Shin Kong Financial Holding Co Ltd

SKFH has formulated the \"SKFH Sustainable Finance Policy\" adhering to the United Nations PRI, PRB, PSI, and EPs. The policy regulates SKFH and its subsidiaries' financing activities such as investment, lending, and life insurance integrating ESG factors and ESG information from third-party independent rating agencies such as Bloomberg, MSCI ESG Rating, S&P DJSI, and IR integrated platforms. Before making decisions, ESG risks and opportunities due diligence must be conducted and evaluated prudently. Those included in the exclusion lists should avoid dealing with each other. In addition, we also formulate asset class specific guidelines for investment, lending, and life insurance activities and sector specific guidelines for controversial and carbon-intensive industries. After inspection, those who belong to the above activities and industries shall follow the guidelines as the basis for decision-making on whether to deal with or not, and only those who meet the guidelines can deal with. [...] In addition, in order to safeguard shareholders, employees and customers' long-term value, reduce sustainability-related risks, and seize opportunities. SKFH upholds the function of pooling market funds for investment as a financial institution and fulfills the spirit of stewardship for institutional investors to formulate engagement policies and voting policies as the stewardship behavior standards for each subsidiary. Subsidiaries need to take engagement actions based on the engagement issues that SKFH is concerned about, and continue to pay attention to the operation status and sustainable performance of counterparties, actively attend annual general meeting, exercise voting rights, and properly dialogue and interact with the management of the counterparty. If the counterparty does not make improvements, no new transactions are allowed. If the deterioration of counterparties continue, capital reduction or divestment actions should be taken.

###### Sustainability Governance 1-2\n\n 1-2-1 Corporate Sustainability (CS) Committee\n\n The Company set up the "Corporate Sustainability Committee" in order to promote and fulfill corporate sustainability development. CS Committee is a functional committee subordinated to the Board of Directors, and its members are nominated by the Chairman and approved by a resolution of the Board of Directors. The Committee shall consist of at least three board members and more than half of the members are Independent Directors. The Committee shall be convened at least once every year to take charge of supervising corporate sustainability plans and implementation. It shall report the corporate sustainability implementation status to the Board of Directors to fulfill the duties and values of corporate sustainability. The CS Committee oversees a Management Committee. The President of the Company serves as the convener of the Management Committee and the Presidents of subsidiary companies serve as members of the Management Committee. They are responsible for the formulation, promotion and supervision of sustainable business strategies. The Management Committee includes seven execution teams which are responsible for developing and executing related projects.\n\n###### 1-2-3 Sustainability Promotion and Public Influence\n\n SKFH contributes to the sustainable development by actively advocating issues related to corporate sustainability. As a long-term member of the Taiwan Institute for Sustainable Energy, we support and participate in the promotion of corporate sustainability. In 2021, we joined hands with other enterprises to become a founding member of the Taiwan Alliance for Net Zero Emission, and promise to jointly promote the transformation of Taiwan's low-carbon economy to achieve the net zero emissions target in 2050.\n\n To exert its public influence and promote the stable development of the industry, SKL joined in Life Insurance Association of the Republic of China and Institute of Financial Law and Crime Prevention, and allocates a part of its revenue from insurance premiums to Taiwan Insurance Guaranty Fund to stabilize the insurance market and protect the rights and interests of proposers, insured persons and beneficiaries. SKB joined in the Bankers Association of the Republic of China to promote the sustainable development of financial market through the association in the industry and the strength of the public organizations. Please refer to the appendix 7.1.1 for other associations that SKFH and the subsidiary companies participated in.\n\n###### Two meetings of the SKFH CS Committee were convened in 2021, and the attendance rate of the members is 90%. The Committee reported the corporate sustainability performance and future plans, as well as the corporate governance and integrity implementation status. For the Committee's 2021 operations in detail, please refer to the official SKFH website.\n\n Corporate Sustainability Committee Organization Chart\n Board of Directors\n\nCSR Policy and\nGuidelines\nCorporate\nSustainability\n(CS) Committee\n\n|Corpora Commit|te Sustainability tee|\n|---|---|\n\n###### Corporate Sustainability Management Committee\n\n|Corpora Manage|te Sustainability ment Committee|\n|---|---|\n|||\n\n###### Stakeholder Engagement 1-3\n\n SKFH has established a diverse communication interface. It carefully listens to the feedback from stakeholders and maintains good relationships with stakeholders. SKFH uses internal and external questionnaires to identify stakeholders that may be reached, affected, or impacted in the subsidiaries' business operations, and identified the following eight groups of stakeholders.\n\n Methods and Issues of Stakeholder Engagement\n\n###### It also uses various channels to engage with stakeholders. The communication channels, frequencies and issues of concern to the stakeholders of SKFH are as follows, and the annual stakeholder engagement results are reported to the Board of Directors on December 28, 2021.\n\nCompany website / Permanent\nInstitutional investors' conference /\nQuarterly\nCredit ratings / Annually\nSpokesperson / Permanent\nInvestors' conference / Irregular\nEmail / Permanent\nService hotline / Permanent\nShareholders' Meeting / Annually\n\n###### Suppliers, cooperation partners\n\nSupplier Management Regulations\n/ Irregular\nPrice negotiation meetings / Irregular\nProject meetings / Irregular\nContract negotiations / Irregular\n\n###### Key Investees and Borrowers\n\nPersonal visits / Irregular\nInstitutional investors' conference /\nIrregular\nAttend Shareholders' Meeting /\nAnnually\n\nSet up an Investor Relation section on the\ncompany website to provide comprehensive\ninformation for investors\nHost quarterly investor conference to fully\ncommunicate with investors\nSet up a dedicated contact window and email\ninvestor Relations Department contact\nemail:ir@skfh.com.tw. To answer questions\nfrom investors and analysts via telephone and\nemail and collect feedback\n\nBusiness seminars and price negotiation\nmeetings\nOnsite audit, inspection and acceptance, and\neducation of labor safety and health\nawareness\n\nVisit the spokesperson or IR\nAttend on site or through video\nE-vote or attend in person\nSign the Compliance Statement of Stewardship\nP i i l f I tit ti l I t\n\nInformation Disclosure\nBusiness Overview\nDividend Policy\nLaws and Regulations\nCorporate Governance\n\n8 investor conferences in both Chinese and English were held. In order\nto follow the pandemic prevention regulations, the Chinese investor\nconference was held online instead.\nInvited to participate in 6 investor conferences to communicate the\ndirection of business performance and strategic development, and\nregularly report investor concerns to the management.\nResponded to more than 500 investor questions by phone and email.\nUpdate the credit ratings of SKFH and its major subsidiaries in 2021\nThe Annual General Shareholders' meeting was held on July 2nd, 2021.\n\nOpen Tender 100% of new suppliers have signed the Supplier's Commitment\nFair price negotiation Statement\nFair procurement\n\nIndustry Overview Financial Performance SKL, SKB, MLS, and SKIT have all issued the Institutional Investor's\nFinancial Performance Environmental Protection Actions Stewardship Report\nBusiness Strategies ESG Issues\nRelated News

SKFH fulfills its responsibilities to shareholders, employees, customers, and society, identifying material public policy issues of the year (covering all business areas of SKFH and its subsidiaries) and consults with third-party advisors to fully consider external perspectives. The Public Affairs Department, responsible for public and government affairs, plans lobbying activities for prioritized issues. It reports directly to the President and is in charge of managing, guiding lobbying efforts, and political donations.

Lobbying and political participation are part of the Board of Directors' corporate risk management. In accordance with SKFH's sustainability policy (and reference to Principles for Sustainable Insurance, PSI), The Public Affairs Department submits lobbying activities, lobbying expenses, and political donations to the entire Board annually. The Audit Committee, composed of independent directors, reviews lobbying-related efforts and expenses each year. If necessary, a separate project meeting may be convened for detailed discussion and review. [...] SKFH has conducted the following assessments for this report:
1. For direct lobbying activities, all lobbying activities will be reviewed and confirmed to be in line with the company's position before participation.
2. Reviewing the company's membership in trade associations worldwide.
3. Identifying trade associations that actively engage in climate-related policies and are influential.
4. Examining the climate-related statements and positions of these trade associations.
5. Assessing the alignment of these trade associations' positions and advocacy actions with the goals of a net-zero future, including whether they are fully aligned, partially aligned, or not aligned.

In this assessment, to confirm the alignment of relevant trade associations with the net-zero goals, we reviewed and evaluated the following factors:
1. The trade association's publicly stated positions to determine if they acknowledge the risks of climate change and express support for the goals of the Paris Agreement, remain silent on the issue, or fail to actively engage in climate policy development.
2. The trade association's statements and policy principles to ascertain a clear position on limiting global average temperature rise to below 2℃.
3. The trade association's principles and policy positions supporting public incentives for energy efficiency and carbon reduction.
4. The trade association's advocacy actions regarding specific climate policies (net-zero actions, SBTi, green buildings), as well as discussions and deliberations among members on current and future policy positions.

For organizations assessed as partially aligned or not aligned, the Company respond by:
1. Identifying and fully understanding areas of misalignment and their reasons.
2. Publicly stating the Company's position to clarify differences with non-aligned organizations.
3. Ensuring that the Company's position is understood by the organizations and maintaining ongoing communication, with a review of the organization's position in an annual assessment report.
4. Reiterating the Company's position and providing appropriate recommendations when the organization is unable to actively pursue and promote effective climate policies. If there is no progress, the possibility of withdrawal from the organization is not ruled out.

In the future, SKFH will continue to monitor direct lobbying opportunities, the internal developments and external statements of the trade organizations we are a part of. An annual review will be conducted and publicly reported to assess their commitment to actively engage in climate policy.

SKFH has set up a Sustainable Finance Group supervised by the Corporate Sustainability Committee based on authorities and responsibilities, which is responsible for planning and implementing sustainable finance in company-wide. The missions and duties of the Sustainable Finance Group shall be subject to SKFH Corporate Sustainability Committee's Rules. [...] The relevant KPIs are established and supervised by SKFH's Corporate Sustainability Committee every year, and are regularly disclosed in the sustainability report. The spirit of sustainable stewardship shall also be actively used to take engagement actions and exercise voting rights to drive the industries towards sustainable development.

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes

Describe the process(es) your organization has in place to ensure that your external engagement activities are consistent with your climate commitments and/or climate transition plan?[…]SKFH's senior management serves on the Board of Directors of the Taiwan Institute of Sustainable Energy (TAISE), and co-founded an NGO, Taiwan Alliance for Net Zero Emissions, to promote industries net-zero transition. Our middle management and staff also actively participate and engage in the activities of TAISE, other NGOs and governmental public hearings, keeping abreast of policy developments and future directions. In the event of new policy trends or regulations, we will bring up the topic for discussion at our regular CS Committee meetings in order to affirm our adjusted climate change strategy.