Policies, Action Plans and Outcomes of Honest Lending
One of the major staples of the financial services sector, the credit business, has traditionally focused on assessing credit, market and operational risk while generally ignoring the environment, social responsibility and other sustainability risks. More recently, however, domestic pollution and food safety problems have sparked debate about corporate social responsibility, and global institutional investors have shown much more concern about whether companies account for sustainability risk from such sources as climate change, environmental degradation, labor-management disputes and other CSR issues. In response to the "Honest Lending" strategy set forth in the "Fubon ESG Visioning Project" strategic blueprint, Taipei Fubon Bank has formulated a set of comprehensive lending standards which take into account ESG risks and opportunities in order to effectively boost the impact of Fubon's corporate social responsibility policies on the financial industry. Currently, Taipei Fubon Bank has formulated sustainable lending guidelines, incorporated ESG (Environmental, Social, Governance) guidelines into evaluation criteria for credit business and strengthened corporal governance in order to further fulfill Taipei Fubon Bank's corporate social responsibility and to complete Taipei Fubon Bank's risk management structure. In the future, Taipei Fubon Bank will continue to strengthen relevant systems in line with the international trends of sustainable loans.
Taipei Fubon Bank began in 2014 to establish regulations on sustainable development financing and the assessment of sustainability risk for corporate loans. These guidelines also cover monitoring the impact clients may have on society’s sustainable development during the loan period and helping them make improvements as necessary. The regulations were established and made effective in June 2015. Based on the sustainable lending guidelines, a client’s sustainability risks such as environmental footprint, ethical management practices and CSR commitment were incorporated into credit risk appraisals. This has not only tied the core competencies of the financial sector to Fubon’s CSR commitment but has also spurred clients to see environmental preservation and corporate social responsibility as important to their operations. In order to further realize Taipei Fubon Bank's emphasis on the ESG-related policies, in June 2015, the decision was made to apply to join the Equator Principles Association. After officially becoming a member bank of the Equator Principles Association in December 2017, Taipei Fubon Bank has revised the risk management mechanism of important outstanding loan projects, actively promoted adjustments in the relevant operating procedures, and implemented internal education and training pursuant to the regulations in the Equator Principles.More details of the Equator Principles compliance are disclosed in the following Taipei Fubon Bank’s official website:
Based on the sustainable lending guidelines, a client's performance in the following categories shall be reviewed:
- Whether the client's main business activities seriously harm the environment or adversely affect sustainable development, such as: gambling activities (not including gambling for public interest); arms dealing; tobacco; radioactive substances; tropical rain forest logging; non-bonded asbestos; PCBs; and driftnet fishing; and any activity involving the illegal use of child labor.
- Businesses operated by clients are assessed to determine whether they are high pollution industries (mining, dyeing and finishing/leather manufacture, printed circuit board, eletroplating, chemical materials, and pulp and paper industries); If yes, the client should provide supplementary information on its state of compliance with waste water and exhaust emissions regulations and related plans on pollution prevention.
- Inspections of records of major environmental penalties imposed.
- The client is assessed to determine whether it is of material risk to social sustainability, including but not limited to inspections on issues in integrity management, violations of the law by the person-in-charge, and suspension of work/business operations.
- Whether the business with the client complies with the regulations of the Equator Principles in the case that such business belongs to the scope of the Principles.
In order to effectively implement these rules, sales agents at Taipei Fubon Bank who handle applications on behalf of institutional clients applying for credit must complete a "Sustainability Risk Assessment Approval Form" for each application (in 2017, a total of 6,356 such assessments were made), which includes evaluating the client's significant environmental and social risks. Enterprises which are found to have violated environmental regulations, ethical management practices or corporate social responsibility guidelines resulting in a major adverse impact on sustainable development are subject to lending restrictions: In cases where, due to an environmental infraction, an enterprise's operations are suspended, a major penalty is assessed, a conviction occurs in a court of first instance, or the company violates a legal order and the verdict is to suspend production or cease operations, Taipei Fubon Bank may not engage in any new loan cases with the company. In the case of existing loan accounts, after a report has been issued in accordance with Taipei Fubon Bank's Regulations Governing the Handling of Major Incidents, the account is handled in accordance with a determination made by senior management. Since the implementation of the sustainable lending guidelines in 2015, so far outstanding loans amounting to a total of more than US$160 million were phased out as a result of violations of Taipei Fubon Bank's internally-formulated sustainable lending guidelines. The decision not to engage in new loan cases was based on the fact that the client was involved in gambling, tobacco or significant environmental issues and adversely affected sustainable development of the environment and the society.
In November 2017, pursuant to the policy of Fubon Financial Holdings, the business of securities investment and transactions was incorporated into the scope of sustainable risk evaluation. Business departments at Taipei Fubon Bank who handle applications related to securities business must complete a "Sustainability Risk Assessment Approval Form (securities investment and transactions)" for each application, which includes evaluating whether the investing or trading subject's main business activities seriously harm the environment or adversely affect sustainable development. If the subject is found to have violated environmental regulations or have caused significant harm to the public safety resulting in a major adverse impact on sustainable development, the subject shall be subject to investment restrictions.
After joining the Equator Principles Association, in 2018, Taipei Fubon Bank will fully realize the Principles in the lending policies in order to continue to strengthen the credit risk management mechanism of significant financing projects so that the identification, evaluation, categorization, review, post-loan control and other relevant management measures can comply with the regulations of the Equator Principles, thereby reducing the adverse effect that such significant financing projects may have on the environment and society as well as spurring clients to stress environmental preservation and corporate social responsibility in their operations.
In view of the world's continued push toward green finance, in 2018, Taipei Fubon Bank issued green bonds (with the first issuance of two-year green bonds at a value of NT$1 billion completed in March 2018) in support of solar energy, wind power generation, clean energy and related industries, with the aim of leveraging our positive role in the financial industry and thereby helping Taipei Fubon Bank to effect a bigger impact in helping industries pursue sustainable development.
Taipei Fubon Bank continues to promote and expand loans to projects in green energy/energy conservation industries, thereby underscoring our dedication to fulfilling Taipei Fubon Bank's corporate social responsibility. Taipei Fubon Bank introduced loans to projects in green energy/energy conservation industries in September 2015 and continues to expand on these loans, in order assist companies to invest in environmentally friendly products, energy-saving equipment, development of green manufacturing systems and pollution reduction, as well as to encourage consumers to buy green buildings, eco-friendly products and appliances with energy-saving labels.
|Special project loans||Description and results in 2017|
|Institutional Banking||Financing for Certified Green Buildings||
|Energy Conservation Financing Scheme – Loans to Integrated Energy Service Companies (ESCOs)||
|Loans for solar energy photovoltaic system projects||
|Retail Banking||Financing for Green Energy Equipment and Green Buildings||
Taipei Fubon Bank provided a total of NT$10.84 billion in outstanding loans to green industries, accounting for 2.04% (increased from 1.89%) of all outstanding loans to enterprises as of year-end 2017. An overview of such projects is as follows:
|Green Industry||Total SME Loans Outstanding, year-end 2017 (Thousand NTD)||Proportion of Outstanding Loans to Enterprises as of year-end 2017||Total SME Loans Outstanding, year-end 2016 (Thousand NTD)||Proportion of Outstanding Loans to Enterprises as of year-end 2016|
|Bicycle (including components) manufacturing||603,437||0.11%||602,658||0.11%|
|Waste disposal / removal||2,061,210||0.39%||870,355||0.17%|
|Resource recycling and handling||2,091,858||0.39%||634,783||0.12%|
|Pollution management (including equipment manufacturing)||70,047||0.01%||29,431||0.01%|
In order to help companies and consumers obtain funds for green investments, Taipei Fubon Bank will continue to promote and expand green energy, energy conservation, and green industry loans, as well as to use the capital derived from issuing green bonds or from joint lending cases to support the green energy industry and to facilitate the development of green energy, especially financing projects for the establishment of solar energy, wind power stations and the procurement of the related equipment. Such capital may also be used for the improvement in energy efficiency and energy conservation, the reduction of greenhouse gases, the recycling or reusing of waste materials, the saving, cleaning or recycling of water resources and other categories, thereby enabling Taipei Fubon Bank to fulfill its corporate social responsibility and jointly cultivate a greener society.
Action Plans and Results of Credit Card Sales Promotions
|Action Plans||Results in 2017|
|Increase proportion of redeemable points in the points exchange program for making cash donations to environmental education foundations and for purchases of more kinds of green energy products.||
In line with the environmental protection policy, in July 2017, Taipei Fubon Bank added the option of redeeming points in the points exchange program for making cash donations to environmental education foundations and for purchases of green energy products, with the aim of combining reward points with environmental protection, and thereby raising awareness of environmental protection.
In 2018, Taipei Fubon Bank plans to continue increasing proportion of redeemable points in the points exchange program for purchases of more kinds of green energy products. Taipei Fubon Bank also plans to work with green products shops on a credit card purchase reward campaign to boost Taipei Fubon Bank's image as a supporter of green purchase and to help encourage more cardholders to do their part in environmental protection!