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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 credit business review and decision making process, and require the completion of sustainable financial assessment for credit business, stipulating that credit business should carefully assess whether there are potential risks of environmental and social hazards in the counterparty or transaction content, and conduct KYC (know your customer) process to understand the reputation, business content, financial status, management capability and regulatory compliance of the credit 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 November 2020, Yuanta Bank completed the formulation of the “Guidelines for Managing Equator Principles Financing Cases＂and related operational procedures. The Equator Principles were officially implemented on June 1 of this year. The “Task Force on Environmental and Social Risk＂ was established to evaluate, review, and monitor the environmental and social risks of credit cases, to appropriately reduce the environmental and social impacts of potential cases, and to encourage customers to pay attention to environmental protection and social responsibility.

In 2021, there is one project financing case that applies the Equatorial Principles and one case that was declined because it is located in a Class II coastal protection zone, which may affect migratory birds’ habitat, and it is in an area of land subsidence. Although the ecological compensation and monitoring plan had been established, but the environmental and social impacts were yet to be observed. As a result, the assessment results were politely rejected. The case undertaken was as follows:

In response to Taiwan government's “Five plus Two" Innovative Industry Policy, Yuanta Bank has lent to these seven industries, including green energy technology and circular economy, to assist these key industries in raising capital. The Group has also begun financing industries with sustainable models such as solar cell manufacturing and the renewable energy power generation industry, healthcare and education-related financing projects, etc. and help Taiwan's industries to move towards low-carbon and sustainable transformation.

Yuanta Bank, in order to assist enterprises in focusing on developing energy infrastructure and clean energy technology, provided NT$3 billion in infrastructure loans in 2021. These loans promote local construction and support enterprises moving towards low-carbon development to create low-carbon cities.

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, select medium- and long-term investment targets through the following risk assessment framework, and consider the environmental and social performance of the investment targets 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.

The Group actively provides asset management client products, incorporates ESG screening mechanism when designing products, and links client funds to ESG investment targets through the ESG products issued by Yuanta. In the consolidated table below, equity, debt and fund investments accounted for 50.77% of the total investment size, an increase of 12.85% compared to the investment size in fiscal 2021.