Pushing Responsible Finance
Fubon Financial Holdings has championed an “ESG Visioning Project” consisting of six strategies. One of them is a responsible finance strategy that addresses eight United Nations sustainable development goals (SDGs), including ensuring access to sustainable and clean energy, building resilient infrastructure, and promoting inclusive and sustainable economic growth, is complemented by several action plans. The strategy has also involved establishing a sustainability risk management framework and credit risk management policy and creating credit review procedures and loan oversight mechanisms to strengthen asset quality and encourage environmental and industrial sustainability.
Formation of Specialized Teams
Fubon Financial Holdings has established the ESG Task Force under the board’s Corporate Governance and Sustainability Committee. Within the ESG Task Force’s Responsible Finance Team, the Risk Management Division is responsible for promoting responsible investment, green credit, sustainable insurance, and climate-related financial disclosure initiatives. The team is headed by the Risk Management Division’s top executive and compiles the ESG activities and plans of relevant units in Fubon subsidiaries. It reports its findings to the Corporate Governance and Sustainability Committee every six months, and that report is then submitted to the board of directors.
Fubon Financial Holdings has put in place a sustainability risk management framework founded on its commitment to responsible finance, and devised the “Fubon Financial Holding Co., Ltd. and Subsidiaries Responsible Investment Management Guidelines” as the highest guiding principles to follow in pursuing responsible investment. The guidelines stipulate compliance with the U.N.’s six major Principles for Responsible Investment (PRI) and the need to consider ESG issues whenever the Company or a subsidiary makes an investment. Credit risk management policies and related rules and procedures along with a credit risk management organization and process have been established to monitor changes in credit risk and ensure that such risk remains within an acceptable range. At the same time, the Equator Principles and sustainability risk assessments have been incorporated into existing credit risk management rules to leverage the financial sector’s influence as a positive force and get more clients to take sustainability seriously. As for the property & casualty insurance business, it adheres to the spirit of the Principles for Sustainable Insurance in managing ESG risk.
The Company and its subsidiaries all comply with the “Responsible Investment Management Guidelines” and incorporate ESG related criteria in the assessment and analysis of investment targets. They have also established concrete ESG assessment protocols for different asset classes based on the type of investment and practicality issues and codified them into rules, guidelines or standard operating procedures. Beyond these steps, the oversight methods of discretionary investment institutions and other financial institutions have been integrated into ESG action plans to encourage investment groups to accept and implement the PRI.
On the credit side, measures are in place to identify and assess the ESG-related risk of each credit customer’s approach to environmental protection, climate change, human rights issues and CSR, and other rules echo the Equator Principles. Following international sustainable lending trends and strengthening related processes will continue to be high priorities in the future.
Fubon Insurance complies with the Principles for Sustainable Insurance, incorporating ESG issues into its insurance-related decision-making process, developing innovative insurance products and services through rigorous underwriting and claims management, and engaging with the public sector, academia and clients and business partners to develop integrated risk planning and mitigation plans.
The Six Principles for Responsible Investment (PRI) and Implementation Results
To put ESG management policies into practice, investment units across Fubon’s subsidiaries have set up management mechanisms for different types of products. The mechanisms include assessing potential investment targets using ESG indicators and screening them against a blacklist of banned industries and companies before investments are made. Each investment is then regularly reviewed after being made and shareholder activism is engaged in as necessary.
Implementation of 6 PRI in 2019
The Equator Principles serve as a risk management framework formulated by the Equator Principles Association for determining, assessing and managing environmental and social risk in projects to be financed and applies to all industrial sectors.More About Equator Principles >
Since joining the Equator Principles Association, Taipei Fubon Bank has referred to the Equator Principles and IFC Performance Standards when reviewing applications to which the principles apply to assess the potential environmental and social impact of each case. It has also requested customers to adopt appropriate risk mitigation measures based on Equator Principle guidelines to reduce the adverse environmental and social impact of their operations and encourage them to take their environmental and corporate social responsibility seriously.
Procedures for Equator Principle Cases
When handling Equator Principle cases, business departments must explain the applicability of the Equator Principles to a particular case in the “Sustainability Risk Assessment Checklist.” Taipei Fubon Bank also requires its business departments to explain the Equator Principles and related regulations to clients before they apply for financing, confirm that clients are willing to follow them, and help clients comply with the Equator Principles before applying and while the financing is in effect. If a client is unable to fully comply, its application for credit should be turned down.
Every credit case to which the Equator Principles apply must be handled based on the procedures detailed below.
Principles for Sustainable Insurance
In 2020, Fubon Insurance introduced the Principles for Sustainable Insurance (PSI) Initiative launched by the United Nations Environment Programme (UNEP) to make its operations and governance more sustainable and align itself with international practices. By identifying, assessing, managing and monitoring risks and opportunities associated with ESG issues, Fubon Insurance is hoping to improve business performance, develop innovative solutions, incorporate sustainability principles in its business and products, and join efforts to lead the industry in developing sustainably. Fubon Insurance voluntarily follows the four principles set out by the PSI, and has published a PSI Report (see the “CSR” section on Fubon Insurance’s official website). A summary of the PSI Report is as follows:
|Embedding ESG issues into corporate decision-making and building internal ESG capacity||
|Integrating ESG issues into underwriting, claims and investment management||
|Providing sustainable products and services and raising clients’ ESG awareness||
|Working together with industries, the public sector, universities and other key stakeholders to promote widespread action across society on ESG issues||