Chang Hwa Bank|Corporate Social Responsibility-Message from the Chairperson

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Message from the Chairperson

Joanne Ling

To Toward the net zero goal, the Bank will focus on 4C in the next step.

Carbon
Expand the greenhouse gas inventory and actively take action to reduce carbon emissions.

Capital
Create investment value and exert long-term sustainable influence.

Credit
Follow the Equator Principles and assist enterprises in transformation by green finance.

Customer
Value the Principle to Treat Clients Fairly and optimize financial friendly services.

Global climate change has been expanding in scope and depth. In addition to the life and property losses, extreme climate events also trigger a series of environmental and biological crises. Natural and man-made disasters continue to occur, and international conflicts and wars remain unresolved. The social and economic instability has made sustainable development a focal point in global discourses. The Bank closely monitors domestic and international sustainable development trends, ESG initiatives, regulations, and actions in various aspects. With a mindset of sustainable governance and management, we understand the Bank’s own development context and utilizes operational networks and resources to seek optimal solutions for risk response. With multidimensional action plans, we continue to drive the sustainable transition, leveraging our financial influence globally. We work with partners along the value chain to foster consensus on sustainability, contributing collectively to the pursuit of a sustainable net-zero vision.
In pursuit of concrete corporate governance practices, the Bank strengthens the financial oversight of the Audit Committee, conducts regular performance assessment of the Board of Directors (including functional committees), enhances the quality of disclosures, and reinforces risk governance. These efforts promote sound risk control and prudent, steady business development. After achieving three short-term "STEP" goals in 2022, which involved the adoption of SASB Standards, the TCFD framework, and the Equator Principles, the Bank further proposed the strategic objectives of "4C Sustainability Vision" (Carbon, Capital, Credit, and Customer) to drive comprehensive ESG development from within. We actively set phased targets, enhance the effectiveness and optimization of sustainability efforts, and aim for a net-zero future, continuously strengthening corporate resilience and sustainable operational development.

The Bank implements carbon management by expanding the scope of greenhouse gas inventory with international standards such as ISO 14064-1, the Carbon Disclosure Project (CDP) Climate Change Questionnaire, and the Task Force on Climate-related Financial Disclosures (TCFD) framework. These measures enable us to effectively assess global climate risks, optimize environmental, energy resource, and GHGs emissions management, and reduce the occurrence of risks, and through the third parties' verifications to ensure effectiveness. In 2022, the Bank obtained the ISO 14064-1 certification for greenhouse gas emissions inventory, completing assessments for all domestic and overseas sites and subsidiaries, covering 100% of the boundary and aligning with consolidated financial statements. Additionally, based on the methodology of the Partnership for Carbon Accounting Financials (PCAF), we conducted 7 carbon emissions inventories for our investment and financing portfolio, observing metric changes. On external evaluation, the Bank achieved the CDP management level (Grade B) and third-party verification on TCFD, attaining the highest level of "Level 5+: Excellence."
Also, the Bank sets and strengthens energy and resource management targets annually to reduce operating costs, ensure smooth operations, and enhance environmental sustainability. In 2022, the Bank signed the Science-Based Targets initiative (SBTi), committing to limit Category 1 and Category 2 carbon emission temperature rise to less than 1.5°C by 2030, while keeping the carbon emission temperature rise for investment and financing portfolios below 2°C. The Bank proactively formulates specific action plans for carbon reduction and carbon neutrality, aiming to align business development strategies with the national goal of "Net Zero Emissions by 2050" and the objectives outlined in the Paris Agreement. In 2022, we continued to implement carbon reduction projects, including the comprehensive replacement of outdated lighting and air conditioning equipment at domestic business operations, purchasing green energy, and establishing solar power generation systems in branches to increase the share of renewable energy usage. We reduced the overall emissions by 6.2% in 2022, contributing 14.8% to the implementation process of the 2030 reduction target (by 42% compared to 2020).
Additionally, in July, the Bank completed the carbon neutrality transition plan for the Changhwa Branch, verified in accordance with the PAS 2060 carbon neutrality standards. With this achievement, the Changhwa Branch became the first carbon neutrality branch of the Bank. Going forward, we aim to replicate this successful model and promote carbon neutrality in more branches.
To proactively prepare for the carbon pricing strategies and the carbon trading system under the Climate Change Response Act, the Bank allocated resources in 2022 for a project-oriented greenhouse gas offset initiative with third-party verification. Both the main project and 1 sub-project were certified for ISO 14064-2, and an internal carbon pricing mechanism was formulated to steadily progress towards zero-carbon sustainability.
As an institutional investor, The Bank's goal is to maximize shareholder value while adhering to the spirit of principles of responsible investment (PRI). This goes beyond mere financial and technical analyses. We broaden our investment horizon by excluding negative industries, setting investment limits for energy-intensive industries, conducting ESG risk assessments for investment targets, and actively engaging through dialogue, negotiation, and voting to understand and participate in the sustainable development paths, such as operations, environmental protection, social responsibility, human rights protection and corporate governance, etc. of invested companies. By fulfilling our stewardship duties, we encourage investee ESG performance and industrial transition. In February 2023, we successfully issued the 1st senior unsecured financial debentures (Sustainability Bond) to exert influence with actual action and demonstrate our commitment to sustainable investments.
Our subsidiary Chang Hwa Bank Venture Capital Co., Ltd follows the same sustainable investment principles. It aims to promote green economic development by setting annual targets to invest in at least two projects related to "environmental sustainability." These projects encompass areas such as green energy, circular economy, soil and wastewater treatment, wastewater or emissions processing or recycling and relevant industries that make concrete contributions to environmental protection.
In April 2022, the Bank joined the Equator Principles Association, incorporating ESG metrics as crucial assessment criteria. We diligently assess the environmental and social risks in credit cases and work with funding recipients to address and mitigate climate risks and impacts. Besides incorporating checks into the credit approval process, the Bank actively develops green financing products that balance economic development with environmental friendliness. Examples include sustainability Linked loan projects, loans for green power and renewable energy-related industries. They support corporate sustainability transitions and the development of green industries, contributing to a circular economy and fostering symbiosis between businesses and the environment to create a shared vision of a better society.
Looking ahead, the Bank plans to expand green products into consumer finance, aiming to obtain four certifications for our credit cards: Water Footprint (ISO 14046), Carbon Footprint (ISO 14067), Carbon Label, and Carbon Neutrality (PAS 2060). Through innovative business and sustainable development, we seek to promote sustainable production and consumption to create a friendly ecosystem with a balanced development between society, environment, and the economic development. The Bank's sustainable development philosophy will be conveyed to every consumer, and we strive to rally partners along the value chain on a net-zero consensus and work together to realize sustainable development goals.
The Bank values smooth communication with various stakeholders, listens to voices and needs of society, and utilizes digital financial technology to enhance financial accessibility, inclusiveness, and affordability. The aim is to provide friendly and affordable financial services and products to all demographics, regardless of gender, age, race, or other differences. The Bank adheres strictly to fairness, integrity, and full disclosure of product information and sales processes, maintains effective communication with customers, and handles disputes appropriately to avoid risks that may harm customer rights.
The Bank offers appropriate and diverse products, services, and resources for different demographics, providing financial services deeply into the social daily life and empowering all to have a better future with financial services. Financing projects such as "Micro-Business Startup Phoenix Program," "Loans for Startup Funding for Young Entrepreneurs," and "Keelung City SME Dream-Come-True Loan" intend to inspire and support women, youths, middle-aged and elderly individuals, micro-enterprises, and communities in pursuing better entrepreneurial and self-realization opportunities. The Bank also actively promotes financial literacy, reduces inequality in information and tool availability, enhances financial education, raises awareness for frauds and information security, and further advances social equity, employment, and socioeconomic development.
The Bank maintains an innovative mindset and keeps up with the times by actively developing diverse possibilities of digital finance. We optimize existing digital financial services and continue to research and develop digital technology applications for financial operations. We actively acquire patent to enrich our intellectual properties and return them to customers through innovative experiences. The Bank is committed to expanding the "Taiwan Pay" project and application formats. By supporting underprivileged street vendors and assisting local development through the Taiwan Pay project, we expanded mobile payments to 21 night markets/markets/ business districts in 2022 and introduced cloud service providers to drive new business opportunities and improve a new digital lifestyle that meets people's needs, such as online food ordering system and smart vending machines. With that, we have won first place in the "Taiwan Pay QR Code" vender expansion competition held by the Financial Information Service Co., Ltd. for seven times from 2020 to 2022. Since 2018, we have launched the Taiwan Pay mobile payment charity event every year, allowing direct donations through the Bank's "CHB Mobile App” to increase convenience and reduce personnel costs and risks for beneficiary organizations. Furthermore, we utilize digital financial technology to create the "Smart Payment Service Platform" for the wholesale meat market, streamlining the bidding process for underwriters and enhancing security, thereby assisting traditional markets in their transformation. In 2022, the Bank received the "Financial Inclusion Promotion Award" at the 11th Taiwan Banking and Finance Best Practice Awards. By integrating various services through mobile payments, we not only enhance the quality of financial services but also enable demographics who face difficulties accessing financial services due to time, location, or underprivileged statuses to have access to financial services, thus creating an inclusive and convenient financial life sphere.

With the "4C Sustainability Vision" as the core strategy, the Bank incorporates employee benefits, diversity and equality, talent development, and community outreach into its management policies, setting comprehensive goals for sustainable and resilient development.

The Bank is committed to fulfilling human rights principles, establishing a healthy and safe workplace, and honoring the core values and development of its employees while expanding business and striving for higher performance. We uphold fairness, reasonableness, and diversity, rejecting discrimination or differential treatment based on any conditions. We provide compensation and benefits better than legal requirements, as well as comprehensive education and training programs to attract and retain human resources, enhancing employee loyalty and dedication. We also emphasize the physical and mental well-being of our employees with various family-friendly and women-friendly measures. These measures include a maternal health protection program for pregnant and postpartum employees, maternity-related leave options, flexible working hours, maternity allowances, and childcare programs, aiming to support employees in achieving a work-life balance. Furthermore, we maintain the effectiveness of ISO 45001 occupational health and safety management systems to prevent workplace hazards. In the event of occupational accidents or situations that affect employee health and safety, we provide immediate assistance and subsequent care and compensation to protect the rights and interests of employees and ensure operational stability. For 9 consecutive years, the Bank has been selected as a constituent of the "Taiwan High Compensation 100 Index," and for 6 years straight a constituent of the "Taiwan Employment Creation 99 Index." We have also been awarded the 1111 Job Bank Happiness Enterprise Gold Award in the financial and management consulting industry for 2 successive years. In addition, we successfully extended HPA's Badge of Accredited Healthy Workplace - Health Promotion, and the "2022 Sports Enterprise Certification" from the Sports Administration, indicating the Bank's recognition in employee care.
In 2022, building on the successful integration of health, environment, and social outreach events from the previous year, the Bank invited all employees to participate in the "Billion Steps, Thousand Trees: Healthy Smart Move" challenge and social outreach event. This initiative encourages employees to engage in moderate exercise to reduce musculoskeletal diseases prevalent in the office. By advocating the use of stairs instead of elevators or walking for commutes, the Bank aims to implement energy conservation and carbon reduction from within and contribute to environmental sustainability. The event not only promotes health benefits but also generates social contributions, earning health benefits while assisting the Taiwan Alzheimer's Disease Association in developing diversified services for dementia patients and their families.
The Bank has long been dedicated to social empowerment work. In addition to the regular partnership with the Huashan Social Welfare Foundation on the donation program for seniors, we support sports development by participating in or sponsoring sports events. Since 2016, we have donated to the Taitung County Sports Association for the "Training Program for Elite and Potential Athletes of Various Sports Committees" for 7 consecutive years, nurturing grassroots athletes. In 2022, we officially established a corporatenamed archery team, aiming to cultivate promising elite athletes to contribute to national sports development, hoping they will one day shine on the world stage representing our country. In terms of environmental public interest, we continue to carry out the "CHB Love Sea Protection Actions," including environmental education lectures and volunteer beach and river clean-ups. Since 2022, we have also partnered with the Kaohsiung Wild Bird Society for the "Budai Salt Field Wetland Guardian ESG Enterprise Partnership Project," jointly safeguarding habitats and biodiversity to protect Earth's natural environment.

The Bank will continue to promote and enhance various sustainability initiatives, deepening and expanding the "4C Sustainability Vision" (Carbon, Capital, Credit, and Customer) to foster a positive cycle of sustainable financial development. We will collaborate with global partners to create a sustainable future in harmony with the environment, contributing to sustainable development goals and the net-zero vision.