Responsible Investment
Standards for Investing In / Pulling
Investment Out of
Specific Industries
Fubon incorporates ESG risk factors into investment assessments, and
sustains
its governance culture by operating ethically, being open and transparent,
and
complying with applicable laws, while creating shared values with society,
the
environment and customers as part of its CSR commitment. To effectively
assess
and manage climate-related risk, Fubon has established the following
principles
for handling investment and loan opportunities:
Power plant |
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Coal mining |
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Cement industry |
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Petrochemicals |
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Steel industry |
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- Companies with major environmental violations, human rights violations (forced labor or child labor issues), occupational safety or food safety problems, labor-management disputes, or corporate governance issues that have been reported in the news, and where the situation is serious and no tangible plans to address the problem have been proposed
- Companies that have violated AML/CFT regulations or where another serious violation occurred and no tangible plans to address the problem have been proposed
- Highly controversial industries involving arms trafficking, gambling, tobacco and liquor production, the sex trade, the killing of wild animals or destruction of their habitats, or the production of internationally banned or restricted chemicals, drugs, pesticides, herbicides or radioactive materials
- Companies that should be actively supported to promote and achieve the United Nations SDGs; products and services should be provided to these companies to help strengthen environmental and social sustainability.
Principles of Responsible
Investment (PRI)
Fubon’s investment units abide by the Principles of Responsible Investment
(PRI)
and establish mechanisms based on specific product characteristics to
continuously reduce ESG risks. The implementation of these mechanisms mainly
focuses on evaluating ESG indicators and screening blacklists to narrow down
potential targets before an investment is made and regularly reviewing
investments and engaging in shareholder activism after they are made.
The Six Principles for Responsible
Investment (PRI)
-
1Incorporate ESG Issues into investment analysis and decision-making processes+ -Implementation Results
- Completed the “Responsible Investment Management Guidelines”at the financial holding company level
- P&C and life insurance units incorporated ESG principles in their investment policies
- Required all stocks in the asset pool to meet ESG guidelines
- ESG investment risk indicators used to assess all investment targets before an investment was made
- Actively pursued thematic invest
- Created a“blacklist”of high-risk countries and companies
- Regularly checked and updated the blacklist
- Bond-issuing domestic and overseas companies in which investments have been made checked annually
- Developed a list of industries with relatively high ESG-related risks
-
2Be active owners and incorporate ESG issues into ownership policies and practices+ -Implementation Results
- All major subsidiaries signed on to the Stewardship
Principles
for Institutional Investors.
Fubon LifeFubon SecuritiesFubon InsuranceTaipei
Fubon BankFubon Asset
Management - Fubon Life has established regulations prohibiting certain actions by personnel involved in domestic equity investments and outlined related reporting requirements to prevent conflicts of interest between personal investment behavior and the Company.
- In 2020, Fubon Life, Fubon Insurance, Fubon Asset Management, and Fubon Securities had attendance rates of 100% at shareholder meetings.
- All major subsidiaries signed on to the Stewardship
Principles
for Institutional Investors.
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3Seek appropriate disclosure on ESG issues by the entities in which we invest+ -Implementation Results
- Collected and reviewed the CSR reports of domestic companies in which investments have been made
- If a specific stock has violated ESG standards and the Principles of Sustainable Insurance, that company is put on the blacklist and no new investments in that company can be made
-
4Promote acceptance and implementation of the principles within the investment industry+ -Implementation Results
- Issuers of foreign funds and ETFs in which investments have been made checked annually; they were all found to be PRI signatories
- Annually check the ESG practices of the domestic issuers of bonds and ETFs in which investments have been made
- Requested all discretionary investment institutions to provide a summary of their ESG activities; they must also comply with Fubon’s blacklists
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5Work with others to enhance our effectiveness in implementing the principles+ -Implementation Results
- Participated in several public project meetings held by government agencies
- Participated in ESG forums held by outside organizations
- Communicated with environmental groups to explain Fubon’s responsible investment initiative and actions taken
- Joined the FAIRR Initiative to use the financial sector’s influence to address material issues and hidden ESG risks in the livestock industry
- Sponsored several investment forums in 2020 held by other organizations and offered views on ESG investment trends
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6Report on our activities and progress toward implementing the principles+ -Implementation Results
- Regularly reported on the implementation of the responsible investment strategy to the ESG Task Force
- Publicly conveyed Fubon Financial Holdings’ emphasis on responsible investment through the annual CSR report
Responsible investment management
mechanism
In response to the U.N. Principles for Responsible Investment, we establish
ESG
investment mechanisms, including assessment process and thematic investment.
The
scopes cover in-house managed positions and mandated positions.
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Responsible investment strategy and action plan
-
In-house managed positions
-
Mandated position
-
ESG
assessment
process -
Inspection
- Review of the negative list
Assessment- In addition to financial analysis, ESG factors are considered in investment analysis
Post-investment tracking- Review ESG checklist annually
- Take initiatives to learn the investment entity when ESG- related news events occur
- Vote against any AGM agenda in violation of ESG principles
- Mandated
institutions shall
follow Principles
for Responsible
Investment (PRI)
guidelines
-
ESG
thematic
investment -
- Promoting human health and well-being related industries
- Green energy related industries
- Company rated as good ESG performers
- Infrastructure Fund
- Green building
- The 5+2 innovative industries, basic infrastructure and social welfare
- Low carbon investment
- Promoting human health and well-being related industries
- Green energy related industries
- Company rated as good ESG performers
- Infrastructure Fund
- Green building
- The 5+2 innovative industries, basic infrastructure and social welfare
- Low carbon investment
Equator Principles(EP)
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 Principles guidelines
to
reduce the adverse environmental and social impact of their operations.
When handling Equator Principles 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 review the Equator Principles and related
regulations with clients before they apply for financing, confirm they 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.


Execution of Sustainability Risk Checks
When institutional clients apply for a credit line, Taipei Fubon Bank
personnel
fill out a Sustainability Risk Assessment Checklist for each client to
accurately assess their ESG risk. (A total of 7,495 checks were conducted in
2020.) Sustainable lending guidelines have been in place since 2015, and
through
2020 loan applications for more than US$200 million had been rejected
because
the client was involved in a high ESG-risk industry, had an environmental
issue,
major human rights risk or CSR violation that caused a material adverse
impact,
or had yet to fully comply with the Equator Principles. Also, there were 3
credit cases that were required after undergoing standard checks to meet the
Equator Principles. Among them, two had Category B (medium risk)
environmental
and social risk levels and the other one had Category C (low risk) risk
level.
2020 Category B Cases – Offshore
wind power
Environmental and Social Impact |
Important measures limiting the environmental and social impact |
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Fishermen’s livelihoods |
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Noise pollution |
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Noise pollution |
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Principles for Sustainable Insurance(PSI)
In 2020, Fubon Insurance introduced the Principles for Sustainable Insurance
(PSI) Initiative launched by the United Nations Environment Programme
(UNEP),
and published its PSI Report for 2019. By identifying, assessing, managing
and
monitoring risks and opportunities associated with ESG issues, Fubon
Insurance
is hoping to develop innovative solutions, incorporate sustainability
principles
in its business and products, and join efforts to lead the industry in
developing sustainability.
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1Embedding ESG issues into corporate decision-making and building internal ESG capacity+ -Implementation Results
- Fubon Insurance set up a “Sustainability Strategy Task Force” led by senior executives to take stock of and devise development plans for Fubon Insurance’s key sustainability businesses.
- Fubon Insurance identifies emerging risks, climate risks, and catastrophe risks concerning ESG issues, and conducts situational stress tests on a regular basis
- Fubon Insurance has also developed ESG-related job-specific training, designed to help employees integrate ESG principles into customer service as they gain knowledge and put their expertise into practice.
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2Integrating ESG issues into underwriting, claims and investment management+ -Implementation Results
- Underwriting management: Fubon Insurance has put in place a reporting process for cases with high ESG-related risks and an Underwriting Committee to monitor the risks. Coverage amounts are adjusted according to such factors as the business involved, ESG-related risk levels, the items covered and the scope of the coverage. In 2020, Underwriting Committee discussed 3 high-tech industry and offshore wind power business activities and resolved the percentage of self-retention by considering the business practice information, underwriting evaluation report and opinions of business entities.
- Insurance product coverage amounts are adjusted according to such factors as the business involved, ESG-related risk levels, the items covered and the scope of the coverage.
- Claims management: Fubon Insurance not only provides multiple claims channels, such as through its website or app, intelligent customer service solution, or customer service hotline
- Investment management: Fubon Insurance has established an ESG-integrated investment management mechanism based on the PRI principles.
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3Providing sustainable products and services and raising clients’ ESG awareness+ -Implementation Results
- Review the ESG risks and chances with 100% customers and offer sustainability-related insurance includes natural disasters, agriculture, green energy and liability insurance.
- Thanks to loss control technologies, Fubon Insurance can help clients quickly rebuild their businesses and reduce capital expenditures, limiting potential risks and damage when accidents occur.
- Fubon Insurance holds corporate loss control seminars and events on agriculture insurance and the prevention of auto insurance losses.
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4Working together with industries, the public sector, universities and other key stakeholders to promote widespread action across society on ESG issues+ -Implementation Results
- Public sector: Fubon Insurance has teamed up with the Council of Agriculture to develop agriculture insurance and supports the development of Taiwan’s green energy industry in line with national energy policy.
- Academic and research institutions: Fubon Insurance has developed a sustained partnership with academic and research institutions, national associations institutions, etc. Fubon Insurance engages in in-depth technical cooperation and exchanges with these institutions through contractual or technical cooperation arrangements to improve the professional skills of loss control engineers and develop quantitative assessment systems.
- Industry associations: Fubon Insurance also looks into potential ESG-related risks across industries and communicates with those associations