SKL complies with the United Nations' Principles for Responsible Investment (PRI), the Principles for Sustainable Insurance (PSI), and SKFH Sustainable Finance Policy, incorporating ESG mechanisms into operational processes and methods for different investment business properties. When making investment choices and providing financing and loans, we follow the asset-specific guidelines of the SKFH Sustainable Finance Policy and integrate ESG issues into decision-making and practices, adhering to the six principles of responsible investment. With the exception of some assets (such as foreign exchange hedging derivative products), all new investments are 100% compliant with responsible investment principles.
Responsible Investment
To implement the concept of sustainable finance, we have established the "Policy and Procedures for Sustainable Investing in Securities". Before making any investment, we conduct an assessment of the investment targets, and no new investment should be made in those included in the exclusion list or the list of non-investable targets; For industries with potential controversy, we conduct ESG due diligence on trading partners according to industry-specific guidelines, and make a careful evaluation to determine whether to continue transactions. Compliance with the guidelines and passing the ESG assessment is a prerequisite for any business dealings.
In addition to establishing a comprehensive ESG investment evaluation mechanism, we also actively respond to the United Nations' Sustainable Development Goals (UN SDGs) in our investment activities and continue to search for sustainable investment targets, grasp ESG opportunities, and invest in sustainable development industries. After investing, we conduct post-investment stewardship, regularly track the operational and financial performance of the investee companies (or portfolios), and continue to pay attention to their sustainable performance and ESG assessment. Through engagement actions such as attending shareholder meetings, exercising voting rights, engaging in dialogue and interactions with the management of trading partners, we exert our influence on the investee companies to enhance long-term value for customers, employees, and shareholders, among other stakeholders.
Responsible Lending
ESG factors are incorporated into the credit investigation process, credit approval process, and post-loan management.
SKL has incorporated ESG issues into its audit process. In the process of financing review, the borrowers are evaluated for environmental protection, corporate integrity and social responsibility (the status of the labor retirement reserve is disclosed in the credit report, and the borrowers are asked to explain the status of any major labor incidents. When an enterprise (an enterprise that is required by the FSC to prepare the ESG report) applies for a loan, the ESG report shall be included as a reference document for the loan application. Otherwise, when applying for loans from other enterprises that do not fall under the preceding categories (enterprises that are not required by the FSC to prepare the ESG report), the credit granting personnel should make every effort to confirm whether the applicant has violated any major pollution or has major labor disputes, and evaluate the situation carefully. According to the credit report and review letter, during the credit review and evaluation, loans may be denied to companies that have failed to comply with sustainability/ESG requirements, or the companies may be required to improve their labor and environmental issues as a condition for the loan.
The format of the credit report have been revised in December 2021 to add an ESG area, and a total of 31 cases were approved in 2022. Furthermore, in 2022, Shin Kong Life Insurance included corporate ESG performance in the evaluation process for granting interest rate reductions. A total of eight companies met the criteria for interest rate reductions on their loans, with a total approved loan amount of 79.2 hundred million dollars.
Subsequent reviews shall be conducted in accordance with the Credit Review Regulations, and the borrower's improvement status shall be tracked every six months. If improvement is not made within the time frame, default conditions shall be established to ensure the quality of credit and the safety of debts.
