The Equator Principles

In order to promote sustainable development, Taishin Financial Holdings Co., Ltd.(“Taishin FHC”) has followed for many years the practices and guidelines established by international institution, including the Carbon Disclosure Project(CDP) and several certifications for ISO, and signed the support for TCFD (Task-force on Climate-related Financial Disclosure) at the beginning of 2019. Today (11 November), Taishin International Bank, an important subsidiary of Taishin FHC, announced that it is now officially adopted the Equator Principles, and becomes a member of the Equator Principles Association. From now on, Taishin International Bank will follow the Equator Principles to review its credit facility cases so as to urge its customers envisaging the potential risks or negative impacts of the environment and society ,enhance the asset quality of Taishin International Bank and help customers operate steadily.

Since 2015, Taishin International Bank has adopted the spirit of the Equator Principles for project financing cases/project-related financing cases, established an audit evaluation mechanism, and disclosed the results in the Corporate Social Responsibility (CSR) report, said Sharon Lin, the Chief Executive Officer of Wholesale Banking Group of Taishin International Bank. After the “Green Financial Principles” were formulated by Taishin FHC in 2019, Taishin International Bank further set up the categories identifying industries that can be actively supported or the controversial corporates that should be avoided directly to engage with, and strengthen the evaluation process of credit facility cases provided to five climate change sensitive industries. The above fully demonstrates that Taishin International Bank values sustainable banking and actively develops credit-granting strategies with ESG risks.

Since the CSR Committee established in 2014, Taishin FHC has actively promoted the CSR in every aspect. For the first time in 2018, Taishin FHC was selected for the Dow Jones Sustainability Index (DJSI) "World Index" and "Emerging Market Index", and re-elected in 2019. In the professional ESG market index, Taishin FHC has been selected in the "Taiwan Corporate Governance 100 Index", "Taiwan High Salive 100 Index", "Taiwan Sustainable Index", FTSE4Good Emerging Markets Institutions, and top 100 companies in the emerging market for Vigeo Eiris. This year, Taishin FHC has won more than 100 awards from domestic and foreign professional organizations.

Sharon Lin emphasized that after joining the Equator Principles Association, Taishin International Bank will establish a project financing credit system that is more in line with international standards, and continue to pay attention to the international sustainable development trend, and make a more positive contribution to corporate social responsibility by the financial profession.

For Implementation of the Equator Principles (EP), Taishin International Bank (TSIB) designated Wholesale Credit Administration Division as the dedicated office and engaged external consultants to organize a project team in 2019 for internal preparation and staffing training.

The main goals for the project team were as follows :

• Review of existing credit and risk management policies and procedures:

The project team interviewed with related departments such as Credit, Credit

Administration, Post-Loan Administration, Marketing, Operation and Legal etc. to review

existing credit and risk management guidelines and procedures after the kick-off meeting.

In the process of interview, 5 meetings for cross department communication were

arranged to evaluate the incorporation of the Equator Principles in credit and risk

management policies and procedures.

• Incorporation of the EP in credit and risk management policies and procedures:

To ensure the financial products supporting a new project are in compliance with the

relevant requirements of EP, TSIB has established the Environmental and Social Risk Control Team to review the environmental and social impacts of projects proposed for financing and provide advice.

Furthermore, TSIB has established comprehensive policies and credit review procedures for EP-related financial products to meet the relevant requirements of Principles 1-10 such as Review and Categorization, Environmental and Social Assessment, Covenants, Independent Monitoring and Reporting and Reporting and Transparency.

The respective roles, responsibilities and senior management in the transaction review process after EP Implementation are simplified listed as follows :

• Staffing training:

For better understanding of main concepts of the EP and Incorporation of the EP in credit

policies and procedures, 4 internal training courses were conducted to all marketing

managers and credit officers covering local and overseas branches. See figure 1 to

figure 3 listed below.

Taishin has formulated the " Guidelines for Loan Applications to the Equator Principles " and related checklists. All financing cases need to be reviewed in accordance with the Equator Principles. If the case meets the scope of the Equator Principles, it is necessary to evaluate the degree of impact of the case on the environment and society. According to the risk and impact size, it is divided into Category A, B, and C. Cases falling into Category A and B require an environmental and social risk assessment report issued by an independent third-party institution, which will then be reviewed by the Bank’s dedicated auditors and supervisors.

For case that meets the scope of the Equator Principles, the undertaker must explain the content of the Equator Principles to the client, and confirm that the client is willing to abide by the Equator Principles. The Bank will provide necessary assistance. If the customer fails to comply with the Equator Principles, the customer's financing application will be declined.

If the post-loan monitoring conditions are listed in the environmental and social risk assessment report issued by an independent third-party institution, the customer will be required to entrust an independent third-party institution to issue monitoring reports on a regular basis. The Bank's dedicated auditors and supervisors will confirm whether the specified monitoring conditions are met. If the customer cannot cooperate with the implementation, or fails to meet the monitoring conditions and has no intention to improve, the customer will be asked to repay the loan.

Taishin has conducted education and training on measures related to the Equator Principles as online courses in response to the COVID-19 outbreak.

√ Statistics of various types of cases in line with the Equator Principles in 2022 :

●Project Finance Advisory Services : 

 ●Project Finance Transactions : 

 ●Project-Related Refinance & Acquisition Finance for Project Finance : 

 ●Project-Related Corporate Loans : 

●Project-Related Refinance & Acquisition Finance for Project-Related Corporate Loans : 

●Project Name Reporting : 

The Equator Principles website: www.equator-principles.com