In order to implement responsible investment, we exclude industries, enterprises or economic activities that are prohibited from investment, and incorporate ESG aspects into the investment analysis and decision-making process according to risk assessment. For investment objects identified as having high ESG risks according to the "Investment ESG Risk Assessment Form", we adopt controlled, reductive or preventive measures on these objects.

• In addition to continuously monitoring the governance of invested companies, TBB assigns representatives to actively participate in various meetings such as board meetings and shareholder meetings of invested companies to oversee their operational status. In 2023, TBB attended a total of 88 board meetings, 78 shareholder meetings, 48 company presentations, and 13 seminar.
• Voting policy: Before exercising shareholder voting rights, TBB carefully evaluates each proposal to fulfill shareholder activism. TBB generally does not support proposals that violate corporate governance, have negative impact on environment or society, or hinder the sustainable development of invested companies. In 2023, TBB supported 100% of ESG-related proposals.
• TBB regularly discloses the status of stewardship governance to customers and continuously pays attention to communication, management and implementation of stewardship related to the invested companies.

• Prohibited Industries: Industries or economic activities that are explicitly prohibited by government regulations or are harmful to environmental sustainability, human health, and social security.
• High ESG Risk Enterprises: Enterprises that undergo ESG risk assessment and have 6 or more negative information items checked in the three dimensions of environment, society, and governance (total of 11 items)(Note).
• Highly Sensitivity Industries: Enterprises engaged in business activities such as mining, quarrying, leather tanning and fur processing of wild animals, and fur trade, or those that have been punished by the competent authority and have not improved. High Polluting/Energy Consuming Industries: Taiwan Business Bank categorizes the petrochemical industry, plastic, rubber, and nonmetal manufacturing industry, base metal manufacturing industry, metal goods manufacturing industry, electronics components manufacturing industry, electricity and fuel supply industry, textile industry, transportation and warehousing industry, wood, bamboo and paper goods and printing industry, and data storage media duplication industry as “high polluting/energy intensive industries”.
• Exception Management: When a loan customer belongs to a highly sensitive industry or a high physical risk enterprise, the credit case originally under the business unit manager's authorization shall be reviewed by the regional operation department. When the credit customer belongs to a high pollution and energy-intensive industry and exceeds the bank's "high Polluting/Energy Consuming industry" limit, the bank's credit risk limit control procedures shall be used for exception management.
• ESG Engagement: Communicate and interact with loan customers in various ways to guide them to pay attention to ESG risks, climate change, and sustainable development issues ； We also promote ESG green energy sustainable project loans to enhance opportunities for customers and the Bank. If a loan customer is found to be involved in ESG-related negative events, the bank will suggest or guide the enterprise to improve and implement the ESG spirit, and its fulfillment will be used as a reference for subsequent loan decisions.

Project Finance Advisory Services

Project-Related Corporate Loans

Project Finance

NT$753 million.

Project- Related Refinance and Project- Related Acquisition Finance for Project Finance

Project-Related Refinance and Project-Related Acquisition for Corporate Loans

Category Definition

• Category A: High level of risk. Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible, or unprecedented.
• Category B: Moderate level of risk. Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.
• Category C: Low level of risk. Projects with minimal or no adverse environmental and social risks and/or impacts. According to TBB's lending and borrowing regulations, if the project is located in an industrial area, it may be classified as Category C.

Equator Principles Cases (Reporting period: 2022/09/16 – 2023/12/31)

Project Finance Advisory Services

Project-Related Corporate Loans

Project Finance

NT$753 million.

Project- Related Refinance and Project- Related Acquisition Finance for Project Finance

Project-Related Refinance and Project-Related Acquisition for Corporate Loans

Category Definition

• Category A: High level of risk. Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible, or unprecedented.
• Category B: Moderate level of risk. Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.
• Category C: Low level of risk. Projects with minimal or no adverse environmental and social risks and/or impacts. According to TBB's lending and borrowing regulations, if the project is located in an industrial area, it may be classified as Category C.

In 2023, the Bank has a total of 28,844 corporate credit application cases, 84 were conditionally approved cases, and 93 were unapproved cases. The following table shows the Bank's status from three major aspects of E, S and G, and statistics of approved vs not approved loan cases:

Unit：Case

• In order to respond to the global carbon reduction trend and support environmental protection and green industries, the balance of TBB’s investment in sustainable bonds reached NT$14.05 billion in 2023. The investment amount have increased year by year, and also set a target for the balance of investment in sustainable bonds to account for 5% of the total bond investment position in 2024.
• TBB issued unsecured primary financial bonds (sustainable development bonds) on September 27, 2023, with an issuance period of 2 years and a total issuance of NT$1 billion. All funds raised were used to finance sustainable development investment plans.

• According to the "Guidelines for Responsible Investment", TBB should conduct ESG risk assessments at least once a year, based on the positions at the end of 2023, the implementation situation is as follows:
  • A total of 160 companies meet the sustainable development enterprise standards recognized by TBB.
  • According to the "Investment ESG Risk Assessment Form", 12 inspection items were conducted, and a total of 23 companies were assessed. The ESG risk assessment results were all "low", among which:
    • None of the listed inspection items occurred: 14 companies
    • There are 9 companies with 1~2 inspection items, and their improvement status is tracked quarterly.
• Decarbonization Strategy:
  • Currently TBB does not invest in any unconventional oil & gas. (Companies that have a proportion of hydrocarbons production of 1% or more from shale oil are defined as shale oil companies)
  • Currently TBB does not invest in mining coal-related enterprises.
  • TBB ceased investments in enterprises or economic activities with revenue gain more than 50% from coal-generated power per year.
• Guidelines for the Certification of Sustainable Economic Activities
  • Make an inventory of whether the invested companies are in the industries or economic activities that are applicable to the guidelines, and engage with the companies that do not comply with the guidelines to plan carbon reduction transformation or improvement plans.
  • At the end of 2023, there are 12 invested companies that were applicable to the guidelines, 11 of which were in line with sustainable economic activities, and one company has not yet met the standard, but has an improvement plan. TBB will keep tracking on the implement of the improvements, engaging with the company in the future.