investment positions, KGI Life distributed 93 questionnaires to high carbon emission investment targets in 2023, with the goal of jointly engaging in climate action with investees, and encouraging investees to actively take inventory and manage GHG emissions, set reduction goals, carry out reduction actions, and track reduction results. Through analysis, we are able to better grasp the scale and industries of investee carbon emissions, as well as their current carbon reduction measures, climate actions, and future carbon reduction goals. 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 given year.