元大金控
In order to implement sustainable financial risk management, Yuanta Bank follows the “Sustainable Finance Guidelines＂to coordinate with the adjustment of relevant business practices and internal processes, incorporate sustainable financial risk management into the lending business review and decision making process. It also requires the completion of sustainable financial assessment for its lending business, stipulating that the lending business should carefully assess whether there are potential risks of environmental and social hazards in the counterparty or transaction content, and should incorporate ESG factors into KYC (know your customer) and CDD (customer due diligence) investigation processes to understand the regulatory compliance of the lending counterparty, international sustainability index scores, and the presence of negative ESG issues to ensure risk control.
Yuanta Bank signed the Equator Principles and became a member bank of the Equator Principles Association in 2020. Yuanta Bank completed the formulation of the “Guidelines for Managing Equator Principles Financing Cases” and related operational procedures in the same year. The Equator Principles were officially implemented on June 1 ,2021. When providing customer credit or related financial advisory services, if the transactions meet the conditions for applying the Equator Principles and are assessed as cases with medium to high environmental and social risks, the credit counterparties will be required to commission an independent third-party organization to conduct environmental and social risk assessments, and issue an assessment report as a reference basis for the environmental and social risk assessment of the case.
The “Task Force on Environmental and Social Risk" was established by Yuanta Bank to evaluate, review, and monitor the environmental and social risks of lending cases. A classification is employed to manage environmental and social risks of large-scale project financing cases. The environmental and social impacts that the projects may cause in terms of climate change, greenhouse gas emissions, and important stakeholders are carefully evaluated under the framework of Equator Principles 4.0. At the environmental and social risk assessment stage, for credit cases rated as A or B grade, an environmental and social risk assessment report shall be completed. If the report lists post-loan monitoring conditions, the borrower shall, as required, commission an independent third-party organization to conduct environmental and social risk monitoring on a regular basis (at least once a year) and issue an “Environmental and Social Risk Monitoring Report.” Adequate environmental and social risk monitoring reports and improvement action plans should be obtained when relevant conditions apply to ensure compliance with the Equator Principles and to raise the awareness of environmental protection and social responsibility among our customers.
Two project financing cases were reviewed according to the Equator Principles. However, both cases were declined, totaling NT$800 million of the rejected cases. Case assessment is as follows:
In response to the goal of net zero transition set by the government, Yuanta Bank has been actively promoting Six Core Strategic Industries by approving loans for green power and renewable energy industries and supporting relevant industries that endeavor to fulfill environmental protection and pollution control requirements through resource integration and green innovative material research and development. With such actions, Yuanta Bank receives the “Excellent Bank for Offering Loans to Six Core Strategic Industries” award.
Unit：NT$ thousand| Categories | 2022 | 2023 | ||||
|---|---|---|---|---|---|---|
| Loan Amount | Total Lending Amount<(Note) | Proportion of Total Lending (%) |
Loan Amount | Total Lending Amount(Note) | Proportion of Total Lending (%) |
|
| Green loans, social loans, sustainable loans*Note1 | $171,124,052 | $639,585,085 | 26.76 | $200,709,500 | $904,895,894 | 22.18 |
| Sustainability-linked corporate loans *Note2 | $38,151,584 | 5.97 | $51,980,335 | 5.74 | ||
| Total | $209,275,636 | 32.73 | $252,689,835 | 27.92 | ||
- This involves the green power and renewable energy industry as well as related infrastructure, and uses resource integration and innovative green material-related R&D to increase industries’ demands for environmental protection equipment, lower water consumption, diminish the harmful impact of waste on the environment, prevent pollution and engage in related construction, build low-carbon buildings, and develop/carry out transportation-related industries and projects.
- Taking reference from the GLPs issued by the LMA, LSTA, and APLMA, we engage in industry specialization discussions with businesses to establish sustainability performance targets (SPTs). These targets are then measured using pre-defined KPIs, and we subsequently track whether the business achieve these goals. If the targets are met, predetermined interest rate discounts are provided.
- In this table, the total lending amount and loan amount are defined as the amount of money from new approved cases in the current year.
Yuanta Bank follows the spirit of the “Sustainable Finance Guidelines”, and the Green Loan Principles (GLPs) and Sustainability Linked Loans Principles, jointly issued by the Loan Market Association (LMA), Loan Syndications and Trading Association (LSTA), and Asia Pacific Loan Market Association (APLMA), when considering green credits and Sustainability-Linked Loans. Our employees will guide businesses towards utilizing funds for green purposes through industry specialization, encouraging carbon reduction transformation, and prioritizing corporate social responsibility. By setting goals, companies will then understand the spirits of ESG. When these companies take proactive actions in any of the environmental, social, or governance aspect and achieve the predetermined goals, we will offer favorable lending terms to support businesses that promote sustainable social development collectively enhancing the positive impact on the environment and society. In the future, Yuanta Bank will review the achievement of its relevant ESG targets and refine relevant business processes. As of this year, there have been 69 cases of green credits, totaling NT$34.5 billion, and 47 cases of sustainability linked loans, with a credit balance of NT$31.7 billion.
Yuanta Bank accepts corporate loan applications. During the ESG factor assessment phase, it explores industry-specific carbon reduction transformation issues through the "Industry Specialization Project." Following this framework, it engages with enterprises, guiding them towards net zero and sustainability targets.
| Front-end research | Analyze industry specialization(compilation) | |
|---|---|---|
| Engagement in sustainability targets | Engagement with enterprises to discuss core values of sustainable operation | |
| Discuss achievable sustainability indicators with enterprises | ||
| Set key performance indicators (KPIs) as measurement benchmarks | ||
| Review of the achievement of goals | Implement annual review of sustainability indicators and execute post-loan tracking management | |
| Categories | 2022 | 2023 | ||||
|---|---|---|---|---|---|---|
| Loan Amount | Total Lending Amount | Proportion of Total Lending (%) |
Loan Amount (NT$ thousand) |
Total Lending Amount | Proportion of Total Lending (%) |
|
| Sustainable SME loans*Note1 | $18,138,108 | $125,902,557 | 14.41 | $25,449,903 | $343,816,224 | 7.40 |
- Companies that use the loans for “green expenditure” and those that engage in renewable energy power generation, cleaning technology, and energy efficiency are companies belonging to the ESG industry.
- In this table, the total lending amount and loan amount are defined as the amount of money from new cases in the current year.
Each subsidiary of Yuanta Financial Holdings incorporates ESG-related screening criteria into investment-related regulations according to its business type and establishes internal mechanisms to implement the spirit of responsible investment. Yuanta Securities, Yuanta Bank, and Yuanta Life, in order to make the best use of the sustainable development of the financial industry, incorporates the assessment of ESG factors into the selection of medium- and long-term investment targets, and considers the environmental and social performance when selecting investment targets, so as to reduce environmental or social risks caused by the investment and support the development of sustainable enterprises with capital.
Yuanta Bank is committed to sustainable investing. In order to streamline the investment review process, it has implemented a paperless system for transaction documents. The "Transaction Decision Management System" has been established to upload relevant transaction supporting documents electronically during the transaction review process, reducing the need for extensive document printing and storage.
Yuanta Securities selects investment targets in proprietary trading, and if the target is a medium- to long-term securities investment, the trading staff of the Securities and Investment Department should fill out the ESG checklist, perform the ESG audit operation process, and have the ESG assessment report approved by the department head of the Securities and Investment Department before executing the transaction. If the target is a bond, an ESG checklist is completed by the bond trader and signed by the senior executive of the bond department to ensure the quality of ESG audit operations.
The ESG audit criteria is formulated with reference to ESG-related indicators from domestic and international databases. The audit process is then conducted by Yuanta Securities’ internal staff through the evaluation of relevant indicators and information including Bloomberg ESG indicator scores of investees, listed company websites, exchange websites, TDCC website and Bloomberg information. In the fixed-price securities trading business, Yuanta Securities uses the principle of medium- to long-term investment in marketable securities, and selects customers’ designated investment targets based on whether they are constituent stocks of the FTSE4Good TIP Taiwan ESG Index, in the hope of guiding customers to select companies with good ESG performance.
The Company has established engagement and voting guidelines this year. The goal is to prompt the invested companies to improve their corporate governance quality and promote overall positive development towards society and the industry through credit issuing and other lending interactions. Crucial ESG issues such as climate change and biodiversity have been listed, so that all subsidiaries can establish relevant evaluation mechanisms or indicators. Companies with low ESG indicator scores will be engaged first. If these companies do not address or improve issues in question, the Group may limit the amount of funds available for them. Moreover, the Group does not rule out the possibility of expressing its appeal jointly with other financial institutions, industry associations, and/or government organizations. The Group has established a decision-making process in favor of the shareholder resolutions that allows us to participate in the invested company’s decision making through voting. If the discussion topic involves a major ESG issue or an ESG issue with potential major risks, the Group may discuss the topic with the invested company’s management before shareholder meetings; if necessary, the Group may vote against the topic or waive the right to vote.
The Group also communicates with invested companies through telephone calls, e-mails, or meetings (such as institutional investors conferences and shareholders meetings). When an invested company violates ESG principles on specific issues and damages the rights of the Company’s customers or beneficiaries, the Company will exercise its voting rights or other shareholders’ rights to express its demands to the management of the invested company and further influence the conduct of the invested company. The total responsible investments of Yuanta Securities, Yuanta Bank, and Yuanta Life this year were NT$66.77 billion.
Yuanta Financial Holdings spares no effort in supporting the sustainable transformation of industries, continuously monitoring the actions and progress of invested companies in topics such as climate change, low-carbon transition, supply chain management, and corporate sustainability policies. We aim to promote concrete climate response actions and enhance climate resilience through interaction with investee companies. The Company has engaged with nine key invested companies in 2023. Industries involved include overseas mining, energy, and manufacturing, as well as domestic steel, semiconductor, electronic product distribution, and shipping industries. Among them, a total of three companies actively participated in climate organizations, set net zero targets, and formulated carbon reduction strategies, serving as successful engagement cases for the Company. Yuanta Funds has conducted engagements as an institutional investors with invested companies and relevant partners to help them establish relevant response strategies, improvement plans, and future goals on major environmental issues. Examples of such engagements are as follows:
