Green Finance

The risk posed by climate change demands resilience and adaptability in our responses. To actualize our sustainable development strategy, we support net-zero initiatives and direct funding towards investment in green industries.

Green Finance Products

Green Investment

The general public is increasingly concerned with economic activities and the associated risks on the environment and natural resources as global climate change intensifies, giving rise to the concept of a low-carbon economy, which is considered to play a key role in maximizing long-term economic growth. Meanwhile, green investment has also emerged as a popular theme. KGI Financial mainly invests in green industries with its two major subsidiaries, CDIB Capital and KGI Life, and actively responds to government policies. The total investment of KGI Financial assets in the six core strategic industries of National Development Council amounted to NT$143.8 billion, of which more 60% of the investments are in green power and renewable energy.

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In commitment to pursuing a balanced development of environmental sustainability, social participation, and corporate governance, KGI Bank creates positive sustainable impacts through funding and financial services, integrating ESG-related aspects into risk assessment and credit decision-making processes. Specifically, in accordance with KGI Financial's "Sustainable Finance Commitment" and the bank's "Credit Policy", the "Sustainable Credit Guidelines" have been established. When conducting corporate credit reviews, KGI Bank adheres to the "Sustainable Credit Guidelines" and establishes sustainable credit review principles under these guidelines, thoroughly considering whether borrowers fulfill their obligations in terms of environmental protection, social responsibility, and corporate integrity, and incorporating ESG-related issues into credit decision-making, credit evaluation items, and post-loan management mechanisms.

According to the provisions outlined in Taipei Exchange Operation Directions for Sustainable Bonds, the scopes for sustainable bonds include the green bonds, social responsibility bonds and sustainable development bonds accredited by Taiwan Exchange. KGI Securities participated in 21 ESG-related underwriting cases in 2023 (including 9 green bonds, 7 social bonds, 3 sustainable development bond, and 2 sustainable development linked bond), with a total of NT$21.1 billion, up 155% compared with the NT$8.28 billion issued in 2022. KGI Life responded to the government’s green finance action plan 3.0 policy to promote green financial product development and invested in green bonds with an investment amount of NT$19.5 billion and sustainability development bonds with an investment amount of NT$10.2 billion to implement the ESG investment spirit through action. KGI Bank has invested in three sustainable development bonds (including one green bond, one social bond, and one sustainable development-linked bond) totaling NT$1.05 billion.

KGI Securities organized equity capital raising cases in the capital market in 2023. These included 16 environmental protection and green energy cases, accounting for about 48% of the number of cases organized in the year. The environmental protection and green energy funds accounting for about 74% of the funds raised in the current year.

Green Credit

When applying for credit cases, all are in accordance with the "Operational Guidelines for Credit Information Reporting by Financial Institutions" of the Joint Credit Information Center (JCIC), which defines green credit and sustainable performance-linked credit. Each case discloses in the credit review report relevant information such as green credit, sustainable performance-linked credit, ESG rating, corporate carbon emissions and carbon intensity, and the amount of carbon emissions avoided by renewable energy project financing. If the counterparties or group members are involved in high carbon-emitting industries, have been involved in highly sensitive industries and climate change-related issues in the past three years, or have had negative incidents related to environmental protection, corporate social responsibility and corporate governance, the results should be listed in the "Sustainability Risk Assessment Checklist", and it should be explained whether there are plans for improvement or transition.

For the handling of project financing cases with high water consumption and high pollution industries reaching more than US$10 million, various feasibility analyses are required in the credit report, including analysis of technology, market, finance and environmental protection, and are listed on a case-by-case basis. Entry conditions are standardized to increase its operational responsibilities.

Post-loan management continuously monitors the dynamics of borrowers, reviewing whether borrowers fulfill their obligations in environmental protection, social responsibility, and corporate integrity. If there are related negative events, it should understand the borrower's improvement or transition plans, and continuously track and evaluate the extent of the impact and take appropriate response measures.

In principle, companies that do not comply with environmental protection standards, are involved in labor disputes or have corporate governance issues, and have no specific improvement plan will not undertake the contract. Those with significant influence on the operation and KGI Bank's creditor's rights will not increase the loan or withdraw the loan gradually, in order to assist and encourage the enterprise to strengthen the implementation of environmental protection and fulfill its corporate social responsibility.

Policy and Goal

To ensure that the organizational goals and key decisions in terms of environmental, social, and governance (ESG) practices are consistent with the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement, KGI Financial adopts a top-down corporate governance structure. With effective policies, management systems, and controls in place, KGI Financial integrates SDGs into the decision-making process to create a responsible banking business model in line with the Principles for Responsible Banking (PRB). KGI Financial is also committed to promoting green finance through green project financing, green lending, and green bond underwriting in hopes of speeding up the transformation and sustainable development of the renewable energy industry in Taiwan.

Performance and Goal 2023

Action Plan	2023 Progress	Short-term Goals 2024
Promoting green industry investments	In response to the National Development Council's six core strategic industry investments, we have invested approximately NT$ 143.8 billion in the six core strategic industries, of which over 60% is invested in green energy and renewable energy fields. KGI Life has invested approximately NT$ 1.46 billion in renewable energy, supporting the development of clean energy in our country. KGI Life invested NT$19.5 billion in green bonds.	Investment in high carbon emission industries lower than 24.5%
Support smart technologies or environmental innovation industries Responding to the problem of an aging population Support culture and innovation industry developments Support innovative industries	Asset management operations The Advantage Fund raised NT$4.54 billion Raised two biomedical funds in Taiwan with a total amount of NT$4.86 billion, and raised biomedical funds totaling RMB420 million in China The scale of the cultural and innovation fund is NT$1.5 billion CDIB Capital Innovation Fund raised NT$1.29 billion	Continue to develop smart technologies, environmental protection innovations, potential healthcare, cultural innovations, and investments in startups.
Implement responsible investment and green finance, and incorporate ESG into investment decisions	KGI Life 100% of relevant investment decision research reports have included ESG assessments. 100% of foreign funds companies have signed PRI. participated in the shareholders' meetings of domestic listed investee companies, with a participation rate of more than 100%. KGI Securities participated in 21 ESG-related bonds, underwriting the total amount of NT$21.1 billion, up 155% compared with the NT$8.28 billion in 2022. among the equity capital raising cases organized by KGI Securities in in the capital market, 16 cases were environmental protection and green energy related, accounting for about 48% of the number of cases organized in 2023. The environmental protection and green energy funds accounting for about 74% of the funds raised in 2023. KGI Bank invested in three sustainable development bonds (including one green bond, one social responsibility bond, and one sustainable development-linked bond) totaling NT$1.05 billion.	Deepen sustainable investment management, regularly carry out carbon inventory of investment portfolios and formulate carbon reduction targets, and deepen discussions with investment targets. Establish an ESG watch list for investee companies that involve environmental pollution, social disputes and corporate governance concerns, etc., and evaluate the relevant risks before investing in the targets on the watch list.
Issue ESG Products - KGI Sustainability Series Funds	KGI SITE offers one ESG bond ETF and two active sustainability bond funds that have been approved by the competent authority for ESG review. In 2023, it is among the leading group in the number of ESG fund issuances in the investment trust industry. issued the first Taiwan ETF adopting Bloomberg MSCI ESG bond index – KGI 15 YR+ USD Grade BBB ESG Sustainable Corporate Bond ETF Funds in May 2021. As of the end of 2023, the fund scale reached NT$897 million. With regards to the two active sustainable bond funds, as of the end of 2023, the fund scale reached NT$3,135 million.	Continuous issuance of sustainability series funds Strengthen the promotion of ESG and sustainable development related products to investors
Promoted ESG related products – KGI Bank green deposit	Following the enthusiastic response of large enterprises to green deposits, KGI Bank has joined with religious groups, universities, and non-profit organizations to participate in the "Green Deposits" project. Through this project, they indirectly support corporate sustainability plans, promoting multi-faceted sustainable development in Taiwanese society with innovative thinking, and putting the SDGs into practice.	Continue to promote ESG and sustainable development related products.
Promote green energy upgrades and fund-raising assistance to the green energy industry	KGI Bank adopted the green credit standard marked by Taiwan Joint Credit Information Center and statistics show that the balance of 11 green credit notes reached NT$17.073 billion, as of 2023, increased 6.31% compared with previous year.	Inventory of ESG risks in credit facilities, deepen the introduction of the spirit of the Equator Principles, evaluate the establishment of exclusion industries, and strengthen engagement with clients.

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Society

Whether it is charity programs, emergency aid, industry-academia cooperation, or talent cultivation, the core we focus on most will never change: the positive driving force that education brings to society.