The Company has formulated the "Sustainable Finance Policy", "Stewardship Principles", and "Administrative Regulations for Promoting the Development of Sustainable Finance", and the “Management Focuses for the Divestment from the Coal and Non-Conventional Oil and Gas Sectors” to specify what represents responsible investment. These measures specifically stipulate that the Company actively supports enterprises dedicated to environmental protection or social responsibility as defined in the Management Focuses for ESG Sustainable Development Industries and High-Risk Industries of Mega Group. The Company must regulate high-environmental and social-impact industries or targets, must not invest in prohibited companies or establish proprietary or underwriting positions in such companies.
I. Industries or counterparties with high environmental and social impacts
The total amount of investment shall not exceed 30% of the total amount of proprietary trading and underwriting of securities. If positions are required, due diligence shall be conducted, with enhanced analysis for prudential assessment. The undertaking is only allowed when the assessment results show no material negative impacts or conditional transactions are adopted to mitigate impacts, with the elevated approval level.
II. High Carbon-Emission Industries
If the mid-to-long-term positions to be established are in a high carbon emissions industry, the limit is 26% of the total proprietary trading and underwriting positions (27% in 2024). It is necessary to check whether the score of the subject matter is not lower than that of its peers in the Bloomberg ESG score. If it is lower than that of its peers, it will not be invested in. If it is necessary to establish a position, it is necessary to perform due diligence and to strengthen the analytical and prudent assessment, and the level of approval should be raised before the investment is undertaken.
III. Investment projects with high sustainability risk
In principle, the Company does not establish medium- to long-term proprietary trading and underwriting positions in targets with high sustainability risk. If it is necessary to establish such positions, the Company should conduct due diligence and strengthen its analysis and prudent evaluation, and must explain the risk response capability and risk mitigation measures of the enterprise in a written report.
IV. Coal and non-conventional oil and gas
For coal and non-conventional oil and gas industries, the proprietary trading business shall avoid investing in controlled entities or issuing financial products linked to controlled entities. The investment position at the end of 2023 was the base period, with the investment position to be gradually reduced to zero by the end of 2040 at the latest. Underwriting: Refrain from underwriting of the controlled entity. Wealth management business: For listed bond products, if the issuing company is a controlled entity, it must be fully labeled by the end of 2030 with sales discontinued by the end of 2040.
V. To achieve the Group’s SBTs, it is necessary to engage with the investees to encourage them to sign the SBTi and support them in investing in "Supporting Economic Activities" (2024 name: Forward-Looking Economic Activities) as a way to achieve low carbon or carbon reduction effects as outlined in the "Reference Guidelines for the Recognition of Sustainable Economic Activities" to enhance customers’ net zero transformation capabilities.
