Chang Hwa Bank|Corporate Social Responsibility-Responsible Investment

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Responsible Finance

While pursuing investment profits, the Bank aligns with the UN Sustainable Development Goals (SDGs), refers to the international initiative for Principles for Responsible Investment (PRI), signs the Equator Principles, and act in concert with the “Corporate Governance 3.0 - Sustainable Development Blueprint” and “Green Finance Action Plan 2.0” of the FSC. With ESG investment as the crux, Chang Hwa Bank took progressive steps towards realizing the Bank's sustainable investment vision, eliminating negative industries, placing emphasis on ESG, focusing on sustainable investment, and exerting investment influence. This brings positive benefits to the environment, society, and economy, practice corporate social responsibility and commitment to investors, and create long-term investment value.

Sustainable Finance

Policy and Commitment

The bank complies with the Stewardship Principles for Institutional Investors, and has formulated the “Chang Hwa Bank Stewardship Principles,” which cover the implementation and disclosure of the responsibilities towards funding contributors and stewardship regulations, and incorporated ESG(Environmental, Social, and Governance) issues into the investment evaluation process to enhance the overall interests of funding contributors (including clients, beneficiaries, and shareholders of the Bank) and fulfill the responsibilities for stewardship.

Responsible Investment Process

In order to implement responsible investment, the Bank has first excluded negative industry targets, and conducted an ESG risk assessment on selected targets using ESG checklists (including climate risks) to assess whether there are major violations of ESG-related issues to determine the feasibility of investment.

Responsible Investment Engagement and Action

The Bank interacts with investee companies through dialogues (e.g., correspondences, teleconferences, visits and participation in meetings, etc.), engagement and exercise of voting rights, etc., to understand and be involved in the sustainable development direction of the investee companies and demonstrate the due diligence of active investors. Interaction between the Bank and investee companies in 2022:
Voting Policy: The Bank pays heavy emphasis to the overall ESG performance of the investee companies, and before voting at the shareholders' meeting of the investee company, the competent and responsible units will review all proposals, communicates and discuss as necessary, or exercise their rights to express opinions during voting.

We have managed to prevent conflicts of interest through the implementation of education, promotion, division of responsibilities, and information control. Resources invested in the implementation of due diligence in 2022:
The Implementation Status of Stewardship

In 2022, the Bank invested in 45 domestic publicly listed companies, and 32 of them were selected as constituent stocks of the Dow Jones Sustainability Index (DJSI) and the FTSE4Good TIP Taiwan ESG Index, and our investment in said companies accounted for approximately 79.14%.
According to the analysis results of the 2022 Taiwan Depository & Clearing Corporation's Corporate Governance Evaluation, the Bank's investments in domestic listed stocks achieved a score of 96.38 points, which is higher than the overall market average score of 91.15 points.

The Bank discloses the implementation of stewardship on the Bank's official website on a regular basis, including the statement of compliance with the “Stewardship Principles for Institutional Investors,” stewardship principles, and annual stewardship report.

CHB Stewardship

ESG Investment

To drive the development of the green energy industry and improve environmental quality, the Bank leveraged on green investment projects to assist enterprises in their transformation and implement sustainable development. As the end of 2023, the balance of the Bank’s cumulative investment in ESG equity and bonds was NT$1.873 billion and NT$17.6 billion respectively.

Investment in sustainable development bonds in the past 5 years

Unit: 100 Million NT$

FY	Green bond	Social development bond	Sustainability bond	Sustainabilitylinked bond (SLB)	Total investment amount
2023	13	3	14		30
2022	34(*1)		17	12	63
2021	33	12			45
2020	37		11		48
2019	3(*2)				3
Total					189

Note:
1. The green bond invested in Chi Mei Industrial Co., Ltd. in 2022 for NT$500 million was sold on October 31, 2022；The green bond invested in Société Générale for NT$500 million in 2022 was matured on October 18, 2023.
2. The green Bond invested in Taiwan Cooperative Bank in 2019 for NT$300 million was matured on November 28, 2022.

In addition, the Bank has completed the issuance of 5-year unsecured primary financial bonds (Sustainability Bonds) on February 22, 2023, with an issuance limit of NT$1 billion. The funds raised are mainly used for green investment plans for the development of renewable energy and energy technology, as well as social impact investment plans that support affordable housing, job creation and can reduce or avoid unemployment caused by socio-economic crises, and actively exert the influence of sustainable finance.
CHB Venture Capital
CHB Venture Capital will engage in at least 2 new investments per year in industries related to "environmental sustainability", and they engaged in 3 new investments in 2023. By the end of 2023, a total of 10 investments were engaged, and invested NT$206 million.
In line with the Government's strategy of promoting the development of the "Five Plus Two Industry Innovation Plan", namely "smart machinery", "Asia Silicon Valley", "green energy technology", "biotechnology and medicine industry", "defense industry", "new agriculture" and "circular economy", CHB Venture Capital invested a total of NT$458 million in 2023, of which the investment amount in the "Five Plus Two" sector amounted to NT$288 million, accounting for 62.88% of the total investment amount.