Fubon Financial-CSR-Corporate Governance

Sustainable Governance

Was ranked in the top 5% of the Taiwan Stock Exchange’s “Corporate Governance Evaluation” of listed companies for the second year in a row.
In December 2016, Fubon Financial Holdings and subsidiaries Taipei Fubon Bank, Fubon Life and Fubon Insurance all received certification under the Taiwan Corporate Governance Association’s “Corporate Governance System Assessment Certification” process. The Company has earned certification five consecutive times.
Fubon Financial Holdings has instituted a robust risk management structure and sound risk management policies and regulations. In a report issued on Nov. 29, 2016, Taiwan Ratings Corp. noted that “Fubon Financial Holdings’ enterprise risk management is adequate and its risk controls strong.

Action Plans	2016 Results	Extent of Completion
Create a strong CSR oversight mechanism	Had ESG (environmental, social and governance) issues supervised by the Corporate Governance and Sustainability Committee under the board of directors and created an ESG Task Force	Completed Two members of the Corporate Governance and Sustainability Committee (independent directors) oversee the operations of the ESG Task Force
Create a strong CSR oversight mechanism	Reports on the task force’s ESG initiatives and results were submitted to the board of directors	Completed A report on initiatives carried out in 2015 and plans for 2016 was presented to the board at the beginning of the year. Another report was submitted in mid-2016 summarizing progress in 2016 H1 and plans for 2016 H2.
Optimize the functions of each of the board’s functional committees	Added the review of M&A issues to the responsibilities of the Audit Committee	Completed
	Helped the board select a nominee for the independent director by-election	Completed The Corporate Governance and Sustainability Committee recommended Mr. Jason Wang as the nominee for independent director in the board’s 2016 by-election
Mid-term Goals
Continue to strengthen ESG practices and earn an even higher DJSI grade Create a fair and reasonable compensation system See that at least 1/3 of the board of directors’ members are independent directors
Long-term Goals
Help the board of directors establish a policy on board director diversity Keep up with the times and solidify and maintain ESG performance

Fubon Financial Holdings’ Corporate Governance Structure

Fubon Financial Holdings has established three functional committees under the board of directors – the “Corporate Governance and Sustainability Committee,” the “Audit Committee,” and the “Remuneration Committee” – to strengthen the board’s management functions.

Committee	Composition Rules	Members	Main Responsibilities	2016 Operations
Corporate Governance and Sustainability Committee	Members appointed by the board and must be board directors; must have no fewer than 3 members, and at least half of the members must be independent directors	Convener: Ind. director Louis Cheung Members: Ind. director Ming-Je Tang; Ind. director Jason Wang Director Chih-Ming Chen Director Richard M. Tsai Ind. director Jin-Ji Chen (resigned on Aug. 30, 2016)	Helps the board nominate board of director candidates and recommends potential independent directors for Fubon subsidiaries Develops initiatives and advises the board on its internal operations and management and issues Oversees implementation of CSR and sustainable operations initiatives and evaluates their effectiveness	Met 4 times; average attendance was 95.83%
Audit Committee	Made up of all of the Company’s independent directors; must have no fewer than 3 members	Convener: Ind. director Ming-Je Tang; Members: Ind. director Louis Cheung Ind. director Jason Wang Ind. director Jin-Ji Chen (resigned on Aug. 30, 2016)	Oversees the fair presentation of the Company’s financial statements Hires (dismisses) the accounting firm used by the Company and certifies its independence and performance Monitors effectiveness of Company’s internal controls Supervises appropriateness of internal compliance procedures Oversees the management of existing or potential risks	Met 8 times; average attendance was 93.75%
Remuneration Committee	Members appointed by the board of directors; must have no fewer than 3 members, and at least half of the members must be independent directors	Convener: Ind. director Louis Cheung Members: Ind. director Ming-Je Tang; Ind. director Jason Wang Ind. director Jin-Ji Chen (resigned on Aug. 30, 2016)	Establishes and reviews the Company’s policies, systems and structures related to the performance evaluations and remuneration of board members and managerial officers Regularly assesses the actual remuneration paid to board members and managerial officers	Met 4 times; average attendance was 100%

Date: Dec. 31, 2016

Fubon Financial Holdings’ determination to meet its responsibilities as a corporate citizen and embrace sustainability was made clear when it set up an “ESG Task Force” under the Corporate Governance and Sustainability Committee. The Task Force, led by Fubon Financial Holdings’ president, is responsible for managing and implementing corporate sustainability initiatives and consists of six working teams focused on corporate governance, employee care, responsible finance, customer engagement, social commitment and environmental sustainability. The committee appointed independent directors Ming-Je Tang and Jason Wang to supervise the ESG Task Force. According to the Corporate Governance and Sustainability Committee Charter, the ESG Task Force is required to submit a report at the beginning of each year on its plans for that year and a progress report every half year. The reports are then submitted to the board of directors after review by the committee.

Working Team	2016 Achievements	2017 Plans
Corporate Governance Team	Fubon Financial Holdings is dedicated to safeguarding shareholders’ rights, and it carries out compliance initiatives and puts a priority on risk management, internal controls and investor communications. Because of these efforts, Fubon was ranked in the top 5% of the Taiwan Stock Exchange’s second annual Corporate Governance Evaluation” of listed companies Emerging risk management principles and assessment procedures established to help subsidiaries identify emerging risk. After compiling emerging risks identified by subsidiaries, FHC-level emerging risks seen as “technology risk – data fraud or theft” and “economic risk – fiscal crises and asset bubbles” Communicated with investors through quarterly investor conferences and nearly 170 domestic and overseas institutional investor meetings, and by answering 310 calls from investors. Also participated in investor and ESG-related meetings (Morrow Sodali, BlackRock) to understand the ESG issues investors are concerned about	Performance evaluations of the board’s functional committees and an outside evaluation system will be instituted to enhance the board’s effectiveness and keep Fubon in the top 30 in the Taiwan Stock Exchange’s Corporate Governance Evaluation rankings of listed companies Will continue to strengthen the Company’s market risk management system Will continue to actively call institutional investors’ attention to the Company’s financial and ESG performance
Employee Care Team	Carried out the “Golden Practices” strategy under Fubon’s ESG Visioning Project that primarily cares for each employee but also extends care to their families and society Established and implemented a human rights policy to help foster a culture that values equality, inclusiveness, and open communications; signed collective bargaining agreements with the Fubon Insurance and Fubon Securities unions; promoted a “Maternal Health Plan” Systematically cultivated the professional competencies of our employees and built a diversified learning environment, creating human capital value Promotes social empowerment to address new trends – focuses on collaborations with academia to nurture professional financial latent	Continue to implement the “Golden Practices” strategy outlined in Fubon’s ESG Visioning Project Continue to support unions and sign collective bargaining agreements, promote harmonious labor-management relations, and expand the “Maternal Health Program” Continue to systematically develop employees’ professional competencies and forge a diverse, self-initiated learning environment to help cope with external trends and internal operating strategies Continue to promote marriage and child care programs, health promotion activities and environmental safety initiatives; encourage employees and their families to participate in public welfare and environmental events to achieve a better work-life balance
Responsible Finance Team	Carried out the “Leading Investment” and “Honest Lending” strategies outlined under Fubon’s ESG Visioning Project Taipei Fubon Bank continued to institute sustainable lending practices and green energy loans, and promoted preferential energy saving loans and credit card promotions The Investment Management Group encourages the investment sector to take ESG performance into account, and requires investment targets to disclose their ESG practices; currently invests in new drug development, pharmaceutical manufacturing and alternative energy; energy-saving designs used in all property investments	Will continue to carry out the “Leading Investment” and “Honest Lending” strategies outlined in Fubon’s ESG Visioning Project Taipei Fubon Bank will continue to promote preferential ESCO (energy service company), green building and solar power loans in line with government policies and offer startup loans to young entrepreneurs in collaboration with Taipei authorities. Consideration also being given to aligning the bank with international trends by joining the Equator Principles Association and introducing a strict credit risk management system based on the Equator Principles to assess major financing deals The Investment Management Group will establish a FHC-level responsible investment policy and incorporate human rights standards and investment guidelines for high risk sectors/targets; subsidiaries’ investment screening divisions will adopt responsible investment strategies based on “product categories.” Also, to meet SDGs objectives, Fubon will assess new potential investment categories, such as new drug development, alternative energy, infrastructure and green building
Customer Engagement Team	Carried out the “Innovative Finance” strategy outlined under Fubon’s ESG Visioning Project Beyond conducting customer satisfaction surveys, Fubon optimized market research systems and adjusted mystery shopper points of emphasis to ensure that service quality was improved and upgraded Strengthened the mechanism used to handle customer complaints, in part by enhancing training in this area; service quality also improved through survey-driven initiatives, a “warm service” campaign, customer feedback and immediate customer support Several programs put in place to protect customers’ rights in line with laws and regulations; they include giving customers more time to review terms & conditions; openly disclosing customers’ rights with regard to different products; setting internal guidelines and training programs; strengthening personal information management; and bolstering product review mechanisms Enhanced innovative financial services across-the-board; invested in mobile digital services and innovative service development	Will continue to carry out the “Innovative Finance” strategy outlined under Fubon’s ESG Visioning Project Subsidiaries will keep developing digital and innovative services in both the business and service realms in pursuit of service excellence Customer satisfaction surveys to remain at the core of service improvement initiatives; will regularly check and raise performance evaluation standards to make service more efficient; in areas that fall below standard indicators, improvements will be proposed and service quality will be closely monitored Strengthen customer service and intensify customer complaint training to maintain good customer relationships Will optimize and enhance digital financial services and give Fubon personnel more convenient operating processes and customers more convenient, easier-to-use interfaces; will also use innovative technologies to develop robo advisers and wearable devices that provide “smart wealth management”
Social Commitment Team	Carried out the “Innovative Finance” and “Tender Care” strategies outlined under Fubon’s ESG Visioning Project Continued to use core competencies to develop programs that help society and drive environmentally and socially beneficial product innovation and cooperation Sponsored sports events and athletes and helped create a more vibrant sports culture, reflecting the Fubon brand’s spirit of “positive energy” Continued to integrate the resources of the financial holding company and its subsidiaries to support public welfare activities by Fubon’s four foundations in different areas and create a “holistic” form of social engagement	Will continue to carry out the “Innovative Finance” and “Tender Care” strategies outlined under Fubon’s ESG Visioning Project Will continue to use core competencies to develop programs beneficial to society that promote health management and strengthen the resilience of social assets Will continue to sponsor sports events and athletes to create a more vibrant sports culture, reflecting the Fubon brand’s spirit of “positive energy” Will continue to integrate the resources of the financial holding company and its subsidiaries to support public welfare activities by Fubon’s four foundations in different areas and create a “holistic” form of social engagement
Environmental Sustainability Team	Carried out the “Golden Practices” strategy outlined under Fubon’s ESG Visioning Project Aligned the Company with international ESG norms by introducing the ISO14001 environmental management system and expanding ISO14064-1 greenhouse boundary Extended measures to save energy and cut carbon emissions and supported green energy purchases and green procurement	Will continue to carry out the “Golden Practices” strategy outlined under Fubon’s ESG Visioning Project Planning to introduce an ISO50001energy management system; will continue to prioritize ISO14001 environmental management system certification renewals and carry out ISO14064-1 greenhouse gas reporting Will maintain measures to save energy and cut emissions while supporting green energy purchases and green procurement