Chang Hwa Bank|Corporate Social Responsibility-Green Transition

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Green Finance and Products

Green Deposits

In response to government policies "Green Finance Action Plan" and "Taiwan's Pathway to Net-Zero Emissions in 2050", the Bank has launched a green deposit initiative since September 5, 2022, guiding the funds deposited by customers in the Bank into projects that meet the green credit standards of the Joint Credit Information Center (such as renewable energy project sites, green buildings, electric vehicles, waste-to-energy power plants, sewage treatment equipment, etc.). A total of 1,958 proposals have been collected, with a total amount of NT$3 billion. The green deposit project of the Bank has been evaluated by a third-party independent institution on the effectiveness, and an assurance report for the green deposit project has been issued.

Sustainable financing products

Data date：2023/12/31

Type	Total loan balance	Category of sustainable loans	Balance	Percentage of sustainable loans
Corporate Lending [*1]	256,470	Green loans, social loans, sustainable loans[*3] (Include “loans for the green power and renewable energy industry”, “the Solar Photovoltaic Equipment Installation Project Loan”, “SME Post-Pandemic Recovery and Low-Carbon Smart Governance Project Loan”, etc.	102,985	53.9%
Corporate Lending [*1]	256,470	Sustainability Linked Loans[*3]	36,673	53.9%
Consumer Lending	642,917	Sustainable loans and mortgages (Include "Youth Assured First Homebuyer Loan", “Reverse Mortgage Loan for Elderly Homeowners”, "Subsidized Home Purchase (Acquisition) and Repair Loan" and “Green Building Loan”, etc.)	50,992	7.93%
SME[*2] Lending	625,770	Sustainable SME loans (Include "Loans for the green power and renewable energy industry", ”Keelung City SME Dream-Come-True Loan", “Loans for Startup Funding for Young Entrepreneurs”, “SME Post-Pandemic Recovery and Low-Carbon Smart Governance Project Loan”, “the Solar Photovoltaic Equipment Installation Project Loan” , etc.)	90,089	14.4%

Note：

[*1]- The Data of “Corporate lending” in this column excludes the lending from SME.
[*2]- SMEs of SME loans are which meet the "Standards for Identifying Small and Medium-sized Enterprises" or small-sized businesses that are guaranteed by the SME Credit Guarantee Fund to comply with Article 5 of the "Business Registration Act" and those that are deemed to be small and medium-sized enterprises. For specific identification thresholds of SMEs, please refer to Article 2 of the “Standards for Identifying Small and Medium-sized Enterprises” and Article 5 of the “Business Registration Act”.
Standards for Identifying Small and Medium-sized Enterprises
Business Registration Act
[*3]- "Green loans, social loans, sustainable loans" and "Sustainability linked loans" have an overlap of NTD$ 1.43 billion. Therefore, when calculating the proportion of sustainable loans, the sustainable loans of corporate are calculated as NTD$138.23 billion.

Green Credit

Green Loan Project
In line with the government's policies to assist the development of green industries, the Bank has launched several green loans project to assist enterprises in improving equipment, transforming to low-carbon, and provided funds for the operation of renewable energy power generation, essentially walking the talk in the support of the development of green industries.

Clean Transportation Loan
To support green expenditures such as clean energy vehicles and infrastructure for reducing harmful gas emissions, the Bank offers financial assistance for the development of low-carbon transportation networks and models, with the goal of promoting urban sustainability. In 2023, a total of 10 households received assistance, resulting in a year-end loan balance of NT$ 1,888 million.
Green Power and Renewable Energy Industry Loan
In order to jointly promote the development of our country's green energy technology industry with the government and promote the momentum of industrial innovation and growth, the Bank cooperates with the competent authorities to promote the policy of "Programme to Encourage Lending by Domestic Banks to Enterprises in Six Core Strategic Industries" and provided the necessary capital and working capital for green energy technology, green power and renewable energy related industries.
Loans for the Offshore Wind Power Industry
In cooperation with the government's policies of reducing carbon emissions and increasing energy independence, and to fully promote the development of industries related to renewable energy and offshore wind power, the Bank actively assists the businesses in the offshore wind power industry in obtaining necessary funds for development, purchase of equipment, and operations. As per the loans provided to the businesses and relevant suppliers who have obtained the license for wind farm development projects through the Ministry of Economic Affairs's selection and bidding mechanism in compliance with the Directions for Allocating Installed Capacity of Offshore Wind Potential Zones. The statistics of loan commitments (approved limits) in the past three years are as follows:
The Solar Photovoltaic Equipment Installation Project Loan
The Bank provides financial assistance to businesses and individuals for the installation of solar photovoltaic equipment supplying Taiwan Power Company, aiming to promote and stabilize the nation's energy transition and renewable energy development. In 2023, a total of 167 business and individual loans were issued, with a year-end loan balance of NT$ 2,614 million.
Green Building Loan
To support green consumption and encourage customers to construct or purchase green buildings that are ecological, energy-saving, wastereducing, and healthy, The Bank actively supports energy conservation and carbon reduction efforts, and fosters a friendly environment. The bank promotes financing for the construction of green buildings and encourages the acquisition of real estate with green building label. By collaborating with customers, the bank aims to create a sustainable home and achieve harmonious coexistence with the global environment.

Sustainability Linked Loans
In response to the development trend of international green finance and to encourage enterprises to increase financing for green and sustainable development, the Bank launched the Sustainability Linked Loans Project in mid-February 2022. If a listed, OTC, emerging or publicly company betters their performance in any of the indicators of control of greenhouse gas emissions, carbon reduction effect, power management, energy consumption and reduction of waste volume and information are available publicly, the loan interest can be reduced accordingly. This is designed to encourage enterprises to pursue operational growth while taking into account the promotion of environmental, social and corporate governance concepts. As of the end of December 2023, the processing situation is as follows: 99 accounts, Balance of loan NT$42.749 billion.
Sustainable Wealth Management and Insurance Products

The Bank ceaselessly promoted ESG-linked trust investment and investment-linked insurance products, introducing sustainable products into the market economy structure to enhance customers' awareness of sustainability. Review whether all the life insurance companies we work with have signed the "Stewardship Principles for Institutional Investors" or the "UN Principles for Responsible Investment (PRI)." These principles demonstrate their commitment to monitoring the business operations of the investee companies, including staying informed about relevant news, financial performance, industry trends, business strategies, and environmental, social, and corporate governance (ESG) issues, incorporating this information into their investment decision-making process.
Solar photovoltaic equipment loan insurance The Bank provides environmentally friendly "Solar Photovoltaic Equipment Loan Insurance", enabling customers to purchase solar equipment with loans while responding to the climate change risks caused by the environment, and enhancing the sustainable economic application through green insurance products.
Statistics on sustainable fund, bond, and insurance

In response to extreme weather conditions, the Bank unceasingly promoted sustainable insurance products, such as residential fire insurance that provides compensation for typhoon or flood damages. In addition, we initiated the "Home Comprehensive Insurance" project to encourage the use of green building materials in renovations, providing exclusive green energy terms for the risk of climate change caused by the environment. This offers policyholders basic insurance coverage and mitigates climate change risks, resulting in positive benefits for sustainable development.

Revenue of service fee and product percentage of residential fire insurance in the past 3 years

Industry Limit Adjustment

With the aim of fulfilling corporate social responsibility, the Bank considers industries that have a significant adverse impact on the environment or social sustainable development (such as non-public welfare gaming, arms and weapons, tobacco, and special entertainment industries, etc.), and avoid investing, financing, or undertaking after careful evaluation.
Referring to the government's "Program for Promoting Six Core Strategic Industries" for the green power and renewable energy industry and the Bank's green enterprise project loans, the Bank assisted enterprises participating in the plan or engaged in green production and services in obtaining financing funds. Post approval by the 9th meeting of the 27th Board of Directors held on January 29, 2024, the credit limit has been increased.
In response to the voluntary reduction cooperation mechanism for climate change, the standards for carbon-intensive emission industries are being gradually expanded. This expansion includes incorporating high-pollution industries covered by the European Union's carbon border adjustment mechanism, as well as the fuel and process carbon emissions of the manufacturing sector in the National Development Council's 2050 netzero emission pathway. Additionally, carbon-intensive emission industries related to climate risk disclosure by SASB are also included. The credit and investment limits will be adjusted annually based on the current year's credit and investment limit ratios, aiming to lead the development of green industries and reduce exposure to carbon-intensive emission industries.