Taiwan Business Bank is responsible for providing financing and consultation services to SMEs to stabilize the foundations of Taiwanese SMEs and respond to the impact of changes in the economy. Taiwan Business Bank provides loans, overdrafts, discounts, guarantees, acceptance of bills and other services approved by the central competent authority to support the development of small and medium-sized enterprises and government policies. In response to the needs of businesses, Taiwan Business Bank provides a diverse range of project assistance loans and implements corporate social responsibility. In addition to including the performance of environmental protection responsibilities of loan applicants into credit evaluation factors, Taiwan Business Bank also launched multiple loans related to energy-saving and environmental protection to encourage private enterprises to adopt renewable energy, energy conservation, pollution prevention and other equipment with low-interest loans.

Taiwan Business Bank has long been committed to sustainable development, and has established the guidelines for responsible lending and responsible investment, excluding the undertaking of illegal or controversial industries and integrating ESG risk assessments into corporate lending and investment decision-making. In response to the global trend of carbon reduction and to strengthen the resilience to climate change risk as well as exert influence on the sustainable development of industries, the Board of Directors approved the commitment to cease undertaking financing projects and investments related to coal mining, coal-fired power plants, and unconventional oil and gas (unless the funds are used for carbon reduction or energy transition), establishing a climate mission from top-down for the entire Bank to achieve net-zero transition, with the aim of contributing to the national goal of “2050 Net Zero Emissions”.

*2 Corporate loans include project finance.

To ensure our net zero transition is implemented, Taiwan Business Bank has launched its Guidelines for Responsible Lending and Responsible Investment in January 2024 to avoid involvement in illegal or controversial industries and to integrate ESG risk assessments into our core lending and investment decisions.

We will continue strengthening our governance in climate change, positioning us as a significant player in the net-zero emissions future. Taiwan Business Bank pledges ourselves to climate change mitigation and adaptation by uniting our employees, our clients and their value chains, and other stakeholders for realizing a sustainable future.

Taiwan Business Bank (TBB) incorporates environmental, social and corporate governance-related issues into the investment decision-making process to fulfill our social responsibilities, and formulated the "Guidelines for Responsible Investment" in accordance with the guidelines of the United Nations Principles of Responsible Investment (PRI), as well as the Bank's "Sustainable Development Best Practice Principles" and "Stewardship Principles for Institutional Investors". TBB continues to pay attention to invested companies’ relevant news, financial performance, environmental protection measures, social responsibilities, labor rights and corporate governance, etc., and leverages the influence of institutional investors by attending shareholders’ meetings, exercising voting rights, and communicating and interacting with directors or managers of the investee companies.

To implement sustainable finance and lead enterprises to prioritize environmental protection and social responsibility, Taiwan Business Bank(the “Bank”)conducts its loan business by adhering to the 5Ps of credit and general credit extension processes, while concurrently introducing responsible lending practices. The Bank integrates 21 items of environmental, social, and corporate governance (ESG) positive and negative risk factors into its corporate credit decision-making process, including project finance. Upon accepting a loan application, a "Loan ESG Risk Assessment Form" must be completed. Through Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures, the Bank verifies whether the borrower complies with the Bank's policies regarding prohibited industries, sector exclusions (such as coal-related and unconventional oil and gas industries), high sensitive industries, and high-pollution/high-energy-consuming industries, while also evaluating their ESG physical risk levels. Appropriate credit terms are then applied based on these risk levels, followed by active engagement and monitoring to understand whether the use of funds aligns with green finance. Through these mechanisms, the Bank aims to encourage and guide customers to strengthen their ESG performance, understand the operational risks posed by climate change, and earnestly implement environmental protection and social care, thereby establishing a more comprehensive and robust risk management framework.

To assist enterprises in moving towards net-zero and sustainable development goals, Taiwan Business Bank provides transition financing services in accordance with its "Reference Guidelines for Transition Credit Review" for enterprises that have formulated transition plans. During the pre-lending review stage, the Bank implements the "Transition Credit Review Process" to conduct a holistic evaluation, requiring the completion of the "Pre-Lending Transition Credit Checklist" to prudently assess the rationality and feasibility of the borrower's transition plan. During the post-lending management stage, periodic tracking is conducted during annual reviews, accompanied by the completion of the "Post-Lending Transition Credit Management Checklist." If any non-compliance is identified upon review, the borrower will be requested to provide supplementary explanations, and evaluations will be made to adjust their transition plan, thereby implementing dynamic risk control.

Furthermore, to expand the impact of sustainable finance, Taiwan Business Bank actively encourages borrowers to complete the "Corporate ESG Information and Sustainable Economic Activities Self-Assessment Questionnaire" and integrates it into the credit extension process. Based on the self-assessment results, for enterprises categorized as "In Transition" or "Non-Compliant," the Bank encourages them to formulate transition plans (including, but not limited to, climate change adaptation plans and concrete actions); for those categorized as "Not Applicable," the Bank encourages them to develop foundational plans and specific measures to address climate change. The Bank hopes to replace traditional, binary credit decisions with proactive guidance and communication. Through robust pre-lending evaluations, post-lending management, and ESG self-assessment mechanisms, the Bank balances financial risk management with responsible lending, accompanying enterprises as they build core resilience for low-carbon transition and collectively realizing the sustainable vision of net-zero carbon emissions.

To facilitate the development of sustainable finance and guide businesses to pay attention to environmental protection and social responsibility while strengthening management of environmental, social, and governance (ESG) risks within itself, the Bank signed to join the Equator Principles Ltd. on September 16, 2022. The Bank has implemented a loan application review process and established TBB’s Guidelines for Equator Principles Compliant Loan Review according to the Equator Principles 4 (EP4) published by the Equator Principles Ltd. Taiwan Business Bank officially implemented the Equator Principles (EPs) on January 1, 2023. Upon accepting a loan application, a "Project Eligibility Checklist for Equator Principles" must be completed and verified by the branch general manager to confirm whether the project falls within the scope of the EPs. Following confirmation, an "Environmental and Social Risk Team" meeting, composed of deputy executives from relevant departments, is convened to conduct an environmental and social risk categorization. Furthermore, in accordance with the Equator Principles 4.0 (EP4.0), biodiversity has been integrated into the Environmental and Social Risk Assessment Checklist as a mandatory evaluation item for project finance. In the 2025 reporting period, the number of transactions applicable to the EPs totaled 2 cases, with an approved credit amount of NTD 8.544 billion. As the only specialized SME bank in Taiwan, Taiwan Business Bank actively guides domestic enterprises to align with international initiatives. By offering tailored programs such as "Green Energy Sustainability Project Loans," "Machinery and Equipment Upgrade Loans," and "Credit Guarantees for Low-Carbon Sustainable Home Project Loans," the Bank enhances enterprises' capacity for climate change mitigation and adaptation. Additionally, the Bank launched the "ESG Sustainable Development Loan Incentive Measures" to support enterprises proactively implementing ESG practices by offering preferential loan interest rates. The Bank also actively participates in sustainability-linked syndicated loans, channeling funds into green industries, guiding enterprises to prioritize sustainability issues, and collectively driving sustainable development forward.Becoming a member of the EPs Association is an important milestone for TBB. TBB will continue to exert its financial influence and utilize its financial professional services, motivating small and medium enterprises to accomplish the low-carbon transition, increase industry resilience, and bring the positive value of sustainable transition to society.

To ensure that each unit is familiar with the Equator Principles mechanism and newly adopted forms, Taiwan Business Bank has commissioned an external consultant since 2022 to conduct comprehensive training courses for the environmental and social risk team and all the business branches, and to provide training materials to deepen staff understanding of environmental and social risks, thereby ensuring effective implementation of the Equator Principles policy.

As set out in the Equator Principles signatory rules, all full equator principles signatories must undertake an independent review of their implementation of the Equator Principles and report a summary of this within the Implementation Reporting section of their Equator Principles annual report on a frequency of at least once every three years. Taiwan Business Bank conducts annual internal audits by an independent review unit (not part of the Environmental and Social Risk Team). The 2025 audit found no deficiencies. Taiwan Business Bank will submit its first independent review in the Equator Principles annual report by June 30, 2027.

The Equator Principles Ltd website: https://equator-principles.com/

Credit process for EP projects

• For Category A and B projects, the Bank will agree with the client that an independent third-party consultant shall provide opinions on the client’s Environmental and Social Management and Assessment documents to ensure compliance with the Equator Principles’ control framework.
• Project A is a joint credit project. The industry category is the construction and operation of a transportation transfer station, and the risk category is Class C.