Fubon Financial-CSR-Leading Investment

Promoting Leading Investment

Underlying Principles

The Leading Investment strategy is outlined in the Fubon ESG Visioning Project strategy blueprint. The strategy states that the Company’s goals are bettering human health and wellbeing; ensuring sustainable and clean energy for all; helping to complete basic infrastructure; and promoting inclusive and sustainable economic growth. In accordance with these goals, the Company will continue to seek out themed investments in biotechnology, green energy, basic infrastructure, the 5+2 Industries, and industries with good ESG performance and low carbon emission. In addition, the Company will also incorporate ESG into investment procedures and establish an ESG evaluation mechanism. Doing so will promote better sustainable performance of investments targets and of our peers in the financial industry.

Establishment of Working Teams

Fubon has a well-established organizational framework in place for promoting responsible investment that allows the Company to proactively achieve various strategic goals. The Investment Management Group reports to the Responsible Finance Team of the ESG Task Force. Meanwhile, senior executives from the Investment Management Group are selected to serve as working team committee members where they complete various tasks on a regular basis, such as summarizing the latest implementation status of responsible investments executed by the investment teams of Fubon's subsidiaries and reporting their findings to the ESG Task Force. Each subsidiary's investment team also designates personnel to undergo training and instruction, which enables them to help incorporate ESG principles into the investment procedures of their respective team.

Formulating Effective Management Policies

The Responsible Investment Management Principles are held as the highest guiding principle for the Company and its subsidiaries in promoting and implementing responsible investment. In doing so, the Company and its subsidiaries must take into account whether an investment adequately meets ESG standards before committing to an investment. Once investments are made, the Company must conduct regular inspections to determine whether each investment remains compliant with ESG criteria, by incorporating ESG principles into their relevant investment policies, internal regulations, and standard operating procedures. This meticulous process entails the exercising of stock rights, creditor rights, as well as shareholders’ equity for companies based in Taiwan and other countries; and the process serves as the main guiding principles for formulating Fubon's responsible investment policies. Moreover, Fubon has adopted the six Principles for Responsible Investment (PRI) advocated by the UN as the basis for disclosing company information to outside parties.

Promoting Strong Management Practices

In order to effectively implement ESG management policies, the investment teams of each subsidiary have set up various management mechanisms based on the specific features of each investment product that are continuously refined and adjusted. Prior to making an investment, our investment teams conduct an assessment based on various ESG indicators and screen out unsuitable investments according to an internal blacklist and other indicators. After an investment has been made, the investment teams carry out regular inspections and engage in principled shareholder activism practices.

Descriptions of Major Accomplishments in 2018 Based on the Six Principles of Responsible Investment are as follows:

Six Principles of Responsible Investment
1. Incorporate ESG Criteria into Investment Analyses and Decision-Making Processes	Finished formulating the Fubon Financial Holdings "Principles for Responsible Investment". Incorporated ESG principles into the investment policies of Fubon Life and Fubon Insurance. All stocks included in the pool of investment assets were verified to comply with relevant ESG rules. Investment targets were assessed according to the ESG risk indicators prior to investment. Actively engaged in theme-based investments (medicine development, alternative energy, ESG performance screening, basic infrastructure funds, green architecture, low-carbon investments, etc.) After evaluating investments with external resources, created a list of high-risk countries and companies. Regularly monitored the internal blacklist. Used the ESG Checklist to conduct annual examinations of domestic and foreign companies that have issued bonds in which the Company invested in.
2. Incorporate ESG Criteria into Fubon's Ownership Policies and Practices	Fubon Life and Fubon Insurance divisions have signed the Stewardship Principles for Institutional Investors compliance statement. Engaged in principled shareholder activism practices and made prudent assessments of investee companies; as of December, 2018, Fubon Life had an attendance rate of 100% for participating in shareholders meetings of investee companies.
3. Seek Appropriate Disclosure of ESG Information From Institutions in Which Investments Have Been Made	Gathered and scrutinized CSR reports issued by domestic investee companies. Any stock that violates ESG or the Insurance Sustainable Development Principles will be added to the Blacklist and cannot receive additional investment.
4. Promote Acceptance and Implementation Of PRI Within The Financial Industry	Used the ESG Checklist to conduct annual examinations of foreign bond funds and ETFs held by Fubon's subsidiaries and verified that the issuers and constituents are all PRI signatories. Used the ESG Checklist to conduct annual verification of the implementation status of ESG principles for domestic bond funds and ETFs held by Fubon's subsidiaries companies. Requested discretionary investment institutions to provide a summary of their ESG activities. Discretionary investment institutions must also comply with the Blacklist.
5. Cooperate To Reinforce Implementation Of PRI Criteria	Participated inmeetings on publicinfrastructure projectsheld by variousgovernment ministriesand departments. Participated in ESGconferences organizedby outside institutions. Communicate with environmental protection groups to explain Fubon’s responsible investment principles and approaches. Fubon Financial Holdings continues to keep channels of communication open for all stakeholders, and to respond to questions raised by stakeholders as soon as possible. Taking NGO stakeholder communication as an example, in June 2018, a non-profit organization inquired about Fubon Financial Holdings' investment ESG management, Fubon Financial Holdings therefore arranged the Investment Management Headquarters to meet with the organization. The organization was concerned about Fubon’s investment in a traditional industry, because the operations of the invested-in corporation are suspected to have a negative impact on the environment. In the meeting, we promised to strengthen follow-ups regarding the corporation’s impact on the environment and human rights as part of the investment evaluation. Afterwards, we implemented the project through responsible investment management. Not only did we continuously watch and evaluate the corporation's ESG performance, but also further reduced our shareholding in this corporation by about 50%. This shows that Fubon Financial Holdings values outside voices. We turn stakeholder concerns into action that propels our ESG Vision Project and helps us march towards our goal of sustainability.
6. Individual Reports On PRI Activities and Progressions	Regularly reported on the implementation status of responsible investments to ESG Task Force. Highlighted the importance of responsible investing in Fubon Financial Holdings' annual CSR report, underscoring Fubon's public commitment to PRI guidelines.