Taipei Fubon Bank has incorporated such CSR issues as climate change, environmental pollution and labor-management relations as evaluation criteria in its credit decisions to act in a socially responsible way.
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 for whether companies account for sustainability risk from such sources as climate change, environmental degradation, labor-management disputes and other CSR issues. Financial institutions must also include these issues among their credit assessment criteria if they hope to meet their social responsibility and optimize their risk control structures.
With that in mind, Taipei Fubon Bank began in 2014 to establish principles 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. In June 2015, the Bank established and put in place sustainable lending guidelines that embodied the spirit of the Equator Principles, incorporating such sustainability risks as a client’s environmental footprint, ethical management practices and CSR commitment 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 stress environmental preservation and corporate social responsibility in their operations. Key components of the approach include:
- Based on the International Finance Corporation’s Equator Principles, any major project under consideration for a loan must obtain environmental impact assessment approval before the loan can be issued.
- Companies or industries involved in activities that seriously harm the environment or adversely affect sustainable development are avoided. Among the businesses not considered are those involving: gambling activities (not including state-run lotteries or games of chance); 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.
- Restrictions are placed on loans to companies that have violated environmental laws or their social responsibility or have had a major adverse impact on sustainable development.
To fulfill green credit implementation, Taipei Fubon Bank rejected a request for a US$40 million loan from a company in the gambling sector in 2015. Through activeparticipation in the international financial trends,Fubon aims to deliver its positive energy bystrengthening its emphasis on social sustainabledevelopment. The Company is committed tofulfill its corporate social responsibility to achievea win-win situation for both the enterprises andthe bank.