Stratregy of Sustainable Development and the Framework of Integrated Report

6 CSR REPORT 2016 - 1 - About this Report

GRI：102-1、102-32、102-45、102-48、102-49、102-50、102-51、102-52、102-53、102-54、102-56

SUN Financial Holding Co., Ltd. (E.SUN FHC) has long been committed to corporate social responsibility E. and appreciates your attention to the 6th CSR report published by E.SUN FHC. This report has been prepared in accordance with the GRI Standards: Core option. Also, this report is in accordance with ISAE 3000 and the Integrated Reporting Framework. E.SUN FHC is the first financial institution in Taiwan complete GRI Alignment Service, the report was submitted for the GRI Content Index, Materiality Disclosure Service, and SDG Mapping Service. It presents the Company's ongoing efforts and results in three different aspects (economic, environmental and social). The report is available in Chinese and English, and can be downloaded from the "CSR" section of the official website. In 2016, E.SUN FHC was selected as constituent stock of "Dow Jones Sustainability Indices, DJSI, for three consecutive years" making it the first and only financial institution in CSR Taiwan to receive this honor. We believe that business management is all about creating values and making the world better. Through publication of this CSR report, we hope to communicate the ideas and practices that E.SUN has adopted towards achieving sustainability to our stakeholders. By sharing open and transparent information, we hope to learn and grow together, and bring positive influence to the society.

Framework and scope of Report The CSR report is prepared and published on a yearly basis; this year's report covers the performance of E.SUN FHC and its subsidiaries (namely E.SUN Bank, E.SUN Securities, E.SUN Venture Capital, and E.SUN Insurance Brokers) in the 2016 financial year (from January 1 to December 31, 2016) with respect to economic, social and environmental aspects. In order to present a more comprehensive picture of various projects and campaigns undertaken by the group, the report also discloses activities that occurred prior to January 1, 2016 and after December 31, 2016. Scope of Report The scope of disclosure focuses on operating activities and services of E.SUN FHC and its subsidiaries (E.SUN Bank, E.SUN Securities, and E.SUN Venture Capital) in Taiwan, which accounts for 95.35% of E.SUN FHC’s net revenue. For the purposes of achieving higher economies of scale and overall synergy, the subsidiary E.SUN Insurance Brokers was consolidated into E.SUN Bank on March 25, 2016. All financial figures are denom- inated in NTD and have been audited by a certified public accountant of Deloitte. Statistics in this CSR report have been presented in a manner consistent with common international standards, and cover the performance of some of E.SUN's overseas branches. Disclosures on social welfare and charity cover the two non-profit foundations (namely E.SUN Volunteer and Social Welfare Foundation and E.SUN Foundation) and subsidiaries; whereas disclosures concerning environmental protection (e.g. use of water, electricity, petrol etc) cover E.SUN's Taipei headquarter building, Dengfeng Building, Boai Building, and branches located throughout the country. The 2016 greenhouse gas inventory and water inventory were inspected and certified by SGS Taiwan. To meet SGS Taiwan's requirements, part of the disclosure covers overseas offices. Any special meanings pertaining to the above quantitative indicators are explained in separate footnotes. Reporting Basis

Organization Principle

The Global Reporting Initiative, GRI GRI Standards: core option

The Global Reporting Initiative, GRI G4 Financial Services Sector Supplement Guidelines International Integrated Reporting Council, IIRC Integrated reporting (IR) United Nations, UN Sustainable Development Goals, SDGs

Taiwan Stock Exchange, TWSE Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies International Organization for Standardization, ISO ISO 26000 Social Responsibility Guidance

United Nations, UN Summary of Global Compact Disclosure

Quality of Information

Data category Standard Certifying Organization

Statement of Assurance Principles No. 1 "Audit and Review Deloitte Financial data of Non-financial Information" AA1000 BSI Taiwan

Environmental data Annual financial report Deloitte

ISO 14064-1 Greenhouse Gas Inventory Sustainability data ISO 14064-1 Organizational Greenhouse Gas Inventory Scope 3 SGS Taiwan ISO 14046 Organizational Water Inventory

Note: This report is based on the principles of accuracy, balance, clarity, comparability, reliability and timeliness of the GRI Sustainability Reporting Guidelines. The source is provided by E.SUN FHC and its subsidiaries, and all content is approved by the CSR Committee and sernior management. Historical CSR reports

Please inform us of any suggestion you may have with regards to the "Corporate Social Responsibility Report of E.SUN Financial Holding Company."

E.SUN Financial Holding Co., Ltd. General Affairs Division No. 115, Section 3, Minsheng East Road, Taipei City TEL：(02)2175-1335 FAX：(02)8712-3513 [email protected] www.esunfhc.com.tw 2011 2012 2013 2014 2015

- 2 - INDEX

2 About this Report 4 Letter from the Chairman 5 2016 Sustainable performance 7 E.SUN Chronicles 8 Stakeholder Engagement 9 ˙Identification of Stakeholder 10 ˙Materiality Analysis 16 Stratregy of Sustainable development and the framework of Integrated Report

22 Business Overview 22 ˙Business strategy 26 ˙Business Performance

1. Governance（G） 28 28 1.1 Corporate Governance 36 1.2 Code of Conduct and Ethics 38 1.3 Compliance 40 1.4 Risk Management 43 1.5 Anti-money Laundering and Anti-terrorism Financing 2. Social（S） 45 45 2.1 Financial Inclusion 48 2.2 Digital Finance 53 2.3 Customer Service 60 2.4 Happy Workplace 76 2.5 Social Inclusion 3. Environment（ E ） 86 86 3.1 Climate Change Risks and Opportunities 87 3.2 Responsible Lending and Investment 89 3.3 Low-carbon Operations 94 3.4 Sustainable ecosystem 100 3.5 Supplier Management

102 Appendix 102 1. Glory and Recognition in 2016 103 2. Comparative table of GRI (Global Reporting Initiative) 112 3. Human Resource Management indicators 113 4. Economic value distributed indicators 115 5. Low-carbon operations indicators 116 6. Comparative table of GRI (Global Reporting Initiative) G4 indicators of financial service sector 117 7. CSR best-practice principles for listed and OTC traded companies 118 8. Comparative table of ISO 26000 terms 119 9. UN Global Compact Comparative Table 120 10. Assurance opinion

CSR REPORT 2016 - 3 - Letter from the Chairman

GRI：102-14 the Chairman Letter from performance 2016 was a year of challenge and change. 2016 The global economy continued to be Sustainable volatile after the Brexit vote and the U.S. presidential election. Higher geopolitical risks also increased uncertainty in financial markets around the world. Meanwhile, the financial services sector face issues of Fintech development and internet security.

Chronicles E.SUN Money laundering prevention and legal compliance will be key to business management for Taiwanese financial institutions looking to expand in other Asian countries. Engagement Stakeholder Interaction between technological advance- corporate social responsibilities and business ments, customer behavior changes, and regu- strategies. E.SUN, for example, invests its core latory shifts makes it necessary for a compa- competencies in financial services into ny to improve stability on the inside and corporate governance, social and environ- increase flexibility on the outside. We under- mental causes, and employees and custom- stand a fast changing environment creates ers. As an expert leader committed to ethical SD Stratregy of challenges and risks, but also lead to more management, we support responsible opportunities and hope. lending and responsible investment policies, and work hard to protect our customers' E.SUN FHC delivered further growth across all assets and contribute to green finance and business lines in 2016. In terms of financial financial inclusion. We promote environmen-

and the FIR Stratregy of SD gauges, net income set another record high tal sustainability through energy conserva- of NT$13.135 billion, EPS was NT$1.50 per tion, carbon reduction, and habitat preser- share. The ROE and ROA came in at 10.35% vation. E.SUN aims to deliver the best total and 0.71% respectively. In terms of intangible performance and become the most respect- metric, the Company made its way into the ed business. Dow Jones Sustainability Index (DJSI) for a third straight year, four leading international A quarter of a century later, E.SUN celebrates

Governance financial magazines—Asiamoney, The Asset, its 25th anniversary. Named after the highest

（ The Banker and Global Finance—unani- mountain in Taiwan, we determine to G mously rated E.SUN Bank as Taiwan’s best become the best and most popular bank. ） bank in recognition of its long-time dedica- We believe that the ultimate purpose of tion to sustainable development and sound running a business is to enhance social business. welfare and work with the community to achieve a sustainable, coexistent relationship with Social （ E.SUN has been an honest and upstanding the environment. We appreciate the continued S ） company dedicated to integrity and profes- support of our customers and work to exceed sionalism since its establishment. E.SUN will their expectations. E.SUN employees strive to continue to work toward the three aims of be first-class citizens of the world, and E.SUN business management, which are overall strives to be a first-class corporate citizen.

Environment performance, corporate social responsibility, Let's walk hand in hand and build a sustain- and sustainable development. We believe able environment and a brighter future in （

E that a company moving toward sustainable Taiwan. ） development has to start by combining

Chairman, E.Sun FHC

- 4 - 2016 Sustainable performance the Chairman Letter from

Sustainable performance

All building were covered Adopted Social Return On Investment by ISO 14064-1：2006 DJSI / MSCI / Bloomberg ESG (SROI) Greenhouse Gases Emissions on E.SUN Golden Seed Project Demonstrate best performance and ISO 14046 Water footprint among financial sector in Taiwan The 1st financial institution in Taiwan performance The 1st financial institution in Taiwan 2016

*Create NT$ 7.40 SROI for every NTD spent on the project Sustainable

Reviewed and Ranked 1st place in cultural E.SUN Hackathon approved 2 case in 2016 Invested 53% The project competition and creative lending award for cultivating FinTech talent Adopted the Equator Principles (EP) for two consecutive years in sustainability bond on project finance (FSC) The 1st financial institution in Taiwan to host the competition E.SUN World MasterCard “E.SUN Wallet” App E.SUN Visa Signature card with ETC and Easy Card function Overseas Medical Mission Online mortgage credit line Intergrated HCE mobile credit card E.SUN Visa Titanium card with ETC and Easy Card function Building house in Cambodia and rate assessment Chronicles E.SUN and QR code payment Received the certificate of Carbon-Footprint label Volunteer program in Mymar Provided fast and tailor-madeservice The 1st financial institution The 1st financial institution Promote CSR program The 1st financial institution in Taiwan in Taiwan in Taiwan to host the competition

Highest growth rate Largest SME lending Highest Wealth Management of aggregate credit card Biggest formosa bond in private bank in Taiwan fee income among Tier 1 banks consumption among underwriter

Tier 1 banks Engagement Stakeholder

Awards and Recognitions

Dow Jones Sustainability Indices, DJSI • E.SUN FHC was included in Dow Jones Sustainability Emerging Market Index for 3 consecutive years, the first and only one in Taiwan financial sector. SD Stratregy of

Excellence in Corporate Social ResponsibilitiesAward • Received CommonWealth Magazine “CSR Awards” for 10 times, in which ranked top 3 in all sectors in Taiwan for 3 consecutive years. • Rank No.1 in Taiwan financial sector for 9 times.

Best Bank in Taiwan (Asiamoney) and the FIR Stratregy of SD • E.SUN Bank received the Best Domestic Bank in Taiwan Award for 3 consecutive years.

Best Bank in Taiwan (The Asset) • E.SUN Bank received Best Domestic Bank in Taiwan award for 2 consecutive years. Governance Best Bank in Taiwan (The Banker) （ • E.SUN Bank received Bank of year award in Taiwan. G ）

Best Practice Awards in Taiwan (Taiwan Academy of Banking and Finance) • E.SUN Bank received six awards in the 8th Best Practice Awards, the winner of all time. • E.SUN Bank received Best CSR award, Best Digital Finance award, Best Wealth Management award, Best Risk Management award, Best SME award and Best Human Resource Development- merit. Social （ S Corporate Governance ） • E.SUN FHC ranked within top 5% of Corporate Governance Evaluation for 2 consecutive years (TWSE). • E.SUN FHC received the Platinum Award for Excellence Management in Corporate Governance in Asia for 7 consecutive years. Environment Most Sustainable Company in Taiwan （

• E.SUN FHC received the Top 10 Most Sustainable Company Award E

for 2 consecutive years. (Taiwan Institute for Sustainable Energy) ）

Best Digital Finance • E.SUN Bank received the award of Digital Champion in Asiapac for two consecutive years. (Gartner) • E.SUN Bank received the award of The First-Ever Digital Banks of Distinction in Taiwan. (Global Finance)

CSR REPORT 2016 - 5 - the Chairman Letter from ESG Performance

In addition to promoting economic development, E.SUN is committed to fulfilling its corporate social responsibilities by contributing its core competencies in areas such as corporate governance, customer service, employee care, environmental protection, and community involvement. E.SUN delivered an performance 2016 outstanding sustainability performance on economic, social and environmental issues in 2016. Sustainable

Consistent growth Consistent growth in total asset for 3 consecutive years Highest in Taiwan's Economy financial sector

1,884,300 13,135 59.75 57.61 55.36 Chronicles E.SUN 12,816 1,775,284 1,566,420 10,529 Engagement Stakeholder 2014 2015 2016 2014 2015 2016 2014 2015 2016 After-tax earnings Foreign shareholding Asset （Unit: NT$ millions）（Unit: %）（Unit: NT$ millions）

2014 2015 2016 Moody's upgraded credit ratings Taiwan Ratings upgradedcredit ratings Taiwan Ratings upgradedoutlook

SD Stratregy of of E.SUN FHC and E.SUN Bank of E.SUN FHC and E.SUN Bank of E.SUN FHC and E.SUN Bank

Upgraded credit ratings or outlook by credit companies for 3 consecutive years

Benefit for over thousand children and the FIR Stratregy of SD Build the second Over 90% for hundred libraries 3 consecutive years Social 21,482,000 20,960,000 110 91.5 91.3 91.5 100 20,528,000 85 Governance （ G ） 2014 2015 2016 2014 2015 2016 2014 2015 2016 Number of E.SUN Libraries Donation to Employee retention children's charities （Unit: %）（Unit: NT$） Social （ S

） in Taiwan FinancialNo.1 sector Decrease for Decrease for three consecutive years three consecutive years Environment

100% 100% 100% 333 325 316 1.68 1.48

Environment 1.29 （ E ）

2014 2015 2016 2014 2015 2016 2014 2015 2016 GHG emissions Energy consumption Water consumption （Unit: t=CO2e/year） per unit area per unit area （Unit: kWh/m2）（Unit: Ton/m2）

- 6 - E.SUN Chronicles

Consolidating – E.SUN’s banking infrastructure the Chairman Letter from

1992 ˙ Establishment of E.SUN Bank. 1994 ˙ Establishment of E.SUN Cultural and Educational Foundation. 2000 ˙ First overseas branch opened in Los Angeles.

˙ Establishment of E.SUN Securities. performance 2016 2001 ˙ E. SUN Bank was awarded the “National Quality Award”. Sustainable

Launching – A new era for E.SUN

2002 ˙ Establishment of E.SUN FHC. ˙ Hong Kong branch opened. Chronicles E.SUN ˙ Establishment of E.SUN Venture Capital.

˙ Founder and Chairman Yung Ren Huang was awarded the “National Quality Award”.

2003 ˙ Establishment of E.SUN Volunteer Foundation.

˙ Establishment of E.SUN Insurance Brokers.

˙ Establishment of E.SUN Investment Consulting. Engagement Stakeholder 2004 ˙ Successful purchase and assumption of Kaohsiung Business Bank. (KBB) Domestic service locations reached 116. 2006 ˙ E.SUN achieved a milestone by receiving 6 awards at the “Taiwan Banking and Finance Best Practice Awards”. 2007 ˙ Representative office in Ho Chi Minh City, Vietnam opened. 2008 ˙ E.SUN Bank was again awarded the “National Quality Award”. SD Stratregy of 2011 ˙ Successful purchase and assumption of Zhunan Credit Cooperative. Domestic service locations increased ten and totaled 132, E.SUN became top 3 among private banks.

Greeting – A wonderful future for E.SUN 2012 ˙ Singapore branch opened. and the FIR Stratregy of SD ˙ Dongguan branch opened, China.

˙ Successful purchase and assumption of Chiayi 4th Credit Cooperative. Domestic service locations increased by four to a total of 136. 2013 ˙ Representative office in Yangon, Myanmar opened. ˙ Invested and held 70% equity share of United Cambodia Bank. 2014 ˙ E.SUN Bank was awarded the “Golden Service Award” for four consecutive year, Governance

making it the 1st in the financial & banking industry. （ G

˙ E.SUN FHC was chosen as constituent stock of the DJSI, and is the first and only financial industry firm in Taiwan ） to receive this honor. ˙ Founder and Chairman Yung Ren Huang was awarded the new “Special Contribution Award” of the “Taiwan Banking and Finance Best Practice Awards”. 2015 ˙ Changan subbranch opened, Dongguan, China. Social （

˙ Dong Nai branch opened, Vietna. S ） ˙ E.SUN FHC set the record as the only one financial institution in Taiwan to be chosen both in "DJSI-World" and "DJSI-Emerging Markets".

˙ E.SUN FHC was awarded the “Excellence in Corporate Social Responsibility Award” for a 7th time, making it 1st in the financial industry. Environment 2016 ˙ E.SUN China sunsidiary and Shenzhen branch opened, the first Taiwanese bank in Southern China Sydney branch in Australia opened. （ E ˙ Yangon Branch in Myanmaropened, the only Taiwanese bank established in Myanmar. ） ˙ E.SUN Bank awarded Best Bank in Taiwan by three international financial magazines —The Banker, Asiamoney and The Asset,recognizing its long-time dedication to sustainable development and sound business. ˙ E.SUN FHC set the record as the only one financial institution in Taiwan to be listed in "DJSI-Emerging Markets" for three consecutive years.

CSR REPORT 2016 - 7 - Stakeholder Engagement the Chairman Letter from

We utilize a number of communication channels to identify issues of concern to our stakeholders. We formulate our management policy and action plans based on the knowledge in order to ensure the needs and expectations of our stakeholders are met. performance 2016 Sustainable

˙Identification of Stakeholder

GRI：102-40、102-42、102-43、102-44 Employee Chronicles E.SUN To identify E.SUN's stakeholders, a Media Customers stakeholder meeting was held and a stakeholder questionnaire distributed to gather comments and opinions of different departments in 2016. Assess- Engagement Stakeholder ment of the questionnaire pursuant to Suppliers Shareholders the five principles of the AA1000 Stake- holder Engagement Standard, which are influence, tension, responsibility, dependency, and diverse perspectives. Communities Government The results were reviewed by the CSR

SD Stratregy of Committee. Stakeholders were divided into seven groups by level of importance.

〈Stakeholders of E. SUN〉 and the FIR Stratregy of SD Note: 1. Communities include neighborhoods around the branches and partners in charity work and environmental causes. 2. Suppliers include affiliated vendors and buyers. Classification of suppliers is shown under 3.5 Supplier Management.

We also re-examined the communication channels and created the CSR section on our website (https://www.esunfhc.com/zh-tw/csr/overview/csr) to satisfy needs of different stakeholders with better precision. A description of the importance of each stakeholder, channels and frequency of communica- Governance tions, issues of concern and our responses are shown in the table below. （ G

） Communication Our response Stakeholders Importance Frequency Issue of concern channels (Corresponding chapter)

Talent and innovation Knowledge Sharing Annual · Human Resource 2.4 Happy Workplace are the key Meetings Management to competitiveness and · Business the foundation to Performance Social （ business sustainability. S

） IT systems and digital On Occupational 2.4 Happy Workplace platforms irregular health and safety · E.SUN e-HR Portal basis · Feedback mailboxes, e.g. Letters to Senior Employees · e-Learning platform Environment Employee Morning meetings Daily Financial Services 2.1 Financial Inclusion （ and Customer 2.2 Digital Finance E

） Experience 2.3 Customer Service

Two-way reporting On Ethical Manage- 1.2 Code of Conduct irregular ment and and Ethics basis Compliance 1.3 Compliance

Employee opinion Annual Human Resource 2.4 Happy Workplace surveys Management

- 8 - the Chairman Letter from

Our response Stakeholders Importance Communication Frequency Issue of concern channels (Corresponding chapter)

Professional education On Human Resource 2.4 Happy Workplace performance Talent and innovation 2016 are the key and training courses irregular Management to competitiveness and basis the foundation to Sustainable business sustainability. Corporate union Quarterly Business Business performance meetings Performance Employee Compliance training Monthly Ethical 1.2 Code of Conduct Management and and Ethics Compliance

E.SUN values customer E.SUN e-Services Daily Consumer Rights 2.3 Customer Service input and focuses on 24-hour customer Protection · Chronicles E.SUN providing a optimal service hotline customer experience · Smart text customer with the customers at service the center and creating · Internet phone value for customers. · Online visitor message board Customer complaint Daily Service quality 2.3 Customer Service hotline and mailbox management Engagement Stakeholder Customer satisfaction Weekly Ethical 1.2 Code of Conduct surveys Management and and Ethics Customers Compliance Visits by customer On Digital Finance 2.2 Digital Finance representatives irregular basis Financial planning and Weekly Financial inclusion 2.1 Financial Inclusion investment seminars Every two

Smile E.SUN Bimonthly SD Stratregy of weeks Sunrise E.SUN Quarterly Quarterly

E.SUN owes its consistent Shareholders Annual Business Business performance growth to the support of Performance its shareholders and Annual reports Annual Business Business performance investors. Performance Investor seminars in Quarterly Corporate 1.1 Corporate

Chinese/English Governance Governance and the FIR Stratregy of SD Announcement of Monthly Ethical 1.2 Code of Conduct business performance Management and and Ethics Compliance 1.3 Compliance Market Observation Monthly Risk management 1.4 Risk management Post System Shareholders Visits by customer On representatives and irregular conference calls basis

Road shows, domestic/ On Governance international institutional irregular

investor seminars, and basis （

investment forums G Board of directors and Quarterly ） functional committees

The financial services Government Annual Anti-money 1.3 Compliance sector is highly performance evaluation Laundering regulated. Policy conferences, On Corporate 1.1 Corporate We comply strictly with a forums, and public irregular Governance Governance Social rigorous set of policies hearings basis （ and regulations. S Official letters, On Risk management ） Government meetings, telephone, irregular 1.3 Compliance email, and public basis 1.4 Risk management information

Consumer Rights 2.3 Customer Service Protection

We believe one simple Forums, workshops, On Environmental 3.1 Climate Change Risks Environment act of love can inspire and charitable irregular sustainbility and and Opportunities others to love. We work or environmental basis Ecological 3.4 Sustainable ecosystem （ with charities campaigns preservaion 3.5 Supplier Management E and environmental ） organizations to make Communities the world a better place. E.SUN Volunteer & Social Weekly Occupational 3.1 Risk and Opportunity of Welfare Foundation and environment Climate Change E.SUN Foundation management 3.3 Low-carbon Operations

GRI：102-43、102-44 CSR REPORT 2016 - 9 - the Chairman Letter from

Our response Stakeholders Importance Communication Frequency Issue of concern channels (Corresponding chapter)

We believe one simple Branch officers serve as Monthly · Social Welfare 2.5 Social inclusion 3.2 Responsible lending performance 2016 act of love can inspire main contact person. · Responsible lending others to love. We work and investment and investment with charities and Sustainable Communities environmental Neighborhood cleanup Daily Environmental organizations to make programs at the Sustainability and 2.5 Social inclusion the world a better place. branches Ecological Protection

Suppliers are E.SUN's Visits by customer Every two Ethical Manage- 1.2 Code of Conduct partners in sustainability representatives, week ment and and Ethics and growth. meetings and email Compliance

On Anti-money Laundering 1.3 Compliance Chronicles E.SUN Suppliers Website disclosure irregular basis Social Welfare 2.5 Social inclusion Interviews and press Quarterly Corporate Media is one of the key 1.1 Corporate Governance channels through which conferences Governance E.SUN provides and Questionnaires and Annual Business collects information and surveys Performance Business performance communicates with stakeholders. Press release Weekly Consumer Rights 2.3 Customer Service Engagement Stakeholder Media Protection Daily Hotlines and email to 2.2 Digital Finance specific departments Digital Finance

˙Materiality Analysis SD Stratregy of

GRI：102-46、102-49、103-1、103-2、103-3

To better understand the connection between issues of concern for our stakeholders and E.SUN's effort to create long term value, in 2016, we refined the way we analyze important topics according to the four principles of the Global Reporting Initiative, which are materiality, stakeholder inclusiveness, sustain- and the FIR Stratregy of SD ability context, and completeness, and the integrated reporting framework. We apply scientific methods to identification of material issues by following the procedure below.

Principles: Sustainability context and stakeholder inclusiveness 1. · Questionnaires are used to collect issues of concern to stakeholders. · Material issues faced by other banks in Taiwan and in other countries and sustainability development Identification around the world, such as the 17 SDGs proposed by the UN.

Governance · The CSR task force gathers and summarizes the list of sustainability issues. （

G Principles: Materiality and stakeholder inclusiveness

） 2. · The process of sustainability issue prioritization by materiality is described as follows. · The departments' score each issue by the economic, environmental, or social impact on the organization internally or externally (e.g. finance, customer loyalty, corporate image, and reputation, degree of strategic integration, and opportunities and competitiveness) and by the degree of stakeholder concern (e.g. level of significance, expected reactions and actions, and expectation of information transparency). · Key representatives of each stakeholder group are invited to complete the CSR Survey for External

Social Prioritization （ Stakeholders to provide a broader understanding of the degrees of external stakeholder concern S

） regarding different issues. · Internal and external results are summarized in a materiality matrix.

Principles: Completeness and stakeholder inclusiveness 3. · Preliminary results are examined by the CSR Committee and modified according to views and

Environment suggestions of the senior management. · With the approval of the executive management, the 2016 materiality matrix contains 18 issues, 12 of

（ which are listed as highly material in the current year. They are also made key points in the disclosure

E Validation herein, which provides details on the strategies for issue response and results. In particular, 6 of the ） issues are listed as material on an ongoing basis. Any major change in related management policies and performance in the current year will still be provided in the report.

4. Principles: Stakeholder inclusiveness and sustainability context · The channels for stakeholder communication will be strengthened and more stakeholder opinions Review collected. The materiality matrix will also be examined for reasonableness during the process.

- 10 - GRI：102-43、102-44 the Chairman Letter from

Results of materiality analysis regarding 18 material issuesof E.SUN in 2016:

Risk Management Ethical Management And Compliance performance 〔High〕 Corporate Human Resource 2016 Governance Management ˙Social Welfare Consumer Rights Sustainable And Information Business Digital Finance Security Performance 〔Low〕 Financial Services And Customer Stakeholder Concern Level Stakeholder Concern Responsible Lending Experience And Investment Operational Environmental Management

Climate Change Financial Inclusion Anti-money Laundering Chronicles E.SUN

Human Rights Environmental Sustainability Protection and Ecological Protection

Workplace Health and Safety

Supplier Management Engagement Stakeholder

Company Impact Level

Comments of the adjusted material issues on the materiality matrix which were different from last year: SD Stratregy of

2017 issues Difference Comments

The rapid growth of Fintech will have a strong impact on the business models in the financial services Digital Finance New issue sector. We are determined to become the industry leader in financial innovations. We have been making progress in digital finance and financial inclusion in recent years. Therefore, the issue of "product and the FIR Stratregy of SD New issue innovation" is divided further into "digital finance" and "financial inclusion" in the current year. Both issues are Financial Inclusion listed as highly material.

As financial markets become increasingly active, domestic and foreign financial regulators are paying a Anti-money New issue lot of attention to money laundering related issues. There have been related incidents in the news in 2016. Laundering Therefore, "anti-money laundering" is added to the list of issues as one of the highly material issues of the year. As the business grows and E.SUN starts operating on a larger scale, we realize the growing importance of ˙Social Welfare Rising corporate social responsibility, and will try to contribute more to charitable causes. Therefore, "social welfare" concern has become more material. Governance We believe employees are our most important asset. Therefore, training, recruitment and selection, Human Resource Integrated employee relations, and compensation and benefits are treated as equally important issues, and, as a result, （

Management issues are all made part of the "human resource management" issue. G ）

Consumer Rights Independent We believe there exist a cause and effect relationship between "consumer rights and information security" And Information issue and and "financial services and customer experience", and priority should be given to protecting consumer Security adjust title rights. Provided customer information is protected by rigorous management, we guarantee consistency in the quality of our customer services. Therefore, the "service quality and consumer rights" issue is divided into "protecting consumer rights" and "service quality management". Financial Services Independent And Customer issue and Social Experience adjust title （ S The financial services sector is not energy intensive, but it pays close attention to the global impact of ） climate change. To formulate appropriate strategies to adapt to and mediate the effects of climate Operational Integrated change, we perform inventories and management of carbon emissions, water consumption and waste Environmental issues generated by our business activities every year. Therefore, the issues, "carbon emission management", "waste Management management", and "energy and water consumption management", remain material on an ongoing basis in the current year.

Our long term commitment to ethical management and compliance with local regulations enables us to Environment deliver a good overall performance. The two sustainability issues, "ethical management" and "compliance",

Ethical （ Management Adjust title are able to complement each other, and so "ethical management" is changed to ""ethical management E

And Compliance and compliance". ）

Business The label "operating performance" is changed to "business performance", an issue that encompasses Performance Adjust title financial results, management performance, and credit ratings.

The label "basic international human rights" is changed to "human rights protection", an issue that Human Rights Adjust title Protection encompasses nondiscrimination, child labor, and forced labor.

GRI：102-47 CSR REPORT 2016 - 11 - the Chairman Letter from

The report describes in detail the real impact of highly material issues on E.SUN's operations. The corresponding GRI topics, management policies, internal/external boundaries of impact, and boundaries of impact are provided in the table below: performance 2016 1 GRI Impact boundary Sustainable GRI topic management Aspect Material Materiality to business of Internal External Issue material policy issue (Corresponding E.SUN Bank Employee shockholders customers Supplier chapter) Explaination of Impact

Business The pursuit of growth and Business Business Perfor- profit is essential to every Performance performance mance company. We believe that a company cannot deliver a Internal operating Operating activities of recipients of activities have a direct loans and investment from E.SUN Chronicles E.SUN consistently positive business Strategy and performance over the long goal of impact on business will have a direct impact on their term without improving the Sustainable performance. business performance and an overall operating efficiency. development indirect impact on E.SUN's financial performance.

Corporate A well established corporate Not 1.1 Governance governance system will applicable Corporate contribute to the stability Governance Corporate Corporate governance at and transparency of a governance has a company's operations. recipients of loans and investment direct impact on from E.SUN will have an indirect

Engagement Stakeholder E.SUN's operating impact on E.SUN's reputation. efficiency as a whole.

Ethical We believe our dedication Anti-corruption 1.2 Manage- to integrity and Code of ment and professionalism is not only Conduct and Compli- the main reason for the Anti-competi- Ethics Operating activities Ethical management and ance continued support and trust tive behavior are linked to ethical compliance at recipients of loans of our customers and the management and and investment from E.SUN will Governance Socioeconomic 1.3 compliance at E.SUN, have an impact on E.SUN's financial general public, but also one compliance Compliance of the drivers of operating and have a direct results and reputation. efficiency. impact on operating Environmental efficiency and corporate reputation.

SD Stratregy of compliance

Risk Effective risk management Not 1.4 Manage- is the only way to ensure applicable Risk Manage- ment efficient use of financial ment A direct impact on Risk management at recipients of resources and reduce or corporate reputation, loans and investment from E.SUN prevent operating risks. financial results and will have a direct impact on E.SUN's operating efficiency. operating efficiency. Anti-money Strict compliance with the Not 1.5

and the FIR Stratregy of SD Laundering Money Laundering Control applicable Anti-money Act prevents money Laundering A direct impact on Anti-money laundering practices at laundering and counters and E.SUN's operating recipients of loans and investment terrorist financing while Anti-terrorism efficiency as a whole. from E.SUN will have a direct reducing operating risks and Financing financial impact on E.SUN and avoid penalty expenses. affects E.SUN's reputation.

Social We believe it is important to Local 2.5 Welfare give back to the community communities Social what we take. We also play Inclusion an active role in charitable E.SUN combines the E.SUN works with its customers in causes and extend our goodwill of its charitable campaigns to make a influence in the society so Indirect employees and its positive difference in society. economic resources to make the

Governance that one simple act of love can inspire others to love. impacts world a better place for everyone. （ Consumer Consumer rights and Marketing 2.3.1 G Rights and personal information are and Labeling Customer ） Information safeguarded with the Protection Security utmost caution so to A direct impact on A direct impact on customer increase customer Customer 2.3.2 E.SUN's operating satisfaction. satisfaction. privacy Customer efficiency. Rrivacy Management

Financial We are constantly improving Not 2.2 Services and the quality of our customer applicable Digital Service Social （ Customer services and providing A direct impact on The quality of financial services has S Experience services in a more ） professional and friendly 2.3 E.SUN's operating a direct impact on customer manner. The goal is to Customer efficiency. satisfaction. create value by Service Society differentiation and increase customer satisfaction.

Human We have been investing in Employment 2.4.1 Resource providing employee training Equal

Environment Manage- and satisfying employee Employment ment Opportunities A well designed needs in various areas for And Employee human resource （ years. It is necessary to Rights management system E encourage employee loyalty will be able to improve ） for a company to stand out efficiency and in the fiercely competitive execution in the coliseum atmosphere that is 2.4.2 workforce. It is also the the financial services sector. Compensa- tion And niche on which E.SUN Benefits And relies to build its core Employee competencies and Assistance long term growth. Programs

- 12 - GRI：102-47 the Chairman Letter from

1 GRI Impact boundary GRI topic management Aspect Material Materiality to business of Internal External Issue material policy issue (Corresponding E.SUN Bank Employee shockholders customers Supplier performance chapter) 2016 Explaination of Impact

Labor/ 2.4.1 Sustainable Management Equal Relations Employment Opportunities And employee Rights

Training and 2.4.3 education Education And Training

Diversity and 2.4.1 Chronicles E.SUN Equal Equal Opportunity Employment Opportunities and Employee Rights

Financial Financial inclusion was No 2.1 inclusion made a material issue for application Financial the first time during the 2016 Inclusion G20 Hangzhou Summit. The A company can It allows more customers and move will have an effect on reduce marginal cost customers with little access to the development of and improve financial services to enjoy more Engagement Stakeholder financial services sectors in operating efficiency friendly financial services. many countries. E.SUN tries by embracing to adopt international financial inclusion. standards in its business strategies. Hence, E.SUN will work actively to achieve financial inclusion, make financial services more widely available, and increase customer satisfaction.

Digital Trends in the development of No 2.2 SD Stratregy of finance Fintech are prompting application Digital financial institutions around Finance the world to invest heavily in The corporate culture, Digital banking services are mobile networks, cloud strategies and changing consumer habits. computing, big data and organizational other digital technologies. structures have to be We have been investing in reformed in response digital finance for years and to the progress in is committed to become the digital finance (or leader in financial innovation. Fintech)

We work not only to improve and the FIR Stratregy of SD efficiency of financial services, but also to make us more competitive in the global market.

Responsible The financial services sector No 3.2 lending and plays a crucial role in the application Responsible investment global transition to a low lending and carbon economy. We have Investment Reducing the negative Indirect improvement of adopted the Equator impact on E.SUN's environmental or social Principles, and implemented operating efficiency. performance of recipients of loans rigorous social and and investment from E.SUN.

environmental risk Governance assessments and management systems Environment accordingly in order to （ prevent parties with high G

environmental or social risks ） from becoming recipients of loans from E.SUN and to increase our reputation and influence.

Note: Social 1. Impact boundary takes into account stakeholders in the value chain. （ S ）

Sustainable Development Goals

In 2015, the United Nations adopted 17 Sustainable Development Goals (SDGs) and 169 targets, which established a clear sustainability vision and the priorities. Countries around the world are uniting and working toward the common goal to end all forms of poverty, fight inequalities and tackle climate change by 2030. Environment

E.SUN FHC's progress in SDGs （ E ） In support of the SDGs of the 2030 Agenda proposed by the UN in 2015, E.SUN FHC followed the SDG Compass and assessed the SDG risks and opportunities arising from business activities in the value chains in 2016. All positive and negative effects at present or in the future were taken into account when we set our goals. Hence, we build E.SUN's sustainability strategy around the 17 SDGs and effectively bring to life the ideology of the SDGs. In addition, the SDGs are incorporated into the business targets, and the five working groups of the CSR Commit- tee work together on the project to complete top-down implementation of the SDGs. The aim is to make real improvement of the global sustainability issue. The relevance between 17 SDGs and E.SUN FHC material issues and the actions taken in 2016 are listed in the table below.

GRI：102-47 CSR REPORT 2016 - 13 - the Chairman Letter from

E.SUN Material Issues SDGs （˙Highly material issues Actions in 2016 Corresponding chapters/sections in current year）

1. No Poverty Financial Inclusion · Small Business lending 2.1.2 performance 2016 · e-Click Online loan application Delivering financial innovations, · Microinsurance facilitating social and economic

Sustainable development

2. Zero Hunger Financial Inclusion · Food Assistance Program 2.1.2 Social Welfare · Microinsurance policies Delivering financial innovations, facilitating social and economic development

· E.SUN Maravi 2.5.2 Community involvement series

3. Good Health And Well-being Financial Inclusion · Retirement trust 2.1.2 Chronicles E.SUN Human Resource Delivering financial innovations, facilitating Management social and economic development Social Welfare · Group insurance 2.4.2 Workplace Health Compensation and benefits and employee And Safety assistance programs · Employee health 2.4.4 Workplace safety and employee health

Engagement Stakeholder · Workplace health and safety

· Blood donation 2.5.2 Community involvement series

4. Quality Education Human Resource · Cultivate employees 2.4.3 Education and training Management Social Welfare · E.SUN Golden Seed Project 2.5.1 Academic education series · NTU Hope Seed Program

· Google Ignite Project

SD Stratregy of · E.SUN Hackathon · SAS Data Mining Project Competition

· TIP Internship Program

· E.SUN Academic Award · E.SUN Scholarships for Outstanding Managerial Talents and the FIR Stratregy of SD · International Masters Forum

5. Gender Equality Corporate Governance · Diverse board members 1.1 Corporate Governance Human Resource Management · Unpaid parental leave 2.4.1 Equal employment opportunities and employee rights · Friendly workplace 2.4.4 Workplace safety and employee health

6. Clean Water And Sanitation Responsible Lending And · Responsible lending and investment 3.2 Responsible lending and investment Governance Investment Operational Environmental · Organizational Water Inventory 3.3 Low-carbon Operations

（ ˙ Management G · Mountain and beach cleaning ˙Environmental Sustainability 3.4.3 ） and Ecological Protection Promoting environmental sustainability

7. Affordable And Clean Energy Responsible Lending And · Responsible lending and investment 3.2 Responsible lending and investment Investment ˙Operational Environmental · Energy management 3.3 Low-carbon Operations Management Social （ 8. Decent Work And Economic Social Welfare · Responsible lending and investment 3.2 Responsible lending and investment S Supporting culture and creativity industries ） Growth Responsible Lending And Investment Financial Inclusion · Digital loans 2.1 Financial Inclusion Digital Finance · Upgrading banking services in Human Resource underdeveloped countries Management · Electronic payment 2.2. Digital Finance Environment · E.SUN Golden Seed Project 2.5.1 Academic education series （ · E.SUN Scholarships for Outstanding E

） Managerial Talents

· E.SUN Academic Award · E.SUN Hackathon · Google Ignite Project

· SAS Data Mining Project Competition

- 14 - the Chairman Letter from

E.SUN Material Issues SDGs （˙Highly material issues Actions in 2016 Corresponding chapters/sections in current year）

· NTU Hope Seed Program performance 2016 · TIP Internship Program

· Finance Knowledge Carnival Sustainable

· International Masters Forum

· Employee education and training 2.4.3 Education and training · Continuing education or examinations for employees · Inspiring innovation e-Learning platform Chronicles E.SUN 9. Industry, Innovation Responsible Lending And · Supporting SMEs 3.2 Responsible lending and investment And Infrastructure Investment · Upgrading banking services in 2.1.2 underdeveloped countries Delivering financial innovations, facilitating social and economic development

10. Reduced Inequalities Ethical Management And · Employees' human rights 2.4.1 Compliance Equal employment opportunities Financial Inclusion and employee rights Engagement Stakeholder Human Resource · Strengthening compliance with 1.3 Compliance Management international financial regulations ˙Human Right Protection · Digital loans 2.1 Financial Inclusion · Financially friendly websites

11. Sustainable CitiesAnd Responsible Lending And · Equator Principle 3.2 Responsible lending and investment Communities Investment ˙Operational environmental · Green Building 3.3 Low-carbon Operations

managmeent · Promoting E.SUN Youbike 3.4.3 Promoting environmental sustainability SD Stratregy of ˙Environmental Sustainability and Ecological Protection · Donations to Southeast Asia 2.5.2 Community involvement series Social Welfare 12. Responsible Consumption Responsible Lending And · Equator Principle 3.2 Responsible lending and investment And Production Investment ˙Operational environmental · Promoting the government's energy 3.4.2 managmeent efficiency subsidies Supporting environmentally friendly ˙Supplier Management products

· Environmental sustainability account and the FIR Stratregy of SD · E.SUN credit card supporting carbon reduction · Green procurement 3.5 Supplier Management

13. Climate Action Responsible Lending And · Climate change risks and opportunities 3.1 Climate change risks and opportunities Investment Climate Change · Equator Principle 3.2 Responsible lending and investment Operational Environmental · Internal carbon reduction measures 3.3 Low-carbon Operations Management Environmental Sustainability 3.4.2

· Credit card carbon neutrality Governance and Ecological Protection Supporting environmentally friendly products （ 14. Life Below Water Environmental Sustainability · Mountain and beach cleaning 3.4.3 Promoting environmental sustainability and Ecological Protection G ）

15. Life On Land Environmental Sustainability · Taiwan Formosan Bear conservation 3.4.1 Taiwan Black Bear Conservation Project and Ecological Protection Social （ S 16. Peace, Justice And Strong Anti-money Laundering · Ethical Corporate Management Best 1.2 Code of Conduct and Ethics ） Institutions Risk Management Practice Principles 1.4 Risk Management Corporate Governance 1.5 Anti-money Laundering and · Risk management system Anti-terrorism Financing · Anti-money Laundering

· Upgrading banking services in 2.1.2 17. Partnerships Social Welfare Environment underdeveloped countries Delivering financial innovations, For The Goals Financial Inclusion

facilitating social and economic （ development E ） · Donations to Southeast Asia 2.5.2 Community involvement series

CSR REPORT 2016 - 15 - Stratregy of Sustainable development and the framework of Integrated Report the Chairman Letter from

GRI：102-15

Since E.SUN was founded, we uphold a business philosophy of "expertise, service, and business." And performance 2016 corporate culture reflects its 3+1 business philosophy: “realism, strength, responsibility,”“teamwork, harmo-

Sustainable ny, happiness,” “leadership, excellence, honor,” and “contentment, cherishingrelationships, and gratitude.” The most important value is responsibility, which demonstrates that E.SUN should be responsible for employees, shareholders, society, country and whole world. It is the key to achieve sustainable development.

Mother Teresa : "Love is on the needs of others, and sees its own responsibilities." E.SUN is well aware of Chronicles E.SUN the love for fellow human beings and the environment behind these responsibilities. True love is selfless. True love is about giving everything. One simple act of love can inspire others to love.

Hence, as it sets out on the path to sustainability, E.SUN makes the commitment to LOVE: Engagement Stakeholder

LOVE SD Stratregy of

L O V E

Leading Innovation Outstanding Governance Value Co-creation Environmental Sustainability

Corporate Environmental

and the FIR Stratregy of SD Customer Equity Group Employee Care Group Governance Group Sustainability Group

Community Community Employee Care Group Customer Rights Group Involvement Group Involvement Group

Customer Rights Group

E.SUN continues to rely on "System, People, and E.SUN, starting with itself and its E.SUN invests in the develop- innovation to create long Information" are the three employees, combines financial ment of green finance and Governance term value for itself and its keys to sustainable expertise and exercises its core reduce or eliminate the impact

（ stakeholders. E.SUN invests in development. E.SUN is competencies to coordinate caused by industries on the

G innovation of processes, committed to adopting internal resources, while taking environment by adopting

） innovation of products and international governance advantage of cross industry responsible lending and services, innovation of standards and building a alliances and working with responsible investment policies. business models, innovation banker's bank. partners to extend its influence E.SUN campaigns for green of ecosystems, and to households, customers, products, energy efficiency, innovation of management suppliers and other enterprises conservation, environmental practices and joins the effort in order to encourage progress education, and local commit- of creating a brighter future. in the society. ment as its contribution to green Social （ living and a sustainable S

） environment. Environment （ E ）

- 16 - the Chairman Letter from

E.SUN follows a 3i strategy, Innovation, Integration, and Influence. It performance promotes corporate social responsibility on an ongoing basis by innovation 2016

making a long term commitment and taking a systematic approach Sustainable to combine core competencies in financial services. 3i Going forward into another decade, E.SUN established three sustain- integration influence ability strategies in 2012, which were taking a big leap in overall performance, becoming Asia's distinguished bank, and becoming a leader in financial innovation. Chronicles E.SUN

Taking a big leap in overall performance means building a stronger presence in Taiwan and advancing into top 3 or top 5 in terms of core businesses. All world class financial institutions had secured their positions in their own countries before venturing into other countries. Becoming Asia's distinguished bank means developing an Asian network to provide opportunities in integrated cross border financial services and Engagement Stakeholder emerging Asian markets. Becoming a leader in financial innovation means becoming a leader in technology. In a volatile environment, IT technology, customers' needs, and regulations are constantly changing. E.SUN will meet the challenges of the future by innovation.

策略與架構 6 Capitals Strategy Stakeholders Stakeholders SD Stratregy of Financial Capital Financial Innovation Financial performance ˙Asset size: ˙Invest more in fintech, including ˙Net profit after tax: $13.135 billion emerging payment methods, $1.78 trillion cross border payment services, Employees ˙Earnings per share (EPS): $1.50 and mobile payment services. ˙ ˙Expand the scope of fintech Return on equity (ROE): 10.35% Human Capital training by launching the TMA ˙Return on assets (ROA): 0.71% ˙Number of employees: program. ˙Integrate real and virtual

7,914 channels and develop digital Human Resource Management and the FIR Stratregy of SD Customers ˙ banking services, including the Average training hours e-Click Loan Application, digital ˙Number of employees: 8,326 per person: foreign exchange services, ˙Employee engagement: hours digital financial planning 97.9% 49.1 services, and the e-Click Online Card Application. ˙Employee retention: 91.5% Manufacturing Capital Shareholders ˙Nationwide branch count: Overall Performance Number of branches and sale offices 136 ˙Facilitate channel transformation ˙Nationwide branch count:137 and construct the New Branch ˙ATM count: 628 System so that both real and ˙ATM count: 667 digital channels provide warm Government Governance ˙Overseas offices: and memorable services. ˙Overseas offices:

7 countries and regions ˙˙ Strengthen relationship with SMEs 8countries and regions （

and global finance customers G with 24operating sites with19 offices and make E.SUN professionals the ） most reliable partners for business owners. Communities Intellectual Capital Digital Finance ˙R&D investment: Asia Deployment ˙Percentage of digital service users: 81.23% 279,659,000 ˙Identify opportunities for setting up overseas offices and build a Suppliers Social Responsibility Social

cross border financial services （ Social Capital platform in Asia. ˙Reaching more than 386,609people S

˙Team up with international ） ˙Community involvement platforms and create the most investment: reliable Taiwanese bank for Environmental Protection Media $295 million Taiwanese businesses operating across borders. ˙Review by the Equator Principles: Approved 2cases Natural Capital ˙Greenhouse gas emission in 2016:

˙ Environment Implementing the Equator Principles 20,188.499 carbon dioxide equivalent tons (CO2e) ˙Environmental management systems ˙Organizational water footprint in 2016: （

ISO14064 137,894.60m3 E ） ISO14046 ˙Black Bear Conservation seminars were ISO14001 attended by more than1,000 people ISO50001

〈Strategy and Integrated Reporting Framework〉

CSR REPORT 2016 - 17 - the Chairman Letter from

Results and short- and medium/long-term goals of E.SUN's sustainability practices in 2016:

Aspect Issue 2016 Target 2016 Result 2017 Target Medium/Long SDGs performance 2016 term goals

．．．． Sustainable Corporate To assess international To devise long term Hold board elections to Continue to observe Governance trends in corporate incentive programs for bring different expertise domestic and governance and refine executives and key and diversity into the international regulatory long term incentive persons and start to boardroom; elect trends and adopt programs for executives implement said reputable independent international standard in and key persons programs in 2017. directors from different sustainable develop- accordingly. ．To complete evaluating backgrounds and a ment by participating ．Following the performance of the chief independent domestic and amendment of the board and directors director; and appoint international Board of Directors and implement an independent directors evaluations and Performance Evaluation additional criterion, as conveners of the certificates. Policy in 2015, the "regular review of Audit Committee, the ．Continue to support the company started corporate sustainability", Corporate Governance capabilities of all conducting self-assess- so that the overall and Nomination functional committees

Chronicles E.SUN ments and peer reviews evaluation encompass- Committee, and the and bring diversity and on the board of es 5 aspects and 49 Remuneration professional capabilities directors to enhance indicators. Committee. into the boardroom by board performance in ．The board of directors ．Refine the board having directors with 2016. as a whole had an director performance different areas of ．To continue refining attendance rate of evaluation process, expertise, sex and age. corporate governance 97.62%. such as external practices and ．The company was evaluation. Continue to participating in external named a Certified increase director evaluation. Company in involvement by keeping CG6010(2015) by the the percentage of full Corporate Governance attendance at 95% or Association in Taiwan, higher. and was ranked in top ．Strengthen corporate Engagement Stakeholder 5% in the Corporate governance system by Governance Evaluation participating external Award by Taiwan Stock evaluations. Exchange Corporation for two years in a row.

Ethical ．Amend the guidelines ．Complete the ．Amend the E.SUN FHC ．Continue to uphold the management for donations in order to amendment of E.SUN internal control system culture of ethical strengthen subsequent Bank Donations and improve the management by and management of Guidelines and require effectiveness of the establishing integrity as compliance stakeholder donations. regular reporting of three lines of defense. the most important ．Implement tax utilization of stakeholder ．Amend the compliance principle for E.SUN governance policies in donations exceeding guidelines for E.SUN FHC employees and making response to develop- NT$5 million and the and E.SUN Bank and it one of the key

SD Stratregy of ment in international tax status of donation plans. strengthen compliance performance indicators. governance. ．Complete the management of ．Achieve a coverage ．Plan and implement establishment of tax overseas branches. ratio of 99% in compliance training governance policies ．Continue to observe compliance training, and self-assessments and the board of domestic and and have more than and modify key points in directors as the ultimate international regulatory 99% of employees pass said training and decision making trends and enable the compliance assessments according authority regarding the employees to better self-assessments by to domestic and policies. Tax comply with the 2020. international governance policies regulations. Plans have ．Continue to strengthen development. The key have to be reasonable been made for 500 compliance manage- points in 2016 are and transparent, compliance classes for ment systems for expected to be encompass all decisions 10,000 participants and overseas branches. confidentiality, and facilitate active a target pass rate of and the FIR Stratregy of SD protection of communication. 99% on the semiannual Governance intellectual property ．Achieve a coverage compliance self-assess- rights, conflict of interest ratio of 100% in ments. and anti-corruption education and training, regulations. and have more than 99% of employees pass the compliance self-assessments.

Risk ．Country risk: ．Make the addition of ．Optimize the risk ．Continue to following Management To refine the maximum 19-level calculation calculation systems for 5 the philosophy of "no exposure to country risk method of national risk major asset categories business is risk free" and and the early warning limits and early warning and validation strengthen risk system mechanisms in order to mechanisms for financial management monitor closely changes engineering models in mechanisms and the risk ．Credit risk: in national risks. 2018. management culture in Governance To implement model ．Introduce a comprehen- ．Construct maximum order to ensure effective validation and sive range of validation credit risk appetites that risk management,

（ strengthen model mechanisms for credit are consistent with discipline and surveillance risk models and mainstream international procedures and to make

G complete validation of frameworks and relevant risk management one of ．） Market risk: the credit risk models for to the business units, and the pillars on which To strengthen the 6 major products in order optimize internal risk E.SUN creates long term capability of estimating to monitor consistency appetite governance value. the risk of financial and effectiveness of framework and ．Integrate the risk products trading. models in risk mechanisms. information and identification. ．Introduce operational management platform ．Operational risk: ．Strengthen the financial risk management (ERLC) in the bank by To extend the trading systems and systems and manage- 2020, and build an early standardized approach complete the ment tools to all E.SUN warning system for for operational risk to calculation methods for overseas branches. Risk market risks in order to include overseas offices the risk weights of 28 management monitor closely changes Social

（ financial products in self-assessment from 15 in financial markets. order to facilitate steps in the processes ．Implement 2nd

S estimation of potential are expected to be generation risk appetite ） losses on financial summarized and 5 mechanisms based on transactions. training sessions be 29 dynamic and ．Start implementing provided in order to prospective macroeco- management more effectively nomic scenarios and mechanisms in the manage operational risk cycles related standardized profiles and raise macroeconomic stress approaches for awareness of tests in order to refine calculating operational operational risks. E.SUN's stress testing of risks in overseas offices, credit risks. including E.SUN China ．Continue to improve the

Environment subsidiaries and the operational risk Sydney Branch. management system Summarize risk and operational risk （ management management analysis in order to significantly E self-assessments from 3

） steps in the processes in improve efficiency, order to improve reduce labor input, operational risk refine system checks, management at enhance management overseas offices. synergy, and focus on potential major risks.

- 18 - the Chairman Letter from

Aspect Issue 2016 Target 2016 Result 2017 Target Medium/Long SDGs performance term goals 2016

Anti-money ．Equip employees with ．Facilitating professional ．Continue to provide ．Reinforce the bank as a Sustainable laundering professional knowledge devel-opment for training so that whole so it is better and capabilities of employees: There are 17 employees are better equipped to combat money laundering employees who are equipped to combat money laundering and prevention, and cer-tified anti-money money laundering; and set the target of 100% of encourage employees encourage employees laundering specialist in certain departments the employees involved handling related (CAMS). to obtain CAMS in the process having activities to become ．The quality of certification with the national or international Certified Anti-Money investigation of target of 90% or more of certification. Laundering Specialist suspicious transaction the employees involved ．Continue to follow trends (CAMS). The target is reports by dedicated in relevant processes in international having 50% or more of unit enhanced having CAMS anti-money laundering the employees involved significantly. E.SUN’s certification. regulations, strengthen in relevant processes case success rate was ．Build and enhance anti-money laundering Chronicles E.SUN having CAMS protection of intellectual skills of domestic and 42.68% in 2016, which property rights in certification. outweighed industry mechanisms monitoring overseas branches, and ．Make the bank better average at 10.65%. suspicious transactions in complete an integrated professionally equipped ．Received the Best AML E.SUN's anti-money global anti-money to combat money Implementation in laundering system. laundering system. laundering, implement Taiwan Award under the ．Optimize or implement standards consistent Asian Banker's anti-money laundering Governance with international Technology Implementa- systems in Taiwan and regulations and trends, tion Awards 2016 for overseas (e.g. help and actively seek efficient reporting of overseas branches recognition in the form suspected money implement automated

transaction monitoring Engagement Stakeholder of awards in Taiwan or laundering transaction. systems and blacklist overseas. scanning features), ．Continue to enhance refine logics monitoring the efficiency of suspicious transactions suspicious transaction (e.g. changing reports. E.SUN’s result parameters), make was 20% higher than overseas branches more industry average for skilled at combating assisting competent money laundering (e.g. provide education and authority to observe training and create a 策略與架構 the illegal cases. communication platform by instant messaging), and start building an integrated

anti-money laundering SD Stratregy of system across the bank.

Human ．To create a friendly ．To create a friendly ．To create a second ．E.SUN believes resource workplace and workplace and continue home for E.SUN employees should give continue to improve to increase employee employees by making the opportunity to shape management working conditions and benefits. The benefit cost plans for E.SUN Childbirth their future. The employee benefits. The per employee for Incentive Program, company is constantly benefit cost per nonmanagement which will offer a reward fine-tuning human employee is expected employees will increase of NT$100,000 for each resources to encourage to increase by 5%. by 12% to NT$1.111 baby born to an E.SUN good employees to ．Education and training, million. The annual employee. To provide become better. The as the average age of employee retention rate better employee employee retention rate and the FIR Stratregy of SD employees decreases, is 91.5%. benefits than those is expected to hold at start shifting toward ．To support a fast required by law. 90% or higher in 2020. fintech, wealth growing business, the ．As education and ．E.SUN employees are management, cross company hires young training are increasingly E.SUN's most important border services and talent from different tailored to younger asset and one of its other long term fields. The average employees, the primary stakeholders. priorities. The company number of employees in company plans to E.SUN is constantly expects to hire 600 new 2016 increased by 412. recruit a total of 500 making the workplace employees and expand 23% of newly promoted individuals from the fields the second home for the scope of job managers from the last 5 of information employees. rotation. The company years were under 40 technology, math and ．As part of its long term expects to organize 2 when they were statistics, risk manage- development strategy, Mid-level Officer training promoted. ment, and business and E.SUN strengthens ． courses for the middle In 2016, 2 mid-level finance. Job rotation will training and job rotations Governance management. officer training courses be made available, and across different roles and ．To assess international were attended by 272 management training departments in order to trends in human rights participants; and 438 and middle manage- help employees （

and establish the E.SUN cross department or ment training programs become more G human rights cross functional rotations will be in place. competitive. management system to took place. The average ．To improve the human ） protect human rights. number of training hours rights management per person was 49.1 system and to work with hours. business partners in ．To devise the E.SUN safeguarding human Social Statement of rights. The scope is Commitment to Human expected to be Rights and establish the expanded to include E.SUN human rights key suppliers.

investigation project. To Social appoint the Corporate （

Social Responsibility S Committee to be the ） unit in charge and to review human rights issues on a quarterly basis.

Social Welfare ．E.SUN Golden Seed ．E.SUN Gold Seed ．Plans have been made ．200 E.SUN Libraries are Program: The project Program: Host the E.SUN for donations to build 15 expected to be completed by 2020 to donated to and built Library Appreciation E.SUN Libraries. Environment 100 E.SUN libraries in press conference to ．The Concern for improve the reading 2015. A Golden Seed celebrate 100 E.SUN Schoolchildren Program environment for

elementary school （ Thank You event was Libraries, and launch the is expected to make children living in remote held in 2016 to 2nd 100 E.SUN Library donations to 10,000 areas and plant seeds of E celebrate the 100th Project. 10 new libraries students in the coming hope by helping them ） library milestone and to were added in 2016, year. learn to read. promote a new Golden and a total of 110 ．The talent scholarship is ．The E.SUN Academic Seed Program. libraries were opened by expected to be Award has a 5-year plan ．Concern for the end of the year. awarded to 15 that expects to invest a Schoolchildren Program: ．The Concern for recipients. total of 40 million by 2020 The donations are Schoolchildren Program ．The reach of charitable to improve quality of estimated to help 10,000 made donations to research in higher campaigns is expected education. children every year. 10,000 students in the to be extended to ．Donations were made to current year, and a total overseas offices. support remote areas in of 36,000 donations Taiwan and Southeast have been made so far. Asian countries.

CSR REPORT 2016 - 19 - the Chairman Letter from

Aspect Issue 2016 Target 2016 Result 2017 Target Medium/Long SDGs performance 2016 term goals

Sustainable ．E.SUN continues to offer ．The Outstanding the Outstanding Management Talent Management Talent Scholarship was Scholarship. An rewarded to 15 estimated 10 to 15 recipients in 2016. scholarships are ．Starting in 2016, the awarded every year. E.SUN Academic Award ．The E.SUN Academic is extended to include Award is currently National Taiwan working with National University, National Taiwan University. The Chengchi University, project is expected to National Tsing Hua start expanding to University and National include other top Chiao Tung University. A Chronicles E.SUN schools in 2016. total of 11 professors received the award in the current year. ．Launch Donations to Southeast Asia.

Fintech and ．To boost the overall ．The official E.SUN ．To continue to refine the ．The target is to become Financial usage volume of the website is visited 50 e-Click Loan Application a leading digital official E.SUN website, million times a year. and be first to offer banking brand and a inclusion improve e-Click E.SUN is first to offer online loan services for technology leader by services, increase e-Click mortgage small businesses. 2020. e-Click mortgage services that provide ．To develop innovative ．Electronic payments: To Engagement Stakeholder services, and provide ．online mortgage quotes. payment services and have electronic more friendly, Integrating payment be one of the first banks payments account for easy-to-use digital tools and offering E.SUN in Taiwan to support 52% of total spending in banking services. Wallet for consumers Apple Pay. Work with five years. ．To promote electronic and E.SUN Pay for leading cross border ．Mobile services: To have payment services by merchants have led to a payment service mobile services account providing integrated 127% growth for providers in Japan and for 80% of total digital payment services for affiliated merchants. Southeast Asia. services in five years. merchants and a The new mobile banking ．To continue to make diverse range of mobile app for Android was digital services more payment platforms. It is launched in October. It common and easier to expected that the received the highest use. The total number of affiliated rating among banking percentage of digital merchants will double ．apps. Foreign currency service users is expected SD Stratregy of and electronic transactions increased to reach 83%. payments will be used by 76% and transfers by by more people. 34%. ．To revamp the mobile To support channel banking app for a transformation and better customer encourage customers to experience. use electronic services. The total percentage of digital service users has reached 81.23%.

Financial ．A digital flagship branch ．To open the first digital ．Two new digital flagship ．It is E.SUN's vision to be and the FIR Stratregy of SD services and is expected to be flagship branch in branches, including an exemplar for the Social opened to facilitate a Taiwan, which is Taichung Dadun digital financial industry and a customer new generation of designed to combine flagship branch and the benchmark for the experience branches combining innovative technologies Tainan Jinhua digital service industry that technologies and arts and arts and culture. flagship branch, are now provides warm and and culture. ．To stay updated of open and E.SUN memorable services. ．To keep abreast of market developments. becomes the first bank market developments. Triggered 19 response in Taiwan to open digital To provide comprehen- measures against major flagship branches in sive, instant and secure events. To provide northern, central, and response measures customers with a southern Taiwan. against major events. To comprehensive, ．New branches are develop the "FES professional assessment designed in line with Financial Management" of events and to launch latest fintech into a more friendly the "FES (Fast, Easy and developments. The Governance financial planning Smart) Financial target is to build 25 new system. Management" as a digital branches and （．To combine Fintech friendly transaction tool. specialty branches in ． G trends and promote To develop real/virtual 2017. branch transformation. integration of various ） To have independent channels to make units conduct branch branches more efficient. service evaluation and The overall branch expand the scope of performance was given satisfaction surveys. a score of 92.01 points.

Consumer ．To improve service quality ．To establish the E.SUN ．Raise awareness of ．Install comprehensive Rights and and protect customers' Bank Fair Customer information security in information security

Social rights. To strengthen the Treatment Policy and the workplace and upgrades, including （ Information credit card purchase Strategy and to refine enforce online constantly improving IT

S Security notification service for service quality. To information security security management ） better protection and introduce the credit card training and self-assess- systems and peach of mind for purchase push ments. 2 information mechanisms and raising customers. notification on mobile security seminars and awareness of IT security ．Following the ISO 27001 banking services, which training are expected to management practices (ISMS) certification in sends instant push be organized. in the workplace. 2015, to ensure effective messages, regardless of ．To respond to ．To advance toward internal/external amount, on the app in international trends in uninterrupted information security addition to the sms information security and information services. The testing and conduct message notification for establish a comprehen- target is for information

Environment regular audits in order to purchases of NT$1,000 or sive information security service availability to reduce information more. system to increase reach 99.95% by 2020. security risks. ．To conduct regular information service （．To promote information internal information availability to 99.86%.

E security training and raise security testing, and, in ） awareness of information addition to semiannual security in the workplace. independent audits, to hire external information security experts to perform complete inspections. ．Held 2 social engineering seminars to raise awareness of information security.

- 20 - the Chairman Letter from

Aspect Issue 2016 Target 2016 Result 2017 Target Medium/Long SDGs performance term goals 2016

Responsible ．Since adopting the ．E.SUN finished ．To enforce responsible ．Take into account of Sustainable lending and Equator Principles in implementing the credit and investment fulfillment of corporate 2015, the target has processes in 2016 and and to evaluate and social responsibility and investment become implementing complete issued 2 loans adjust credit and commitment to the appropriate accordingly. investment policies. To environmental processes and ．The bank invests 57% of give investment priorities sustainability when complete assessments its bond portfolio in to DJSI and GS Sustain issuing a loan or accordingly. sustainable enterprises. Focus List companies. investing in a company. ．To utilize the bond ．To support green energy. ．To continue to support Companies that have investment portfolio to The total outstanding green energy. The target clearly caused damage support sustainable balance of Project is to have the to the environment or companies. It is Sunroof loans is NT$578 outstanding balance of the society as a whole expected 50% or more million, and the total Project Sunroof loans will be rejected if they of the portfolio will be power generated is 18 grow by 50% by 2018 continue to fail to make Chronicles E.SUN invested in DJSI million kW. compared to 2016. improvement after companies. ．It will be expected to meeting with the bank. issue green bond in ．Continue to enhance Taiwan in 2017, and the domestic economic fund raised will be used growth by supporting entirely on projects that SMEs. make real improvement to the environment. Examples of such projects include development of renewable energy and Engagement Stakeholder energy technology, conservation of water resources, cleaning or recycling and reuse, and reduction of greenhouse gases. 策略與架構 Business ．To conduct ISO 14064 ．Received certificate of ．Continue to 100% ．Reduce carbon environment Greenhouse Gas ISO 14064 Greenhouse conduct ISO14064 emission, water management Inventory, including Gas Inventory by SGS greenhouse gas consumption and waste Environment Scopes 1, 2 and 3 and and expand the scope inventory and ISO14046 generated by 1% per

to expand the scope of to all business units in organizational water year. The target is a total SD Stratregy of inventory. Taiwan. footprint in all branches reduction of 10% by 2025 ．To conduct ISO 14046 ．Received certificate of and expand scope to and another 10% Organizational Water ISO 14064 Organizational other subsidiaries and reduction in carbon Footprint Inventory and Water Footprint overseas. emission by 2030. expand the scope of Inventory by SGS and ．Continue to encourage inventory. expand the scope to all new branches and ．To expand the ISO 14001 business units in Taiwan. buildings to be certified and ISO 50001 ．Complete ISO 14001 and as green buildings. environmental and ISO 50001 certification ．To continue to energy management and expand the scope implement energy systems. to include the efficient measures with ．To promote priorities to headquarters building, the target of a 1% green building licenses Dunnan Branch and reduction per person per and the FIR Stratregy of SD for newly constructed Fuxing Branch. year. branches and buildings. ．The Hope Building was completed in 2016 and received the Gold Grade Green Architecture Certificate.

Environmental ．To advocate ．Have issued 15,169 ．Continue to organize ．Offer long term support sustainability conservation of Taiwan Formosan Black Bear and support animal for animal conservation black bears and issue Affinity Cards to sponsor conservation and and environmental and the Formosan Black the premiere of the environmental sustainability in Taiwan conservation Bear Affinity Card. The documentary Black Bear sustainability campaigns. and urge members of company expects to Forest. E.SUN also plans to the public to come Governance sponsor filming of Black ．Organized and establish branch with a together and take

Bear Forest, scheduled supported 39 events to theme of Formosan action. （ to be in theater in 2016. promote animal Black Bear conservation. ．To organize animal conservation and ．Continue to work with G

education and environmental partners to promote the ） environmental sustainability, which E.SUN Youbike sustainability events. were attended by campaign. It is ．Following Taiwan's first 10,000 participants, in expected that E.SUN credit card to receive 2016. credit cards will be used international and ．Credit cards (E.SUN ETC 2 million more times to national carbon EasyCard credit participate in the labeling certification, card/Signature credit campaign in 2017. the company expects card) underwent to conduct another another carbon footprint Social carbon footprint inventory. The process （

inventory in 2016. involved production S

improvement and ） electronic statement campaigns. Carbon emission during a credit card's life cycles was reduced by up to 17% to 1.1kg CO2. The company also received a carbon footprint reduction certificate. ．Continue to work with Environment partners to promote the

E.SUN Youbike （ campaign. E.SUN credit E

cards have been used ） 6.07 million times to participate in the campaign at the end of 2016.

CSR REPORT 2016 - 21 - Business Overview

Leading the Chairman Letter from in excellence ˙Business strategy

GRI：102-1、102-2、102-3、102-4、102-6、102-7、102-10

Pioneering Helmed new frontiers by experts performance 2016 Sustainable Chronicles E.SUN Engagement Stakeholder

Vision

We believe our strength is decided by our vision. E.SUN Bank has long remained dedicated to upholding our core values of honesty and integrity. Having created a refreshing and professional brand image, we are SD Stratregy of determined to build a business that will stand the test of time. A quarter of a century later, E.SUN is still holding itself up to the highest standards and aims to be not only the best performing, but also the most respected enterprise. We believe that, in addition to making a commitment to the operations of a financial institution, E.SUN employees will have to fulfill corporate social responsibility before they can be considered world class citizens and E.SUN a first rate corporate citizen. and the FIR Stratregy of SD Following our commitment to the community and our support for corporate social responsibility and sustainability, we have established the E.SUN Foundation and the E.SUN Volunteer & Social Welfare Foundation. The foundations operate under the guidelines of "love and care" and "one simple act of love can inspire others to love", and act as a medium for E.SUN and its employees to make contributions to the community. E.SUN hopes, with these efforts, to establish itself as the most preferred bank and a favorite of the local community. Governance （

G Establishment Date 2002-01-28, E.SUN Bank established on 1992-02-21 ） Headquarters Taipei, Taiwan Paid-in Capital 87,654

Total Asset 1,884,300 Social

（ Number of employees 8,326 S

） Subsidiaries E.SUN Bank - E.SUN China - Union Commercial Bank, Cambodian E.SUN Securities - E.SUN Investment Consulting Environment - E.SUN Venture Capital （

E BankPro e-Services Technology ） E.SUN Foundation E.SUN Volunteer Foundation

（Unit: NT$ million） As of December 31, 2016

- 22 - the Chairman Letter from

An exemplar for the financial industry and a benchmark for the service industry performance An exemplary individual possesses both good character and real talent, and demonstrations all-round achievement in ethical, 2016 intellectual, physical, social skills, and aesthetic education. E.SUN seeks to have the best self-discipline and greatest self Sustainable demands in the financial industry, consistently upholds a steadyand straight business style, and has established a fresh new professional brand and image. Over the course of twentyfourth years, our professional management, optimal service, superlative quality, demanding corporate governance, excellent risk management, and constant attention to our corporate social responsibilities has helped us to boost standards in Taiwan's financial and service industries.

E.SUN employees strive to be first-class citizens of the world, Chronicles E.SUN E.SUN endeavors to become a first-rate global corporate citizen

Apart from their refreshing professionalism in the workplace, E.SUN's employees are also full of warmth and concern. In the spirit of "a smile will inspire even more smiles" and "one simple act of love can inspire others to love," E.SUN employees strive to act as first-class citizens of the world. Because E.SUN believes that the meaning of its existence is to increase human welfare, beyond focusing on its corporate business, it is also actively concerned about social development, environmental protection, its Engagement Stakeholder responsibilities to society, and the promotion of art and culture. We feel that only by fulfilling our social responsibilities can we truly contribute to human welfare and act as a first-rate global corporate citizen.

Taiwan’s E.SUN, the World's E.SUN

Thanks to the unstinting efforts of E.SUN's management and all employees, E.SUN's brand, service, and team have won the trust and affirmation of customers and society. We will continue our dedicated efforts as we strive to transform E.SUN into one of SD Stratregy of Asia's distinctive banks. We look forward to seeing E.SUN thrive and shine on the international financial stage.

Corporate business philosophy and the FIR Stratregy of SD

Named after the highest mountain in Taiwan, we are determined to be the best bank in Taiwan.We aspire to be the best-performing, and most respected financial institution in Taiwan. Since it was founded, E.SUN has made establishment of institutional systems, cultivation of talents, and development of information technology the three pillars of its quest for long-term sustainability, and upholds a business philosophy of "expertise, service, and business." Following continuous. Governance （ G ）

Expertise Service Business Social （ S ） When Taiwan first permitted the E.SUN's service begins with a smile, and Toward our employees, we seek to establishment of new banks in 1992, leaves customers with a feeling of warmth. cultivate professional manpower and E.SUN was the only approved bank We listen to our customers, strive to satisfy provide a superior work environment. without support from conglomerates or customers' needs, exceed our customers' Toward our customers, we seek to provide government. Instead, E.SUN has relied on expectations, and win an even greater optimal service and create the largest

a professional management team mindshare of customers', with the goal of possible value. Toward our shareholders, Environment formed of outstanding managers and making E.SUN a leading financial industry we rely on sincerity and fresh expertise to （ other superb individuals to establish a brand in customers' mind. create outstanding overall performance. E

professional navigation system and Toward society, we hope to promote ） create a true "banker's bank." public welfare by boosting economic development.

CSR REPORT 2016 - 23 - the Chairman Letter from

Service network performance 2016 Sustainable In April 2017, E.SUN FHC operated a service network that comprised of 137 branches under E.SUN Bank and 18 branches under E.SUN Securities in Taiwan. E.SUN continues to innovate and improve its services, combining advanced digital technologies with arts and culture in digital branches in northern, central and southern Taiwan to bring customers the distinctive branch experience. The Taipei Branch (the flagship service outlet featuring digital banking and arts) is the first branch to combine fintech and arts. Meanwhile, Xinban (with a Chronicles E.SUN cultural and aesthetic theme), Xinyi (with classic decorations), and Taichung (the wealth management hub featuring a musical theme) have all been exquisitely designed to give customers the best combined experience of banking service, arts and culture. Engagement Stakeholder SD Stratregy of With regards to digital channels, E.SUN prides itself for being the innovator that brings customers the best banking experience. By utilizing a variety of service networks including Internet banking, mobilebanking, website, customer service center, automated service equipment and branches, the Company aims to deliver the most secured, convenient and custom-tailored financial services that help improve customers' lifestyles. and the FIR Stratregy of SD Governance （ G ） Social （ S ） Environment （ E ）

- 24 - GRI：102-6 the Chairman Letter from

Overseas Expansion performance 2016 Sustainable

With regards to the overseas service network, E.SUN has set its goals to develop distinctive service features that distinguish itself from other Asian banks. Driven by a business strategy to focuses on "expansion into Asia with roots in Taiwan.", the Company continues to expand operating sites outside Taiwan, and currently has 24 operating sites across 8 countries and

regions. Currently E.SUN has two subsidiaries, China and Cambodia. E.SUN's Cambodian Chronicles E.SUN subsidiary - Union Commercial Bank PLC (UCB) currently has 13 branches in Cambodia. The subsidiary will continue its fundamental establishment in the future, as it is the key for E.SUN entering the ASEAN market. E.SUN China subsidiary was established on January, 2016, in which it was not only the first Taiwanese bank upgraded from branch to subsidiary, but also the first Taiwanese bank in southern China. It has four operating sites, including Headquarters, Dong- Engagement Stakeholder guan Branch, Shenzhen Branch and Dongguan Changan Sub-branch. Furthermore, the Com- pany has 6 existing overseas branches, including Los Angeles, Hong Kong, Singapore, Dong Nai (Vietnam), and Sydney (Australia), and Yangon (Myanmar). In particular, E.SUN Yangon branch was established on October, 2016, which is the first and only Taiwanese bank receive license in Myanmar. In the Meantime, E.SUN will continue searching for entry opportunities into other Asian markets. The Company is making preparations for the establishment of Tokyo

Branch in Japan and Jakarta representative office in Indonesia. SD Stratregy of

In the future, E.SUN aims to provide quality cross border financial service through integrated and efficient platform. so that we can create optimize value for shareholders. and the FIR Stratregy of SD

LA Hong Kong Singapore Dongguan UCB Chang'an Dong Nai China Sydney Yangon Tokyo （2000）（2002）（2012）（2012）（2013）（2015）（2015）（2016）（2016）（2016）（2017）

Taiwan Overseas Virtual channels

˙137 branches ˙4 operating sites under E.SUN Bank (China), ˙CALL Center Governance ˙14 corporate banking centers China subsidiary ˙Personal Online Banking ˙11 operating sites under Union Commercial Bank, （ ˙16 consumer banking centers ˙Corporate Online Banking Cambodian subsidiary G ˙ ˙ ） 16 wealth management centers ˙Hong Kong Branch Mobile Banking ˙18 securities branches ˙Los Angeles Branch ˙WebATM ˙Singapore Branch ˙ATM, Foreign currency ATM ˙ Sydney Branch and iPayment ˙Dong Nai Branch (Vietnam) ˙E.SUN e-Customer Service: ˙Yangon Branch (Myanmar) Social ˙Hanoi City Representative Office (Vietnam) customer service hotline, （ S

smart customer service, ） Voice Over Internet Phone (VoIP) and visitor message board

〈Distribution channels〉 Environment

Services and Products （

Consumer Banking, Corporate Banking, Wealth Management, Trust Service, E

E.SUN Bank ） Financial Products, Internet Banking, Mobile Banking, Credit Card.

E.SUN Securities Brokerage, Underwriting, TMU, Margin Trading, Fixed Income Investment, E-Commerce.

E.SUN Venture Capital Invest in unlisted but promising restructuring of businesses that hold long-term potential.

E.SUN Insurance Brokers was merged with E.SUN Bank on March 25, 2016

GRI：102-6 CSR REPORT 2016 - 25 - the Chairman Letter from ˙Business Performance

GRI：102-5、102-7、201-1 performance 2016

Sustainable E.SUN was founded with an expertise-driven management that made a long term commitment to creating value for stakeholders and to listening to the voices of shareholders and investors. The business management style combines internal stability and external flexibility. Short- and long-term strategies are modified in response to changes in circum- Chronicles E.SUN stances. Excellent business results are achieved by teamwork and disciplined innovation and execution.

Engagement Stakeholder Financial performance

E.SUN's overall performance continued to grow in 2016 with another record breaking earnings of NT$13.135 billion. The EPS, ROE, and ROA were NT$1.50, 10.35% and 0.71%, respectively. Loan services maintained steady growth and the outstanding balance increased by 9.2% in the year. Regarding asset quality, E.SUN

SD Stratregy of has been keeping it at a sound level with an NPL ratio of 0.19% and an NPL coverage ratio of 630%.

Category 2014 2015 2016

Total assets 1,566,419,858 1,775,283,931 1,884,300,190 Management capabilities Equity 107,661,346 121,660,898 129,181,358 and the FIR Stratregy of SD Net income 32,754,519 38,489,329 41,064,832 Net profit attributable to parent company shareholders 10,528,552 12,816,347 13,135,212

Return on assets (%) 0.73 0.78 0.71

Profitability ROE (%) 11.11 11.23 10.35

EPS (NT$) 1.56 1.63 1.50 Governance Employee salaries and benefits 8,347,056 9,057,587 10,184,405 （

G Dividend to shareholders 7,550,027 9,521,550 11,370,931 ）

Economic value Tax 2,688,166 3,125,729 3,602,654 distributed 1 Investment in community involvement 259,056 227,364 295,073 Expenditures in studies and campaigns 2 of financial industry policies 15,208 23,320 19,025 Social （ Political donations3 0 0 0 S ）

（Unit: NT$ thousand）

Note: 1. Investment in community involvement includes cash donations, contributions of time, donations-in-kind, management

Environment expenses. Details are shown in chapter 2.5 Social Inclusion. In addition, details of major plan of investment in

（ community involvement are shown in Appendix IV Economic Value Distributed (EVD) Indicators of the CSR Report.

E 2. Major organizations of policy studies and campaigns include: Bankers Association, Trust Association, Securities ） Association, Corporate Governance Association and other organizations involved in finance related policy studies and campaigns. Details are shown in Appendix IV Economic Value Distributed (EVD) Indicators of the CSR Report. 3. E.SUN is politically neutral and makes no political donations whatsover. The cumulative sum of political donations remains 0 over the years.

- 26 - the Chairman Letter from

0.43 0.43 0.28

1.00 Cash Dividend performance 0.89 0.87 2016 Stock Dividend Sustainable

2014 2015 2016 （year） Note:

〈Dividend payment in past three years〉 Dividend payment in 2016 was distributed by 2015 distributed earnings.

Business Performance Chronicles E.SUN

E.SUN achieved significant and balanced growth across all service categories in 2016, and reported good results in all key service categories.

E.SUN ranked 1st Consumer lending The cumulative credit The fee income from Engagement Stakeholder among private banks increased by14% card spending was wealth management in SME lending, to NT$ 91.0 billion. NT$ 300.1 billion. services increased by Won the Excellent SME The 18.9% growth rate 12%. st Credit Guarantee ranked 1 among Partner Award for the Tier 1 banks. 11th time. SD Stratregy of Corporate Banking Consumer Banking Credit cards Wealth management

〔Overseas expansion〕 E.SUN has 24 operating sites across 8 countries and regions, including China, Hong Kong, Singapore, USA, Australia, Vietnam, Cambodia and the FIR Stratregy of SD and Myanmar. E.SUN China sunsidiary opend on January, 2016. Australia branch opend on April, 2016. Myanmar branch opend on October, 2016, which is the first and only Taiwanese bank open branch in Myanmar. E.SUN will use completely overseas sites to privde customer comprehensive corss border financial services.

Credit Rating Upgrade Governance

E.SUN received rating or outlook upgrade from international credit rating companies for three consecutive （ years. In 2016, Taiwan Rating Company raised E.SUN FHC and E.SUN Bank’s outlook from stable to positive. G ） Recognized E.SUN’s strength in diversified franchise and superior asset quality. It also emphasizes that continuously business diversification will support E.SUN’s core earning. 3.15%

Global Global Credit Rating Agency long-term rating short-term rating Outlook Social （

17.19% S

Moody's Baa1 P-2 Stable ） E.SUN FHC S&P BBB- A-3 Stable 24.30% 55.36% Taiwan Rating Company Positive twA+ twA-1 - 32 -

Moody's Stable A3 P-2 Environment

E.SUN Bank S&P BBB A-2 Stable （ E

Foreign Institutions and Natural Persons ） Taiwan Rating Company twAA- twA-1+ Positive Domestic Natural Persons Other juridical Person Financial Institutions Note: Data as of December 31, 2016 〈Shareholder Structure〉

CSR REPORT 2016 - 27 - Governance the Chairman Letter from

E.SUN builds its corporate governance practices on honesty and integrity and its code of ethics. Resources are introduced from various sources to create a consistent internal system and an internal audit procedure, effectively ensuring E.SUN's business activities comply with the regulations and reducing and preventing operational performance 2016 risks. E.SUN strives to create long term value for its employees, shareholders, customers, other companies and the society as a whole. Sustainable

˙ 1.1 Corporate Governance

GRI： 102-18、102-22、102-23、102-26 Chronicles E.SUN E.SUN continues to support the capabilities of the board of directors and management of the management team while dedicating itself to increasing transparency to protect shareholders' rights and fulfill its corporate social responsibility. E.SUN ranked among Top 5% in the Corporate Governance Evaluation by TWSE for the second consecutive year (1st Evaluation and 2nd Evaluation). The honor was recognition of E.SUN's commitment to corporate governance and the results it achieved. The E.SUN FHC gover- Engagement Stakeholder nance framework is shown below.

Shareholders’ meeting SD Stratregy of

Audit Committee Board of Directors

Corporate Govermance and Nomination Chairman Auditing Division

and the FIR Stratregy of SD Independent Directors Remuneration Committee and Directors General Auditor

Board Strategy Develpoment Committee

Corporate Social Responsibility President Committee CEO of Consumer Banking Headquarter Division Governance CEO of Corporate Banking （ G ）

CEO of Overseas Business Units

Asset & Liabillity Social （ Management Committee S ） President

Human Resource Strategy Development Risk Development Committee Committee Management Committee CHO CSO CRO Environment

（ Investment Total Quality Information Technology

E Management Committee Management Committee Strategy Committee ） CFO CBO CIO

〈Governance framework of E.SUN FHC〉

- 28 - the Chairman Letter from

˙Diverse board members

E.SUN is equipped with a well-designed director election system. All directors are elected through a fair, open and just process that complies with the Articles of Incorporation and the Director Election Rules. Board com- performance position and diversity standards are considered with care so that the board will consist of experts from the 2016

financial service sector, the industries and the academia and include 4 independent directors from different Sustainable backgrounds. All members of the board must be equipped with the knowledge, skills, literacy and a general skill set necessary to perform their duties. In addition, directors will be provided with a variety of courses that help them gain a better understanding of their fields and fulfill their duties of loyalty and due diligence as business decision makers and leaders.

7 board meetings were called in 2016, and 97.62% were in person by all members. The board of directors has Chronicles E.SUN access to full and transparent information and works as a whole to make plans for the company's future in areas such as organizational development, performance enhancement, business development and risk management through extended discussions and deliberations. The board of directors makes decisions that have a material impact on the company and serves to oversee the management team. Keeping a clear communication channel between the parties will help the board of directors perform their functions. Engagement Stakeholder

Board diversity:

Financial services 100%

Investment 100% SD Stratregy of

Management 100%

Financial accounting 58%

Electronics/Technology/Information 58% and the FIR Stratregy of SD Biomedicine 25%

Real estate brokerage 25%

Ground transportation 25%

Food and drink 17% Governance

Textile 17% （ G ）

Directors by background Social 17% （ S 50~59 17% ）

83% 50-59: 2 Male: 10

83% Environment Over 60 Over 60: 10 Female: 2 （ E ）

〈Directors' age group〉〈Directors' gender group〉

GRI：102-22、102-23、102-24、102-26、102-33、405-1 CSR REPORT 2016 - 29 - the Chairman Letter from

Education, Independence Criteria Position Name Gender Current Position and Experience of Outside Director performance 2016 Education：Department of Cooperative Economics at

Sustainable National Chung Hsing University Chairman Yung-Jen Huang Experiences：Chairman of E.SUN Bank, V President of E.SUN Bank Education： MBA of the City University of New York Current Position:：President of E.SUN FHC and E.SUN Bank, Director Joseph N.C. Huang Managing Director of E.SUN Bank Not Applicable Experiences：Chairman of E.SUN Venture Capital

Education：Master of Public Administration at Harvard University Director Gary K.L.Tseng Current Position:：Chairman of E.SUN Bank V Chronicles E.SUN Experiences：Director of Banking Bureau, Financial Supervisory Commission Education：Kai-Nan Commercial & Technical High School Director Jackson Mai Current Position:：Chairman of Hsin Tung Yang Co.,Ltd., V Managing Director of E.SUN Bank Experiences：Chairman of Shang Yang Development Co.,Ltd. Education：PhD of Department of Accounting at University of Minnesota Current Position:：Dean, College of Management, National Taiwan University V Independent Chen-En Ko Director Independent director of E.SUN Bank

Engagement Stakeholder Experiences：Chairman of Taiwan Corporate Governance Association

Education： PhD of Business Administration, University of Illinois, USA ： Independent Current Position: Professor of International Business at Ji-Ren Lee National Taiwan University, V Director Independent director of E.SUN Bank Experiences：CEO of EMBA, National Taiwan University

Education：Master of Mathematics and Statistics of University of Michigan Current Position:：Independent director of E.SUN Bank, Independent Chen-Chen Chang Lin Managing Director of E.SUN Bank V Director Experiences：Chairman of Financial Information Service Co., Ltd.,

SD Stratregy of Vice President of Engineering Office, Institute for Information Industry

Education：Bachelor of Department of Mechanical Engineering, National Cheng-Kung University Current Position:：Director of Yulon Motor Co.,Ltd., Independent Director of China Motor Co.,Ltd., V Director Hsin-I Lin Independent director of E.SUN Bank, Experiences：Vice President of the Executive Yuan, Minister, Ministry of Economic Affairs Chairman of Industrial Technology Research Institute and the FIR Stratregy of SD Education：Chu Nan Junior High School Current Position:：Chairman of Fu Yuan Investment Co.,Ltd., Director Ron-Chu Chen Director or E.SUN Bank V Experiences：Chairman of Nien Hsing Textile Co.,Ltd. Education：Chung Jung High School Current Position:：Chairman of Shang Li Car Co.,Ltd. Director Chien-Li Wu Director or E.SUN Bank V Experiences：Chairman of Shen Li Investment Co.,Ltd. Education：EMBA, University of Tennessee, Knoxville.

Governance Director Magi Chen Current Position:：CFO of E.SUN FHC and E.SUN Bank, Not Applicable Director or E.SUN Bank

（ G ） Experiences：Deputy president of E.SUN FHC and E.SUN Bank

Education：Department of Business Administration at Soochou University Current Position:：Deputy president of E.SUN FHC, Director Ben Chen CEO of consumer banking division and Not Applicable Director of E.SUN Bank Experiences：Deputy president of E.SUN FHC and E.SUN Bank

Note: 1. The fifth board of directors were elected on June 20, 2016. Board members are appointed for three-year term. Social （ 2. Please refer to 2016 annual report for more information on director’s nationalities and positons within other companies. S

） · The director must not have been employed by the company in an executive capacity within the last five years. · The director must not accept or have a “Family Member who accepts any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current fiscal year or any of the past three fiscal years”, other than those permitted by SEC Rule 4200 Definitions. · The director must not be a “Family Member of an individual who is, or during the past three years was employed by the company or by any parent or subsidiary of the company as an executive officer.” · The director must not be (and must not be affiliated with a company that is) an adviser or consultant to the company or a member of the

Environment company’s senior management. · The director must not be affiliated with a significant customer or supplier of the company.

（ · The director must have no personal services contract(s) with the company or a member of the company’s senior management.

E The director must not be affiliated with a not-for-profit entity that receives significant contributions from the company.

） · The director must not have been a partner or employee of the company’s outside auditor during the past three years. · The director must not have any other conflict of interest that the board itself determines to mean they cannot be considered indepen- · dent. 3. Joseph N.C. Huang, Magi Chen and Ben Chen are Executive Director, so they are not applicable for the independence of Outside Director.

- 30 - GRI：102-22、102-23、102-24、102-26 the Chairman Letter from

˙Board performance evaluation system

To ensure a functioning board of directors and effective corporate governance, E.SUN has established the Board of Directors Performance Evaluation Policy. The board of directors and functional committees under- performance go annual evaluations based on their performance in the previous year. The results will be reviewed by the 2016

Corporate Governance and Nomination Committee and then submitted to the board of directors. Assess- Sustainable ment forms are completed by directors for themselves (self-assessment) and for other directors (overall performance) at the beginning of each year. The board meeting organizer will consolidate the assessment results and make suggestions for improvement. The results will subsequently be presented for the chairman's review. For the purpose of ensuring effective performance evaluation of directors and supervisors of subsidiaries, facilitating corporate governance practices and providing a basis for remuneration and director/su-

pervisor nominations, E.SUN has established separately the Directors/Supervisors Performance Evaluation Chronicles E.SUN Policy for Subsidiaries. Directors and supervisors appointed to companies in which E.SUN holds directly 100% of the voting shares will have to undergo evaluation according to the rules. Furthermore, E.SUN FHC has also established performance evaluation processes for the functional committees under the board of directors. E.SUN is the first financial holding company to create objective assessment mechanisms based on indicators such as operational discipline, material decisions and results of the functional committees in order to ensure Engagement Stakeholder the committee fulfills their purposes.

Items in overall board performance evaluation:

Involvement in company management Quality of board decisions SD Stratregy of

Internal control The board composition and structure and the FIR Stratregy of SD

The selection of suitable board directors and further studies

〈Five dimentions to evaluate board performance〉 Governance Note: 49 factors （ G ）

Attendance Participation Role of Quality of Professional and personal & directors decisions knowledge Interaction development Social （ S ）

〈Five issues to evaluate board performance〉

Note: 15 factors Environment （ In 2016, the item, "regular inspections of sustainability practices", was made one of the indicators in the board of directors’ E ） performance evaluation process in the interest of creating short-, medium- and long-term value for the company and achieving sustainability. In 2017, E.SUN reviewed the performance of the board of directors and functional committees in 2016. The overall performance was in line with corporate governance principles. The functional committees served their purposes as intended and effectively making the board more effective.

GRI：102-28 CSR REPORT 2016 - 31 - the Chairman Letter from ˙Competent functional committees

To ensure an effective board of directors and refine the quality of board decisions, the Audit Committee, the Corporate Governance and Nomination Committee, the Remuneration Committee, the Board Strategy performance 2016 Development Committee and the Corporate Social Responsibility Committee are created by authority and

Sustainable function under the board of directors and responsible for deliberating proposals and major issues in the economy, the environment and the society as a whole. All functional committees comprise entirely or partially of independent directors to add vision, objectivity and comprehensiveness to various decisions and suggestions made by committees. The design ensures the committees supervise and check the board's decisions and all proposals are submitted to be discussed and resolved by the board. If a conflict of interest exists for a director or the legal person they represent with a specific matter on the agenda, then the director may not take part

Chronicles E.SUN in the discussion and said agenda should be submitted to be discussed by the board of directors for stakeholders' best interest. Responsibilities and status of functional committees are shown in the table.

· Fair representation of the financial statements. · Appointment/Dismissal of financial statement auditors, independence and performance. Engagement Stakeholder Responsibilities · Effective implementation of internal control. · Compliance with regulations and rules. Audit · Management of existing or potential risks. Committee · Audit Committee is composed of four independent directors (Chen –En Ko, Ji-Ren Lee, Chen-Chen Chang Lin, Hsin-I Lin). Independent director Chen–En Ko is the convener. Status · Meetings are called on a quarterly basis and as needed. · 5 meetings were called in 2016, and the average attendance was 100%.

· Soundness of organization and system of corporate governance and effectiveness of the ethical management policy.

SD Stratregy of · Search, review, and nomination of director, independent director and supervisor candidates of E.SUN Responsibilities and its subsidiaries. Corporate · Construction and development organization of the board of directors to ensure an appropriate board Governance composition. and · Nomination or review executive candidates. Nomination Committee · Corporate Governance and Nomination Committee is composed of four independent directors (Chen –En Ko, Ji-Ren Lee, Chen-Chen Chang Lin, Hsin-I Lin) and four directors (Jackson Mai, Yung-Jen Status Huang, Joseph N.C. Huang, Gary K.L.Tseng). Independent director Ji-Ren Lee is the convener. · Meetings are called at least once a year and as needed. and the FIR Stratregy of SD · 2 meetings were called in 2016, and the average attendance was 100%.

· Formulate and regularly review performance of the directors and executives and the remuneration policies, systems, standards and structures. Responsibilities · Regularly review and formulate director and manager remuneration. · Submit remuneration packages to the board of directors for approval and summarize for the committee Remuneration members the company's overall level of remuneration. Committee · The Remuneration Committee is composed of four independent directors (Chen –En Ko, Ji-Ren Lee, Chen-Chen Chang Lin, Hsin-I Lin), and Chen-Chen Chang Lin is the convener. Status · Meetings are called at least twice a year and as needed. Governance · 4 meetings were called in 2016, and the average attendance was 100%. （ G ） · Report strategic development goals or other major strategy-related matters that affect the Responsibilities development of the company to the board of directors.

Board Strategy · The Board Strategy Development Committee is composed of four independent directors (Chen –En Ko, Development Ji-Ren Lee, Chen-Chen Chang Lin, Hsin-I Lin) and six directors (Yung-Jen Huang, Joseph N.C. Huang, Committee Status Gary K.L.Tseng, Jackson Mai, Ron-Chu Chen, Chien-Li Wu). Chairman is the convener. · Meetings are called at least once a year and as needed. · 2 meetings were called in 2016, and the average attendance was 100%. Social （ · Stipulate the annual plans and strategic directions of corporate social responsibility (CSR)

S · Establishment of CSR projects and activity plans ） · Follow up and review the implementation outcomes of annual plans, strategic directions, projects and Responsibilities activities. · Compilation and accreditation of CSR reports Corporate · Decide on matters related to the media's evaluations of CSR. Social · Other decisions related to CSR. Responsibility · The committee is composed of two directors (Yung-Jen Huang, Joseph N.C. Huang) and four executive Committee

Environment officers (CHO Jyh-Cherng Wang, CRO Oliver Shieh, CMO Bright Wen, CBO Daniel Tsai), Chairman is the convener.There are five dieicated groups under the committee.

（ Status · The committee convenes at least once a year, and ad hoc meetings can be called as needed. The meetings will be chaired by the convener or a member of the committee named by the convener. E

） · 4 meetings were called in 2016, and the average attendance was 100%.

- 32 - GRI：102-19、102-20、102-21、102-26、102-31 the Chairman Letter from ˙Independence and conflict of interests of Board of directors

E.SUN FHC elected four independent directors at shareholders’ meeting on June 20, 2014, all board members were appointed for three-year term.Over 30% of Board members are independent directors. E.SUN drafted performance 「Rules Governing the Scope of Powers of Independent Directors」, the content includes「If an indepen- 2016

dent director objects to or expresses reservations about the matter, it shall be recorded in the board meeting Sustainable minutes」,「The Company or any Board members shall not interrupt, refuse or circumvent the independent directors from carrying out their duties.」and「The independent directors, when carrying out their duties, may request the Board to appoint relevant personnel to professional specialists for assistance as they deem necessary.」Above rules not only help independent directors dedicate to their duties and also effecitvley enhance the function of Board and overall performance of the Company. Chronicles E.SUN To facilitate business development and to take into account of business needs, 3 directors also serve as managers of the company. 75% of the boards is outside director. To ensure fairness, the "Stakeholder Transaction Policy" has been created as a means to regulate security of transactions conducted between the company and subsidiaries with stakeholders. The policy requires all transactions to be conducted in confidentiality, fairness, and utmost full faith in the best interest of the company. Furthermore, measures must be taken to Engagement Stakeholder prevent conflict of interest and exploitation of illicit gains.

According to E.SUN FHC Rules of procedure for meetings of its board of directors, if any director or a juristic person represented by a director is an interested party with respect to any agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interests of the company, the director may not participate in discussion or voting

on that agenda item, and further, shall enter recusal during discussion and voting on that item and may not SD Stratregy of act as another director's proxy to exercise voting rights on that matter.

Recusals of Directors due to conflicts of interests:

Directors Motion Reason for recusal Voting participation situation and the FIR Stratregy of SD

· Joseph N.C. Huang Top-level manager 2015 Motion is related to the Recusal of Joseph Huang following the reporting of · Magi Chen year-end interests of the director year-end bonus distribution for top-levelmanagers · Ben Chen bonus distribution plan below vice president. Magi Chen and Ben Chen did not participate in the discussion and voting of resolutions.

· Joseph N.C. Huang Salary adjustments for Motion is related to the Recusal of Joseph Huang following the adjustment of · Magi Chen top-level interests of the director salaries for vice presidents or below. managers Magi Chen and Ben Chen did not participate in the · Ben Chen Governance discussion and voting of resolutions. （ G ）

· Joseph N.C. Huang 2015 Employee Bonus Motion is related to the Did not participate in discussion and voting of · Magi Chen Distribution interests of the director resolution. · Ben Chen Plan for Top-Level Managers

· Joseph N.C. Huang Top-level manager 2016 Motion is related to the Recusal of Joseph Huang following the reporting of · Magi Chen year-end interests of the director year-end bonus distribution for top-levelmanagers · Ben Chen bonus distribution and long term below vice president. incentive distribution plan Magi Chen and Ben Chen did not participate in the Social discussion and voting of resolutions. （ S ） · Yung-Jen Huang Nomination for the Motion is related to the Did not participate in discussion and voting of · Joseph N.C. Huang Company’s sixth interests of the director resolution. · Gary K.L.Tseng term board of · Jackson Mai directors · Ron-Chu Chen

· Chien-Li Wu Environment · Magi Chen （

· Chen –En Ko Nomination for the Motion is related to the Did not participate in discussion and voting of E ） · Ji-Ren Lee Company’s sixth interests of the director resolution. · Chen-Chen Chang Lin term board of · Hsin-I Lin independent directors

GRI：102-25 CSR REPORT 2016 - 33 - the Chairman Letter from ˙CSR governance

E.SUN FHC established a corporate social responsibility committee (CSR Committee) in 2011. The chairman serves as the committee’s convener, and there are five working groups to handle theissues of corporate performance 2016 governance, social welfare, environmental sustainability, customer rights, and care for employees. The work-

Sustainable ing groups effectively integrate resources and boost efficiency; there were a total of 30 working group conferences in 2016. In addition, the company regularly reports CSR strategies and implementation results to the board. As a rule, the company employs systematic and well-planned methods to achieve the long-term fulfillment of its corporate social responsibilities.

E.SUN has long been followed “E.SUN FHC Corporate Social Responsibility Best-Practice Principles”, “Corpo-

Chronicles E.SUN rate Governance Best-Practice Principles” and “Ethical Corporate Management Rules, Operating Proce- dures, and Action Guide”. In addition to incorporating CSR-related subject matter in new recruits training and various professional training programs, in dailylife also encourage employee playing volunteer spirit. We can make the society better and maximize the social influence of the company’s CSR measures.

Engagement Stakeholder Board of directors

Corporate Social Responsibility Committee SD Stratregy of CSR team

Corporate Social Environmental Customer Employee Governance Responsibility Sustainability Rights Welfare

General Affairs Division Headquarters Division, General Affairs Division General Affairs Division General Affairs Division (legal), General Affairs General Affairs (management), (customer services), (human resources),

and the FIR Stratregy of SD Division (shareholder Division. (manage- Business Management Business Management Headquarters Division. relations), Compliance ment) Section (corporate Section (consumer Team, Business banking), Investment banking), Business Management Section Management Division, Management Section Unit (risk management), Financial Manage- (credit card), Business Auditing Division. ment Section. Management Section (wealth), Business Management Section (IT), Business Management Section. (fintech) Governance Formulating an Bringing the E.SUN Establishing detailed Implementing Complying with （ G ） appropriate Volunteer & Social targets and methods customer services and applicable labor organizational Welfare Foundation of achieving protection of their regulations; providing structure to facilitate and the E.SUN environmental rights and investing in effective education independence of the Foundation together in conservation and financial service and training for board of directors, support of charitable energy efficiency; innovation and employees; and transparency of the causes, such as major building and development in order offering an organiza- company, and disaster relief, promoting an to offer a comprehen- tion that facilitate effective implementa- academic research, environment for a sive line of financial career development. CSR Mission tion of compliance, education and sustainable lifestyle; services. internal audit and training, and reaching and being responsible Social （ internal control. out to minority groups. for preparation and

S Fulfilling corporate amendment of the ） social responsibility in E.SUN Energy various areas and Efficiency White Paper. exercising influence to make a difference. Environment E.SUN conveys complete corporate information to external parties through an established network of com- （

E munication channels. The network encompasses a complete and diversified line of channels, including a ） spokesperson, a public relations department, an investor relations department, a shareholder affairs department, and an official website. In addition to engaging shareholders and investors effectively, E.SUN also relies on the network to gather comments and opinions from external parties, which will be given to the management to facilitate decision making.

- 34 - GRI：102-19、102-20、102-21、102-26、102-31、102-32 the Chairman Letter from

E.SUN FHC's investor communication procedures: performance Information is disclosed voluntarily to the public regularly and 2016 ˙ during quarterly investor seminars and semiannual press

Spokesman conferences in order to ensure that investors, shareholders, Sustainable media and other stakeholders are aware of changes in the company's business overview, financial conditions and development strategies as soon as these changes occur. E.SUN always holds an online investor seminar in English on the same night after an investor seminar in Chinese in order to Public keep investors around the world engaged and up to date. Relations The official E.SUN FHC website is equipped with investor ˙ relations section in both Chinese and English. The pages are Chronicles E.SUN updated regularly and provide information of concern to stakeholders, including a company profile, material information, historic dividend distribution, monthly revenues, details of shareholders meeting, credit ratings, and other documents Investor required by law. Contacts are also made available to Investor Relations communication stakeholders as part of a two-way communication channel. channels Business performance, EPS, financial data, and material Engagement Stakeholder ˙ information are disclosed regularly and filed with the competent authority as required. The prospectus or annual report is prepared as required, and Stock ˙ Service business decisions and financial/business results disclosed accordingly. Department 策略與架構 SD Stratregy of

E.SUN FHC website

Annual Report Operating Shareholder Analyst Summary Meeting Meeting and the FIR Stratregy of SD

2016 Investors Communication performance

˙Total number of press conference: 2 ˙Total number of 1 on 1 meetings: 144 ˙Total numberof overseas roadshow or conference: 6 ˙Actively respond to International ESG survey: DJSI、MSCI、CDP、Bloomberg Governance ˙FINI shareholders: 55%, the highest in Taiwan Financial sector. ˙Total numberof physical and online Analyst meetings both in Chinese and English version: 8 （ G ） ˙Upgraded on credit rating or outlook from credit rating companies (Moody’s, TRC, S&P) for 3 consecutive years

˙Participating in labor union Social （ S

To promote the development of the domestic financial industry, E.SUN FHC and its subsidiaries actively partic- ） ipate in the activities of organizations including the Bankers Association of the R.O.C., Taiwan, Securities Asso- ciation, Trust Association of R.O.C., Taiwan Academy of Banking and Finance, Taiwan Financial Services Roundtable, Chinese Excellent Management Association. E.SUN FHC President Joseph N.C. Huang is the director of the Taiwan Corporate Governance Association; E.SUN Bank Chairman Gary K.L.Tseng is a director Environment of the Bankers Association of the R.O.C. a member of the Financial Supervisory Commission’s financial （

research and development fund management committee, and a member of the Taiwan Academy of Bank- E ing and Finance’s board training and guidance committee; and Wang Jyh-Cheng, chief human resource ） officer at E.SUN Bank, is a supervisor of the Chinese Excellent Management Association. These individuals provide recommendations concerning practical operations at appropriate times, and are striving to do their part to improve the domestic financial environment as a whole.

GRI：102-13、102-33 CSR REPORT 2016 - 35 - the Chairman Letter from performance 2016

Sustainable ˙ 1.2 Code of Conduct and Ethics

GRI：102-16、102-17、205-1、205-2、205-3、206-1、415-1

We uphold the core values of integrity and professionalism. The 3+1 business philosophy and common vision Chronicles E.SUN are based on "realism, strength, responsibility", "teamwork, harmony, happiness", "leadership, excellence, honor", and "contentment, cherishing relationships, and gratitude", and provide the foundation to E.SUN employees' service values and conducts. Ethics and integrity are made part of every E.SUN employee's DNA through orientation, self-learning, and following examples of the management team. E.SUN aims to build a business of ethics and integrity by strengthening compliance, anti-corruption, anti-money laundering practices.

Engagement Stakeholder E.SUN has established the "Ethical Management Principles" (EMP) and "Ethical Procedures and Code of Conduct" (EPCC) and implemented sound corporate governance and risk management. The regulations above, for the purpose of enforcing the ethical management policy, require the directors, managers, employees, and nominees or other entities in which the company has substantive control comply with the Company Act, the Securities and Exchange Act, the Business Entity Accounting Act, the Political Donations Act, the Anti-Corruption Act, the Government Procurement Act, the Act on Recusal of Public Servants Due to Conflict of Interest, other regulations applicable to TWSE/TPEx listed companies, and laws and regulations governing other business activities or applicable in places where the group operates.

SD Stratregy of E.SUN places a great emphasis on integrity and anti-corruption measures. The company and its subsidiaries and other entities in which the company has substantive control will assess the legitimacy of counterparties and acquire a full understanding of their ethical management practices and compliance with the corporate social responsibility policy before starting a business relationship. E.SUN always explicitly refuses to directly or indirectly provide, promise, request, or accept illegitimate benefits in any form. Contracts always contain explicit provisions on ethical management and corporate social responsibility. The company is also working to extend the corporate culture and the commitment to integrity into its subsidiaries. As its contribution to creating a sound financial market, the subsidiary E.SUN Bank has established the Fair Customer Treat- and the FIR Stratregy of SD ment Policies and Strategies. The policies implement the principles of fairness and reasonableness, equality and mutual benefit, and good faith, and highlight and protect the rights of financial consumers.

E.SUN is politically neutral and makes no political donations whatsoever. E.SUN employees are prohibited to discuss politics or engage in political activities at the office during the work hours. It is also prohibited to display posters, literatures or speeches from political campaigns. Any direct or indirect contributions made by the company and its directors, managers, employees, and nominees and other entities substantively controlled by the company to political parties, political organizations, or individuals shall comply with the Political Donations Act and the Company's internal operating procedures. Contributions shall not be used as Governance a guide to reap commercial benefits or trade advantages.

（ G ） The Corporate Governance and Nomination Committee is the unit in charge of ethical management practices. The committee is responsible for assisting the board of directors and the management in formulating and supervising implementation of ethical management policies and prevention measures. The committee also reports regularly to the board of directors. The company ensures effective implementation of the ethical management policies. Details of the practices in 2016 are as follows: Social （ S ） Environment （ E ）

- 36 - the Chairman Letter from

Education and training performance Courses, such as the E.SUN General Knowledge on Law or the E.SUN EMP and EPCC, are offered at the training facilities to raise awareness. 2016 A total of 330 hours were completed. Self-assessment practices are incorporated into entry-level training, mid-level courses, and

professional training courses. The concept and practice of three lines of defense are reinforced through case studies in order to enable Sustainable the employees to work together in prevention of unethical behaviors.

Compliance Campaign

The legal compliance team is responsible for raising awareness in the workplace. In 2016, the theme of the campaigns was "new niche markets in integrity". The Ethical Management Principles and examples of important internal announcements were turned into videos and case studies that educated the employees on things to watch out for when they performed their duties. Chronicles E.SUN Annual Tests Moral standards Recusal

E.SUN FHC and its subsidiaries have all employees complete an online test every year. The test encompasses the E.SUN EMP and EPCC. The tests in Code of ethics Confidentiality 2016 focused on ethical business activities, prohibition of unethical behaviors and infringe on stakeholders' rights, and the duty of confidenti- E.SUN employees ality to the company's intellectual property rights. Service philosophy EPCC Anti-corruption regulations Engagement Stakeholder

Respect for human rights Protection of Intellectual Communication Channel Property Rights

By maintaining open channels of communication, E.SUN enables employees to give feedback to the management and the human resource department through a variety of channels. The company also provides means to report malpractices, and appoints a unit to be the handler of all reported misconduct. Reports involving a director or executive will be submitted to the independent directors. In addition, the company will volunteer to outline its business integrity policy and practice on its website, Corporate Stakeholders SD Stratregy of in the annual report, and in investor seminars and other public events. Governance Note: Stakeholder area: provides an effective channel of communication for employees, stockholders, and stakeholders Contact Information for Audit Committee and Indepent Directors: Regular Inspection [email protected] and the FIR Stratregy of SD

Ethical management has been made part of the company's employee appraisal and human resource policies. There are clear and effective systems in place to enforce rewards and discipline. The business management units conduct self-assessments and compliance self-assessments in order to ensure effective management. The audit unit performs independent audits to ensure uninterrupted operation of the organization as a whole. The units work together to manage and prevent unethical behaviors. No corruption or anti-competitive behaviors in 2016.

Means to report malpractices and whistleblower protection Governance

As part of its efforts to adhere to the principles of ethical management and to meet high ethical standards, the company has established the "Ethical （ G ） Management Principles" ("EMP") and the "Ethical Procedures and Code of Conduct" ("EPCC") as the ultimate guidelines for all E.SUN employees. A comprehensive range of means are in place for members of the public or E.SUN employees to report unethical behaviors. In addition, mechanisms are in place to maintain confidentiality and anonymity and to protect whistleblowers. Reports will be examined carefully and impartially and facts be investigated to ensure the means to report malpractices remain effective means to report malpractices, whistleblower protection, employees making direct reports, investigation finding violation of EMP and EPCC, reports from the public investigation finding violation of EMP and EPCC, complaints of sexual harassment.

2014 2015 2016 Social （ S

Report unethical behaviors from internal personal 0 3 0 ） Violation of the EMP and EPCC 0 0 0 Report unethical behaviors from external personal 21 36 26 Violation of the EMP and EPCC 0 0 0

Sexual harassment complaint 0 0 0 Environment （

Note: E ） 1. There is no violation of the EMP and EPCC in any of the reports in the last three years. 2. To ensure every employee's voice is heard, E.SUN gives its employees opportunities to provide anonymous feedback every year. The feedback will be given directly to the management team, and the CEO will assemble the appropriate teams to provide responses. There were 2,277 open feedback messages in 2016.

GRI：205-1、205-2、205-3、206-1 CSR REPORT 2016 - 37 - the Chairman Letter from performance 2016 Sustainable ˙ 1.3 Compliance

GRI：307-1、419-1

Compliance with the competent authority's requirements and local financial regulations is the basic Chronicles E.SUN requirement for sound business practices. E.SUN has implemented a solid compliance system to ensure effective compliance. The company also provides training to raise awareness of basic knowledge of the law in the workplace in order to facilitate compliance management. No fines for non-compliance with economic (anti-corruption, anti-money laundering), social (labor, product marketing) or environmental (conservation) laws and regulations. Engagement Stakeholder

Compliance Practices

E.SUN has the E.SUN FHC Legal Compliance Policy and the E.SUN FHC Legal and Regulatory Compliance System Guidelines in place to provide compliance guidance. The headquarters compliance officer leads the compliance management unit in handling planning, management, and execution of compliance, establishing detailed procedures of compliance assessment, and supervising the departments in compliance self-assessments and overseeing compliance related affairs. The headquarters compli-

SD Stratregy of ance officer assists with and oversees the first line of defense, which is identification and management of compliance risks. The headquarters compliance officer also presents reports and recommendations to the executives and the board of directors in order to keep the executives and the board of directors informed of the compliance status. The responsibilities of the compliance management unit are described as follows.

˙Announcement, inquiry, coordination, and communication of regulations Systems are created between the units and between the company and its subsidiaries for clear, adequate announcement, inquiry, coordination, and communication of regulations. The compliance management unit provides regulatory updates and and the FIR Stratregy of SD amendments as they become available to the compliance staff in each unit. Meetings of compliance officers are held to announce important compliance issues and to provide a venue for sharing related experiences. Regarding inter-subsidiary issues, the compliance unit, in addition to offering comments, will assist the subsidiaries in communication and coordination in order to ensure consistency within the group. ˙Following regulatory changes Work and management regulations are updated promptly to ensure compliance with the laws and regulations. Any update is announced to all units as soon as possible to ensure all business activities comply with the current laws and regulations. Statements of compliance will be issued to accompany all applications of new products or services. Governance ˙Compliance Self-Assessment （ G ） E.SUN conducts compliance self-assessments every six months in order to examine whether the units have complied with the regulations and completed improvement as required. E.SUN FHC and its subsidiaries are also required to undergo compliance assessments according to law in order to maintain an effective compliance system. Compliance units will assess compliance practices in their respective organizations in order to make compliance a more integrated part of the business. ˙Whistleblower mechanisms-reporting sysyem The Company has determined relevant legal compliance procedures. In the case of major violations of laws or regulations, the organization’s legal compliance manager shall be notified. In the case of violations of business integrity rules, the executive of Social （ the legal compliance management unit shall be notified. S ） ˙Onsite Compliance Surveys To better understand actual compliance practices, the compliance management unit started conducting onsite compliance surveys in 2013, and has completed 61 surveys so far to effectively conduct campaign, communication, and consulting services on compliance. The compliance management unit will be accompanied by the anti-money laundering department and related business management units on its onsite surveys to understand practices such as personal data protection, anti-money

Environment laundering and compliance in key business areas at individual units. Face-to-face discussions will give the units a better understanding of improvement or correction to be made. The compliance management unit also listens to feedback from the

（ units. The approach facilitates interaction and allows the compliance management unit to have a better idea of compliance

E practices in different units. ） ˙Education and training To reinforce knowledge of important laws and regulations and improve compliance knowledge and skills in the workplace, E.SUN organized education and training courses for employees in 2016. They are summarized as follows.

- 38 - the Chairman Letter from

(I) External courses: 2,479 employees completed 3,189.8 training hours by attending 327 courses offered by the Taiwan Academy of Banking and performance Finance, the Bankers Association of the R.O.C., the Trust Association of R.O.C., the Corporate Governance Association in Taiwan, 2016 the Department of Labor of Taipei City Government, the Securities and Futures Institute, the Taiwan Stock Exchange, the Taipei

Exchange, and the Taiwan Securities Association. Sustainable (II) Internal courses: 6,039 employees completed 3,264.5 training hours by attending 97 professional courses on mid-level officer training course - banking regulations, entry-level training course - overview of banking regulations, the Banking Act and banking operations, study of compliance regulations and deposits/transfers, corporate banking, financial planning, and foreign exchange services. (III) Other:

Important compliance rules and cases will be announced during morning meetings or training sessions. The compliance manage- Chronicles E.SUN ment unit regularly provides compliance education materials so that individual units can raise awareness of compliance during compliance training.

Month Training Class Month Training Class

January Penalties imposed by FSC on financial institutions in 2015 July Raising awareness of ethical management and important internal announcements.

February Raising awareness of personal information protection August Raising awareness of the Financial Consumer Protection Act.

March Raising awareness of insurance services September Raising awareness of the Fair Trade Act and standard contracts. Engagement Stakeholder

April Raising awareness of labor laws and human resource management October Raising awareness of important AML/CTF regulations.

May 2016 Compliance Instructions November Raising awareness of important foreign exchange regulations.

June Raising awareness of important banking laws and regulations. December Raising awareness of important banking laws and regulations.

(IV) Online tests: 策略與架構 An online compliance e-Learning test is designed for employees working in respective areas. A score of 90 or higher will be a pass. The test was completed by 100% of the test recipients. The results are listed in the table. Employees who failed to reach the threshold or attend the test had reports issued to strengthen their training in compliance in order to improve their understanding SD Stratregy of and ensure compliance of business activities.

Number of Test Applicants Pass Fail Absent Average Total Number of Employees Number of Employees Number of Employees Number of Employees Score

6,563 6,526 8 29 94.58

Strengthening compliance with international financial regulations and the FIR Stratregy of SD

Following FATCA of the United States, OECD has stepped up international taxation to prevent tax evasion in other countries. OECD has also established the Common Reporting Standard (CRS), which was implemented in Hong Kong and Singapore on January 1, 2017. It is expected to be implemented in Australia on July 1, 2017. In addition to the countries above, more than 90 countries have adopted the standard. E.SUN has hired external consultants to help overseas units implement applicable international regulations as another step toward reduced inequalities (SDG 10) and a way to strengthen financial institutions around the world (SDG 17). Governance 3% 4%

Tax governance （ G ） 5% 88% E.SUN FHC establishes its tax governance policy in accordance with the principles of realism, strength, and responsibility. Paid a total of NT$3,603 million 1. To fully understand and adhere to local tax regulations; and to calculate correctly the taxes in taxes in 2016 and file tax returns by statutory deadlines. To comply with international tax regulations and Social

ensure transactions are conducted at arm's-length. （

2. To facilitate assessment of the overall impact of changes in local and international taxation S

Taiwan ） laws and the risks and enable a timely decision making process. China & Hong Kong 3. To disclose tax related information regularly to stakeholders via financial statements, annual USA reports and other public channels to ensure transparency. Others 2% 2% 4. To maintain an open and honest communication channel with the tax authority; to play an 8% active role in tax seminars by providing practical experience and suggestions as a member of

the industry; and to offer assistance in improving the tax environment and system. 88% Environment （ E.SUN FHC paid a total of NT$3,603 million globally in taxes in 2016. The taxes fell Paid a total of E into categories such as profit-seeking enterprise income taxes and business taxes. ） NT$3,126 million Since the company operates primarily in Taiwan, 88% of the taxes were paid in in taxes in 2015 Taiwan. Taxes paid in the last two years are listed as follows.

CSR REPORT 2016 - 39 - the Chairman Letter from

Implementing effective risk management practice Improving Creating and credit rating • Ensure open, fair, transparent information maintaining disclosure • Verify a balance between performance 2016 risk and profit • Maintain excellent asset Providing Sustainable quality ˙ 1.4 Risk Management Optimizing • Ensure early risk warning guidance and risk aversion on strategic

GRI：102-11

Chronicles E.SUN Strengthening the risk management culture

A sound risk management culture is the base for sound risk management practices. The board of directors is the ultimate risk management authority at E.SUN. Risk management is one of the performance indicators for managers and business units. Remuneration has to be based on a reasonable correlation with future risks and consistent with E.SUN's short- and long-term business performance. Engagement Stakeholder

Risk management is aimed at ensuring asset protection, enhancing customer service quality, and increasing shareholder value. It expects to control potential risks in business activities within the agreed risk tolerance range, and, provided solvency requirements are met, achieve a reasonable balance between risk and return to form the strongest support for business growth. To effectively identify, assess, monitor and control all types of risk, E.SUN has always follow “no services or operations can be consid-

SD Stratregy of ered beyond risk” and we uphold the highest guiding principles of risk management: safety and liquidity first, profitability second, growth next, and always pay attention to the public interest.

E.SUN FHC has established the "Risk Management Policy and Guideline Principles", which provide operation-related regulations for each risk factor, serving as the basis for risk management implementation to achieve improved corporate reputation, reinforced risk culture, optimized capital utilization, and and the FIR Stratregy of SD provision of strategic management decisioning.

The scope of risk management encompasses primary risks in every business process, including credit risk, market risk, and operational risk. To respond to a rapidly changing environment, we conduct risk management on asset liability risks, climate change risks, legal risks, strategic risks, reputation risks, and geopolitical risks, and constantly monitor changes in the global environment to facilitate continuous refinement of our existing risk management mechanisms in order to convert risk into opportunities. Governance Please refer to 3.1 Climate Change Risks and Opportunities for details on the identification of climate

（ G ） change risks.

The Audit Committee Board of Directors

Corporate Governance President Audit Division and Nomination Committee Social （

S Remuneration Committee ） Risk Management Committee Remuneration Committee Chief Risk Officer

Corporate Social Responsibility Committee Environment （ E

） Chief of Chief of Asset Chief of Chief of Chief of Other Anti-money And Liabilities Credit Risk Market Risk perational Risk subsidiaries laundering Management Risk

〈E.SUN FHC’s Risk Management Organizational Framework〉

- 40 - the Chairman Letter from performance 2016 Sustainable E.SUN FHC The boards of directors take ultimate responsibility for the management of the risks and approve overall risk Board of Directors management policies and important decisions based on the overall business strategies and environment.

To strengthen risk governance communication, coordination, reporting, and recommendation within the board of directors, the Company has established an independent Risk Management Committee with the President as the chair, and the Chief Risk Officer as the executive secretary responsible for reviewing business risk management policies, ensuring compliance with international risk management regulations, promoting and creating risk management systems, and reinforcing the functions and duties of the Risk

Risk Management Management Committee over time. Chronicles E.SUN Committee The Risk Management Committee regularly or irregularly convenes quarterly RMC meeting depending on situation. The Committee reviews the appropriateness of the risk mitigation strategies proposed by the Risk Management Committee or each level risk unit, taking into consideration the company's strategic development and environmental changes. The Committee is responsible for proper management of matters pertaining to credit risk, market risk, operational risk, and asset liability risks, and regular reporting/disclosing of overall risk management implementation status to the board of directors/on annual financial reports.

The units are responsible for defining risk tolerance limits and monitoring indicators to monitor the risks of Risk management each unit, and formulating standard operating procedures and submitting risk reports according to business Engagement Stakeholder units content. Subsidiary risk management units are responsible for directly reporting to the board of directors and to the Risk Management Committee of the E.SUN FHC.

Business unit Implement risk management to daily work

ne of D st Li efe The First Line Identify and manage product, Fir ns e e Th of Defense event, process, and system risks. SD Stratregy of

Risk e

s Plan risk management systems and

T n

h The Second Line management e

f monitor the execution of risk e

e system of Defense T

D management mechanism. h

i f r d o

L e Audit unit in in e L Audit and verify o d Independently audit and verify the f n The Third Line D o effectiveness of the risk manage- and the FIR Stratregy of SD e ec of Defense fen S se The ment mechanism. Risk management division Plan and monitor

Extending risk horizon by training

To raise risk awareness and to systematically extend the risk horizon, E.SUN ensures that every E.SUN

employee starts learning about E.SUN's core philosophy regarding risk, discipline and process. E.SUN Governance

employees in different departments and at different stages of their careers are also provided with （ G ） appropriate education and training on risk management.

1. Orientation for new recruits Every new recruit will complete risk basic management courses during orientation in order to understand the risk management culture at E.SUN, self-discipline, and the risk profiles of E.SUN's operations. 2. Professional training Social （

E.SUN's core philosophy is “no business can be considered beyond risk”. E.SUN implements risk management of S related business in training programs, and continuously discussing and focusing on the general or specific risk issues ） among all product line. This approach makes each product line keep risk management in mind in their own business activities.

3. Developing middle management Having been exposed to the products and services, E.SUN employees will have a clear idea of the organization and positioning of its products. Employees will learn about the importance of a balance between "risk and opportunity" Environment along the entire product line. Furthermore, the mid-level officer program is aimed to help employees identify risks in （ every business activity and understand the responsibilities required of the middle officer. E ） 4. Continuing training for managers E.SUN has implemented a series of leadership courses for managers. These courses are designed to help managers respond to external challenges and risks through learning and approach the decision making process from a strategic perspective that encompasses the company as a whole. The risk management culture is also strengthened as a base in the corporate governance practices.

GRI：102-30 CSR REPORT 2016 - 41 - the Chairman Letter from performance 2016 Major risk control mechanisms 2016 Risk Management Performance Sustainable

˙Credit risk control mechanisms ˙Country risk With regard to credit risk management goals and development E.SUN has rigorously engaged in overseas expansion in recent strategies, we comply with the competent authority’s legal and years, developing rapidly with respect to investments in financial regulatory system, and have drafted “Credit Risk Management- products or establishment of overseas subsidiary bank branches.

Chronicles E.SUN Guidelines” and internal credit policy and transaction counter- Therefore, to refine our country risk management mechanism, party credit risk control mechanisms asa basis for credit risk we reinforced our country risk limit early warning mechanism in management during the course of business development. We 2016 and strengthened our sensitivity to country risk changes in continuously monitor and assess domestic and foreign econom- order to facilitate monitoring changes in country risks and ic and financial trends, and make appropriate revisions to our preventing risk impact expansion. internal regulations at suitable times. Due to the quickening pace of global climate change in recent years, the Company ˙ has adjusted its centralized monitoring of businesses or transac- Market Risk Management Mechanism tion counterparties with high carbon emissions, which is included In a rapidly changing financial market, E.SUN refined its financial in internal regulations. Management is accomplished by

Engagement Stakeholder product transaction system, limit management system, and determining credit risk limits and transaction counterparty limits, methodology of financial product risk weighting in 2016 to such as credit lines, industry type, country, and business group, quickly control the market risks inherent in financial product all of which must comply with the competent authority’s transactions and investment as well as customer transaction risks regulations. and to facilitate the prediction of future financial product transaction risks, which is conducive for strengthening the ˙Market riskcontrol mechanisms market risk management mechanism. In order to effectively control the market risk caused by price ˙ fluctuations in equity, products, interestrates, and exchange Management of credit risks rates, and the mutual linkage between these fluctuations, all In response to the implementation of the new Basel Capital financial producttransactions must be conducted in

SD Stratregy of Accord, E.SUN continues to refine its internal rating system, credit accordance with the Company’s “Market Risk Management- risk data warehouse, and establishment and integration of retail Guidelines.” Regular assessment of the transaction value of banking and corporate banking Internet ratings based (IRB) company’s financial products isperformed in accordance with model into credit handling system. We also constantly inspect regulations, and reports concerning market risk exposure and and improve operation-related mechanisms, including credit stresstest results are made to the board and E.SUN FHC’s Risk risk control policies, evaluation procedures, and credit business Management Committee in order to bettercontrol market risk. development strategies. To facilitate digital banking development, we constantly improve the stability and effectiveness of ˙Asset and liability riskcontrol mechanisms our risk identification model, actively integrating a comprehensive model verification mechanism, which enables credit and the FIR Stratregy of SD In order to avoid possible losses due to inability to liquidate extension services to be completed online under effective risk assets or obtain financing so as to fulfill its responsibility to provide control. In light of the current digital banking development trend funds for the full period, E.SUN FHC and its subsidiaries have (Please refer to 2.1 Financial Inclusion), E.SUN has setup a credit drafted “Liquidity Risk Management Guidelines” able to ensure rating model verification work group in 2016 to act as an control of asset and liability funds shortage adequacy and have independent supervisor of the rating model, thus establishing a established liquidity early warning indicators for use when complete internal rating model verification mechanism. The observing the state of financial market funds. If any early Company conducts external independent third-party model warning indicators are triggered, funds emergency response verification test to improve verification depth and width. mechanisms will be activated, ensuring that this company or a subsidiary will have sufficient liquidity. ˙Operational Risk Management Mechanism

Governance ˙Operating riskcontrol mechanisms In 2016, we began introducing the standardized approach for operational risks that has been implemented in Taiwan by

（ G ） The Company has drafted “Operating Risk Management domestic business management and business units to overseas Guidelines” in order to provide consistent guiding principles for business operations. Through on-site and telephone training, we the effective identification, assessment, supervision, and control educated our overseas employees on self-assessment of risk all operating risks that may be encountered, and has controls, key risk indicators, and damage/loss events caused by established comprehensive operating risk management operational risks so that they can understand the purpose, mechanisms able to monitor changes in operating risk. The benefits, and execution procedures of related tools, thereby auditing unit regularly audits the implementation of operating improving the operational risk management capability of our risk management procedures, which ensures that operating risk overseas business operations. In reference to the experience of management assessment and control procedures are our Chinese subsidiaries and Sydney bank branches, we implemented as effectively as possible. customized pre-planning processes for our other overseas Social （ branches at the end of 2016 to continue to enhance the effect

S and efficiency of such processes. ） ˙Subsidiary risk control mechanisms Operating procedures and criteria for each risk level are ˙Asset Liability Risk Management Mechanism planned and established in compliance by following with the E.SUN FHC Risk Management Policy and Guideline Principles. In 2016, E.SUN established a liquid coverage ratio computation The subsidiaries continuously promote risk-based decision-mak- platform, which replaces the traditional paper-based ing and create appropriate risk taking mechanism. In addition to operations. This platform not only shortens the operating time, complying with the regulations of competent authority, each but also provides automated analysis function that facilitates Environment subsidiary also takes into consideration the changes in the enhancing the analysis and management of asset liability risks. overall economic environment, international financial trends, （ and the social environment, establishes risk management E

） operational regulations, and executes daily management, measures risk levels, and monitors and reports abnormal events to the FHC and subsidiary risk management department as well as the audit department.

- 42 - GRI：102-30 the Chairman Letter from performance 2016

˙ 1.5 Anti-Money Laundering and Anti-terrorism Financing Sustainable

We strongly believe in creating a stable national or regional financial system and a sound bank monitoring mechanism, as well as effective law enforcement because they can reduce the negative impacts (e.g., crime rate, corruption, a country's reputation, and social cost) of money laundering and Chronicles E.SUN terrorism financing on the economy and society.

Because of this belief, E.SUN is committed to anti-money laundering practices and anti-terrorism financing through active compliance with international regulations and requirements such as the policies and processes announced by the Financial Action Task Force on Money Laundering (FATF). In

addition, we reinforce our "know your customer" operations, implement customer due diligence (CDD) Engagement Stakeholder regulations, ensure effective name list scanning and suspicious transaction monitoring, and enhance employee awareness on anti-money laundering to fulfill our responsibilities as a social citizen and prevent illegal use of the financial system in bleaching of capital or providing financing to terrorists.

Anti-Money Laundering and Anti-terrorism Financing Policy SD Stratregy of

In compliance with the Money Laundering Control Act and terms and conditions of the Directions Governing Anti-Money Launder- ing and Counter-Terrorism Financing of the banking sector, we established the E.SUN Bank Anti-Money Laundering and Anti-terrorism Financing Policy, the Directions Governing Anti-Money Laundering and Counter-Terrorism Financing of E.SUN Bank, and related procedures and operational guidelines, which clearly describe the principles and procedures for customer identity recognition, establishment of business relationship, monitoring and reporting of suspicious transactions, and educational training to achieve the following objectives: and the FIR Stratregy of SD

1. 2. 3. 4.

To comply with “Money To comply with “Money To assure the adequacy of the To strengthen the employees’ Laundering Control Act” and Laundering Control Act” , scanning, evaluation, and awareness on detection of relevant legislation for the relevant legislation promulgat- recognition of high-risk name money laundering by purpose of preventing the ed by the authorities and list functions in the system in implementing customer due Bank from being used for applicable international order to mitigate the risk of diligence, appropriate money laundering or terrorist practice. being used for money document retention and financing. laundering and terrorist transaction monitoring. financing. Governance （ G ）

Anti-Money Laundering and Combating Terrorism Financing Mechanism

To effectively execute anti-money laundering plan and implement independent and three lines of defense: Social The First Line of Defense The Second Line of Defense The Third Line of Defense （ S ） E.SUN appointed the deputy president of As the dedicated unit, the Anti-Money The compliance group is responsible for E.SUN Bank as the head responsible for Laundering Department under the Risk reviewing self assessments conducted anti-money laundering, including Management Division is responsible for by all units on compliance with promoting, coordinating, and formulating anti-money laundering and anti-money laundering policy and supervising the implementation of anti-terrorism financing policies and conducting staff training at a regular matters related to anti-money operational regulations, monitoring basis. laundering and combating terrorism suspicious money laundering transac- financing, and for reporting to the board tions, handling the reporting of Environment of directors at least once every six anti-money laundering activities, and months the internal control measures managing matters related to the （ and implementation status of anti-money laundering operations of E ） anti-money laundering activities. overseas branches and subsidiaries. The dedicated unit submits quarterly reports on the current status or implementation effectiveness of anti-money laundering activities to the head responsible for anti-money laundering.

CSR REPORT 2016 - 43 - the Chairman Letter from

Specific anti-money laundering and anti-terrorism financing practices are as follows:

˙Refine anti-money laundering system In 2014, E.SUN planned and builds an anti-money laundering system in accordance with international anti-money laundering performance 2016 standards, and after the system went online in 2015, E.SUN continued to improve the system's CDD functions and suspicious transaction monitoring logic and parameter settings. Sustainable ˙Enhance employee professionalism E.SUN encourages employees to obtain international professional certifications that are approved by the competent authority to improve their professional knowledge and anti-money laundering capabilities. As of the end of 2016, 17 employees of the Company have acquired certifications for Certified Anti-Money Laundering Specialist (CAMS). ˙Strengthen the anti-money laundering management of overseas branches

Chronicles E.SUN E.SUN effectively manages the implementation status of anti-money laundering practices of its overseas branches through examining the independence and professionalism of overseas heads responsible for anti-money laundering, assisting the development of overseas anti-money laundering system platforms, verifying the adequacy of educational training. In addition, E.SUN conducts quarterly overseas video conferences to strengthen its communication mechanism. ˙Accountable unit Anti-money laundering activities are unanimously analyzed and investigated by the Anti-Money Laundering Department, which submits reports to the Investigation Bureau of the Ministry of Justice. Engagement Stakeholder ˙Strengthening education and training Creating an adequate and carefully planned employee selection procedure, including checking candidates for integrity and professional knowledge required to perform the duties. At E.SUN Bank, managers in charge of anti-money laundering and combating terrorism financing, staff of the Anti-Money Laundering Department, anti-money laundering managers and staff of business units in and outside Taiwan, and money laundering prevention officers of business units in and outside Taiwan undergo 12 hours or more of anti-money laundering courses every year. The courses will involve recently amended regulations and latest trends and forms of money laundering and terrorism financing risks. In addition, the Anti-Money Laundering Department is required to design orientation courses to help new employees understand the regulations and responsibilities. E.SUN Bank also

SD Stratregy of hires experts and scholars from inside and outside the bank to teach on-the-job training courses. In addition to explaining the regulations, the courses provide case studies to help employees identify different cases and get a full understanding of the characteristics of money laundering and terrorism financing and the types of suspicious transactions. The training is intended to enable employees to identify suspected money laundering and terrorism financing transactions and ensure the effectiveness of anti-money laundering and combating terrorism financing measures.

Recognition for E.SUN’s anti-money laundering system and the FIR Stratregy of SD

E.SUN’s AML awarded “ The Anti-Money Laundering Risk Technology Implementation of the Year” from The Asian Banker magazine on September in 2016.Recognition for its effort in compliance with the anti-money laundering system framework and logic of a risk-based approach, which is advocated by the Financial Action Task Force on Money Laundering (FATF). Governance （ G ）

Centralized monitoring of suspected anti-money laundering exhibit significant result

E.SUN Bank's anti-money laundering system was launched in January 2015, and the Anti-Money Laundering Department was Social （ established in which dedicated personnel is appointed to conduct analytical investigation on money laundering alerts and to S

） report suspicious activities to the Investigation Bureau of the Ministry of Justice. According to the Investigation Bureau, a significant improvement was observed in the case success rates and the number of official letters sent by the Investigation Bureau in recognition of our effort. (Source: Official letters from the Investigation Bureau of the Ministry of Justice)

E.SUN Bank 35

Environment other Financial Institution 30 60% 25 （ 40.17% 20 E

） 40% 25.06% 15 20.60% 20% 11.99% 11.67% 10 9.11% 11.55% 5 8.98% 0% 0 2013 2014 2015 2016 2013 2014 2015 2016

〈Suspicious activity report(SAR) case success rate〉〈Number of official letters sent by the Investigation Bureau in recognition of our effort〉

- 44 - Social

GRI G4：FS5、FS7、FS13、FS14 the Chairman Letter from

E.SUN asserts that corporate social responsibilities are fulfilled by understanding the society's true needs, proper- ly utilizing core financial competencies and financial innovation capabilities, integrating internal and external resources, devising feasible execution plans, and continue to improve these plans so that they form a positive performance cycle.With innovative thinking, we actively develop FinTech applications and invest in various social programs 2016

to create value for the customers and take actions to contribute to the society. Sustainable

˙ 2.1 Financial Inclusion

GRI：203-2 GRI G4：FS5、FS7、FS13、FS14 Chronicles E.SUN

By leveraging the core competencies of the financial industry, we created convenient financial services that closely meet customer needs so that customers with different needs are able to access the most suitable financial products and services through smooth and convenient means, thereby realizing the value of financial inclusion. Engagement Stakeholder

E.SUN established an Electronic Banking Department in 2000, and created a Digital Banking Division in March 2015, which takes charge in the formulation of digital finance policies, management of digital brands and key innovative applications for new digital businesses, construction of a digital channel platform for business management, product R&D, marketing, planning, business model designing, application system development, and digital financial risk management. SD Stratregy of 2.1.1 Online Lending services: Creating service value E.SUN actively develops financial inclusion, using big data as the core to build online unsecured personal loan service and online mortgage platforms. Since 2014, E.SUN Bank has successively introduced e-Click Loan Applica- tion, home mortgage credit line and rate assessment, and online mortgage application, which allow potential borrowers to easily gain access to relevant information without visiting our branch offices, thus saving them time and costs and fulfilling their funding needs. and the FIR Stratregy of SD

A personal loan model factory enhances loan application efficiency and risk control

E.SUN employs big data, quantitative analysis, and cloud services to construct a personal loan model factory, while simultaneously developing 4D risk management technologies that encompass four dimensions of credit rating, value calculation, overall economy alert indicators, and solvency prediction, and thoroughly integrating these technologies in the development of our online unsecured personal loan Governance service. Through this personal loan model factory, the time required to review cases sourced from physical

channels is shortened from three days to one day, the decision process is considerably shortened, and （

cread line and G process efficiency is enhanced to help customers quickly acquire funding. By integrating different

rate assessment ） platforms and combining risk management technologies, E.SUN can identify customers whose loan application was declined by the bank and those without bad credit record and provide them with small amounts of funds or short-term loans. Social （ S ） Online home mortgage credit line and rate assessment saves time and costs

After E.SUN's exclusive online home mortgage credit line and rate assessment was introduced in 2016, customers can gain online access to customized mortgage informa-

tion in real time, as well as highly accurate, transparent Environment bank evaluation information. In response to the rapidly

small business corporate （ changing market, E.SUN endeavors to ensure consistency

loan assessment e-click loan E

in its online evaluation service and offline review processing ） so that customers can gain positive experiences in using all of our service channels.

Speedy and customized solutions Objective reviews No temporal and spatial limitations

CSR REPORT 2016 - 45 - the Chairman Letter from

2016 Outcome of Digital Loan Popularization

Credit services are offered on a digital banking platform to render real-time and customized loan application performance 2016 services. These services have continued to grow since their development. In 2016, the number of submissions and reviews has increased by over 40%, and 20% of all loan applications were assessed online. The online Sustainable mortgage loan interest rate calculation platform was launched at the end of 2015, and as of the end of 2016, 30,000 cases of online calculations were completed. Based on estimations of real estate appraissal fee rate, this platform helped customers save NT$320 million in real estate appraisal costs.

In the future, E.Sun will continue to develop a diversely integrated digital financial service platform, enabling customers in sparsely populated or remote areas to enjoy access to a full range of convenient financial services, thereby realizing the concept of inclusive finance. Chronicles E.SUN

The 8th Outstanding Financial Business Elite Award held by Taiwan Academy of Bankingand Finance The Credit Risk Technology The Credit Risk Technology - "Best Risk Management Award"

Engagement Stakeholder Implementation of the Year Implementation of the Year for Personal Loan Model Factory 〈The Asian Banker〉〈The Asian Banker〉 TABF 2015 2016 2016 Bank 3.0 Risk Management Innovative Application SD Stratregy of

A remarkable success story

Mr. Liu was the owner of a beverage shop. He was forced to close down his shop due to the economic slowdown during the financial crisis. In several occasions, he was financially incapable of paying his and the FIR Stratregy of SD credit card bills. Later, Liu succeeded in obtaining a position as a technician at a small and medium enterprise (SME) where he earned a stable income, and eventually, he paid off his debts.

Liu had applied for personal loans to pay his children's tuition fees, but all the banks had declined his application because of his poor credit record. After receiving Liu's loan application, E.SUN evaluated it using the risk management model of the Personal Loan Model Factory. Bcause Liu has a stable source of income and is financially capable of repaying the loan, E.SUN approved the application. Liu has repaid the loan on time in the past two years. He has also expressed gratitude toward E.SUN for their Governance support in his times of need. This shows that integrating various risk control model and identifying

（ customer's risks from different dimensions enable E.SUN to account for both risks and business

G benefits, thus helping more people. ） Social （ S ） Environment （ E ）

- 46 - the Chairman Letter from 2.1.2 Innovative financial service: Promoting socioeconomic development By using innovative methods and integrating the strengths of our customers and the society, we leveraged corporate resources and core competencies so that economically disadvantaged groups can enjoy basic rights, equality, and convenient barrier free financial services in a friendly financial environment where a better society and thriving economy are provided. performance 2016

Specific practices for promoting popularized financial services in 2016 Sustainable

˙School Hope Luncheon Program: Assisting disadvantaged students through innovative financial services E.SUN has developed a distinct innovative service process in which school subsidies are provided. In contrast to the past

approach whereby meal vouchers are given to economically disadvantaged students, the School Hope Luncheon Program Chronicles E.SUN introduces school mobile payment service, which allows users to purchase points online and make payments offline after opening a virtual account online. By scanning the QR code on their mobile phone, students can complete payments, conveniently and without having to reveal their identity. Such mobile electronic wallet application enables disadvantaged students to receive daily allowances while having their personal information protected. In collaboration with school teams, this Program provides students the opportunity to advertise themselves, engage in innovation and entrepreneurial activities, and collectively build a convenient payment platform in school settings. Engagement Stakeholder ˙User friendly Internet banking website: Providing convenient financial services for individuals with visual impairment The E.SUN website conforms to the standards prescribed in Class A+ barrier-free public "interest rate and foreign exchange rate information network." We received the A+ certification from the National Communications Commission on May 6, 2016.Visually impaired users are able to access our website via screen reader software or a braille display. In 2016, we provided a link to the User Friendly Internet Banking website directly on the home page of our personal Internet banking website, providing greater convenience and favorable user experience for visually impaired users. SD Stratregy of

˙Insurance care trust product: Care and protection

In response to the growth of aging population and decline in birth rate and to realize the third sustainable development goal (SDG) (Good Health and Well-being), E.SUN is the first financial institution to cooperate with an insurance company to introduce an insurance care trust product that incorporates long-term nursing care. When the insured sustains injuries causing physical disabilities or dementia, the trust mechanism facilitates ensuring that the insurance bonus provided serves its function of caring

for and protecting the insured. Under the trust framework, a trust supervisor can be appointed to ensure that the insurance and the FIR Stratregy of SD claim is applied to protecting the insured.

˙Microinsurance to ensure basic financial protection to underprivileged citizens

To provide the economically underprivileged in the country with basic personal insurance coverage and to fill the gap of the government's social security programs or social assistance mechanism, as well as to fulfill our corporate social responsibility, and realize SDG 1 (No Poverty) and SDG 2 (Zero Hunger), E.SUN has partnered with insurance companies to offer microinsurance

policies to this sector of our society to cover specific risks. Governance （ G ˙Strengthen the banking services of developing countries ）

The concept of inclusive financial system proposed by the United Nations in 20005 is aimed at enabling every developing country to possess a complete financial institution system where suitable financial products and services are provided to everyone, especially economically disadvantaged groups that cannot access financial services easily through conventional financial systems. Social （ S ） As one of the few financial institutions in Taiwan to own subsidiaries in Cambodia, E.SUN has not only shared its experience in financial development with developing countries but also acted as a promoter of the inclusive financial system, supporting microfinance institutions (MFIs) in Cambodia. Through MFIs, E.SUN can indirectly service groups (e.g., people from rural areas, those living in poverty, and micro-enterprises) that are often neglected by traditional financial institutions, bestowing economically disadvantaged people in developing countries the chance to start their own business, improve their quality of life, and escape from poverty. As at the end of 2016, E.SUN's Cambodian subsidiary - Union Commercial Bank PLC (UCB) has approved loans to six MFIs to the value of NT$600 million. Environment UCB offers Internet banking service with which customers can inquire about their account balances. In addition, UCB also

provides electronic credit card services, including e-bank statements for customers and affiliated stores. Since January 2017, （

UCB offers credit card transaction SMS services, using technologies to facilitate enhancing local financial development (SDG E 9) and strengthening its partnership with the local government (SDG 17). ）

CSR REPORT 2016 - 47 - the Chairman Letter from performance 2016 Sustainable ˙ 2.2 Digital Finance

GRI：203-2 GRI G4：FS5、FS7、F8

Chronicles E.SUN E.SUN is committed to developing a digital financial platform and supporting the FSC Bank 3.0 pollicy for online services. Combining our database, innovation capability, and technologies, we focus on developing a new payment platform that offers both online and offline channels as a means of extending payment platforms to settings where frequent transactions take place and developing such platforms in new payment markets.

Engagement Stakeholder In support of SDG 8 (Decent Work and Economic Growth), we designed a fair open platform for SMEs in Taiwan so that SMEs can buy and sell products anywhere across the world. In addition to continuously developing and expanding financial services across different borders, E.SUN leverages the strengths of financial intermediaries and digital media to develop Internet Plus products for SMEs. With these products, SMEs can capture opportunities to improve their revenue and identify risks, using a payment platform to access comprehensive business information and financial services. SD Stratregy of E.SUN has developed a wide variety of customer-oriented browsers and mobile digital platforms, which enable customers to enjoy exclusive financial services on different digital devices (e.g., computers, laptop, mobile phones) anytime and anywhere. These platforms can also facilitate enhancing service efficiency.We employed big data analysis to accurately ascertain customer needs and afford financial services that can solve customers' problems. Customized digital marketing and technologies are adopt- and the FIR Stratregy of SD ed to provide customers with heartwarming digital banking experiences.

However, the constant development of new technologies implies the possibilities of new risks imposed to new technological applications. Therefore, while developing digital innovative financial services, we place additional emphasis on reinforcing information security related systems to comprehensively monitor new risks arising from the use of new technologies in order to create a safe and convenient financial service environment. Please refer to 2.3.2 Customer Privacy Management for details on information Governance security management. （ G ） Social （ S ） Environment （ E ）

- 48 - the Chairman Letter from 2.2.1 Electronic payment: A convenient payment platform By developing domestic and foreign e-payment platforms, E.SUN encourages merchants and consumers to develop the habit of using e-payment apps, and in turn increases the number of noncash transactions in Taiwan, thereby advancing toward a cash-free society. E.SUN integrates payment and information services to facilitate cross-border transactions, helping Taiwanese merchants to conduct secure cross-border transactions. E.SUN continues to cooperate with domestic and foreign merchants (including online/offline channels) and payment institutions to build a comprehensive and convenient e-payment lifestyle for the society of Taiwan. E.SUN offers payment services performance 2016 that help vendors attract customers and also merchants digital services that facilitate the business management

of small and large merchants to help them increase their revenues. Sustainable

Development of e-payment platforms in 2016

˙Mobile scan payment: More business opportunities for Taiwanese merchants Chronicles E.SUN

In collaboration with Ant Financial Services Group's Alipay payment platform, E.SUN launched the cross-border, O2O QR code payment services in November 2015 to enable visitors from Mainland China to pay for their purchases on the Alipay platform with their mobile handsets, or purchase products from Taiwanese shopping website by using Alipay or Tenpay. Merchants are able to price goods/services and receive payments in NTD, without incurring exchange rate losses.

˙Multi-payment platform: Engagement Stakeholder Accelerating the promotion of e-payment market in Taiwan To create a more convenient e-payment environment where Taiwanese consumers can easily complete a transaction by using e-payment apps, E.SUN employs a common infrastructure and application programming interface (API) to allow Taiwanese merchants and electronic wallet operators to access E.SUN's multi-payment platform. With only a single machine, Taiwanese merchants can accept multiple e-wallet payments, which prevent redundant investment in software/hardware and unneces- sary social costs. In addition, this approach can make use of the space inside a store, simplify check-out and accounting processes, and enhance payment convenience for consumers. It also resolves the problem in which a diversity of payment

options is provided in the market but most of them are not accepted by vendors, and facilitates progress in electronic payment SD Stratregy of services in Taiwan.

˙Multi-card receiving platforms: Creating value for customers

The multi-platform for card receiving provides services to our partnering merchants that are not limited to credit card. It also and the FIR Stratregy of SD includes a diverse set of payment collection tools with multiple features. With respect to payment collection mechanisms, apart from credit card, debit card, collections and payment transfer, we also make adjustments to terminal collection equipment. Moreover, we seek external strategic partnerships to create even more channels for payment collection, including electronic tickets, cross-border payment and e-wallet services. We also incorporate barcode scanning payment to offer a one-stop payment collection solution that is both convenient and diverse, and which improves transaction efficiency and consumer experience, thereby increasing consumer usage and offering our merchants the best possible payment collection solutions.

˙E.SUN Wallet: Governance Brand new e-wallet experience （ G

E.SUN Bank launched an in-house developed e-wallet service, the "E.SUN ） Wallet" app, in December 2015. The app utilizes the latest host card emula- tion (HCE) technology to transform physical credit cards into virtual card numbers that are stored replacing on a cloud server. The app is an e-wallet that makes NFC transactions without SIM cards. Customers only need to download the "E.SUN Wallet" app, complete the authentication procedure, and add a credit card to the app. In addition, E.SUN Wallet allows customers Social to store more than one card in the app and choose which card to use in just （ S ） the same way that customers use conventional credit cards. Thus customers can truly feel what it is like to go out without their wallet. A new barcode feature was added in September 2016. Customers can use barcodes or QR codes to make payments and also collect points, redeem O2O bonus points, and use other value-added services. In addition, customers can employ the product voucher function to redeem their bonus points fir e-coupons. Customers will then be able to redeem these coupons for goods by present-

ing the barcodes for scanning by merchants. Environment （ E ）

CSR REPORT 2016 - 49 - the Chairman Letter from

2016 Development outcomes of e-payment platforms performance 2016 Sustainable Chronicles E.SUN Engagement Stakeholder

Since the launch of the cross-border O2O business in 2015, over 11,000 stores are now using E.SUN's cross-border wallet service, and these stores, including large chain stores, such as convenience stores, and small and medium stores in Taiwan such as the Ningxia nightmarket, business district in Ximending, and Liuhe nightmarket. E.SUN simultaneously provides partnering merchants e-wallet data SD Stratregy of analysis, marketing, digital financing, and other value-added services to help SMEs develop and aid Taiwanese merchants to capture more business opportunities and improve the management of their payment platforms.

and the FIR Stratregy of SD 2.2.2 Digital banking: Providing new interactive experience for customers E.SUN is the first financial institution in Taiwan to invest in network platform management. Our website is the most visited website among our peer industries, with over 10 millions users visiting our website. Cross-platform integration enables us to refine our digital service quality, rendering warm and memorable services to our customers. A comprehensive smart platform maximizes the effects of big data applications, promoting a substantial growth in overall flow traffic volume. The considerable growth rate made E.SUN the Tier 1 bank with the highest growth in flow traffic volume. In 2016, we set our goal to increase the growth of online transactions to 20% of the total card spending. In terms of foreign exchange, we aim to increase the amount of digital purchases to an amount equivalent to Governance that of 137 branches. （ G ）

Current status of innovative digital banking services in 2016

Social ˙ （ S ） New version of mobile banking: Creating the best customer experience

To create the most favored and user-friendly mobile banking app, E.SUN is devoted to developing mobile apps and constantly improving these apps by introducing push notification functions that notify customers of any changes to their account balances or investment performances. We are also committed to examining the latest app designs in the market to improve our financial services to one that better accommodate customer user habits.

In 2016, E.SUN upgraded its mobile banking app, incorporating a waterfall interface that enables customers to browse their

Environment account information easily as if they are browsing their social network apps. Account information is presented graphically, allowing users to understand the content at a glance and reducing the threshold of traditional financial information. Functions （ most often used by customers are placed on the home page. Based on an analysis of how customers operate the app, the E

） operation procedure was redesigned, reducing 60% to 70% of the entire transaction process so that customers can complete a financial transaction quickly and customize their function settings according to their needs.

- 50 - the Chairman Letter from

˙New E.SUN website: Highest number of visitors

Since E.SUN's official website was launched, it has combined big data and customer database, creating interactive experiences, instant feedback, and customized service features that allow customers to access the latest information on their mobile performance 2016 devices and enjoy customized services. Beginning with the official portal, users are presented with context-based graphics that guides them through all website functions, which is designed with e-commerce in mind. Menus and user interface elements Sustainable facilitate search, and convenient building block configurations create customers' favorite digital contents that define the decisions they make. In the "Digital financial section," the "online teller" is available 24/7 throughout the year. Customers are not limited by time or space and can apply for credit cards or personal loans, manage their money or make payments with this one-stop-shop service. Chronicles E.SUN

信用卡貸款網路銀行預處理服務

線上櫃台 Engagement Stakeholder

財富管理金流申請繳費稅表單下載

˙Online bill payment: Making payments at ease

Customers can use payment services via our online platform and paper-based application forms for various utilities. The simple SD Stratregy of application procedure enables customers to make payments effortlessly. Our customized electronic statement offers useful features based on the customer's purchase pattern. Events and special offers that may be of interest to the customer are made available via this service.

˙E.SUN's 24-hour seamless customer services and the FIR Stratregy of SD In addition to a 24-hour customer service hotline, a Smart e-Customer Service app was also introduced in April 2016, which acts as a little portable financial advisor that interacts with customers through texts. Customers can use the smart text customer service on their mobile phone, computers, or iPad and ask their questions by typing them out on the dialogue window, to which they will receive a wide array of information regarding financial products. These heartwarming services can satisfy the needs of overseas customers and those with hearing impairment. Customers also can get in touch with our customer service representatives via our "VoIP" and "visitor message board" to access immediate assistance. Governance （ G ） Social （ S ） Environment （ E ）

CSR REPORT 2016 - 51 - the Chairman Letter from

˙Innovative digital financial services: Capturing investment opportunities for customers

Between 2015 and 2016, E.SUN has successively introduced the following innovative digital financial services: performance 2016 Requesting an assessment of the Assignor's ability to withstand risks (KYC) Sustainable and principal agreements for trust contracts The E.SUN personal online banking website makes available first-time KYC and online signing and renewing of principal agreements for specific monetary trust contracts. These convenient digital services can improve operational efficiency and also reduce the amount of papers used, thus achieving the goals of energy efficient carbon reduction. Chronicles E.SUN Mobile financial consultant APP FES Financial Management

To accommodate the growing prevalence of For the purpose of providing convenient digital mobile devices and customers' need for digital transaction functions, efficient financial advisory services, E.SUN Bank is the first to establish a services, and low-risk operations, E.SUN is the first "Mobile Financial Consultant" app and the first in the industry to launch the "FES Financial wealth management bank to equip financial Management" function. Using their tablet advisors with tablet computers for providing computers, financial advisors can plan a Engagement Stakeholder customers with investment consultation customer's investment portfolio with this function, services. With a cross-system integrated app and the customer confirms the portfolio via and fun-filled interface, the tablet computer mobile banking. This process reduces the can be used to conduct searches and temporal and spatial limitations inherent in a introduce customers to products, and this financial service. approach is a breakthrough from previous methods in which information is presented in hard copies. Mobile banking Subscription The mobile banking app has also added the new "mutual fund subscription" feature, which incorporates SD Stratregy of the fund stop-loss/stop-gain notification service. Customers can now gain timely access to their investment portfolios and market information via a variety of channels with these paperless and environmentally friendly digital services.

and the FIR Stratregy of SD Outcomes of innovative digital banking services in 2016

˙ Since the new version of mobile banking went live in October 2016 to the end of 2016, 280,000 users have installed the app on the Android system, accounting for 66% of all banking app installations. This app received the highest rating, making it the No. 1 downloaded app under the finance category. Regarding business growth, the number of transfers increased by 34%, the number of foreign currency transactions grew by 76%, and the number of applications for push notification went up by three folds. Mobile opportunities are the primary targets of the market. In the future, E.SUN will continue to customize smart services based on customers' lifestyle needs. Governance ˙ E.SUN's new website has been visited by over 50 million users in 2016 ever since its official launch. Our digital foreign

（ exchange service allows more customers to experience easy access to digital foreign exchange transactions. In 2016, the

G new funds in our digital foreign exchange channel were the same as the new foreign exchange funds that are obtained

） through our 137 physical branches, and more than 50% of the funds are obtained through digital channels. Our innovative real-time push notification mechanism for pushing exchange rate information has prompted considerable growth in transaction rates.

Taiwan Outstanding The 16th Best Enterprise The "Best User Experience" Social （ S ） Financial Business Elite Award One More Click Award and Product Website the Best New Generation The Best Digital Banking Award of the Year Website Service Category

〈External recognition〉

˙ Given the rapid development of customer mobile and community lifestyle, E.SUN's social media has yielded significant results. The number of E.SUN Lucky Cat followers reached 230,000 since the fan page was established in 2010. The new E.SUN Bank - Digital Lifestyle and Offers fan page also attracted 50,000 followers, and E.SUN Bank's official LINE account also Environment incorporated over 3 million friends in as short as six months. （ E ） ˙ Percentage of digital customers with E.SUN Bank’s account：

Year 2013 2014 2015 2016

Percentage of users in digital service（%） 74.0 75.6 75.0 81.2

- 52 - the Chairman Letter from

˙ 2.3 Customer service

E.SUN Bank believes there's always room for improvement in the quality of services that we provide. To performance achieve customer satisfaction and to enhance customer value, the Bank dedicates itself to becoming 2016 an exemplar for the financial industry and a benchmark for the service industry, leading its peer industry Sustainable to introduce concepts such as refined services and comprehensive innovation into the financial sector. Recognition and awards of E.SUN’s customer service performance in 2016 are listed below.

E.SUN Bank E.SUN Bank E.SUN Bank was top-ranked among received e-solution received

financial institutions partner bank Wealth Management Survey Chronicles E.SUN in Golden Service Award in Taiwan Best service provider for five times 〈The Asset〉〈Wealth Magazine〉〈CommonWealth Magazine〉 Engagement Stakeholder 2.3.1 Protecting customers' rights

GRI：102-2、417-1、417-2、417-3 GRI G4： FS15、FS16

E.SUN aspires to be the most trustworthy and reliable financial institution that strictly adheres to its spirit of "risk

management above all" in the legal compliance and risk management of its business activities, including product SD Stratregy of services, marketing projects, advertisements, and operating procedures. Such measure is aimed to protect customers' rights and maintain the Company's service quality. We formulated the E.SUN Bank Fair Customer Treatment Policy and Strategy and E.SUN Securities Fair Customer Treatment Policy and Strategy as the Company's value system and code of conduct with which all employees can comply. In addition, we adopt principles of fairness, equality, and reciprocity to ensure that the interests and rights of financial consumers are protected. Regarding customer complaints and dispute handling mechanisms, we have devised E.SUN Bank Consumer Handling Guidelines and E.SUN Securities Consumer Dispute Handling Procedures, providing customers with a fair and the FIR Stratregy of SD and transparent complaint filing channel (please refer to 2.3.4 Customer Complaint Filing Mechanism for details regarding channels for filing complaints). The channel aids us in quickly handling customer opinions to keep in harmony with our customers while elevating customer satisfaction and building a lifelong, reciprocal relationship with our customers.

Accountable unit of customer right protection Governance To manage customer responses from different channels, E.SUN has created a Customer Experience Team that

compiles a summary of customer opinions and conducts analysis, review, and improvements. The team submits （ annual report to the board of directors and management team as a way of showing the value we place on G protecting customers' interests and right. To implement comprehensive quality control and support the rules of ） each business unit and regulatory requirements, E.SUN has established departments that oversee issues relating to the protection of customers' rights. Each department personnel actively participates in system design and testing to facilitate business development and compliance with relevant regulations. Social （ S ） Products and service marketing

E.SUN offers a diverse range of financial products and services and adheres to national and local laws in product and service marketing. To provide accurate financial information for customers and ensure that customers are fully aware of product characteristics and their own rights, we not only provided detailed product descriptions on our website and in our product manuals and prospectuses, but also disclosed relevant expenses, risk factors, and terms and conditions on application forms for customers. Mortgage calculation Environment

function is also provided on E.SUN's official website for customers. （ E With respect to the use and protection of consumers' personal information or particularly important provisions ） and clauses in application forms, the relevant words are clearly labeled in distinct colors or fonts to ensure that customers fully understand their rights, possible risks, and how the Bank makes use of their information.

CSR REPORT 2016 - 53 - the Chairman Letter from

Prudent transaction management mechanism

E.SUN establishes the transaction procedure of its wealth management service following the laws and regulations of performance 2016 the competent authority, including the Financial Consumer Protection Act, Regulations Governing the Suitability of

Sustainable Financial Products or Services for Financial Consumers in the Financial Service Sector, and Regulations Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises. To comply with regulatory requirements and ensure the security of customer's transaction, E.SUN has established control measures and stringent internal control principles for different transaction channels, and detailed operating procedures cover all processes from front-office transactions to back-office settlement. Mutual checking is performed, and regular internal audits and special audits confirm the accuracy of customer transactions. Customers making transactions over the counter must complete and sign the transaction application form. Financial advisors visiting customers in person must also comply with the operating regulations for wealth management service. With Chronicles E.SUN respect to placing orders via virtual channels such as telephone, Internet banking, or mobile banking, E.SUN takes into consideration user convenience and also adopts the highest inspection standards to verify customer identity and password, with the hope of adopting a sound risk control mechanism to making customers feel at ease when placing orders. In addition, our internal regulations require that bank staff can look up customer account information or carry out transactions only if there is a business reason to do so. Bank supervisors or employees may not access customers' information or conduct transactions on their behalf without authorization if the bank supervisors or employees are financially associated with the transaction targets. When operating the transaction system, warnings about the protec-

Engagement Stakeholder tion of personal information will be displayed on screen to remind users of their responsibility to protect customers' privacy.

Monitoring market condition to protect customer's assets

E.SUN is committed to protecting customer assets. The Wealth Management business unit selects signature financial products that are in line with the latest trends, adhering to strict product review processes to verify that the products SD Stratregy of are legit, appropriate, and meet customers' investment needs, which reduce the possibility of selling disputable products. Product review systems are shown in the Table below.

Product items Review Mechanism

To sell suitable financial products and take into consideration both business performance and risk management, we created a Wealth Management Product Review Work Group in accordance with FSC's Regulations Governing the and the FIR Stratregy of SD Wealth Suitability of Financial Products or Services for Financial Consumers in the Financial Service Sector, and Regulations management Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises. According to the key review items prescribed in regulatory requirements, products are reviewed before they are placed on the shelves.

In accordance with Regulations Governing Offshore Structured Products and Regulations Governing Review and Structured Management of Offshore Structured Products, we formulated the Regulations Governing the Establishment of a Product products Review Committee and Review Procedure Internal Management for Offshore Structured Product Services. These regulations serve as a basis for handling matters related to offshore structured products.

Governance Regarding investment-type insurance products for elderly customers, E.SUN requires at least one of their children to

（ accompany them and sign the "Consent Form for Confirming the Rights and Obligations of Insurance Purchase under

G Accompaniment". The subsequent insurance processing procedure is commenced only after confirming the insurance ） application with the applicant and the accompanying person on the phone in order to protect the rights of elderly customers.

In addition, E.SUN has developed a comprehensive management mechanism to respond to major incidents. When an emergency situation or incident arises in the market or if significant changes in a major economic indicator have occurred, the Company's team of experts will meet immediately to discuss market outlook and any response measures Social （ S ） that should be taken. In addition, customers that we judge to be affected most by the incident will be notified within 24 hours by text.

Strengthening employees' professionalism in product marketing Environment E.SUN has cultivated a team of financial specialists who educate sales personnel or related marketing personnel on

（ compliance with laws related to product and service marketing. Such training aims to improve their professionalism E

） and their ability to provide safe financial services. We incorporate customers' investment returns into our sales personnel's performance assessments in replace of a reward system based on sales performance so that our sales personnel or marketing personnel can provide suitable asset allocation advices from customers' perspectives. When the competent authority announces regulations for new products or new processes, business management unit will initiate training programs immediately. The training is focused on the influence of these new products/processes on customers' rights and improving sales personnel's ability to provide customers with the latest and most accurate information.

- 54 - the Chairman Letter from

2.3.2 Customer Privacy Management

GRI：418-1 performance 2016

We attach a great level of importance to the security of customer's personal information. Information security is Sustainable extremely crucial as the prevalence of digital financing increases. To prevent information leakage while customers use our digital services, we complied with personal information protection laws and formulated stringent management mechanisms and measures. In 2016, E.SUN did not receive complaints relating to infringement of customer privacy or loss of customer information.

Personal Information Security Protection Policy Chronicles E.SUN

In May 2015, we received the latest ISO/IEC 27001 international certification for the Information Security Management System (ISMS), and ever since then we have remain committed to information security management. In conjunction with Taiwan's Personal Data Protection Act and the overall plans drafted by E.SUN FHC and subsidiaries, we have commissioned experts to perform a full-scale inventory of our information operations, review all processes, and examine and strengthen the company's existing information system framework and hardware/software specifications, ensuring that they meet the highest standards and can maintain the security Engagement Stakeholder and confidentiality of customer information.

In accordance with relevant regulations of personal information protection, E.SUN regularly conducts annual inspection to verify the current situations of its personal information database and complies with the E.SUN FHC and Subsidiary Guidelines for Personal Information Management and Organization to examine and adjust the Personal File Checklist and Overview of Corporate Information Flow, and incorporate them in the scope of this program and the handling method. SD Stratregy of

Information safety management mechanisms

All systems that are used to service customers are established using stringent regulations and undergo strict information security testing such as program code security scanning, system penetration test, and other automated testing. In addition to conducting internal tests, we also employ external information security partnering vendors to conduct external information security testings (e.g., external manual penetration test, and the FIR Stratregy of SD fraudulent activity inspection, and fake app detection) on all of E.SUN's systems to make system changes and perform risk assessments as a means of monitoring any changes to reduse risks of human error.

Information security management is executed by the Chief Information Officer and Deputy Chief Information Officer, who are responsible for the review of short/mid/long-term development plans for information operations, review of information system security policies and security measures, information system development plans and resource promotion operations, training of Information Division personnel, project management, and external reporting. Governance

The Information Division develops audit plans for the next year based on the ISO/IEC 27001 standard, conducts （

external auditing every half year and executes internal auditing, and determines the scope and method of G each auditing plan. Internal auditing group members must receive appropriate auditing training. If non-con- ） forming items are identified during the auditing process, a correction proposal is developed for subsequent improvements. E.SUN performs self-inspection during the internal audit that is conducted semi-annually and identifies potential problems as early as possible to implement corrective and preventive measures and lower operating risks. Social Regarding information security audit, the Auditing Division regularly conducts general audits on every informa- （ S ） tion operating units and project audits, and incorporate additional item audits on specific information security operations. The audit results are communicated to the unit under audit for inspection and improvement and are submitted to the competent authority, E.SUN FHC, and E.SUN FHC Audit Committee.

Reporting and management of information security related events:

Records and Event Classification Handling Events Environment （

Events are recorded and classified according The time allocated to handle different levels of E ） to the degree of impact and urgency level into events differs. Events of higher levels are given four levels. higher priority. If the cause of an event cannot be determined when classifying events, then problem management form is required to ascertain the cause of the event.

〈Reporting and management of information security related events〉

CSR REPORT 2016 - 55 - the Chairman Letter from

To strengthen information security management, external information security experts are employed to conduct penetration testing to facilitate identifying possible problems and make amends as soon as possible. Regarding internal operations, data leak prevention (DLP) systems for emails, Internet connection, and USB access are installed. If any sent emails or USB access violate DLP policy, the head of the Information Division must review the emails or USB access before the emails can be sent or USB access is granted. If the Internet connection violates the DLP policy, then such performance 2016 access is denied directly. Sustainable As increasingly more hacker groups are formed to launch advanced persistent threat (APT) on specific targets, international corporations have successively experience information leakage and other information security incidents. In particularly, sending emails to a specific target and attaching links to malicious websites in the email are the main methods of attack. In addition to adopting security measures such as malicious website filtering and intrusion prevention system (IPS), E.SUN has also added more measures against APT with respect to email and Internet access to further prevent targeted attacks. Chronicles E.SUN E.SUN's Corporate Online Banking website: Comprehensive security measure

For corporate customers, the security of online transactions is particularly important because a slight negligence may impose risks to corporate operations. To create a safe transaction environment for corporate customers, E.SUN's Corporate Online Banking website employs CAPTCHA test when customers

Engagement Stakeholder attempt to log onto their Internet banking, and conducts end-to-end encryption on the passwords. The transactions are made under the support of process control and security authentication device. WEB firewall is established to prevent against malicious programs. In future, we will continue to E.SUN Corporate conduct security testing on program codes to ensure that our Online Banking corporate customers can complete transactions more conveniently and safely. SD Stratregy of

Enhancing employees' awareness on information security

We are fully aware that even a precise information security defense tool cannot guarantee 100% protection. Therefore, the information security awareness of our employees represents the most important defense in information protection. and the FIR Stratregy of SD Therefore, we request all E.SUN personnel responsible for transactions (including front, middle, and back office personnel and brokers) to assume responsibility for maintaining strict confidentiality. Except when required by law or formally authorized, all transaction information is kept confidential, preserving customers' information security. To maintain the fairness of market transactions, no transaction related personnel may use internal information to perform unauthorized transactions for personal gain or to benefit a related party. In addition to regular information security lectures, an email social interaction project drill platform is developed to conduct monthly drills at irregular intervals to enhance employees' security awareness.

Governance We protect the rights and personal information of customers through the use of rigorous internal controls and highly user-friendly transaction platforms, which offer customers a secure, stable, and fast transaction environment. We （ comply with the regulatory authority's laws and regulations when implementing transactions and account operations, G

） and also pre-transaction planning, during-transaction monitoring, and post-transaction audits in accordance with our thorough, rigorous operating procedures. We have also incorporated elements of legal compliance into our employee performance appraisal procedure, conducted regularly scheduled compliance training so as to improve the quality and quantity of our legal compliance operations. Social （ S ） Helping customers protect their information

To help customers protect their personal information and to prevent customers from visiting phishing websites and being tricked into give information away, E.SUN Bank checks fake websites and apps on a monthly basis. Websites or apps suspected of disguising themselves as offering the bank's services will be reported to reduce the number of victims. Environment

（ We also try to prevent unauthorized use of credit cards by launching "push notifications on transaction". The service

E alerts customers of transactions regardless of amount. The mechanism provides better protection and help customers ） reduce the risk of unauthorized use of their cards.

- 56 - the Chairman Letter from

2.3.3 Customer service quality

GRI：102-44 performance 2016

We are committed to providing better services by gaining a better understanding of customers and designing Sustainable more innovative, more diverse products and services (please refer to the chapter on 2.1 inclusive finance and 2.2 digital finance). We are always making improvement to the service quality management system and to service efficiency in order to create more value for customers.

E.SUN Securities passed the ISO 9001: 2015 Quality Management System verification in 2016, the first security broker in Taiwan to receive the new ISO9001 verification. By formulating clear quality policies and quality goals and

devising relevant operating guidelines and management handbook, E.SUN Securities upholds the spirit of devel- Chronicles E.SUN oping standard and systematic operating procedures and accepts comprehensive inspection and integration.

Service Quality Management System

To continue providing high-quality services, E.SUN has established a Total Quality Management (TQM) Commit- tee, which is chaired by the Chief Brand Officer. Subsidiaries may establish work groups when deemed neces- Engagement Stakeholder sary to execute comprehensive management of quality monitoring. Comprehensive quality promotion entails service management planning and analysis of customer responses. Committee meeting emphasizes vertical and horizontal communication within the organization to continue process refinement. The TQM Committee convenes at least two meetings every year, and ad hoc meetings may be convened as needed. Relevant personnel must attend the meeting during which they will submit reports of issues for discussion, conduct inspection, and provide suggestions.

Each unit of the subsidiary has appointed Customer Service Officer and a Regional Customer Service Officer SD Stratregy of Team to help the Customer Service Division manage customer service activities, such as arranging weekly customer service schedule, service case discussions, and regional customer service meeting.

Sustaining high-standard service quality

To improve professionalism, efficiency and service quality in the workplace, quantitative management indicators and the FIR Stratregy of SD are designed to use data to manage service quality at E.SUN. The indicators measure "operation quality" and "customer satisfaction" (weighted at 50% each). The scores are also made part of the performance evaluation indicators. Units delivering excellent services will be rewarded while those below average will be given more training. Furthermore, the Customer Service Division supplies teaching materials and complaint case studies based on customer feedback on a monthly basis. In addition, the management units provide training courses and video conferences for respective product lines in order to consistently deliver services up to customers' standards in a systematic, methodical and organized manner. Governance Year 2013 2014 2015 2016 （ G

Service quality score 88.63 89.55 91.08 92.01 ）

〈Annual service quality assessment〉

Digital service: Enhancing customer service efficiency Social （ S ）

In March 2016, Taipei Branch of E.SUN Bank commenced operation, which is the first flagship service outlet featuring digital banking and arts that provides customers with online/offline seamless financial services, interactive digital financing experience, exclusive account opening advisory services, exclusive corporate counters, and fast and friendly financial services. Innovative technologies including a Small-i Robot, which combines artificial intelligence and big data analysis, are used to provide simple financial advisory services and interactive experi-

ences for customers. E.SUN also introduced the iPayment automated machine, which can be used to make Environment payments and inquiries, print bills, and exchange cash for change, （ E

enabling customers to lead a ） more convenient lifestyle. E.SUN endeavors to seek a full range of innovative financial services. Please refer to 2.2. Digital Finance for details on innovative digital services.

CSR REPORT 2016 - 57 - the Chairman Letter from

Digital services simplify complex transaction procedures. Through a digital platform, we integrated deposit slip functions and features that allow customers to schedule an appointment to open an account. Customers can complete their account opening information on various electronic devices and enter their transaction details before using a digital platform for complete their banking transaction.Branch employees will show customers performance 2016 how to use the digital platform, creating a memorable experience for customers.

Sustainable The advancement of digital technologies has steered bank customers toward using Internet and mobile digital platforms to make transactions. We actively invested in developing digital financial platform and online services to enhance customer experience. For example, E.SUN Securities is the first security broker to introduce an innovative A+ Mobile Ordering app (Winner version), online password application service, fingerprint identification login and ordering function, and an exclusive Certification Treasure Box System, which analyzes the common ordering problems experienced by investors. Thus, customers can enjoy efficient, convenient, and a secure banking experience during the investment process. Chronicles E.SUN

Safety 玉山證券致力提供您多元化整合行動服務， Engagement Stakeholder 更多智慧、更多便利，帶來美好新生活！數位創新服務 3S

E.SUN A+Mobile Ordering (Winner version) Stability Speed SD Stratregy of

E.SUN Securities developed the one and only AI robot in the securities market—E.SUN Smart Cat Housekeeper. The core value of this

and the FIR Stratregy of SD innovation is a smart, heartwarming investment consultation service that provides prompt responses to any questions. Customers are given the opportunity to experience a service that is distinct from those in the market and enjoy a brand new service experience in using text-based communication and a 24-hour customer service. In 2016,

E.SUN E.SUN Smart Cat Housekeeper received the Wealth Magazine FinTech Innovative Application Award of Excellence. Governance （ G ）

Customer satisfaction surveys Social （ S ） E.SUN's outstanding services have always been recognized by many customers and received the highest number of service quality awards in the banking industry. E.SUN is the only financial institution in Taiwan to have received three National Quality Awards. We regularly investigate the satisfaction of our new customers to reinforce customer relationship, and we also conduct interviews at physical branches to interact with our customers directly and deliver warm and memorable services.

Environment In 2016, we distribute online questionnaires to new customers, new loan customers, credit obligors, and customers seeking financial advices within a week after they have received E.SUN's service, to collect their feedback and sugges-

（ tions regarding their experience with E.SUN. A total of 150,000 questionnaires were distributed in 2016, and 90% of the E

） customers expressed their satisfaction with our service in the questionnaire.

In future, we will continue to provide better services, improve service quality management and operating procedures, and develop customer-centric digital services based on the core values of safety, stability, and speed, in hopes of earning customers' trust and support through satisfactory services.

- 58 - the Chairman Letter from

2.3.4 Customer Complaint Filing Mechanism To provide customers with excellent services and to continue to cultivate customer relations, E.SUN has established a customer feedback handling procedure, in which customer problems are responded within either 24 hours, 3 performance days, or 15 days depending on the level of the problem reflected by the customer. E.SUN provides diverse 2016 feedback channels, including: Sustainable

1 2

Customer suggestion boxes at all of our 137 branch offices. Visitor message board on our official website, and QR Code Chronicles E.SUN system and postage-paid customer surveys to collect comments and suggestions from our customers.

3 4 Engagement Stakeholder

Dual customer service centers in Northern and Southern E.SUN e-Services on our official website, mobile banking app, Taiwan with the 24-hour hotline: and fast and friendly financial services: Smart text customer (02)2182-1313 0800-30-1313 service - a portable, convenient service combining artificial intelligence to provide immediate response to customer queries and simple accounts inquiry function. Customers can as a way of strengthening a customer service that is available also get in touch with our customer service personnel via smart SD Stratregy of 24/7 all-year round. text customer service, VoIP, and messaging service, to solve their problems with greater efficiency. These channels provide a seamless network of financial services for our customers.

5 and the FIR Stratregy of SD

E.SUN Bank's official LINE account, E.SUN Lucky Cat fan page, and E.SUN Bank Digital Lifestyle and Offers fan page, which are social medial through which to interact with customers and help them solve their problems. Governance （ G ） Social （ S ） Environment （ E ）

CSR REPORT 2016 - 59 - the Chairman Letter from

˙ 2.4 Happy Workplace performance 2016 E.SUN strives to make the workplace the second home for employees. E.SUN approaches human resource management from four directions and ensures every employee is given the opportunity to Sustainable shape their future as long as they are willing.

2.4.1 Equal employment opportunities and employee rights Chronicles E.SUN

GRI：102-8、102-41、202-2、406-1、408-1、409-1、412-1、412-3

Human rights management Engagement Stakeholder In 2016, E.SUN published the "Declaration on Human Rights" on its website and established the due diligence program. The Corporate Social Responsibility Committee is the body that invites managers and employees on all levels in all departments to review human rights issues and identification and evaluation of the recruitment policy on a quarterly basis in order to ensure an effective human rights policy. Declaration on Human Rights SD Stratregy of Human Rights Study Project Subjects Issues

1. Child labor, forced labor, and discriminatory Establish E.SUN's human rights vision criteria based on the E.SUN CSR policy in its 2. Fair pay and promotion corporate vision and issues of 3. Safe workplace and working hours Review interest to stakeholders. assessment tools 4. Freedom of association and right to bargain and processes, All employees collectively and the FIR Stratregy of SD re-examine and Review 5 Employment of people with disabilities modify human regularly 6. Feedback channels rights related potential actions and human rights commitments, issues in and explore different areas 1. Money laundering other potential and assess 2. Terrorism financing human rights implementation Establish 3. Violation of economic and trade sanctions issues currently of the Potential Business 4. Financial crimes including fraud, tax evasion, not being vision declaration of Risk bribery, and corruption assessed. human rights. Governance

（ 1. Personal information protection

G Review Assess 2. Service quality and consumer rights

） improvements impact 3. Credit risk 4. Responsible lending and investment Customers 5. Unfavorable human rights issues involving corporate borrowers Social （ S ） Supervise Devise execution plans 1. Ethical corporate management 2. Impact of unfavorable human rights issues Business partners involving primary suppliers

Implement mechanisms to supervise, monitor, Having identified the and evaluate impact of potential 1. Improve educational resource allocation improvement plans in human rights issues,

Environment (E.SUN Golden Seeds Project) order to stay informed initiate discussions in the 2. Promote financial education of mitigation of Corporate Social （ potential impact. Responsibility (E.SUN Parent-Child camp)

E General public Committee and propose 3. E.SUN Cultivate outstanding management ） plans for improvement. talent scholarship

〈E.SUN Human Rights Framework〉

- 60 - the Chairman Letter from

Diverse workplace

The E.SUN recruitment policy is based on equality and human rights. E.SUN supports diversity in the workplace performance by offering equal opportunities regardless of gender, race, age, political inclination, marital status, and family 2016 conditions. Sustainable

Employees of E.SUN FHC and its subsidiaries Chronicles E.SUN

43.8% 56.2% 56.6% 43.4% Engagement Stakeholder

〈Taiwan〉〈Overseas〉

Male：3,520 Male：159 Female：4,525 Female：122

Total: 8,045 Total: 281 SD Stratregy of

Total: 8,326 （Unit: people）

（Male: 3679, 44.2%；Female: 4647, 55.8%）

Note: There was no non-regular employee in 2016. Majority of E.SUN's business operation based in Taiwan in 2016 with local hiring ratio and the FIR Stratregy of SD of 100%. The definition of employees is the annual average number of employees in 2016.

Education Governance 5.4% 0.6% 2.1% 3.2% （ G ） 21.6% 39.5%

72.4% 55.2% Social （ S ）

〈Taiwan〉〈Overseas〉

Master：1,734 Master：111 Environment Bachelor：5,826 Bachelor：155 （

College：431 College：6 E ） High school and below：54 High school and below：9

Total: 8,045 Total: 281 （Unit: people）

GRI：405-1 CSR REPORT 2016 - 61 - the Chairman Letter from

Age/gender distribution of managerial level

5.6% 4.1% performance 2016 Sustainable 29.4% 30.1% Under 29 Under 29

65% 30-39 65.8% 30-39 40-49 40-49 Over 50 Over 50 Chronicles E.SUN

〈Male〉〈Female〉

Total: 306 Total: 73

Total: 379 Engagement Stakeholder

Under 29 30-39 40-49 Over 50 Total percentage

Male 0 17 199 90 306 80.7%

Female 0 3 48 22 73 19.3%

SD Stratregy of Total 0 20 247 112 379 100%

（Unit: people） Note: Persons in this chart consist of managers from business units and above, including 1 disabled individual of managerial level who is over 50-year-old. and the FIR Stratregy of SD Age/gender distribution of non-managerial level

1.8% 0.7%

9.1% 13.5%

Governance 41.9% Under 29 Under 29 33.9% 56.3% （ 42.8% 30-39 30-39 G

） 40-49 40-49 Over 50 Over 50

〈Male〉〈Female〉

Total: 3,372 Total: 4,575 Social （ S ）

Total: 7,947

Under 29 30-39 40-49 Over 50 Total percentage Environment Male 1,412 1,443 457 60 3,372 42.4% （ E

） Female 2,577 1,549 418 31 4,575 57.6%

Total 3,989 2,992 875 91 7,947 100%

（Unit: people） Note: Persons in this chart include 34 disabled individuals.

- 62 - the Chairman Letter from

Age/gender distribution of mid-level officer

0.4% 4.9% 1.4% performance 2016 9.8% Sustainable

42.3% 47.5% Under 29 42.3% 51.4% Under 29 30-39 30-39 40-49 40-49 Over 50 Over 50 Chronicles E.SUN

〈Male〉〈Female〉

Total: 1,401 Total: 837

Total: 2,238 Engagement Stakeholder

Under 29 30-39 40-49 Over 50 Total percentage

Male 5 666 593 137 1,401 62.6%

Female 12 430 354 41 837 37.4%

Total 17 1,096 947 178 2,238 100% SD Stratregy of

（Unit: people） and the FIR Stratregy of SD Age/gender distribution of employee

3% 1% 0.3%

29.4%

35% Under 29 Under 29 Governance

62% 30-39 67.3% 30-39 （ G

40-49 40-49 ） Over 50 Over 50

〈Male〉〈Female〉

Total: 2,277 Total: 3,811 Social （ S ）

Total: 6,088

Under 29 30-39 40-49 Over 50 Total percentage Environment Male 1,407 794 63 13 2,277 37.4% （ E

Female 2,565 1,122 112 12 3,811 62.6% ）

Total 3,972 1,916 175 25 6,088 100%

（Unit: people）

CSR REPORT 2016 - 63 - the Chairman Letter from

Age/gender distribution of new recruits performance 2016 Taiwan Overseas

Sustainable Male 492 16

Female 574 39

Total 1,066 55

（Unit: people） Chronicles E.SUN

29% Engagement Stakeholder

46.2% 53.8% 71% Male Male Female Female

〈Taiwan〉〈Overseas〉 SD Stratregy of Total: 1,066 Total: 55

Total: 1,121 （Unit: people） and the FIR Stratregy of SD

Under 29 30-39 40-49 Over 50 Total

Taiwan 972 76 18 0 1,066

Overseas 35 15 4 1 55

Governance Total 1,007 91 22 1 1,121 （（Unit: people） G ） Social （ S ） Environment （ E ）

- 64 - GRI：401-1 the Chairman Letter from

Employee rights

E.SUN has established the Statement of Commitment to Human Rights and Environmental Sustainability in performance accordance with the labor laws, including the Labor Standards Act of the Republic of China and the Act of 2016 Gender Equality in Employment, to protect the rights of all employees. The Human Resource Development Committee meets once every quarter to review the organizational structure, employee rights, and actual social Sustainable involvement in order to ensure equality in terms of remuneration, terms of employment, training and promotion. E.SUN guarantees equal or better treatment for female employees than male employees. No incident of discrimination was reported in 2016. Furthermore, we enforce strictly the rule prohibiting employment of child workers under 16 in order to eliminate any form of forced labor. There has not been any incident of endanger workers' basic rights. It is also explicitly stated in the E.SUN Workplace Rules that employees may not work beyond the statutory working hour limits.

Chronicles E.SUN Any relocation of personnel due to the Company’s development needs (because of the establishment or moving of business locations) or need for rotation as part of an employee’s career development must comply with the “Five Principles for Relocation,” which is based on relevant law. Employees who must be relocated will be given 1-2 weeks to hand over their duties to their successors and prepare for work in a new environment. Notification time must comply with the following requirements if the circumstances stated in articles 11, 13, and 16 of the Labor Standards Act occur:

1. Persons who have worked continuously for at least 3 months, but less than 1 year, must receive at least 10 days of prior notice. Engagement Stakeholder 2. Persons who have worked continuously for at least 1 year, but less than 3 years, must receive at least 20 days of prior notice. 3. Persons who have worked continuously for at least 3 years must receive at least 30 days of prior notice.

Occupational injury leave

Number of Number of Occupational Number of Numbe rof Menstrual Number of Absence Percentage of employees Days of injury rate employees Days of leave Days of rate lost days taking occupational (%) taking sickness menstrual occupational injury leave sickness leave leave SD Stratregy of injury leave leave

Male 50 452.5 3.01 264 729.5 0 0 0.06 28.82

Female 74 384.5 4.46 698 3,777 251 347 0.22 26.31

Total 124 837 7.48 962 4,506.5 251 347 0.27 55.13 and the FIR Stratregy of SD Note: 1. Occupational injury leaves are defined in Article 6 of the Employee Leave Guidelines. Employees who become disabled, injured or ill due to occupational hazards shall be given occupational injury leaves for medical treatment and rest. 2. Total working hours = 16,585,392 (Total number of employees * Daily working hours * Total working days) 3. Total working days = 2,073,174 (Total number of employees * Total working days in a year) 4. The Lost day rate is based on one million hours. 5. The total number of employees involved in incidence of occupational diseases and the number in death or disability incurred at work are both 0. 6. No overseas employee took any occupational injury leave. 7. All occupational injuries in 2016 fell into the category of traffic accidents. Governance Statistics of Unpaid Parental Leaves and Reinstatements （

Applications for unpaid parental leaves and reinstatements at E.SUN comply with the Labor Standards Act, and the rules are described in detail in G

respective guidelines. An application system is in place to enable employees to complete applications over the internet. ）

Male Female Total

(1) Number of Employees that applied for parental leave in 2016 15 173 188 Social （ S ） (2) Number of Employees that planned to return from parental leave in 2016 (A) 14 137 151

(3) Number of Employees that actually returned from parental leave in 2016 (B) 9 106 115

(4) Return rate (B/A) 64% 77% 76%

(5) Number of Employees that returned from parental leave in 2015 (C) 1 85 86 Environment (6) Number of Employees that returned from parental leave in 2015 who worked 1 78 79 for a full year in 2016 (D) （ E (7) Retention rate (D/C) 100% 92% 92% ）

Note: 1. There are 998 employees who are qualified for parental leave, including 414 male employees (41.5%) and 584 female employees. (58.5%) 2. The foregoing employees who do not return all voluntarily resign for family or personal reasons.

GRI：401-3、403-2、402-1 CSR REPORT 2016 - 65 - the Chairman Letter from

Separation rate The turnover rate at E.SUN has always been lower than the industry average (at 15-20%). The A+ performer retention is 90% or higher. A fair performance management system makes it possible to build an exceptional team, and allows good employees to become better and the compa- performance 2016 ny to retain talent and provide effective training. Sustainable

Attrition Age Gender Total Rate Under 29 30-39 40-49 Over 50 Male Female

Taiwan 8.6 483 195 29 11 302 416 718

Overseas 6.3 14 5 0 0 7 12 19 Chronicles E.SUN Total 8.5 497 200 29 11 309 428 737

Note: The total number of employees is based on the average total employees at E.SUN FHC throughout 2016.

Engagement Stakeholder Diversified Employee communication

In line with our long term beliefs, we have established a wide range of communication channels to fully listen to our employees’ suggestions. We believe that listening to our colleagues’ voices is the essence of valuing and interacting with them. Employees can provide feedback through multiple channels below: SD Stratregy of Headquarter Division

· Union · Regular employee engagement surveys · Organizational surveys by external consultants

Human Resources Department Business units Vertical and the FIR Stratregy of SD · Creating a mentoring program/mailbox E.SUN Financial Holding · Opinion sheets · E.SUN e-HR Portal Employee Whistleblower · Organizational surveys by external consultants Channels

Labor affair agencies

· Labor inspection agencies

Governance · Municipal labor affair authorities or labor inspection departments （ G ） Horizontal communication Social （ S ） Employee engagement surveys

Employee engagement surveys are completed every year to assess employee satisfaction and collect suggestions for E.SUN's future. A survey was conducted in 2016 to collect feedback from all employees. The response rate has been 90% or higher and the satisfaction rate higher than 97% in the last 3 years. Employee feedback is collected via the use of anonymous questionnaires, and the suggestions have proven useful

Environment towards improving E.SUN's internal policies. （ E

） 2012 2013 2014 2015 2016

Employee engagement 98.8% 98.3% 97.6% 97.7% 97.9%

Response rate 95.5% 98.6% 92.9% 94.1% 90.0%

- 66 - GRI：401-1 the Chairman Letter from

2.4.2 Compensation and benefits and employee assistance programs

GRI：201-3、202-1、401-2、405-2 performance 2016 Sustainable Remuneration

"Making good people better" is how E.SUN evaluates and remunerates employee performance. By implementing a fair performance appraisal system, E.SUN inspires the best out of its employees and identifies potential talents. In terms of internal equity, salaries vary by grade and by responsibility, local CPI and other considerations. Salaries are reviewed every year and adjusted to reflect performance and promotion. The Chronicles E.SUN average salary increase is 4-6% for E.SUN employees in 2016. Variable pay is adjusted every year to reflect the performance of the company as a whole. Bonuses and profit sharing are based on performance rated on a corporate and team level and adjusted at the individual level. The process involves financial and non-financial indicators. Furthermore, basic salaries for female employees are 100% of those for male employees, while basic salaries for female managers are 100% of those for male managers on same grades. It shows that salaries do not vary by gender and the calculation takes into account the importance and uniqueness of respective job responsibilities. Engagement Stakeholder Having assessed international trends in corporate governance, E.SUN refined incentive programs for executives and key persons accordingly in 2016 to make the programs more long-term corporate performance-based. Compensation will be linked to performance in the next three years. In addition to the 3-year deferral, compensation will also reflect future stock prices to create incentives for executives and key persons to maintain standards of long term performance and to grow as the company grows. The design of such rewards also contains an element of risk management performance. The company may use the clawback provision to retrieve previously paid compensation in the event of damage to the company's reputation or material losses to the company due to a major risk event, inadequate internal management, or fraud. E.SUN SD Stratregy of has always been committed to integrity and professionalism. Executives and key persons are encouraged to work together, leading E.SUN to sustainable development.

In terms of external equity, E.SUN, since becoming included in the market salary surveys in 2013, started working with consultants to optimize its competitiveness in terms of remuneration. The average annual salary (salary plus variable pay) of the entire workforce in 2016 was consistent with the industry standard. The standard salary for entry level employees is 1.5 times or higher above the statutory minimum wage in Taiwan.

and the FIR Stratregy of SD To help employees plan for a financially secure retirement, E.SUN takes the initiative to make the 6% monthly contributions into the pension plan as specified in the law. Details are available in the financial statements.

Employee Benefits

E.SUN works hard to implement benefits that cultivate a happy workplace and team environment. The Employee Welfare Committee, established in accordance with the Employee Welfare Fund Act, provides

Governance allowances for employees, and works through Human Resource Development Committee (HRDC) to organize interdepartmental meetings. Employees on all levels are invited to attend and discuss benefit related issues. （ E.SUN also collects employee feedback through employee communication channels, and continues to G develop unique employee assistance programs representing E.SUN's culture. In 2016, the size of the non-man- ） agerial staff was 7,947, and the average spending on employee benefits was NT$1.111 million, NT$121,000 more than the figure in 2015. The total spending on employee benefits was increased by 12.26%.

2014 2015 2016 Social （ S ） Non-managerial staff 7097 7563 7947

Average spending on benefits 96.1 99 111.1

Number of employees in 2016 Total (unit: New Taiwan Dollar)

Marriage subsidies Environment 351 3,054,000

（ Birth subsidies 372 1,116,000 E ） Child education subsidies 1,959 4,593,000

Spouse or child medical subsidies 161 11,862,818

Employee family member leisure travel subsidies - 3,869,918

Employee family member year-end party subsidies - 28,122,800

Subsidiesfor E.SUN children 417 41,700,000 - 68 - the Chairman Letter from

· Labor Insurance, National Health Insurance · Mother's Day and Father's Day gifts of · Preferred interest rates and savings association Employee Parents gratitude and appreciation cards · Housing loan subsidies and consumer loans · Mother's Day present · Incentive trips and overseas travel · Mother's Day essay contest · Maternity services in workplace · Group insurance · Group insurance performance E.SUN 2016 benefits Sustainable · E.SUN Childbirth Incentive Program · Better family care leave and fraternity · E.SUN Family and Children Foundation leave than those required by law · Children's education subsidies · Group insurance · Childcare and facilities · Incentive trips and annual dinner parties Children Spouse Chronicles E.SUN Employee benefits

｜E.SUN Childbirth Incentive Program｜

E.SUN fulfills its corporate social responsibility as its contribution to the future of the nation and demonstration of E.SUN's commitment to the land and its people. Structural problems in the economy such as low birth rates and an aging population prompt Engagement Stakeholder E.SUN to encourage employees to invest in the next generation. Planning for the E.SUN Childbirth Incentive Program started in 2016. The program provides a NT$100,000 allowance for each baby (including first babies). Successful applicants will receive a lump sum payment. A total of NT$41.70 million were paid out in 2016 to help create a loving environment for children of E.SUN employees. E.SUN is an employer that encourage employees to have children and work together for a better future.

We are very pleased when we heard about the E.SUN Childbirth

Incentive rogram. It provides real benefits and we thank the SD Stratregy of head office for thinking of everything and making a second home for the employees. - eply to 01 nowledge Sharing Survey

｜｜Overseas travel and the FIR Stratregy of SD

It is said that, to attain wisdom, it is better to travel tenthousand miles than to read ten thousand books." ｜Subsidized mortgage and consumer loans Wetherefore arrange for outstanding managers andrepre- ｜ sentative of mid-level officers to visit differentcountries and To help employees become homeowners and enjoy happy experience their cultures, and thesetrips are led by senior family lives, all employees, even thosewho are still in their managers. The interculturalexperience acquired from these probation periods, may apply for mortgage and unsecured trips inspires broaderperspectives. A total of 351 persons consumer loans with preferential interest rates. And in order to (includingemployees and families) participate in these take care of employees and their families, employees'parents tourists in2016, and visited Britain, Italy, Spain, Japan, China who wish to build, purchase, or renovate homes may also and Myanmar. receive employee family memberloans. 1,347 employee applied for benefical mortgage, and 2,042 applied for Governance consumer loan. ｜Preferential employee deposits （ and employee savings trust｜ G ）

We provide employee a preferential interest rate on deposits ｜Employees Insurance and the rate is decided by the board rate plus a certain ｜ increment. Furthermore, in order to encourage employees to In order to secure employees, we purchase various types of prepare for a secure retirement, we have established an insurance for our employees. Apart fromthe labor insurance employee saving trust. Trust members can make monthly and national health insurance required by law, we also provide deposits based on their personal financial plans, and the employees groupinsurance, comprehensive business insurance, Social Company trust makes contributions as a form of subsidy every and other necessary insurance. Employee groupinsurance （ S ） six months, helping employees to fulfill their retirement plans the includes regular life insurance, accident insurance, medical Company and ensuring a comfortable life in their retirement. All insurance, and business travelinsurance. All insurance premiums employees who have passed their probationary period may are paid by the Company. apply to join the trust. In 2016, the Company contributed a total of NT$62,672,000 in subsidies to the trust.

｜Maternity care in workplace｜ Environment

We have invited a designer to produce custom-made clothing for pregnant women, （

which ensures that pregnant employee will have comfortable outfits at work. We have E

also produced the “E.SUN Smooth Pregnancy–New Mother’s Caring Handbook,” ） which contains health care information concerning all stages of pregnancy. This handbook explains the different stages of pregnancy and fetal growth, possible discomfort during pregnancy, key nutrients needed by pregnant women, and how to apply for labor insurance, health insurance, and group insurance after the child is born. The handbook expresses the hopes of E.SUN and pregnant women for the next generation.

CSR REPORT 2016 - 69 - the Chairman Letter from

｜Maternal health care plan｜ performance 2016 In support of the government's policy to promote protective maternal care, members of the Workplace Safety Committee have carefully made plans for necessary health and safety measures. The E.SUN Maternal Health Care Plan

Sustainable has been established to ensure mental and physical health of female employees during pregnancy, after childbirth, and during breastfeeding.

Target audience Unit/Personnel Responsibilities Planning process

Nurses Health risk assessment Requirement assessment Chronicles E.SUN 1. Female employees who are pregnant or planning for Workplace safety personnel Occupational hazard Occupational hazard assessment and pregnancy assessment individual hazard assessments 2. Female employees who have recently given birth Onsite medical professionals Individual hazard Hazard control, job reassignment, 3. Female employees who are assessments, improvement plans and classification breastfeeding hazard control, and classification Health instructions, education and protective measures Department heads Job reassignment, Engagement Stakeholder replacement, Performance evaluation and review and improvement and management of working conditions

Female E.SUN employees Report of change in physical conditions

Performance evaluation and review and management

Evaluation of the results of the E.SUN Maternal Health Care Plan is based on health management services for all maternal workers as a

SD Stratregy of whole. The process takes into account of the rate of participation in maternal health risk assessments, hazard control, job reassignment or replacement, change of working hours, and completion rate of improvement of working conditions. Actual practices and results are reviewed regularly by the Workplace Safety Committee and HRDC.

〔Nursing room〕

E.SUN has established many convenient and safe breastfeeding rooms across headquarters and L & D center. In 2014 and 2015, we passed the superior certification of nursing room by the Bureau of Health, Taipei City Government. It makes employee breastfeeding and working and the FIR Stratregy of SD possible aftermaternity leave. The average usage per month in 2016 reached 588.

Benefits for employees' parents

Unlike other companies that provide the three major holiday bonuses, E.SUN, besides the Chinese New Year Governance bonus, provides Mother's Day and Father's Day gifts of gratitude and appreciation cards, which contain a

（ thank-you from the management team and can be customized by employees themselves. In addition to gifts G of gratitude, a Mother's Day essay contest is organized to encourage employees to put their love for their moth- ） ers into words.

Card Present Gift of gratitude ($)

Social 7,950 7,895 39,720,000 （ S ）

〈2016 Mother's Day gifts of gratitude and presents statistics〉

Card Gift of gratitude ($) Environment

（ 8,029 40,040,000 E ）

〈2016 Father's Day gifts of gratitude and presents statistics〉

- 70 - the Chairman Letter from

Benefits for employees' spouses performance 2016 ｜Family care leave and fraternity leave｜ Sustainable

We offer flexible family care mechanisms, and provide family care leave and paternity leave that are more generous than required by law. Both male and female employees can take up to seven days of family care leave each year, and this time does not count as regular leave of absence. This mechanism is applied for any employees in need. The company provides more special leave days than required by law in order to allow new employees to have sufficient rest and family time. Employees who have been with the company for more than three months but less than one year will be given seven special leave days in the current year. The pro rata days will start to accumulate after three months with the company. Chronicles E.SUN Benefits for employees' children

｜E.SUN’s Family Concern and Outstanding Child Award｜

E.SUN FHC Founder and Chairman Yung Ren Huang contributed 3 million shares of E.SUN FHC’s stock to establish the E.SUN Family Concern and Outstanding Child Award. This award provides short-term economic support to meet the needs of any E.SUN employees who suffer from sickness Engagement Stakeholder or injury, family tragedies, or natural disasters, and also offers grants to elementary, junior high school, high school, university, and graduate students who display exceptional scholastic performance or participate and win awards in major domestic or foreign competitions. All employees can submit applications for this award. In 2016, there were 76 cases of Outstanding Child Award and 6 cases of Family Concern. So far, there have been 339 cases of Outstanding Child Award and 39 cases of Family Concern since it launched.

｜Children's education subsidies｜｜Childcare facilities and measures｜

E.SUN provides children's education subsidies, available starting in E.SUN has engaged in authorized chain daycares to provide elementary school. Applications are accepted from both public childcare service to employees at a discount, which complies with SD Stratregy of school and private school students for any given semester. When the requirements of the Gender Equality in Employment Act. both parents are with the company, both parents can submit an application.

2.4.3 Education and training and the FIR Stratregy of SD

GRI：404-2、404-3 GRI G4： FS4

Career development

The training system comprises of three focuses: orientation, professional financial skills, Building Governance and management skills. Courses have been arranged to provide employees with the professional skills they need to succeed, from new recruits to senior management. In addition to skills （ expertise in relevant areas, E.SUN also invests in the cultivation of " talents" and encour- G

π ） age employees to build second specialties through internal recruitment and horizontal job rotation. The aim is to develop well rounded employees through training and challenges in order to create a complete and flexible talent supply chain.

To reinforce the idea of lifelong learning in the workplace and to help employees Internal and

manage retirement, E.SUN considers self development a crucial part of career devel- Social external （ S ） opment. E.SUN employs the 360 multidimensional assessment framework and the training developmentally appropriate practice to determine gaps in managerial, core and professional competencies in order to provide and arrange for appropriate training. A variety of online and offline courses are available as an integrated learning system that enables managers and employees to take an active approach to learning. The goal is to help E.SUN employees improve their managerial skills and continue to enhance their employability so they will be able to undertake greater responsibilities in the future. New graduate Environment Regarding assistance for employees at the end of their careers and for dismissed training employees to find employment in other areas, the company has not dismissed any program （ employee and therefore does not offer any assistance of the kind. Nevertheless, the E ） Human Resources Department has a contact that offers a career development consulting service for dismissed employees.

CSR REPORT 2016 - 71 - the Chairman Letter from

Education and training

E.SUN invests in education and training because it believes employees are the most important asset. We provide performance 2016 the most comprehensive training paths and the most friendly, easy-to-access learning environment. E.SUN has

Sustainable been developing digital courses in the last three years and has made much progress in digital learning. Pre-session learning, online and video sessions are recorded made available through digital courses. The New Branch System (NBS) has been launched to make business operations and training more effective while reducing overall training costs and hours. The percentage of operation related training out of total training activities is changed from 30.4% in 2014 to 21% in 2016. The difference is allocated to professional marketing training, the percentage of which has increased from 46.4% in 2014 to 52.7% in 2016. The training statistics include employees in Taiwan and overseas. A total of 262 internal training courses were held and employees were sent to 676 seminars hosted by professional training agencies. These courses were attended 79,638 times. On average each employee completed 9.6 courses. In Chronicles E.SUN 2016, the training hours per person were 49.1 hours.

Male Female 9.5% 9.6% 11.9%

Training hours completed by managers 18,423 4,079 11.6% 10.5% 9.3% 2.1% 4.0% 5.1% Average training hours 60.2 55.9 Project Management/ Strategy Deployment Cultivation Engagement Stakeholder Training hours completed by non-managers 186,278 199,887 Management Capabilities Training 46.4% 48.1% 52.7% External training Average training hours 55.2 43.7 Professional / Marketing Skills Cultivation Total training hours 408,667 Operational Capabilities Training

Training hours per person 55.7 43.9 30.4% 27.9% 21.0%

Total training hours per person 49.1 SD Stratregy of

2014 2015 2016 Note: 〈Percentage of Training Activities〉 The number of employees include those in Taiwan and those overseas. Compliance classes are not included.

To ensure that the training program can effectively improve employees' skills, the bank started applying the Kirkpat- rick Model to management of training results. and the FIR Stratregy of SD Level Method Description

（） Based on participant feedback (satisfaction). Identify the degree to which participants are satisfied with the Reaction L1 Survey/Questionnaire lecturers, courses, teacher performance, and methods.

Examination Based on participants' scores on tests prepared by lecturers. Classroom discussion Evaluate performance of participants during classroom discussions. Learning（L2） Case study presentation Evaluate participants' presentation and written reports.

Simulation Evaluate participants' actual behaviors and problem solving processes during simulation.

Governance On-the-job evaluation Evaluate participants' actual behaviors at work and the professional standards and service quality that they display.

（ Behavior（L3） 360 Degree multidimensional Managers evaluate new recruits in terms of evaluation, promotion, personal performance, and a customer's

G assessment framework perspective to determine whether they apply their training to actual tasks.

） Hands-on evaluation Evaluate participants' actual behaviors at work. Results（L4） Performance evaluation Evaluate training results by examining any evaluation and performance improvement. Social （ S ）｜E.SUN LEAD Leadership Program｜｜Cultivating talent with an international perspective｜ "Leadership and legacy are the starting points for the sustainable Overseas expansion is an important strategy for E.SUN’s third development of a business, while management and hierarchy decade. In this age of global competition/cooperation, E.SUN has are the keys to endless business innovations." To realize its vision responded to its overseas growth by continuously training and achieve sustainability, the E.SUN management team has management talent with an international outlook. E.SUN provides carefully constructed the E.SUN LEAD Leadership Program. It is a variety of training programs to cultivate colleagues become developed with the goal of guiding trainees toward applying international professional financial specialists. Environment leadership on themselves, the team, the business, and changes. With regard to continuing education overseas, employee Courses offered under this program are hosted by National selected by different business unit executives to participate in （ Taiwan University professors, world-class consultants and successful continuing education, fact-finding trips, and seminars. Employees

E entrepreneurs, whereas E.SUN's executive management also were arranged to Oxford, the University of Pennsylvania, Peking ） shares its experiences. The learning modules are delivered via a University in China, Harvard University, schools in Singapore, and variety of media, including case studies, discussions, exchange of Hong Kong, aiming at enhancing their professional, management practical experience, onsite tours, hands-on practice in preparing and leadership skills. projects, and e-learning, all of which are designed to create leaders of tomorrow.

- 72 - GRI：404-1、404-2 the Chairman Letter from performance ｜Assisting employees ｜Inspiring innovation｜ 2016 with continuing education and examinations｜

In order to encourage employees to enhance their professional To improve innovation skills of mid-level officers, we have included Sustainable financial skills and obtain professional licenses, to overcome future special courses in the mid-level officer training program and challenges, E.SUN has drafted a “Special Professional License made plans for innovation contests to inspire the potential for Incentive Subsidy Program.” This incentive program provides innovative thinking in mid-level officers. A total of 77 proposals subsidies to E.SUN employees covering the cost of various have been submitted at the end of 2016, 17 of which are in the professional examinations, including the bar, CPA, CFA, CFP, FRM, process of being implemented and driving the innovation and PMP examinations. At the end of 2016, a total of $4,630,000 in momentum at E.SUN. In 2017, we invited AlexanderOsterwalder, subsidies had been provided for 199 employees. member of a new generation of world class entrepreneurs, to guide top performing managers in a business model workshop. The group worked to create innovative business models by Chronicles E.SUN utilizing the Business Model Canvas and the Value Proposition Canvas, both of which were invented by the speaker.

Performance management system Engagement Stakeholder The purpose of the E.SUN performance management system is to improve employee competencies. The system is linked to goals of the organization and teams and encourage cooperation in order to take E.SUN to the next level. In 2016, all employees in Taiwan and overseas were evaluated under the performance management system. SD Stratregy of

Performance program at beginning of year

The performance program begins with strategy every January. Targets of managers or higher and section supervisors are tracked and managed directly by the head office. The others are based on

two-way communication between managers and employees, and the FIR Stratregy of SD who work together to establish future performance targets and related action plans.

Review and annual Interim performance evaluation at end of year modification

In December, the annual performance evaluation process July and August are the months for interim performance takes place according to the performance program and modification and review. Performance will be subject to provides a basis for remuneration, promotion and training in dynamic modification and management in response to the future. changes in the internal or external environment. Governance （ G ） e-Learning platform

We have e-Learning+ in place to provide a learning platform that can be accessed anytime, anywhere. The platform offers a large variety of courses, including the latest in the financial Social services sector, customer service etiquette, professional （ S ） competencies, and electronic books on arts and culture. It not only helps E.SUN employees broaden their professional horizon, but also offers a gateway to arts and refinement. Starting in 2015, the platform has also been offering leadership and management courses to help E.SUN managers improve their skills. A process started in 2016 to integrate e-Learning+ and offline face-to-face courses so that the system would Environment

support training management and history and effectively （

provide maximum resources and assistance for face-to-face E courses. Prerequisite assignments are designed to be more ） interactive and turn the teaching style in face-to-face courses upside down. The system effectively helps employees improve their skills of autonomous management and autonomous learning. The processes have been made 35% more efficient, and the number of paper examinations has fallen by 40%.

GRI：404-3 CSR REPORT 2016 - 73 -

the Chairman Letter from

｜Issuing publications to publicize health ｜Regular health check-ups and tracking｜ and disease prevention knowledge｜ performance 2016 Our quarterly public Sunrise and bimonthly Smile E.SUN contain We have established a dedicated team for employee health

health columns, and we invite authoritativedoctors affiliated with management-related matters. Weconduct employee health Sustainable famous hospitals and clinics to share information concerning check-ups on an annual basis in conjunction with superior majordiseases and preventive healthcare knowledge. We have hospitals andclinics, and the check-up items and frequency are further established a “notifiable communicabledisease better than required by law. Following recommendationsfrom announcement and reporting system” to provide real-time physicians at National Taiwan University, we have added information about communicablediseases, allowing employees to abdominal ultrasound and hepatitis B screening to our checkups, take preventive measures and perform notification. and we conduct cancer screening in accordance with theMinistry of Health and Welfare’s four-cancer screening policy. This program make colleagues find outquickly about any potential health problems. In addition, the Department of Environmental andOccupational Medicine at National Taiwan Chronicles E.SUN University helps analyze employees’ health check-up.

｜Certified Sports Company by the Sports Administration of the Ministry of Education｜

The company was named a Certified Sports Company by the Sports Administration of the Ministry of Education in 2016. There were only 50 companies on the list. E.SUN encourages its employees to engage in activities that contribute to mental or physical wellbeing outside the Engagement Stakeholder office. The company has created a fitness center for employees and hired coaches for the table tennis club, the badminton club, the dance club, and the yoga club and so on.

Friendly workplace SD Stratregy of The Sexual Harassment Prevention, Complaint and Disciplinary Guidelines are established for the purpose of creating a friendly workplace and achieving SDG 5 gender equality. A prevention hotline is made available to prevent sexual harassment from taking place. The mission is to create a friendly workplace and eliminate gender derived hostility in the workplace in order to protect employees and the parties they serve from the threat of sexual harassment. and the FIR Stratregy of SD ｜Healthy, gender-equal work environment｜｜Employee health consulting and concern measures｜

In addition to the Gender Equality Committee, E.SUN has The company pays attention to working hours, health issues and established the E.SUN Holding and Subsidiaries Sexual Harassment working conditions. The system automatically sends email to Prevention, Complaint and Investigation Guidelines to prevent check on employees who are working overtime or on special sexual harassment from taking place. and to protect the victims' duty. The company also works with the Department of rights. The guidelines state clearly that E.SUN FHC and its Environmental and Occupational Medicine of National Taiwan subsidiaries shall each establish a sexual harassment complaint University Hospital and hires doctors in specific fields to provide review committee, which will consist of the employer and onsite services and inspect the working conditions. The doctors representatives of the employees. The committees are responsible provide advice on working conditions and mental or physical Governance for handling sexual harassment complaints. Administrative health questions. Meanwhile, E.SUN tries to encourage employees

assistance for the committee will be provided by the human to make appointments with the doctors and take a positive （ resource department. The guidelines also require hotlines and attitude toward their own mental or physical issues. The onsite G designated email addresses to be set up and full-time staff be services provided by the doctors cost a total of NT$868,000 in ） appointed to process complaints. Any offender found to have 2016. committed sexual harassment will, depending on circumstances, be subject to appropriate disciplinary actions, such as warnings, demerits, reallocation, demotion, and pay cuts. Social （ S ） Environment （ E ）

CSR REPORT 2016 - 75 - the Chairman Letter from performance 2016 Sustainable ˙ 2.5 Social Inclusion

GRI：203-1、203-2、413-1 GRI G4：FS7

Chronicles E.SUN For the purpose effectively quantifying the benefits of community involvement, E.SUN adopted the Corporate Community Investment (CCI) framework by the London Benchmark Group in 2016. The framework not only produces a clearer picture of E.SUN's contributions to the community in terms of manpower, material and financial resources, but also helps us take more factors into consideration when making plans for community activities so that E.SUN employees can donate money, manpower or time as they are able. Engagement Stakeholder

Donations-in-kind Commercial facilitation Cash donations Community engagement Contributions of time Charitable donations Management expenses

300 295 300 295 SD Stratregy of

259 259

and the FIR Stratregy of SD 227 227 50.4%

200 200 68.0%

Amount (NT$ mn) 60.5% Amount (NT$ mn) Governance 52.2% （ 78.5% 71.8% G ）

100 100 Social （ S ）

45.5%

32.5% 41.4% 27.0% Environment 27.7%

（ 19.4% E ）

5.6% 4.8% 3.6% 5.0% 1.4% 1.6% 0.5% 2.1% 0.5% 0 0 2014 2015 2016 2014 2015 2016 〈Distributed by types of social involvement〉〈Distributed by categories of activity〉

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Series Project Results in 2016

· A total of 110 E.SUN Libraries have been built since late 2007. E.SUN is advancing performance Academic toward the goal of building another hundred E.SUN Libraries. 2016 E.SUN Golden Seed Project Education · SROI on E.SUN Library at Liming Elementary School, Pingtung County: NTD 7.4

· Holding the first Cyber Angel's Pick picture book storytime Sustainable

E.SUN Outstanding Management Talent Scholarship · Number of winners: 15 people, receiving NT$2.3 million in total

E.SUN Academic Award · Number of winners in 2016: 11 people, for a total of 21 people

E.SUN Campus Hackathon · Number of student participants: 400 Chronicles E.SUN

Google Ignite · Number of student participants: 1,600

SAS Big Data Championship · Number of student participants: 800

NTU Hope Seed Program · Number of student trainees: More than 20

E.SUN summer internship program · Number of participants: 73 Engagement Stakeholder Finance Knowledge Carnival · A total of 8 Finance Education Promotion Activities.

International Masters Forum · Master: Alexander Osterwalder

· E.SUN resource circulation charity sales raised more than NT$6 million. Community Concern · The program provided assistance for 10,289 disadvantaged children in 2016. Involvement for Schoolchildren Program · The "Caring for Children in Need" campaign was organized in 9 sessions. · E.SUN raised a total of NT$10 million in the Cycling across Taiwan tour in 2016. In past four years, a total of 110 E.SUN employees have completed the Cycling across Taiwan tour. SD Stratregy of

Supporting local agricultural Since 2014, E.SUN has acquired a total of 120,000 kg of E.SUN Maravi Rice. development ·

Blood donation · A total of 4,284 bags (250cc per bag) of blood were donated.

· Working with Mackay Memorial Hospital to provide overseas volunteer clinics in Cambodia

Donations to Southeast Asia · Working with Mackay Memorial Hospital to help Cambodian boy undergo heart and the FIR Stratregy of SD surgery · Donations to Cambodia - Community Housing Project · Participating in creating an international Myanmar volunteer team Governance （ G ） Social （ S ） Environment （ E ）

〈Investment in social projects and results in 2016〉

GRI：413-1 CSR REPORT 2016 - 77 - the Chairman Letter from

Series Project Results in 2016

E.SUN Cup International AAA · The E.SUN Cup International AAA Baseball Tournament has taken place 10 times performance 2016 Sports Baseball Tournament since 2007 and is expected to continue. · NT$4 million sponsorship. Sustainable

· Number of participants: 60 in total E.SUN Junior Baseball Camp · NT$1 million were invested in 2016.

E.SUN Junior Baseball · Number of seminars/examinations: 18 in total Protection Camp · NT$400,000 were invested in 2016.

· E.SUN has sponsored 21 high school baseball teams since 2007,

Chronicles E.SUN Baseball equipment and will continue to provide sponsorships. sponsorship in remote areas · NT$600,000 were invested in 2016.

E.SUN invited 500 disadvantaged children from Taichung into the stadium 11th Asian AAA · and cheer for the national team. Baseball Tournament · NT$3.5 million were invested in 2016.

· E.SUN has sponsored 17 Mother's Day concerts since 1997, and will continue For Mothers to provide sponsorships. Engagement Stakeholder Arts and --Mother's Day Music Concerts Humanities · The concert in 2016 was attended by an audience of 960.

· The E.SUN Choir Group has been holding the Eternal Love Chorus Concert at the E.SUN Eternal Love Chorus Concert National Concert Hall every five years since 2001. at National Concert Hall · The 4th concert took place in 2016 and was attended by an audience of 1,500.

· E.SUN has been inviting the Vienna Boys' Choir to perform in Taiwan since 2011, Vienna Boys' Choir and will continue to organize the concerts. · 5 concerts took place in 2016 and was attended by 6,000 in total. SD Stratregy of · E.SUN has worked with the government and co-organize 7 Yilan International Yilan International Children's Children's Folklore & Folkgames Festivals since 2010. Folklore and Folkgame Festival · The event in 2016 was visited by 360,000 people.

Zero Distance · E.SUN has organized 3 Zero Distance - Dream Come True Projects since 2015, - Dream Come True Project and is expected to continue. at National Theater · A total of 370 children from remote regions participated in the project in 2016. and National Concert Hall Art and the FIR Stratregy of SD

Mini lanterns at the Taiwan Lantern E.SUN has been sponsoring the mini zodiac lanterns at the Taiwan Lantern event hosted event by the Tourism Bureau by the Tourism Bureau for 14 consecutive years since 2003.

Supporting music by working 2 orchestra concerts in 2016: "Die 12 Cellisten der Berliner Philharmoniker" with renowned cello player and "Cellist Chang's Family Concert" Cheng-Chieh Chang

E.SUN has been supporting creative industries and the film industry in Taiwan for years. Supporting the film industry Sponsorships in 2016 included the nature documentary, Black Bear Forest, which the Governance in Taiwan director, Hsiang-Hsiu Lee, spent 6 years to make; and 52Hz, I love you, in which the

（ director, Te-Sheng Wei, tried to convey the beauty of life and love through original music. G ） Social （ S ） Environment （ E ）

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2.5.1 Academic Education Series performance 2016 Sustainable E.SUN Golden Seed Project

In order to improve the reading environment for children living in far-flung neighborhoods, E.SUN volunteers started visiting many rural elementary schools in 2007 and conducted extensive interviews with the principals and teachers to find out about the children's lifestyle and local characteristics. It was decided at the end to launch the E.SUN Golden Seed Project. The project unites E.SUN and E.SUN employees and customers and bridges the gap between two ends of an m-shaped economy through E.SUN World Card, the first top-tier credit Chronicles E.SUN card in Asia that is linked to a charity program. VIP cardholders are able to enjoy E.SUN's premium financial services while giving back to the community and planting seeds of hope. We believe if more people in rural areas start reading, children will have a better chance of changing the future and achieving SDG4 Education 2030, which provides quality education for children.

At the end of 2016, E.SUN has issued more than 140,000 E.SUN World Cards. It also announced during the E.SUN

Library Appreciation press conference in February 2016 that it had reached the target of building 100 E.SUN Engagement Stakeholder Libraries that it set 8 years ago. At the end of 2016, there are 110 E.SUN Libraries in 19 cities in Taiwan. It is expected that 15 more E.SUN Libraries will be created in 2017. The target now is 200 E.SUN Libraries at the pace of 10 to 15 new libraries a year. SD Stratregy of and the FIR Stratregy of SD

｜Implementation of Social Return On Investment (SROI)｜ Governance （ To find out about the influence of E.SUN Libraries in the society, E.SUN conducted a survey on 100 E.SUN Libraries in 2016. It was discovered that more G than 70% of schools would arrange for teachers and volunteers to keep the libraries open to local communities on holidays. E.SUN was first to ） introduce SROI in 2016. 16 E.SUN Libraries in Taitung, Penghu, and Pingtung were selected and screened by level of difficulty in access to public library resources in order to identify the schools with the most restricted access to resources. The Liming Elementary School in Pingtung County, which was also the 60th E.SUN Library, was selected as a case study to quantify social benefits. In particular, the cost in the denominator refers to the cost of manpower (NT$12,112) and the cost of establishment and maintenance (NT$213,756). The social benefits in the numerator refer to the social benefits received by students, teachers and the communities in terms of an improved reading environment, access to books and space utilization. It was calculated that every NT$1 invested would create NT$7.4 in social benefits. E.SUN will continue to refine the analysis model and include more qualitative and quantitative indicators and expand the scope to include other E.SUN Libraries. Results of the project are reported to Social

the stakeholders. （ S ）

｜A wide variety of learning resources｜ Date Location In addition to continuing to build more E.SUN Libraries, the E.SUN 9/13 Yutian Elementary School, Pingtung Volunteer & Social Welfare Foundation dedicates itself to introducing

more outside resources into rural schools. In 2016, E.SUN invited the CEO 9/14 Guangxing Elementary School, Yunlin Environment of Cyber Angel's Pick for the first time to host picture book storytime that

was aimed to teach children about online security and gender equality. 10/7 Chenggong Elementary School, Kaohsiung （

The mission was to create a creative yet healthy and safe online environ- E

ment for children. 5 picture book storytime were held in 2016. 10/15 Jiaxing Elementary School, Tainan ） 10/22 Ailan Elementary School, Nantou

〈List of picture book picture storytime hosted by Cyber Angel's Pick in 2016〉

GRI：413-1 CSR REPORT 2016 - 79 - the Chairman Letter from

E.SUN Outstanding Management Talent Scholarship

To encourage outstanding students to become outstanding manag- Number of performance 2016 Year ers, E.SUN established the E.SUN Outstanding Management Talent recipients Total Scholarship in 2005 and started using action to nurture the key to Sustainable Taiwan's future. The rules were amended in 2016 to expand the 2013 16 NT$3.2 million scope. Students in 94 different programs in 10 different business, 2014 17 NT$3.4 million science, and law schools are eligible to apply for a NT$200,000 2015 17 NT$3.4 million scholarship for one academic year. In 2016, E.SUN selected 8 top 2016 15 NT$2.3 million performing students from 4 schools who studied law, corporate management, technology management, finance, IT management, 〈Results of E.SUN Outstanding Management and service science. Talent Scholarship in last 4 years〉 Chronicles E.SUN

Added to the existing list of eligible students, which are students in certain master's programs at National Taiwan University, National Chengchi University, National Tsing Hua University, National Chiao Tung University, National Chung Hsing University, National Chung Cheng University, National Cheng Kung University, and National Sun Yat-sen University and new students, are students in master's programs in management school at National Taiwan University of Science and Technology and National Central University. Engagement Stakeholder E.SUN Academic Award to encourage cutting edge research in Taiwan

The E.SUN Academic Award is awarded to professors in the college of management who published papers in the Top 3 international journals within their respective fields of research. Since its establishment in 2010, the E.SUN Academic Award has been awarded to 22 professors. In October 2015, the scope of the E.SUN Academic Award

SD Stratregy of was expanded to include NTU, NCCU, NTHU, and NCTU and fields such as finance, accounting, marketing, IT management, operations management, and organizational management. Some of the winning professors have broken the record for first paper published by Taiwanese author in an international journal, effectively demonstrat- ing excellent results. The list of winning papers in 2016 is published on the E.SUN website. and the FIR Stratregy of SD

E.SUN Hackathon

To encourage exchange between academia and industries and shorten the distance between learning and practical experience, E.SUN held the first E.SUN Hackathon in 2016. It was the first hackathon in Taiwan to be organized by a financial institution and co-organized by Data Science in Taiwan Conference. IBM Taiwan was the sole Governance partner in technology. A total of 400 students participated in the

（ event. The panel of judges consisted of academics and industry

G experts. A professional team of E.SUN managers was also part of the ） panel. 3 workshops were held in 2016. These workshops ranged from design thinking, IBM Bluemix training, and API training and hands-on experience. It was hoped that the hackathon would inspire creativity in young students and lay a solid foundation for the development of fintech in Taiwan. Social （ S ） Google Ignite

E.SUN Bank has been collaborating with Google in the investment of the Google AdWords Challenge since 2013. E.SUN Bank also worked with Google to launch Google Ignite in 2015. In addition to continuing to collaborate on Google Ignite in 2016, E.SUN started matching more comprehensive, more indepth digital marketing courses to job

Environment descriptions so that new graduates from unrelated disciplines and without professional marketing training would be equipped with practical digital capabilities. These projects not only created more jobs for young Taiwanese, but also （ make E.SUN a more competitive digital marketer. 7 digital marketing forums took place in 2016 and were attended E

） by more than 1,600 students.

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SAS Big Data Championship

E.SUN has worked with SAS and co-hosted the Information Scientist Series Competition for five years in a row. 800 performance students formed into 200 teams to participate in the competition in 2016. The competition focused on big data 2016 analytics and digital marketing, and tried to identify potential behavior patterns in different consumer groups and relationships between market development and potential opportunities. Sustainable

NTU Hope Seed Program

E.SUN FHC has been working with the NTU Career Development Office in running the Hope Seed Program for

two years. The curriculum is designed to include digital banking seminars, case studies of innovative marketing, Chronicles E.SUN innovation workshop, and dialogues on digital banking. Hands-on projects of digital advertisement were added in 2016 so that creative ideas from the students could be actually tested in the market. The objective is to enhance the seed program in both breadth and depth. The scope of the partnership was expanded in 2016. More than 20 students were accepted and proceeded to complete half-day courses at E.SUN every month. It is hoped that the program gives students interested in the banking sector a better understanding of the practical aspect of banking services. Engagement Stakeholder

E.SUN summer internship program

E.SUN offered the internship project (TIP) to NTU students in 2011. The comprehensive training modules for MA candidates received much positive feedback from the students. The internship project placed an emphasis on a well rounded approach to financial training that balances breadth and depth. The lessons included courses at the E.SUN headquarters, building financial expertise, and practice cases. In addition, a variety of activities were incorporated into the internship project. Examples included volunteering, art appreciation, and career development discussions. These extracurricular activities were meant to broaden the horizon and encourage SD Stratregy of the students to acquire different skills. In 2016, following previous success with NTU, E.SUN expanded the project to allow more students to have the opportunity to participate in the practical aspect of banking services and clarify the direction of their own future. A total of 73 students participated in the internship project in 2016.

Finance Knowledge Carnival and the FIR Stratregy of SD

E.SUN frequently partakes in the Finance Knowledge Carnival hosted by the Financial Supervisory Commission and assisted in promoting the On-Campus and In-Community Finance Education Promotion Activity. Lecturers were invited to inform the public of correct financial knowledge. 8 sessions were held in 2016.

International Masters Forum - Alexander Osterwalder Governance E.SUN FHC has hosted an international master forum each year for five years in a row. In 2016, E.SUN invited the

master who changed business models, Alexander Osterwalder to speak on the topic of "Building Second （ Growth Engines for Businesses". Mr Osterwalder showed Taiwanese business owners and consumers how to use G the Business Model Canvas and the Value Proposition Canvas to describe the relationships between corpora- ） tions, customers, and the environment and how to create a second growth engine in a fast changing environment. Social （ S ） Environment （ E ）

2012 2014 2016 Gary Hamel Philip Kotler Alex Osterwalder 2013 2015 Clayton M. Christensen Rita Gunther McGrath

〈Caption: Introducing global perspectives to make Taiwan more competitive〉

GRI：413-1 CSR REPORT 2016 - 81 - the Chairman Letter from

2.5.2 Community involvement series performance 2016 Sustainable Concern for Schoolchildren

｜Concern for Schoolchildren Program｜

To help children who face financial disadvantage or sudden changes in their Number of circumstances and enable them to focus on study without having to worry about Year Total Chronicles E.SUN financial support and to provide relief on education expenses for their families, recipients E.SUN operates the Concern for Schoolchildren Program on an ongoing basis. The 2013 5,627 NTD 11,254,000 program provides NT$2,000 per eligible child per semester to be spent on tuitions and expenses, books, field trips, clothes or miscellaneous expenses. E.SUN raised 2014 10,264 NTD 20,528,000 a total of NT$10 million in the 4th Cycling across Taiwan tour in 2016. The tour was 2015 10,480 NTD 20,960,000 led by Joseph Huang, managing director of E.SUN FHC. A total of 110 E.SUN employees have completed the Cycling across Taiwan tour during the four years 2016 10,289 NTD 20,578,000 and raised money for 2,000 disadvantaged children under the Concern for Schoolchildren Program. The fund is used to ensure disadvantaged children can 〈Results of Concern for Schoolchildren Program

Engagement Stakeholder continue to go to school. in last 4 years〉

｜Reaching out to children in children's homes under Caring for Children in Need｜

To help children who face financial disadvantage or sudden changes in their Number of Dedication of E.SUN volunteers is the engine driving the Caring for Children in Year Total SD Stratregy of Need campaign and organizing events at children's home across the country. For recipients 13 consecutive years, E.SUN volunteers in Greater Taipei, Taoyuan, Taichung, 2013 16 sessions 302 Yunlin and Chiayi, and Kaohsiung have been making plans and coordinating efforts. Examples include taking children from children's care home to profession- 2014 15 sessions 369 al baseball games, musicals, and 3-on-3 basketball games. E.SUN volunteers also 2015 13 sessions 340 provided after school tutoring. In 2016, a total of 305 E.SUN volunteers participated in the process and held 9 sessions that gave the children a warm and happy 2016 9 sessions 305 experience. Furthermore, E.SUN sponsored the Asian AAA Baseball Tournament in 2016. It also invited 500 children from disadvantaged families to watch the game live in the stadium. 〈Statistics on Caring for Children in Need and the FIR Stratregy of SD in last four years〉

Supporting local agricultural development - E.SUN Maravi Rice

E.SUN has been sponsoring E.SUN Maravi Rice for 3 years since 2014. The program supports organic agriculture and industrial transformation and encourages local farmers to adopt organic farming that contributes to food

Governance production while maintaining biodiversity. E.SUN has acquired a total of 120,000 kg over three years. We share E.SUN Maravi Rice with our employees and important customers. The gesture shows not only our support of SDG （ 2 end hunger, but also the importance of maintaining biodiversity in Taiwan. G ） E.SUN's sponsorship will be renewed for another 3 years starting in 2017. The project will place a greater emphasis on encouraging farmers to work more efficiently and be more open to new ways. The focus will be on the study of aphyocypris kikuchii, which is a fish endemic to Taiwan, and its habitat in order to promote aboriginal culture and experience. We are committed to acquiring 40,000 kg a year and we encourage consumers to join the environmental effort and keep Taiwan beautiful. Social （ S ） Environment （ E ）

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"Love Leads to More Love" Blood Donation Event

To alleviate shortage of blood and help those in need, E.SUN performance Bank and E.SUN Volunteer Foundation have initiated blood Year Total (Unit: 250cc/bag) 2016

drives for 16 consecutive years, specifically during winter and Sustainable 2013 4,027 summer vacations when seasonal blood shortages occur. In 2016, local host branches invited 32 groups and organizations 2014 4,636 to co-host the event. E.SUN will continue to organize 2 blood 2015 4,352 drives a year in local communities in order to draw more 2016 4,284 attention to the cause while achieving SDG 3 health and wellbeing. 〈Blood drive results in last 4 years〉 Chronicles E.SUN

Donations to Southeast Asia

In support of the financial regulator's policy to encourage Taiwanese financial institutions to compete with the rest of Asia, E.SUN continues to expand its network in Southeast Asia. E.SUN pays attention to managing locally, sharing experience from Taiwan's banking sector, and showing involvement in local communities in order to

achieve SDG 17 strengthening the global partnership for sustainable development. Engagement Stakeholder

｜Overseas volunteer clinics ｜

We or ganized our first overseas volunteer clinic in 2016. We worked with Mackay Memorial Hospital, Formosa

Budding Hope Association, and China Airlines and SD Stratregy of visited Cambodia on the campaign, Donations to Cambodia - Overseas Volunteer Clinic. More than one thousand people benefited from the two-day medical E.SUN working with Mackay Memorial Hospital and dental services. Union Commercial Bank, E.SUN's to help Cambodian boy undergo heart surgery subsidiary in Cambodia, provided staff who volunteered to act as interpreters and helped with The campaign, Donations to Cambodia - Overseas distributing the supplies. Volunteer Clinic, encountered a 6-year-old boy who had been diagnosed with a large ventricular septal defect with compensated cardiac failure and pulmonary arterial hypertension by a cardiologist. The doctors and the FIR Stratregy of SD arranged for him to come to Taiwan and undergo a heart surgery in September. The boy recovered well and ｜Donations to Cambodia checked out of the hospital in October. It was expected - Community Housing Project｜ he would be able to live the life of a normal child.

In October 2016, E.SUN worked with social enterprises to establish an international partnership that organized the campaign, Donations to Cambodia - Community Housing Project. 19 E.SUN volunteers visited local families and orphanages in remote areas and helped build homes and other buildings. The Governance volunteers also worked with local children and helped them learn more about their culture （ and history. E.SUN employees threw G themselves into manual labor work and ） learned to give and grow up.

One does not realize his own ignorance until he steps into an unknown land. One does not discover his own insignificance until he opens both arms and tries to embrace the world.

They walked into a remote Cambodian Social village where people had very different （ S ） backgrounds. However, the cultural and language barriers were easily overcome with a smile or a friendly look. The trip had been a lesson in gratitude and contentment. Neither means staying with the status quo and rejecting changes. Instead, both encourages us to work hard to create our own paths and always give back to the community. Even the smallest contribution sends a ripple of positive Environment influence throughout the world and makes it a better place. Li-Yang Lin, Office of General （ E

Manager. ）

GRI：413-1 CSR REPORT 2016 - 83 - the Chairman Letter from

2.5.3 Fitness Development

E.SUN created the E.SUN Junior Baseball Development Fund Account in 2007. The fund is dedicated to supporting performance 2016 junior baseball in Taiwan and providing systematic assistance for players who wish to devote themselves to professional baseball. E.SUN works with the Chinese Taipei Baseball Association in organizing four charitable campaigns Sustainable in support of junior baseball and launching the E.SUN Cup junior baseball games.

E.SUN Junior Baseball Camp E.SUN Cup The 2016 E.SUN Junior Baseball Chronicles E.SUN International AAA Baseball Camp took place in the baseball Tournament stadium of National Taiwan Sport University for 6 days. A total of junior · E.SUN has hosted the E.SUN Cup International baseball players and coaches were AAA Baseball Tournament for 10 years. Many divided into two camps and trained players who participated in the tournament at the location. Cruz, the hitting has gone on to pursue their baseball dreams coach who helped the national in professional baseball in the United States, team won the U-21 Baseball World Japan and Taiwan. Cup 2014 was also present to instruct E.SUN Junior Baseball the players and give them Protection Camp

Engagement Stakeholder Taiwan hosted the 11th Asian U18 Baseball advanced baseball lessons and · E.SUN promotes a comprehensive health Tournament in 2016. Excellent E.SUN Cup teach them correct hitting plan. It works with the Orthopaedic players faced the Koshien all-star team from techniques. Surgery Department, the Physical Japan and the KBO team from Korea. Medicine and Rehabilitation Department and injury prevention physicians of Chang Gung Memorial Hospital on an E.SUN preventive care team. The team toured Remote Caring Program the country and provided 18 E.SUN Junior Baseball Protection Camps and physical E.SUN and the Chinese Taipei Baseball examinations for junior baseball players in

SD Stratregy of Association have teamed up to promote the 2016. There used to be one preventive Remote Caring Program. The program care provider available during the E.SUN supplies new baseball bats and gloves, Cup games. The position was replaced by protective gear and practice balls for junior two certified injury prevention profession- baseball teams in remote areas. As of 2016, als, who were constantly ready to protect donations have been made to 21 high the players and provide instant, safe school baseball teams, including Chungdau emergency care. Senior High School in Yilan, National Taitung University Affiliated Physical Education Senior High School in Taitung, Lu Shin Senior High and the FIR Stratregy of SD School in Taitung, Yuli High School baseball team in Hualien, Dader Industrial and Commercial Vocational High School baseball team, and Hualien Physical Education High School baseball team. Furthermore, Hsinchu Municipal Cheng De High School baseball team managed to enter the quarter finals of the E.SUN Cup junior baseball games, which was the team's best record. Governance （

G 2.5.4 Arts and Humanities Series ）

｜For Mothers - Mother's Day Music Concerts｜ Social

（ S ） E.SUN always holds the For Mother - Mother's Day Music Concert in May when carnations bloom. The performance in 2016 took place in Hsinchu and was delivered by ProArte and the Choir of Elementary School of National Hsinchu University of Education. The concert, attended by E.SUN employees and customers and their mothers, celebrated a mother's love and gave thanks to all mothers in the world. Environment （ E ）

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｜Vienna Boys' Choir｜

E.SUN Bank is a long term performance supporter of arts and 2016 culture. It started inviting the

Vienna Boys' Choir to Sustainable perform in Taiwan every year in 2011. The heavenly voices of the Bruckner members of the Vienna Boys Choir were enjoyed by 6,000 in five concerts in Taipei, Taichung, Tainan and Pingtung. Chronicles E.SUN

｜Yilan International Children's Folklore Engagement Stakeholder and Folkgame Festival｜

E.SUN has been involved with the Yilan International ｜Mini lanterns at the Taiwan Lantern Children's Folklore and Folkgame Festival, hosted by the Yilan municipal government, for seven years in a event by the Tourism Bureau｜ row. In addition to the land/water game zones, the E.SUN FHC has been sponsoring the mini zodiac lanterns at the Taiwan organizer invited children folk dance groups from Lantern event hosted by the Tourism Bureau for 14 consecutive years Taiwan and other countries to perform at the event. since 2003. The mini lanterns are very popular with the local crowd as Visitors were able to enjoy a feast of arts and well as foreign visitors. Every visitor is able to collect one for free during

theatres. The event welcomed 360,000 visitors. SD Stratregy of the Lantern event and join the celebration of this ancient tradition.

｜Zero Distance - Dream Come True Project at National Theater and National Concert Hall Art｜ and the FIR Stratregy of SD To facilitate multidimensional learning and development, the E.SUN Foundation has supported the Zero Distance - Dream Come True Project at National Theater and National Concert Hall Art for two years in a row. The project invited children from rural areas on an artistic journey. A total of 370 elementary school children from rural New Taipei City, including Youmu Elementary School in Sanxia, Laomei Elementary School in Shimen, Hengshan Elementary School in Sanzhi, and Shifen Elementary School in Pingxi, were invited to ｜Die 12 Cellisten enjoy a promotional concert, A Young Person's Guide to the Pipe der Berliner Philharmoniker Organ, in April 2016. A group of 150 students from rural high schools and Cellist Chang's Family

in Miaoli were invited to enjoy a concert delivered by visually Governance impaired pianist and an Amis singer, Together - The Soundtrack with Concert ｜

Suming and Yu-Siang Huang, in December 2016. （

E.SUN Bank and renowned cello player G

Cheng-Chieh Chang team up to support ） music. The two invited "Die 12 Cellisten der Berliner Philharmoniker" to perform in Taiwan in July 2016. The group consists of members from the cello section of one of ｜Supporting Taiwanese film, "52Hz, I love you"｜ the world's best orchestra, Berlin Philharmonic. The concert was billed From E.SUN continues to use action Paris to Buenos Aires. The two organized the Social to support Taiwanese films. Cellist Chang's Family Concert in November （ S ） After KANO in 2014, E.SUN of the same year. The concert was enjoyed joined Director Te-Sheng Wei by 3,500 music lovers. again in 2016. In addition to providing corporate banking services, E.SUN invited customers and business partners to enjoy the movie and share music, arts, and films

with others. Environment （ E ）

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E.SUN has adopted the Equator Principles. It brings expertise in the financial services sector to help industries with a large impact on environmental risks to achieve a balance between economic growth and environmental sustainability.We started by improving ourselves by utilizing business environment management mecha- performance 2016 nisms and environmental conservation projects on an ongoing basis. It is hoped that our actions will inspire

Sustainable customers, employees, and business partners to join the effort to protect the environment.

˙ 3.1 Climate change risks and opportunities

GRI： 201-2 Chronicles E.SUN

The risks of global warming and abnormal climate change have been rising. The impact of climate change is wide ranging and is already affecting the global ecosystem and economy.195 countries reached an agreement at the Paris Climate Conference in December 2015. Meanwhile, China ratified the Paris climate accord in September 2016, and would work to keep temperature rise below

Engagement Stakeholder 2 degrees Celsius since the industrial age by 2100. The ideal target is to keep temperature rise below 1.5 degrees Celsius.

In response to climate change, the United Nations adopted 17 Sustainable Development Goals (SDGs) in 2015. In particular, SDG 13 "climate action" explicitly names climate change mitigation and adaptation as the vision and goals of sustainability. It calls on the world and businesses to take urgent action to combat climate change and its disruptions. The expectation is to pursue green economic SD Stratregy of growth while adhering to environmental conservation.

E.SUN understands that the financial services sector plays a crucial role in climate change mitigation and adaptation. We apply the skills and influence of a financial institution and monitor the disastrous impact of climate change and its effect on financial markets and economic development. In addi-

and the FIR Stratregy of SD tion, we identify risks in financial investment, lending and other business activities in order to facilitate risk management and seek potential opportunities for growth.

｜Climate change risk management｜｜Climate change opportunities and responses｜

Separate standards of practice are established for businesses subject to high We have adopted the Equator Principles (EP) on December 28, potential for pollution. Credit limits are also imposed to control risks. Categories 2015. The principles are the standards against which we identify, such as credit limit, industry, country, and group must comply with the regulator's assess, and management environmental and social risks in large Governance requirements.The risk management unit report climate change risks to the board financing projects and help clients manage the impact of business of directors and the E.SUN FHC Risk management committee in order to keep the activities on the environment and the society. The goal is to ensure （ board of directors and the executives informed of the impact of climate change the supply of loans does not cause material potential risks or G on the company. adverse impact on the environment or the society.We have taken ） the initiative to support the government's policy to support the development of renewable energy sources. We invest in green industries to fuel the development and progress in the renewable energy industry. Furthermore, in response to changes in user habits, Risk based internal control we have been investing in Fintech and the development of an online system with minimum disruption. In addition to offering more friendly services, we will reduce potential carbon emission by

Social Compliance Risk management Internal Audit customers and E.SUN in the processes, which will contribute to （ mitigation of global warming. E.SUN actively promotes environ- S

） mentally friendly policies, green procurement and green buildings in the its business processes. It was first to implement three major international environmental certification systems. E.SUN also brings its suppliers and business partners to join the energy efficiency · Implement preview · Detect risks · Internal Audit campaign and support environmental sustainability. · Establish regulations · Transfer/Control risks · Internal control effectiveness analysis and feedback Environment

（ E ） Self audit (accurate and effective)

Good internal control ensures safe and secured operations and enables the organization to realize its full potential.

- 86 - the Chairman Letter from

˙ 3.2 Responsible lending and investment

GRI：102-12 GRI G4： FS1、FS2、FS3、FS5、FS9、FS10 performance 2016 Sustainable Adopting international standards and the Equator Principles

Following the inclusion of the Equator Principles in the E.SUN Bank The Equator Principles are a set of Credit Policy in 2014, E.SUN has made specific provisions to support noncompulsory principles that are enterprises that pay attention to corporate social responsibility. E.SUN adopted on a voluntary basis. They were created in 2003 to provide a tool to be Bank adopted the Equator Principles in December 2015 to ensure used by financial institutions to assess loans would not be used to cause material potential risks or adverse processes and systems in large financing Chronicles E.SUN impact on the environment or the society. projects and manage social and environmental risks. While the campaign for its adoption has been going on for E.SUN enforces due diligence rigorously. Regarding industries with a more than a decade, the Equator greater impact on the environment or the society, such as those in Principles have evolved into an universal mining, infrastructures, oil and gas extraction, and energy, E.SUN will social and environmental assessment framework for financing projects. A total handle the loan applications by classifying the risks and help clients of 88 financial institutions around the

implement plans to monitor and improve the environmental world have adopted the principles at Engagement Stakeholder impact.E.SUN responds with care to stakeholder attention to credit the end of 2016. assets in financing projects. In addition to applying the Equator Principles, E.SUN exercises its strength in risk management and influence in resource allocation and works with clients to pursue sustainability.

E.SUN will continue to subject approved cases to post-loan management mechanisms. It will also monitor environmental and social risks regularly according to the scope of consent given by clients in order to find out

whether the clients have made improvement or implemented management mechanisms as promised.We will SD Stratregy of continue to follow up and update information related to the Equator Principles. We will also work with other banks in Asia that have adopted the Equator Principles and modify our guidelines as needed. Results in 2016 are described as follows.

˙ An environmental and social risk team was created under the Corporate Banking Division of E.SUN Bank. After close to a year of working to implement the systems and modify related lending processes, the team established the Project Financing Guidelines under Equator Principles, and followed the Equator Principles to provide 6 training sessions on credit review and post-loan management for employees of the branches in

Taiwan, the subsidiaries, and the head office. The process not only raised awareness of the Equator Principles in the workplace, but also created and the FIR Stratregy of SD trainee lecturers with a better understanding of the Equator Principles.

˙ The loan agreements entered into with customers will include provisions of the Equator Principles. If customers fail to fulfill social and environmental covenants, E.SUN will have to work with customers to take remedial measures to comply with said covenants as much as possible.

Loan allocation and interim management

File for a loan Business unit Credit review unit Loan Authorization Meeting Enterprises Application registration at head office Review Committee of managing directors and review Preliminary review Approved/Rejected Approved/Rejected Governance and second review （ G ） Environmental and social risk team at head office Assessment of potential environmental and social risks

Independent third party evaluation agency Facilitate the document review and present the impartial opinion of a third party Social （ S ）

˙ After considering the potential environmental and social risks and its attitude toward risks and its risk appetite, the company approved two Equator Principles Approved cases: 2 EP applicable financing applications classified as Risk Category C. Name Project C Project M Risk Category C B

Note: Environment Industry Others Energy Risk Category C cases may be exempted from independent third party reviews. Country Vietnam Australia （ E ） Reviewed by independent No Yes third party*

CSR REPORT 2016 - 87 - the Chairman Letter from

Lending to and investing green industries to make a better world performance 2016 To ensure future generations will continue to be able to enjoy nature without pollution, Section 3 of the E.SUN Bank Credit Policy states that lending services shall give support to green industries in alternative energy, water resources

Sustainable and pollution control. E.SUN provides financing as needed for enterprises with a positive outlook and involved in reducing energy consumption or pollution or introducing environmentally friendly measures. Such financing programs include the "Rooftop PV Financing" and the "Green Energy and Industrial Equipment Output Loans". In addition, E.SUN supports government policies and offers "Loans for Machine/Equipment Upgrades" by providing preferred rates for customers looking to purchase and install new and clean energy equipment, pollution control equipment, or energy efficient equipment.

Results in 2016 are described as follows. Chronicles E.SUN ˙ At the end of 2016, a sum of NT$8.7 billion has been loaned to more than 200 customers in solar power, LED, environmental engineering and other green industries. ˙ At the end of 2016, a sum of NT$1.8 billion has been loaned to companies in sustainable water resources and water regeneration. ˙ E.SUN supports the government's policy and provides financing for wind power generation businesses. The company not only supports offshore wind farm operators, but also provides financing for onshore wind farm operators overseas. ˙ The Rooftop PV Financing program was launched in mid-2016. A total of 273 solar power stations were installed after loans were approved by the end of the year. These stations will reduce 11,823 metric tons of CO2e (equivalent to 30 Da’an Forest Parks) per

Engagement Stakeholder year. E.SUN sets its goals as building a green financial ecosystem and extending its financial expertise to help corporate customers assess installation of solar power systems in order to bring more supporters into the energy efficiency campaign.

Region Total Northern Central Southern Eastern Penghu

Number of power stations 273 46 4 140 0 83 Percentage 100% 17% 2% 51% 0% 30%

SD Stratregy of Note: Data published by the Bureau of Energy in 2015 showed an annual electricity emission factor of 0.528 kg CO2e.

˙E.SUN Bank makes corporate social responsibility practices of a company the most important consideration when selecting equity or bond investment.At the end of 2016, 24% of the equity positions and 57% of the bond positions were listed on the Dow Jones Sustainability Index (DJSI), showing significant improvement when compared to 19% and 54%, respectively, at the end of 2015. ˙E.SUN Bank works hard to establish itself as an international bond underwriter. At the end of 2016, 53% of issuers of E.SUN underwrit- ten bonds were listed on the Dow Jones Sustainability Index (DJSI), doubling the figure, 25%, in 2015. and the FIR Stratregy of SD

Supporting SMEs and promoting steady growth in domestic markets

SMEs are the engine behind economic and social development in Taiwan. 98% of the business owners are SME owners and 80% of the labor force work at SMEs. E.SUN Bank endeavors to be a reliable business partner for SMEs and provide a line of friendly , secured financial services that will respond to the needs of SMEs as they enter different

Governance stages such as growth, innovation, and transformation. （

G E.SUN Bank follows the E.SUN Bank Credit Policy and actively provides financing and consulting services for SMEs to

） help them improve business performance.E.SUN continues to join government resources and promote the Small and Medium Enterprise Credit Guarantee Fund, the Innovative Special Loans, and the Creativity Financing Program. E.SUN offers one-stop financial services for SMEs.

Results in 2016 are described as follows. Social

（ ˙ SME loans:

S ．"Best SME Financing Award" ）．Recipient of Good grade in the "Program to Strengthen Domestic Banks in Processing Loans to SMEs" for the 4th year. ．Winner of The Asset's Best in Treasury and Working Capital - SME for the 4th time. ˙ Small and Medium Enterprise Credit Guarantee Fund (SMEG): ．Winner of the Credit Guarantee Partner Award - Head Office from MOEA and the Credit Guarantee Fund for the 11th year. ．The cumulative balance issued at the end of 2016 was NT$39.48 billion. ˙ Financing culture and creativity industries:

Environment ．Since the FSC started promoting the Creativity Financing Program in 2014, E.SUN has installed 11 points of service for culture and creativity businesses seeking financing. The points of service provide consistent services across the country.

（ E ）．E.SUN won first place in the Creative Industries Lenders Competition for the second year. At the end of 2016, a sum of NT$53.1 billion has been loaned to culture and creativity businesses. ˙ Innovation in SMEs: E.SUN offers the Innovative Special Loans to support SMEs trying to complete industry upgrades and build up innovation capabilities. At the end of 2016, a sum of NT$3.25 billion has been approved, ranking E.SUN in first place with a market share of 34%.

- 88 - ˙ the Chairman Letter from

˙ 3.3 Low-carbon operations

GRI：102-12、302-1、302-2、303-2、303-3、305-1、305-2、305-3 performance 2016

Carbon Disclosure Project: Sustainable E.SUN has actively participated in the Carbon Disclosure Project (CDP) initiated by leading international institution investors and has become a CDP supported corporation that discloses climate change related information. E.SUN FHC volunteered to take the CDP water questionnaire in 2016.

E.SUN's low-carbon operation results in 2016: Chronicles E.SUN Environmental Highlight Sustainability Program Results 2016

First place Inspections are conducted every year in in Taiwan's financial accordance with the ISO14064 greenhouse gas inventory system, and corporate carbon emission Augmented announced. The scope was expanded this year Engagement Stakeholder ISO14064-1:2006 to also include E.SUN L&D Building and Boai Building in addition to the headquarters building GHG Inventories and 137 branches in Taiwan.The 2016 carbon services across emission arising from business activities in 2016 is 100% inventory 20,188.499 metric tons CO2e.

In addition to greenhouse gas inventory Scope First place 1and Scope 2, E.SUN is the first bank in Taiwan to ISO14064-1:2006 SD Stratregy of in Taiwan's financial continue with Scope 3 in the second year Implemented (employee travel). The Scope 3 emission in 2016 organizational was 174.1108 metric tons of CO2e. greenhouse gas Implemented organizational inventory Scope 3 greenhouse gas inventory Scope 3 and the FIR Stratregy of SD

The scope of water footprint inventory was First place Expanded expanded this year to also include E.SUN L&D in Taiwan's financial Building and Boai Building in addition to the ISO14046 headquarters building and 137 branches in organizational Taiwan.2016 organizational water footprint was 137,894.60 m3. water footprint Adopt organizational inventory water footprint inventory Governance （ G

The ISO14001 environmental management ） system was implemented in 2013. The scope was First place Expanded scope of in Taiwan's financial expanded in 2016 to include Dunnan Branch and ISO14001 Fuxing Branch. There are plans to expand the scope to include other branches in Taiwan in the environmental future. management Social Adopt ISO14001 system （ environmental management system S ）

E.SUN took the initiative to implement the ISO50001 energy management system in 2014. First in Taiwan's financial Expanded scope of The scope was expanded in 2016 to include

Dunnan Branch and Fuxing Branch. There are Environment ISO50001 energy plans to expand the scope to include other

management branches in Taiwan in the future. （ E ） Both bank and securities system Implement ISOISO50001 system

CSR REPORT 2016 - 89 - the Chairman Letter from

Energy management performance performance 2016 Scope Scope 1 Scope 2 Sustainable Stationary Mobile Sources in Effusion Indirect Emission type source source manufacturing sources energy emissions emissions processes emission

Volume (t-CO2e/year) 94.3890 1,978.5006 0.0000 318.9320 17,796.6777 Percentage (%) 0.47% 9.80% 0.00% 1.58% 88.15%

Chronicles E.SUN Volume (t-CO2e/year) 2,391.8216 17,796.6777 Percentage (%) 11.85% 88.15%

〈GHG emission 2016〉

Note: 1. Scope 1 includes refrigerants, fuels for company cars, diesel generators, methane and natural gas; Scope 2 includes emissions from

Engagement Stakeholder electricity. 2. Gasoline, diesel (stationary sources), diesel (mobile sources) emission factors based on the "Environmental Protection Administration greenhouse gas emission coefficient management table (V. 6.0.3 2017/04)", were, respectively, 2.361 KgCO2e/L, 2.615 KgCO2e/L and 2.651 KgCO2e/L. Global warming trends were based on the IPCC Second Assessment Report published in 2007. 3. No biodiesel was used in the current year. 4. The power factor, based on the 2015 electricity emission factor released by the Bureau of Energy of the Ministry of Economic Affairs, was 0.528 Kg CO2e/degree. SD Stratregy of

14000 and the FIR Stratregy of SD 12000 Volume (t-CO 10000

8000 Governance

2 Scope 1+2 emission (t-CO2e/year) e/year) （ 6000 G Scope 2 emission (t-CO2e/year) ）

Scope 1 emission (t-CO2e/year) 4000

2000 Social （ S ）

0 2013 2014 2015 2016

〈E.SUN's organizational carbon emission in last 4 years〉 Environment

（ E ） Note: 1. The scope included headquarters and all branches from 2013 to 2015. 2. The scope was expanded in 2016 to include Dengfeng Building and Boai Building.

- 90 - GRI：305-1、305-2 the Chairman Letter from performance Total power consumption (kWh) Total (degree) 2016

Total power consumption at branches (kWh) Total water consumption at branches (degree) Sustainable

Total power consumption at headquarters (kWh) Total water consumption at headquarters (degree)

120000

+6% -7% -7% 25,000,000 100,000 Chronicles E.SUN -5.32% -8.51% -11.08% Water consumption (degree) Power consumption (kWh)

20,000,000 80,000

1,500,0000 60,000

10,000,000 40,000 Engagement Stakeholder

5,000,000 20,000

0 0 2013 2014 2015 2016 2013 2014 2015 2016

〈E.SUN power consumption in last 4 years〉〈E.SUN water consumption in last 4 years〉 SD Stratregy of

Note: Note: The scope was expanded in 2016 to include Dengfeng Building and Boai The scope was expanded in 2016 to include Dengfeng Building and Boai Building. More people and more equipment are involved, and energy Building. More people and more equipment are involved, and water consumption has increased as a result. The total energy consumption is consumption has increased as a result. The total water consumption is 33,705,829 kWh. 137,894.6 m3. and the FIR Stratregy of SD

Total (L) Total weight (kg)

Total diesel consumption (L) Total weight of recycled materials (kg)

Total gasoline consumption (L) General waste (kg)

7,000 140,000 -13% -8% -14% -63% -74% -70% Total fuel (gasoline/diesel) consumption (L) Governance 6,000 120,000 （ G ） 5,000 100,000 Weight (kg) 4,000 80,000 Social 3,000 60,000 （ S ）

2,000 40,000

1,000 20,000 Environment

0 0 （ E ） 2013 2014 2015 2016 2013 2014 2015 2016

〈Fuel consumption at headquarters building in last 4 years〉〈Waste recycling at headquarters building in last 4 years〉

Note: Note: The scope was expanded in 2016 to include Dengfeng Building and Boai Recycling categories:paper, plastic, metal (iron/tin cans). Building. In addition, we added gas into calculation so the total energy consumption was 450.04 MWh in 2016.

GRI：306-2 CSR REPORT 2016 - 91 - the Chairman Letter from

Low-carbon operation management policy performance 2016 Objectives Policy Execution Review Sustainable

The earlier 3-year reduction target Since the release and implementa- he Environmental Sustainability E.SUN's largest source of GHG emission was reached in 2015. A new tion of the E.SUN Energy Efficiency Team under the Corporate Social is electricity consumption. In order to sustainability target was set in 2016. White Paper - E.SUN Green Policy, Responsibility Committee promote a low carbon environment, In order to reach earlier the E.SUN has been dedicating itself to establishes environmental internal prices of carbon, water, and reduction target in Taiwan's environmental conservation, which conservation and energy efficiency electricity were established and made Intended Nationally Determined encompasses environmentally targets, methods and projects. The part of the performance indicators for Contribution (INDC), the GHG friendly and energy efficient team conducts regular reviews and the business units. A energy efficiency emission reduction by 2030 was set policies, support for environmental deliver regular reports to the and carbon reduction report has to Chronicles E.SUN at 50%, the equivalent of a 20% education, building an environmen- executives. It also promotes energy be filed every month and reviews reduction from the level in 2005. tally friendly and energy efficient efficiency and carbon reduction monthly utilities bills, electricity bills, 2016 was chosen as the base year. culture and implementing programs to reduce GHG emissions and communication bills. The figures The carbon emission per capita environmentally friendly and caused by energy consumption. will be compared to the electricity was 2,800kgCO2e, the water energy efficient measures. In consumption in the same period of consumption per capita was 18.99 addition, the environmental/energy the previous year. Any irregular power degrees, and the waste per capita management policy was consumption should be explained and was 94.37kg. It is hoped that established with green finance, improved. Furthermore, environmental carbon emission, water consump- saving the earth, and environmen- administrators will include sustainability

Engagement Stakeholder tion and waste will reduce by 1% tal sustainability at the core. E.SUN activities and implementation results in each, by 10% each by 2025 and by also took the initiative to implement the performance evaluation process. a further 10% each by 2030. international management systems. It is the mission of each E.SUN employee is to save the earth and achieve environmental sustainability.

Daily business environment administrative measures

SD Stratregy of Green construction: Green construction was made one of the key initiatives in 2015 which priority will be given to new buildings. The Hope Building was completed in 2016 and received the Gold Grade Green Architecture Certificate. As a green building dedicated to the environment, energy efficiency, waste reduction, and health, it endeavors to facilitate a sustainable world.

｜Energy efficient lighting｜ and the FIR Stratregy of SD 1. Regarding high efficiency lighting fixtures and energy efficient tubes, E.SUN has started replacing existing energy efficient light fixtures with more energy efficient, more environmentally friendly T5 light fixtures.Lighting in parking lots, emergency exits, floor lighting, emergency signs, and fire signs use LED light bulbs. 2. Essential lighting in the lobby and offices must be turned off when no one is working. Lights should be divided into different areas and controlled by different switches.Dis- play lighting should be turned off when the space is not receiving foreign visitors.All lights, except for safety or essential lighting, in non-office areas should be turned off.All lights are turned off after the end of business hours.Lights in non-office areas are turned off for one hour at noon every day. Nonessential computers will be shut down at the same time. Governance 3. Signs will be lit for 2 hours less each day. 4. Lighting in elevators is controlled by automatic energy efficient switches. （ G ）｜Energy saving on air conditioning｜ 1. The temperature settings on the air conditioning units are increased by 1 degree, except during summer hours. 2. Air conditioning settings are adjusted by targets of the energy efficiency campaign. As a general rule, the units will be set to fan before 8:00 am and after 18:30 in order to reduce use of air conditioning. Social （ 3. Ceiling fans are used as needed to generate air flow and make air conditioning more S

） efficient. 4. All offices equipped with air conditioning equipment should set room temperature between 26℃ and 28℃ . 5. Curtains are installed to reduce direct sunlight and save on air conditioning. 6. Temperature monitoring and modifying systems are installed on each floor to ensure air conditioning functions normally. Environment ｜Elevator efficiency｜（ E ）

1. Employees are encouraged to use the stairs when going up or down within three floors to save energy. 2. The number of working elevators changes with business hours and after hours. 3. Elevators skip certain floors during business hours. 4. Energy efficiency features:Fan and lighting in elevators automatically turn off to save energy after 3 minutes of idling after the door closes. 5. Improving transportation efficiency:The high speed computing power of a computer is used to achieve optimized elevator deployment and improved efficiency and to shorten the average wait time.

- 92 - the Chairman Letter from

｜Fuel efficiency management｜｜Water resource management｜ 1. Joins the energy efficiency campaign 1. E.SUN installs only sanitation equipment with EPA certification for water efficiency in its to encourage employees to choose headquarters building. public transit or carpooling. 2. Water saving devices are installed to reduce the amount of water coming out of performance 2016 2. Priority is given to EPA certified vehicles faucets. in procurement of company cars. 3. Water towers, reservoirs, pipes and connections are checked regularly for leaks. Employees on field duty are 4. Rooftop catchments are installed to harvest rainwater, which will be used to water the Sustainable encouraged to carpool to reduce the gardens. number of cars needed. 5. Water resource utilization at the headquarters building and branches across the 3. Daily gas/diesel consumption is country is monitored regularly, and water saving results from each unit are published recorded and managed to make regularly for review and discussion. Abnormal utilization will be investigated to ensure energy management more efficient. the energy efficiency policy is enforced. 6. Rooftop water towers are cleaned twice a month and the water checked for PH value and chlorine level at the same time. 7. Regarding safety and maintenance of daily drinking water, E.SUN headquarters building is equipped with 31 standing and tabletop water fountains, which are subject Chronicles E.SUN to regular inspection and maintenance. Sampling and testing are performed by a testing agency approved by the central competent authority every three months. Filters are replaced every six months to ensure the water is safe to drink. 8. Water used by the company is supplied 100% by Taiwan Water Corporation. No underground water or water from other sources is used. Water in the office buildings and points of service is supplied for the exclusive use of employees and some customers, and therefore has no significant impact on the water source. All used water is released into rivers and oceans via the sewage system. 9. A declaration of water conservation has been issued. Details include the following:1.

Support the water conservation policy; 2. Implement environmentally friendly lending Engagement Stakeholder to support water resources businesses; and 3 Raise awareness of water conservation in and outside the company to encourage employees and more consumers to join the effort to achieve sustainability.

｜Resource sorting, recycling and reuse｜ Reduce Replace 1. Office waste is sorted into general, recyclable, and kitchen waste. All waste is stored SD Stratregy of in one place on B3 by the property manager until it is cleared away by the recycling service provider.Final waste will be either incinerated or recycled. 2. Waste is sorted and recycled. Materials that can be used (e.g. shopping bags, paper printed only on one side) are reused for more effective utilization. 3. Recycle bins are placed next to copy machines to encourage employees to reuse 4R paper that has been printed only on one side in order to reduce paper consumption. 4. Reusable envelopes are adopted for internal communication. Envelopes that have been used or through the mail can be reused to reduce waste. 5. A battery recycling bin is set up in the lobby. It is cleared regularly and processed by

an EPA approved recycling service provider. Employees are encouraged to use and the FIR Stratregy of SD Recycle Reuse environmentally friendly rechargeable batteries. 6. IT equipment, light bulbs, printer cartridges and other office supplies are sorted and recycled. General waste is taken away by a qualified waste processing company to be processed at an incineration plant.In addition to sorting waste, the company encourages employees and customers to bring their own mugs, chopsticks and bags ｜Promote paperless transactions｜ to reduce waste.

1. We invited customers to help conserve paper by not using print-out statements. All 667 ATMs nationwide an environ-

mental protection promotion channel Governance encouraging employees and

customers to get in the habit of （｜Promoting electronic and mobile transactions｜

conserving energy. G

2. A total of 1,147 e-Learning sessions ） were held in 2016. The sessions were 1. Customers are encouraged to use telephone banking services, WebATM, internet attended by 223,150 participants. The banking services, and electronic subscription and to choose electronic statements estimated saving on paper was 893,000 instead of paper statements. sheets, roughly the equivalent of 5 2. Video conferencing equipment is made available to reduce the cost of time and metric tons of CO2e. travel as well as GHG emission incurred during travel. 2,987 sessions were held in 2016. 3. E.SUN enforces paperless processes in Example: The annual saving by choosing video conferencing is, calculated at a total the office, electronic payroll, electronic driving distance of 69,663 km, 13.8 metric tons of CO2e.E.SUN will continue to

encourage the energy saving replacement of overseas travel with video conferenc- Social training materials, and double sided （ ing and telephone meetings for employees in different countries.

printing. Printers should be set to print S

on both sides or multiple pages on one ） side to save paper and ink.The Note: electronic document system replaced Carbon emission generated by travel is based on data released by the Environmental its paper equivalent in 2016. The Protection Administration of the Executive Yuan. change led to a reduction of 46 kg of http://ecolife.epa.gov.tw/cooler/check/Co2_Countup.aspx CO2e in 2016. 4. Credit cardholders are encouraged to

opt for electronic statements. 570,000 Environment cardholders have applied for the

service. The equivalent paper （ E ） consumption is 27.36 million sheets, which translate to a saving of 153.22 metric tons of CO2e.

(Note:According to the EPA Taiwan Carbon Footprint, the carbon emission of one sheet of A4 paper is 0.0056 kg of CO2.) www.epa.gov.tw/

CSR REPORT 2016 - 93 - the Chairman Letter from

˙ 3.4 Sustainable ecosystem

3.4.1 Taiwan Formosan Bear conservation performance 2016 Sustainable The Formosan black bear is Taiwan's sole native bear species. The survival of the black bear notonly implies the preservation of this species in Taiwan, but also implies protecting the integrity ofTaiwan's forest ecosystems and overall biodiversity. In the past five years, E.SUN FHC has been working with Taiwan black bear conservation and restoration units, including the Taiwan Endemic Species Research Institute, COA, Yushan National Park Administra- tion, Taipei Zoo, and the Taiwan Black Bear ConservationAssociation to promote a series of black bear conserva- tionactivities. Responding to the need for conservation and protection of biodiversity in Taiwan, as well as to encourage people to cherish the Earth, we seek to use our corporate advantages to inducepublic concern for

Chronicles E.SUN conservation issues, and take tangible actions to support black bear conservation.

"Bears Love E.SUN: Black Bear Conservation" Seminars - Into aboriginal tribes Engagement Stakeholder E.SUN collaborated with the Taiwan Black Bear Conservation Association in touring the "Bears Love E.SUN: Black Bear Conservation" Seminars for the second year. In 2016, the seminars targeted aboriginal elementary schools near the black bear's habitat in the Central Mountain Range. The tour "Bears Love E.SUN: Black Bear Conservation in Aboriginal Tribes in Central Taiwan" lasted three months between September 27 and December 20. The tour reached into tribes near bear country in Heping District of Taichung and Renai and Xinyi Township of Nantou. Seminars were held at 20 remote schools, including Hongye Elementary School of SD Stratregy of the Atayal tribe, Lushan Elementary School of the Seediq tribe, and Xinyi Elementary School of the Bunun tribe, and attended by more than 1,000 teachers and students. The seminars raised awareness of black bear conservation and its endangered status in local communities via interactive teaching.

and the FIR Stratregy of SD Sponsoring the documentary Black Bear Forest "Zoo Keeper 2016" Camp

E.SUN sponsored the nature documentary, E.SUN and Taipei Zoo joined force and organized the "Zoo Keeper 2016" Black Bear Forest, which the director, Camp to teach the public about animal behaviors and basic training for a Hsiang-Hsiu Lee, spent 6 years to make and zoo keeper. The event aims to raise awareness of animal conservation record movements of black bears in through hands-on experience. Taiwan.Before the film was premiered, E.SUN invited close to 3,000 E.SUN employees and their families to 13 exclusive viewings in Taipei, Governance Taichung and Kaohsiung. The documentary "Finding the Best Keeper" urged the public to support conservation （ efforts and start paying attention to the Taiwan black bear conservation awareness activity

G environment. ） E.SUN holds the "Finding the Best Keeper" Taiwan black bear conservation- awareness activity at Taipei Zoo during the New Year's break, at VIP familysummer camp, and at elementary school celebrations. Through lively Q&Agames to enhance the importance of black bears conservation and impartsrelevant knowledge, ensuring that black bear conservation concepts tookroot among Taiwan's younger generation. Close to 36 families attendedthe sessions. Social （ S ） Black Bear for the Environment calendar

A cartoon black bear demonstrates various ways of saving energy and

Environment reducing carbon emission. The calendar is designed to urge the

（ E ） public to join E.SUN and make conservation part of their daily routines.

- 94 - the Chairman Letter from

3.4.2 Supporting environmentally friendly products

GRI：302-2 GRI G4：FS8 performance 2016 Sustainable ｜Issuance of Taiwan's first credit card combining conservation and environmental concept｜

E.SUN Bank cooperate with Taipei Zoo to issue Taiwan's CSR credit card, combining conservation and environmental concepts—the "Black Bear Affinity Card." Whenever a transaction is made using this card, 0.2% goes to an animal conservation fund. The first contribution from this fund was a NT$4 million donation to Taipei Zoo, and was used for black bear conservation, habitat protection, restorationof Taiwan's native species, and environmental education program. Customers who use purchases made

with the "Black Bear Affinity Card" tocontribute to Taipei Zoo, Taiwan Black Bear Conservation Chronicles E.SUN Association, Animal Protection Association of the ROC, and Taiwan Environmental Information Association will also receive triple the usual amount of bonus points. Engagement Stakeholder

｜Environmental sustainability accounts, ｜E.SUN credit card supporting carbon reduction｜ the first in Taiwan financial sector｜ E.SUN ETC Easycard Titanium MasterCard/Visa Signature card was E.SUN ETC Easy Card has established environmental sustainability the first credit card in Taiwan to be awarded the Carbon Footprint accounts, the first one among Taiwan financial sector. Whenever Labeling Certification and PAS 2050:2011 carbon footprint and cardholders make a purchase using their card, E.SUN will contribute water footprint certification by the Environmental Protection 0.1% of the transaction value to anenvironmental sustainability Administration. The card was first in the world to occupy the account using the eTag stored value feature, and funds from the identification card product category. In 2016, a carbon footprint

accounts are used for environmental protection, energy inventory was conducted again and identified carbon emissions SD Stratregy of conservation, andpreservation of Taiwan's natural ecology. throughout a credit card life cycle to be 1.1 kg of CO2e. Improvement was made in the production process, and consumers were urged to opt for electronic statements instead of paper statements to reduce carbon emission. A third party verification agency verified that the GHG emission was reduced by 17% throughout the credit card life cycle. E.SUN is the first financial institution to receive a carbon footprint reduction verification statement. Our goal is zero carbon emission. By purchasing carbon credits created by wind power generation in Changhua Coastal Park, E.SUN made the credit card carbon and the FIR Stratregy of SD neutral and the first zero carbon emission credit card in Taiwan.

｜Promoting the government's energy efficiency subsidies｜ Governance We support the government's energy efficiency policy. By buying

any of the energy efficient appliances eligible for state （

allowances and paying with an E.SUN E-life Mall Card at E-life Mall G

in January 2016, customers were entitled to 5% cash back if they ） opted in the installment payment plan. Furthermore, an additional allowance of NT$2,000 was available on air conditioning units, refrigerators, television sets, water saving washing machines labeled Class 1 or 2 to encourage consumers to switch to energy efficient appliances. Social （ S ） Environment （ E ）

CSR REPORT 2016 - 95 - the Chairman Letter from

3.4.3 Promoting environmental sustainability

GRI G4：FS4 performance 2016

Employee Sustainable E.SUN has made a long term commitment to Participation environmental sustainability. Environmental education in the workplace, events and activities, environmentally friendly products, installation of low carbon equipment, and support for environmental conservation E.SUN FHC programs in Taiwan and overseas all reflect

Chronicles E.SUN E.SUN's determination to take action and Government working with Customer encourage more people to join the effort. Partnership different disciplines Support and industries

Engagement Stakeholder NGO Collaboration E.SUN Environmental Awareness and Education Day on the 13th of each month

We have designated the 13th day of each month E.SUN Environmental Awareness and Education Day. On this day, E.SUN volunteers provide environmental-related information and knowledge to colleagues, and use the company's SD Stratregy of e-learning platform to regularly issue environmental protection and energy conservation teaching materials. Taking the "4Rs"—Reduce, Recycle, Reuse and Replace—as a basis, we are devoted to cooperate the concepts of environmental protection, energy conservation, and carbon reduction with all employees' daily life.

2016 Conservation Teaching Materials and the FIR Stratregy of SD January Sustainability guidelines for financial institutions: Equator Principles Feburary Say no to unreusable plastic bags. March Forest conservation begins with you and me. April Earth Day everyday. Reduce carbon emission and save the earth. May Detox while you walk outdoor. June Global warming affects you and me. July Beach water and healthy living August Had your fish with any plastics today? Microplastics Governance September A different Midautumn: Lights off Moonlight on （ October Have you done anything for earth today G ?

） November A plastics free life starts today. December Join the campaign to reduce carbon emission and heal the earth.

E.SUN Vegetables Day on Mondays Social （ S ） E.SUN makes every Monday a Vegetables Day to encourage employees to eat less meat and more vegetables. In addition to helping people stay healthy, Vegetables Day reduces carbon emissions from livestock as well as crops fed to animals and eases global warming. EPA has also included one meat free meal a day as one of the Top 10 energy saving measures. It has announced that having one meat free meal a day will reduce 780 grams of CO2e. 2,500 people in E.SUN L&D Building and Hope Building support the campaign every week, effectively reducing 2,274,480 Environment grams of CO2e. Furthermore, from E.SUN headquarters building and from branches to households, provided a

（ E ） balanced diet, suppliers to the company kitchen give priority to locally grown food available in the season to reduce waste in shipping, cooling and kitchen waste and in shipping of raw materials and to reduce carbon footprint.

- 96 - the Chairman Letter from

Resource Circulation and Charity Sale activity

E.SUN actively launch Resource Circulation and Charity Sale activity for five consecutive years. Items including performance 2016 books, audiovisual products, electronics and appliances, toys and leather good. The program aims to utilize

the extra resources. Sustainable

The theme of the 2016 charity sale was resource circulation. It combined digital elements and innovation to introduce a new online bidding process and a fast mobile payment service. The event achieved maximum synergy between charity and innovative thinking. In 2016, E.SUN employees supplied more than 5,000 new and secondhand items. All proceeds from the sale were donated to the Concern for Schoolchildren Program to help disadvantaged children receive the same opportunity as other children.The 2016 charity sale raised more than NT$6 million. The sum would be used to provide assistance in care, expenses, books, uniforms and field trips for 3,000 elementary school students for one semester. Chronicles E.SUN

13-Book Lovers: Magazine circulation day activity

In order to realize E.SUN's environmental protection spirit, the "13-Book Lovers: Magazine circulation day activity" has been held at the E.SUN Headquarter Building. In order to effectively achieve the goal of resource Engagement Stakeholder sharing, we collected the magazines that various departments had subscribed to (or had received as donations), along with employees' own books, magazines, CDs, and DVDs, they were made freely available to employees We totally collected 2,257 items in 2016, and circulated 1,738 items, for a circulation rate of 77%.

Promoting E.SUN Ubike SD Stratregy of E.SUN's Easy Card enjoys the highest market share in Taiwan. In order to Riding for Love conserve energy, reduce carbon emissions, and cherish the Earth, we are continuing to implement the "E.SUN Youbike Smile 123" bicycle rental discount A dream will only remain a program together with the GIANT Corp. and the governments of Taipei, New dream if one never tries to make it come true. We never Taipei, Taichung, Changhua, Taoyuan City and Hsinchu City. Total number of realize our potential until stations are 988. This program calls on customers and the public to embrace we try. I thank E.SUN for a healthy, active lifestyle, save energy and reduce carbon dioxide emissions, helping me make me dream

come true.We completed the and the FIR Stratregy of SD and work together to build a better future by protecting the land. mission with encourage and determination against weather, wind and terrain.Led by the general E.SUN Cycling across Taiwan Tour manager, we shared the same goal and learned to work as a team. Our formation changed with the E.SUN FHC and E.SUN Bank have organized the E.SUN Cycling across Taiwan environment and our Tour for four years in a row. The tour advertises the benefits of low carbon physical conditions. In spite transport and sends charitable support to far corners of the society.The tour of the differences in stamina and riding skills or Governance took place between March 22 and March 31, 2016. Joseph Huang, President experience, we cheered

of E.SUN FHC and E.SUN Bank, led a team of 30 E.SUN volunteers and set off each other along the （

from E.SUN headquarters building to cycle around Taiwan. For every kilometer journey and became a real G

team. Our commitment to ） cycled by an E.SUN volunteer, E.SUN will volunteer to donate NT$10,000 to the success supported us Concern for Schoolchildren Program. A total of NT$10 million were donated to through the end and helped support disadvantaged children and help 5,000 children have a happy raise NT$10 million for the childhood and access to schooling. Concern for Schoolchildren Fund.It was a wonderful feeling to finish something as a team! Social （

- Jian-Hong Chen, senior manager, S Corporate Banking Department ） Environment （ E ）

CSR REPORT 2016 - 97 - the Chairman Letter from

Promoting butterfly conservation

E.SUN has co-organized the "Yangmingshan Butterfly Festival" in performance 2016 Yangmingshan National Park for four years in a row. This event promoted

Sustainable butterfly habitat conservation and environmental education, including guided butterfly-watching tours of Mt.Dadun and Caoshan, a butterfly ecology exhibition, talks about butterflies, and a concert. In 2016, teachers and students from Tunshan Elementary School of Tamsui, a member of the E.SUN Golden Seed Project, were invited on a nature tour. The group consisted of 32 grade 3 or grade 4 students, 3 teachers, 1 parent, and E.SUN volunteers. They followed the guide and completed a 1.5-hour tour along the Erzihping Trail. The tour educated the children Chronicles E.SUN on nature and the habits of butterflies and plants. In addition, the children received free books on butterflies found in Taiwan to allow them to learn more about butterflies and butterfly conservation when they were back to school.

Adopting trails in Yushan National Park trail Engagement Stakeholder

We have adopted and maintained trails in Yushan National Park trail for sevenconsecutive years, and use this opportunity to promote conservation andenvironmental education. We encourage E.SUN employees to participateand together do their part to protect the environment.

Becoming a member of the Taiwan Beautification Association SD Stratregy of

This association was established for the purpose of maintaining a clean environment and public toilets,while helping volunteers train their inner strength. E.SUN FHC is the 65th branch. For 6 years, managershave led 13 E.SUN environmental volunteers in participating in clean-upactivities. We hope thatour employees' physical involvement in cleaning up the community will arouse the public's concernand love for the environment. and the FIR Stratregy of SD

"Beautiful Taiwan, Smiling E.SUN" environmental clean-up activity

In order to create an even better living environment, and fulfill their corporate social responsibilities, apart from conducting environmental education, and promoting energy conservation and reductionsin carbon emissions, E.SUN employees have responded enthusiastically to environmental cleanupcampaigns. A total of 4,000 employees from 208 units in E.SUN FHC group participated in the "Beautiful Taiwan, Smiling E.SUN" environmental clean-up activity, which was led by E.SUN personnel and focused on the streets near branches, and nearby communities and public Governance areas.This activity aroused people's concern for environmental protection, gave the living environmentaround E.SUN

（ offices a whole new look, and gave participants healthy exercise and a new outlook. G ） Social （ S ） Environment （ E ）

- 98 - the Chairman Letter from

Mountain and BeachCleaning

Between September and November 2016, a total of 2,458 E.SUN employees and their families were involved performance in the "Mountain and Beach Cleaning" program at various parts of the country. The event is customized to suit 2016

local conditions. Activities and routes were designed to be completed by 13 teams. In addition, the business Sustainable units in Penghu, which lacked in mountains, showed their support by cleaning the beach instead.The event took place in several locations, including Hutou Mountain Park in Taoyuan, Shiaonanhai Ecological Park in Tainan, Aimen Beach to Lintou Beach in Penghu, and Xinyue Beach in Hsinchu. The activities were welcomed by local residents. Participants also invited tourists on the beach to join the effort and sent the impact of the event further into the world. Chronicles E.SUN Lights off for the summer solstice

E.SUN participates in the Society of Wilderness' "Lights off for the Summer Solstice" activity by turning offsign lighting at all branches from eight o'clock to nine o'clock on the evening of the summersolstice—the longest day of the year, and inviting employees to join in. While relying on tangible

actionsto reduce energy consumption, this activity also encourages Engagement Stakeholder everyone to turn off their 3C products, gooutside, personally appreciate the environment, learn how to adapt to a new lifestyle, and reflect onhow everyone has the power to change the world.

Turn off the lights for the Mid-Autumn Festival: Appreciating the Brightness of the Moon SD Stratregy of

We must all work to protect this beautiful land, and must do our part to reduce global warming. E.SUNresponded to Gold FM's "Turn off the lights for the Mid-Autumn Festival" activity by turning off the lightsof all vertical and horizontal signs at all branches from eight o'clock to nine o'clock on the evening of the Mid-Autumn Festival. All employees were encouraged to also turn off their household lights for the same one-hour period in this very simple and healthy activity showing our love for the Earth. and the FIR Stratregy of SD

Earth Hour

The Earth Hour activity was initiated by the World Wildlife Fund in Sydney, Australia. At eight o'clock in the eveningon the last Saturday in March, many landmark buildingsand corporate towers switched off their lights to Governance savepower, and employees, customers, and nearby residents were

encouraged to follow suit. Group action will be needed as we face the （ threat of global climate change. But as long as we adjust our living habits, G and take easysteps in our everyday lives, we can reduce our energy ） consumption and contribute to environmental protection. For the Sixth consecutive year, E.SUN took part in this activity by turning off power to horizontal and vertical signs at all branches one hour early. Social （

International Car Free Day S ）

International Car Free Day was initiated in France, and Taiwan soon followed suit. With strong support from private groups and government encouragement, Car Free Day provides an opportunity to promote energy

conservation and use of eco-friendly, sustainable transportation. On 2016 Environment International Car Free Day, E.SUN used its website, internal publicity, and Ubike marketing activities to encourage employees to come to work using （ E ） a low-carbon means of transportation, such as mass transit, cycling,walk- ing, or carpooling, and let employees participate in the various Car Free Day activities held indifferent areas to advocate eco-friendly lifestyles.

CSR REPORT 2016 - 99 - the Chairman Letter from

˙ 3.5 Supplier Management

GRI：203-2 GRI G4：FS5、FS7、F8 performance 2016 Sustainable E.SUN cooperates with over 1,000 supply chains include service supply chains, equipment supply chains, and project contractors; the service includes postal services, logistics, security, electronic equipment, telecommunications, furniture, civil engineering, and architectural design.

When selecting suppliers in Taiwan or in other countries, E.SUN gives priority to local suppliers. Regarding Chronicles E.SUN supplier management, E.SUN follows the E.SUN Bank Administration and Management Regulations and selects qualified suppliers. The company works only with suppliers that comply with local regulations and have signed the Statement of Commitment to Human Rights and Environmental Sustainability. The statement clearly specifies E.SUN's requirements and expectations of the supplier regarding environmental health and safety, prohibition of child labor, labor management, elimination of any form of

Engagement Stakeholder forced labor, absence of damage to basic labor rights, basic human rights and the code of ethics. 100% of the new suppliers added in 2016 were selected in accordance with the above principles. No significant error was discovered.

E.SUN implements the following process to enhance the supply chain management efficiency. SD Stratregy of Establish service targets for a supplier's products and services and implement related programs and necessary procedures. Evaluate the difference between results and targets during execution and provide a basis for Planning improvement.

and the FIR Stratregy of SD Adhere to the targets and record data during execution. Execution

Evaluate and audit the quality of products and services. Compare results and expected performance after planning and execution. Propose plans for improvement to make future plans more feasible. Audit Governance

（ Propose modifications after completing planning, execution, and audit of a supplier's products and services.

G Identify suitable methods to reduce the difference between targets and results. Make the procedures of the

） Correction next round of execution easier and described in more detail. Social （ Supplier training S ）

We require suppliers performing highly dangerous work, including subcontractors in new building projects or branch renovation projects, to comply with the Occupational Safety and Health Act. In addition, responsible persons of said suppliers and E.SUN employees must provide health and safety training for the operators involved and raise awareness against danger in order to reduce injuries in the process. No construction accident related injury or death occurred in

Environment 2016. （ E ）

- 100 - the Chairman Letter from

Green procurement performance 2016 To reach SDG 12 responsible consumption and production, we support EPA's green living and spending policy and

follows the principle of green spending and environmentally friendly procurement. E.SUN has actively purchased Sustainable environmentally-friendly products, green consumption and procurement, including Green Mark, Energy Mark, Water conservation Mark, and GreenBuilding Material Mark since 2010. We also raised green building material use to 45% (compared with the standard of 30%), as of 2016 the total purchase amount reached NT$373 million. Chronicles E.SUN

Green procurement principle Engagement Stakeholder ．Priorily purchase and use building materials, equipment, and apparatus bearing the Green Mark or Green Building Materials Mark and complying with legal requirements. ．Priorily purchase recovered, recyclable, low pollution, energy-saving products. We refuse to purchase products that are excessively packaged, dangerous to the environment, and cannot be readily decomposed, as well as machinery and equipment with high energy demands. ．In order to facilitate modification, renovation, and redecoration for units, procurement must be standardization and consistency. ．Purchased products that can enhance customer’s safety and fulfill corporate social responsibility. SD Stratregy of E.SUN continues to participate in the EPA's Green Procurement Program for Private Enterprises and Organizations. The company purchases EPA approved products and Category 2 or 3 environmentally friendly products. E.SUN has been named an outstanding benchmark organization for "Green Procurement by Private Enterprises and Organizations" by Taipei City Department of Environmental Protection 8 years in a row and an outstanding benchmark organization for "Green Procurement" by and the FIR Stratregy of SD the EPA for 7 years in a row. The goal is to facilitate an upgrade of the green industry through green procurement and improve the conditions regarding the environment as a whole.

Meanwhile, we exercise our influence through purchases and sales to raise awareness of environmental conservation and green spending among business partners and encourage them to invest in the development of green products and technology (details of green products shown in 3.4.2 Supporting environmentally friendly products) in order to create opportunities in sustainability together. Governance （ G ） Social （ S ） Environment （ E ）

CSR REPORT 2016 - 101 - Appendix

1. Glory and Recognition in 2016

CommonWealth Magazine DJSI Gartner Taiwan Academy The Banker, The Asset, 9 times ranked No.1 The 3rd straight year included in Awarded Digital Champion of Banking and Finance Asiamoney, Global Finance in the Award of Excellence Dow Jones Sustainability Index in Asiapac for two consecutive years 8th Best Practice Awards Best Bank in Taiwan in Corporate Social Responsibilities

The only one The only one The only one The winner Recognition from in Taiwan financial sector in Taiwan financial sector in Asian financial sector in Taiwan financial sector international financial magazine

Overall Performance • E.SUN FHC was included in Dow Jones Sustainability Emerging Market Index for 3 consecutive years (2014-2016), the only one in Taiwan financial sector. • E.SUN Bank received the Best Domestic Bank in Taiwan Award for 3 consecutive years (2014-2016) (Asiamoney) • E.SUN Bank received the Best Domestic Bank in Taiwan Award for 2 consecutive years (2015-2016) (The Asset) • E.SUN Bank received Bank of year award in Taiwan (2016) (The Banker) • E.SUN Bank ranked No.1 of the benchmark financial institution in Taiwan (2016) (CommonWealth Magazine) • E.SUN Bank received six awards in the 8th Best Practice Awards- Best CSR, Best Risk Management, Best Wealth Management, Best SME, Best Digital Finance and Best Human Resource Development (2016) (Taiwan Academy of Banking and Finance)

Digital Innovation • E.SUN Bank received the award of Digital Champion in Asiapac for two consecutive years (2015-2016) (Gartner) • E.SUN Bank received the Best Initiative in Innovationaward in asia for two consecutive years(2015-2016) (The Asset) • E.SUN Bank received nine awards from The Asian Banker, including Best Data and Analytics Initiative in Taiwan, The Credit Risk Technology Implementation of the Year in Taiwan. (2016) • E.SUN Bank received the award of Asia Pacific Leader in Business Agility (2016)(IDC) • E.SUN Bank Ranked 1st place in cultural and creative lending award for two consecutive years (2015-2016) (FSC)

Customer Service • E.SUN FHC received sixawards in Wealth Management Surveyfrom Wealth Magazine, including Best Wealth Management Bank, Best service provider, Best Financial Consultant Team, Best Choice Bank,Best Promotion activities and Most Promising Bank, the winner among Taiwan financial sector. (2016) • E.SUN Bank was top-ranked among financial institutions in Golden Service Award for five times (2011-2014, 2016) (CommonWealth Magazine) • E.SUN Bank received the award of Best in Treasury and working capital -SME in Taiwan for 4 consecutive years (2013-2016) (The Asset) • E.SUN Bank received SME Partner Award in 11 consecutive years (2006-2016)(MOEA, Credit Guarantee Fund)

Sustainable Development • E.SUN FHC ranked No.1 in financial institutions in the Award of Excellence in Corporate Social Responsibilities 9 times (2007-2010、2012-2016), (CommonWealth Magazine) • E.SUN FHC received Best CSR Award in Financial sector and Education Promotion, the only one in Taiwan financial sector. (2016) (Global Views) • E.SUN FHC received the Platinum Award for Excellence Management in Corporate Governance in Asia for 7 consecutive years, the only one in Taiwan financial sector.(2010-2016) (The Asset) • E.SUN FHC received the Golden Quality Award in Financial Brand & CSR Survey (2016): -Best CSR -Best Domestic Bank brand image award -Best Banking Service -Best Banking Product -Best Fintech in Banking -Best Fintech in Securities • E.SUN FHC received the Top 10 Most Sustainable Company Award for 2 consecutive years (2015-2016) (Taiwan Institute for Sustainable Energy) • E.SUN FHC ranked within top 5% of Corporate Governance Evaluation for 2 consecutive years (2015-2016) (TWSE)

- 102 - 2. Comparative table of GRI (Global Reporting Initiative)

★ Major issues

GRI 102: General Disclosures Page Omission SDGs Disclosure Description

102-1 Name of the organization 2、22

102-2 Activities, brands, products, and services 22、53

102-3 Location of headquarters 22

102-4 Location of operations 22

102-5 Ownership and legal form 26

102-6 Markets served 24、25

102-7 Scale of the organization 22、26

8. DECENT WORK AND ECONOMIC 102-8 Information on employees and other workers 60 GROWTH

102-9 Supply chain 100

Significant changes to the organization and 22 102-10 its supply chain

102-11 Precautionary Principle or approach 40

102-12 External initiatives 87、89

102-13 Membership of associations 35

102-14 Statement from senior decision-maker 4

102-15 Key impacts, risks, and opportunities 16

Values, principles, standards, and norms of 16. PEACE AND 102-16 36 JUSTICE STRONG behavior INSTITUTIONS

Mechanisms for advice and concerns about 16. PEACE AND 102-17 36 JUSTICE STRONG ethics INSTITUTIONS

102-18 Governance structure 28

102-19 Delegating authority 32、34

Executive-level responsibility for economic, 、 102-20 environmental, and social topics 32 34

Consulting stakeholders on economic, 16. PEACE AND 、 JUSTICE STRONG 102-21 environmental, and social topics 32 34 INSTITUTIONS

Composition of the highest governance body 28、29、 5. GENDER EQUALITY 102-22 16. PEACE AND and its committees JUSTICE STRONG 30 INSTITUTIONS 、、 102-23 Chair of the highest governance body 28 29 30

5. GENDER EQUALITY Nominating and selecting the highest 16. PEACE AND 102-24 29、30 JUSTICE STRONG governance body INSTITUTIONS

GRI：102-55 CSR REPORT 2016 - 103 - GRI 102: General Disclosures Page Omission SDGs Disclosure Description

16. PEACE AND 102-25 Conflicts of interest 33 JUSTICE STRONG INSTITUTIONS

Role of highest governance body in setting 28、29、 102-26 purpose, values, and strategy 30、32、 34

The information Collective knowledge of highest governance were not integrated 102-27 yet and shall be body dosclosed in the future.

Evaluating the highest governance body’s 31 102-28 performance

The information Identifying and managing economic, environ- were not integrated 102-29 yet and shall be mental, and social impacts dosclosed in the future. 40、41、 102-30 Effectiveness of risk management processes 42

Review of economic, environmental, and 102-31 social topics 32、34

Highest governance body’s role 102-32 2、34 in sustainability reporting

102-33 Communicating critical concerns 29、35

The information were not integrated 102-34 Nature and total number of critical concerns yet and shall be dosclosed in the future. The information were not integrated yet and shall be 102-35 Remuneration policies dosclosed in the future. The information were not integrated 102-36 Process for determining remuneration yet and shall be dosclosedin the future. The information were not integrated 102-37 Stakeholders’ involvement in remuneration yet and shall be dosclosedin the future. The information were not integrated 102-38 Annual total compensation ratio yet and shall be dosclosedin the future.

The information Percentage increase were not integrated 102-39 yet and shall be in annual total compensation ratio dosclosedin the future.

102-40 List of stakeholder groups 8

8. DECENT WORK AND ECONOMIC 102-41 Collective bargaining agreements 60 GROWTH

102-42 Identifying and selecting stakeholders 8

102-43 Approach to stakeholder engagement 8~10

102-44 Key topics and concerns raised 8~10

- 104 - GRI：102-55 GRI 102: General Disclosures Page Omission SDGs Disclosure Description

Entities included in the consolidated 102-45 2 financial statements

102-46 Defining report content and topic Boundaries 10

102-47 List of material topics 11~13

The changes of existing scope or calculationwill be added in 102-48 Restatements of information the note, and we will also revise the historical information.

102-49 Changes in reporting 2、10

102-50 Reporting period 2

102-51 Date of most recent report 2

102-52 Reporting cycle 2

Contact point for questions regarding the 2 102-53 report

Claims of reporting in accordance with the 102-54 2 GRI Standards

102-55 GRI content index 103~111

102-56 External assurance 2

GRI 103: Management Approach Page Omission SDGs Disclosure Description

10 Explanation of the material topic and its GRI 103-1 management Boundaries approach apply to material issues of 2016, including 16. PEACE AND The management approach and its Business JUSTICE STRONG 103-2 Performance, INSTITUTIONS components Corporate Governance, Code of Conduct and Ethnics, Risk Manage- ment, Anti-money- Loundering, Social Welfare, Customer Rights And Information Security, Financial Services And Customer 103-3 Evaluation of the management approach Experience, Human Resource Management 、Financial Inclusion, Digital Finance, Responsi- bleLending And Investment

GRI：102-55 CSR REPORT 2016 - 105 - STANDARD DISCLOSURES PART: Topic-specific Standards

GRI 200: Economic Series Page Omission SDGs

Series Disclosure Description

Direct economic value ★ 201-1 26 generated and distributed GRI 201: Economic Performance Financial implications and 201-2 other risks and opportunities 86 due to climate change.

efined benefit plan obligations 13. CLIMATE ACTION 201-3 and other retirement plans 68

Financial assistance received 201-4 Not applicable from government (Not a material issue)

GRI 202: Ratios of standard entry level Market 202-1 wage by gender compared to 68 Presence local minimum wage

Proportion of senior management Not applicable 202-2 hired from the local community (Not a material issue)

★ 2. ZERO HUNGER 7. AFFORDABLE AND GRI 203: Infrastructure investments and CLEAN ENERGY 203-1 76 Indirect services provided supported 9. INDUSTRY, INNOVATION AND INFRASTRUCTURE Economic 11. SUSTAINABLE CITIES Impacts AND COMMUNITIES

1. NO POVERTY 2. ZERO HUNGER 3. GOOD HEALTH Significant indirect economic 45、48、 AND WELL-BEING 203-2 Not applicable 8. DECENT WORK AND impacts 76 (Not a material issue) ECONOMIC GROWTH 10. REDUCED INEQUALITIES 17. PARTNERSHIPS FOR THE GOALS

GRI 204: Proportion of spending on Procurement 204-1 Practices local suppliers

★ Operations assessed for risks 16. PEACE AND GRI 205: 205-1 36、37 JUSTICE STRONG related to corruption INSTITUTIONS Anti-corruption

Communication and training 16. PEACE AND 205-2 about anti-corruption policies 36、37 JUSTICE STRONG INSTITUTIONS and procedures

Confirmed incidents of 16. PEACE AND JUSTICE STRONG 205-3 corruption and actions taken 36、37 INSTITUTIONS

★ Legal actions for anti-compet- GRI 206: 16. PEACE AND JUSTICE STRONG Anti-competi- 206-1 itive behavior, anti-trust, and 36、37 INSTITUTIONS tive Behavior monopoly practices

- 106 - GRI：102-55 GRI 300: Environmental Series Page Omission SDGs Series Disclosure Description

GRI 301: Materials used by weight or Not applicable for 301-1 financial sector Materials volume

Not applicable for 301-2 Recycled input materials used financial sector

Reclaimed products and their 301-3 Not applicable for packaging materials financial sector

7. AFFORDABLE AND GRI 302: CLEAN ENERGY 8. DECENT WORK AND Energy Energy consumption ECONOMIC GROWTH 302-1 89 12. RESPONSIBLE within the organization CONSUMPTION AND PRODUCTION 13. CLIMATE ACTION

Energy consumption outside Not applicable 302-2 of the organization (Not a material issue)

Not applicable 302-3 Energy intensity (Not a material issue)

Not applicable 302-4 Reduction of energy consumption (Not a material issue)

Reductions in energy requirements Not applicable 302-5 (Not a material issue) of products and services

GRI 303: 303-1 Water withdrawal by source Not applicable Water (Not a material issue)

Water sources significantly affected Not applicable 302-2 by withdrawal of water (Not a material issue)

Not applicable 302-3 Water recycled and reused (Not a material issue)

GRI 304: Biodiversity Operational sites owned, leased, managed in, or Not applicable for 304-1 adjacent to, protected areas financial sector and areas of high biodiversity value outside protected areas

Significant impacts of activities, Not applicable for 304-2 products, and services on financial sector biodiversity

Not applicable for 304-3 Habitats protected or restored financial sector

IUCN Red List species and national 304-4 conservation list species with Not applicable for habitats in areas affected by financial sector operations

GRI：102-55 CSR REPORT 2016 - 107 - GRI 300: Environmental Series Page Omission SDGs Series Disclosure Description

3. GOOD HEALTH AND WELL-BEING GRI 305: 12. RESPONSIBLE Direct (Scope 1) CONSUMPTION Emissions 305-1 89、90 AND PRODUCTION GHG emissions 13. CLIMATE ACTION 14. LIFE BELOW WATER 15. LIFE ON LAND

3. GOOD HEALTH AND WELL-BEING 12. RESPONSIBLE Energy indirect (Scope 2) CONSUMPTION 305-2 89、90 AND PRODUCTION GHG emissions 13. CLIMATE ACTION 14. LIFE BELOW WATER 15. LIFE ON LAND

3. GOOD HEALTH AND WELL-BEING 12. RESPONSIBLE Other indirect (Scope 3) CONSUMPTION 305-3 89 AND PRODUCTION GHG emissions 13. CLIMATE ACTION 14. LIFE BELOW WATER 15. LIFE ON LAND

Not applicable 305-4 GHG emissions intensity (Not a material issue)

Not applicable 305-5 Reduction of GHG emissions (Not a material issue)

Emissions of ozone-depleting 305-6 Not applicable substances (ODS) (Not a material issue)

Nitrogen oxides (NOX), sulfur Not applicable 305-7 oxides (SOX), and other (Not a material issue) significant air emissions

GRI 306: Water discharge by quality Effluents and 306-1 Not applicable and destination (Not a material issue) Waste

3. GOOD HEALTH AND WELL-BEING Waste by type and disposal 6. CLEAN WATER 306-2 91 AND SANITATION 12. RESPONSIBLE method CONSUMPTION AND PRODUCTION

Not applicable for 306-3 Significant spills financial sector

Not applicable for 306-4 Transport of hazardous waste financial sector

Water bodies affected Not applicable for 306-5 by water discharges and/or financial sector runoff

★ GRI 307: Non-compliance with 16. PEACE AND Environmental 307-1 environmental laws and 38 JUSTICE STRONG INSTITUTIONS Compliance regulations

GRI 308: New suppliers that were Supplier 308-1 screened using environmental 100 Environmental criteria Assessment

Negative environmental Not applicable 308-2 impacts in the supply chain (Not a material issue) and actions taken

- 108 - GRI：102-55 GRI 400: Social Series Page Omission SDGs Series Disclosure Description

★ New employee hires and 5. GENDER EQUALITY GRI 401: 401-1 64、66 8. DECENT WORK AND employee turnover ECONOMIC GROWTH Employment

Benefits provided to full-time employees that are not provided 401-2 68 8. DECENT WORK AND to temporary or part-time ECONOMIC GROWTH employees

5. GENDER EQUALITY 401-3 Parental leave 65 8. DECENT WORK AND ECONOMIC GROWTH

★ GRI 402: Labor/ Minimum notice periods 402-1 65 8. DECENT WORK AND Management regarding operational changes ECONOMIC GROWTH Relations

GRI 403: Workers representation in formal Occupational 8. DECENT WORK AND Health and 403-1 joint management–worker health 67、74 ECONOMIC GROWTH Safety and safety committees

Types of injury and rates of injury, occupational diseases, lost days, 3. GOOD HEALTH 403-2 65 AND WELL-BEING and absenteeism, and number of 8. DECENT WORK AND work-related fatalities ECONOMIC GROWTH

Workers with high incidence or Not applicable 403-3 high risk of diseases related to their (Not a material issue) occupation

Health and safety topics covered in formal agreements with trade 、 8. DECENT WORK AND 403-4 67 74 ECONOMIC GROWTH unions

★ 4. QUALITY EDUCATION Average hours of training per 5. GENDER EQUALITY GRI 404: 404-1 72 year per employee 8. DECENT WORK AND Training and ECONOMIC GROWTH Education Programs for upgrading employee skills and transition assistance 8. DECENT WORK AND 404-2 71、72 ECONOMIC GROWTH programs

Percentage of employees 5. GENDER EQUALITY 404-3 receiving regular performance 71、73 8. DECENT WORK AND and career development reviews ECONOMIC GROWTH

GRI：102-55 CSR REPORT 2016 - 109 - GRI 400: Social Series Page Omission SDGs Series Disclosure Description

★ Diversity of governance 405-1 29、61 GRI 405: bodies and employees 5. GENDER EQUALITY 8. DECENT WORK AND Diversity and ECONOMIC GROWTH Equal Oppor- tunity Ratio of basic salary and 405-2 68 5. GENDER EQUALITY remuneration of women to men 10. REDUCED INEQUALITIES

GRI 406: 406-1 Incidents of discrimination 60 Non-discrimi- and corrective actions taken 5. GENDER EQUALITY nation

GRI 407: 407-1 Operations and suppliers in Freedom of which the right to freedom of Association and association and collective Not applicable Collective bargaining may be at risk (Not a material issue) Bargaining

Operations and suppliers at GRI 408: 408-1 60、100 significant risk for incidents of Child Labor 8. DECENT WORK AND child labor ECONOMIC GROWTH

GRI 409: 409-1 Operations and suppliers at 60、100 significant risk for incidents of Forced or 8. DECENT WORK AND Compulsory forced or compulsory labor ECONOMIC GROWTH Labor

GRI 410: 410-1 Security personnel trained in human rights policies or Security Not applicable Practices procedures (Not a material issue)

GRI 411: 411-1 Incidents of violations Rights of involving rights of indigenous Not applicable Indigenous peoples (Not a material issue) Peoples

Operations that have been GRI 412: 412-1 60 subject to human rights Human Rights reviews or impact assessments Assessment

Employee training on human 412-2 Not applicable rights policies or procedures (Not a material issue)

412-3 Significant investment 60、100 agreements and contracts that include human rights clauses or that underwent human rights screening

-110 - GRI：102-55 GRI 400: Social Series Page Omission SDGs Series Disclosure Description

★ GRI 413: Operations with local Local 413-1 community engagement, 76∼85 Communities impact assessments, and development programs

Operations with significant Not applicable 413-2 actual and potential negative (Not a material issue) impacts on local communities

5. GENDER EQUALITY GRI 414: New suppliers that were 8. DECENT WORK AND 414-1 100 ECONOMIC GROWTH Supplier Social screened using social criteria 16. PEACE AND JUSTICE STRONG Assessment INSTITUTIONS

Negative social impacts in the Not applicable 414-2 supply chain and actions taken (Not a material issue)

GRI 415: 16. PEACE AND 415-1 Political contributions 36 JUSTICE STRONG Public Policy INSTITUTIONS

GRI 416: Assessment of the health and Customer 416-1 Not applicable for safety impacts of product and financial sector Health and service categories Safety

Incidents of non-compliance concerning the health and Not applicable for 416-2 safety impacts of products financial sector and services

★ Requirements for product and 12. RESPONSIBLE GRI 417: 417-1 service information and 53 CONSUMPTION AND PRODUCTION Marketing and labeling Labeling

Incidents of non-compliance Not applicable 417-2 concerning product and service (Not a material issue) information and labeling

Incidents of non-compliance concerning marketing Not applicable 417-3 (Not a material issue) communications

★ GRI 418: Substantiated complaints Customer 418-1 concerning breaches of 55 customer privacy and losses of Privacy customer data

★ GRI 419: Non-compliance with laws 16. PEACE AND Socioeconomic 419-1 and regulations in the social 38 JUSTICE STRONG INSTITUTIONS Compliance and economic area

GRI：102-55 CSR REPORT 2016 - 111 - 3. Human Resource Management indicators

Indicator 2014 2015 2016 Note

Percentage of Female 56.3% 56.5% 55.8% Percentage of female in executive officer 36.8% 37.8% 37.4% Percentage of female in middle level officer 40.3% 41.3% 41.1% Percentage of female in managerial level 19.9% 20% 19.3% Percentage of female in sales managerial level 18.3% 23.2% 26.0%

Indicator 2014 2015 2016 Note

Average training hours 56.6 51.9 49.1

Average training cost 58,428 59,268 53,332 Percentage of employee training expenses out of total revenue 1.09% 0.98% 0.9% [Total income - (Total operating expenses - Total compensation cost)] Return on human resources 277% 303% 283% /Total compensation cost

Indicator 2014 2015 2016 Note

Attrition rate 8.5% 8.7% 8.5%

Employee engagement rate 97.6% 97.7% 97.9%

Indicator 2014 2015 2016 Note

Total hours of involuntary absence (occupational Absence rate 0.26% 0.22% 0.27% injury leaves, sick leaves, and menstrual leaves)/ Total hours of work on the calendar

Disabling injury frequency 2.25% 2.42% 2.17%

Total On job training hours 7634 hr 8342 hr 9,626 hr Number of on-the-job training sessions 286 289 297 Completion rate of workplace safety orientation 100% 100% 100% Occupational safety officers, fire safety managers and first aid personnel are required to renew Number of candidates - 195 244 certification every 2 or 3 years. All certificates were to renew certification valid in 2014, and so no renewal courses were provided. Renewal exams were organized for occupational safety officers in 2015 and for first aid personnel in 2016. Number of renewal training hours - 1,170 hr 976 hr Number of participants in fitness courses 2,084 2,112 3,120 Health check-up rate 64% 40% 76% Number of participants in fitness seminars 3,814 4,280 5,316 Number of employees eating in the cafeteria 860 1,120 1,300 Number of employees applied for Child education subsidies 1,373 1,555 1,959 Child education subsidies (unit: New Taiwan Dollar) NT$3,299,000 NT$3,722,000 NT$4,593,000 Subsidies for E.SUN children (unit: New Taiwan Dollar) - - NT$41,700,000 New initiative Number of applications for injury/illness payout 26 30 24 Amount of applications for injury/illness payout 204,978 170,241 54,963 Ratio of Employees in Labor Union 13.47% 12.76% 11.26%

-112 - 4. Economic value distributed indicators

Indicators \ Year 2014 2015 2016

Employee Salaries and Benefits 8,347,056 9,057,587 10,184,405

Employee Salaries 7,085,058 7,656,005 8,566,403

Other employee benefit expense 1,261,998 1,401,582 1,618,002

Distributed Earnings 7,550,027 9,521,550 11,370,931

Cash Dividend 1,786,648 3,173,850 3,419,231

Stock Dividend 5,763,379 6,347,700 7,951,700

Tax 2,688,166 3,125,729 3,602,654

Investment in community involvement 259,056 227,364 295,073 Expenditures in studies and campaigns 15,208 23,320 19,025 of financial industry policies Political donations 0 0 0

（Unit: NT$ thousand）

Investment in community involvement in 2016

Unit: Category NT$ thousand Note

Supporting SMEs in Taiwan, and contributing to the Small and Medium Enterprise Supporting SMEs in Taiwan 91,701 Credit Guarantee Fund and the Overseas Credit Guarantee Fund.

E.SUN Golden Seed Project Supplying regular maintenance for 100 E.SUN Libraries every year, and making 46,006 donations for 10 new E.SUN Libraries.

Children Care Program 21,513 Providing assistance for 534 elementary schools and 10,284 study allowances. E.SUN Cup International AAA Hosting 38 E.SUN Cup games, and supplying junior baseball training camps Baseball Tournament 19,637 and preventive care camps and donating baseball equipment.

Supporting progress in arts and culture in Taiwan, organizing world class arts Arts and culture - world class arts 16,314 and culture events, and inviting the Die 12 Cellisten der Berliner Philharmoniker and culture events and the Vienna Boys' Choir to perform in Taiwan.

Disaster relief for victims Supplying donations to earthquake victims in Tainan and Typhoon Nepartak of major disasters 16,000 victims in Taitung, and donating medical supplies to Kumamoto, Japan. Supporting the film industry Encouraging progress in creative and cultural industries in Taiwan, in Taiwan 11,728 and sponsoring films such as 52Hz I Love You and Black Bear Forest.

Helping innovators in Taiwan become more competitive and adopt international 2017 International Masters Forum 9,141 standards, and inviting Alex Osterwalder, inventor of the Business Model Canvas, hold international masters forum. Encouraging cutting edge research in Taiwan, and awarding the E.SUN E.SUN Academic Award 7,412 Academic Award to 11 teachers in 2016. Yilan International Children's 5,504 Supporting the local culture, and continuing to sponsor the Yilan International Folklore and Folkgame Festival Children's Folklore and Folkgame Festival for the 7th year.

For Mothers Hosting 2 Mother's Day concerts, where the E.SUN Choir Group performed to --Mother's Day Music Concerts 4,189 express gratitude for all mothers in the world, and receiving 2,500 visitors.

E.SUN Outstanding Management Talent Scholarship 3,929 Training managers of tomorrow, and welcoming 8 new talented trainees in 2016.

Note: The equivalent investment in community involvement includes the following: cash input, input in kind, labor input, and administrative expenses.

CSR REPORT 2016 - 113 - Payments relevant to studies and campaigns of financial sector

Payment Note

2016 19,025

The Bankers Association Including 56% for financial studies and training funds, of the Republic of China 9,417 35% for annual member’s funds, and 5% for billed communication expenses.

Trust Association of the Republic of China 5,138 100% for exam fees for trust service representatives

Taiwan Securities Association 2,506 Including 99% for service fees and 1% for exam fees

Taiwan Corporate Governance Association Including 99% for corporate governance evaluation fees 1,131 and 1% for exam fees Taiwan Institute for Sustainable Energy 345 Including 81% for sponsoring the foundation and 19% for exam fees

R.O.C. Bills Finance Association 250 ongoing membership fees The Insurance Agency Association of the Republic of China 159 69% for certificate registration and 31% for association memberships Taiwan Development & Research 71 Academia of Economic & Technology 100% for expenses for filing public safety inspections for buildings Others 8

2015 23,320

Trust Association of the Republic of China 14,834 100% for exam fees for trust service representatives

Including 60% for financial studies and training funds, The Bankers Association of the Republic of China 7,856 33% for annual member’s funds, and 3% for billed communication expenses. Including 50% for ongoing membership fees, R.O.C. Bills Finance Association 400 50% for membership service fee.

Taiwan Securities Association 195 Including 85% for service fees and 15% for exam fees

Taipei Exchange 19 100% for Service fees

Others 16

2014 15,208

Trust Association of the Republic of China 7,534 100% for exam fees for trust service representatives

The Bankers Association Including 65% for financial studies and training funds, of the Republic of China 6,796 32% for annual member’s funds, and 2% for billed communication expenses. Taiwan Development & Research Academia Expenses for filing public safety inspections for buildings of Economic & Technology 374

R.O.C. Bills Finance Association 200 100% for ongoing membership fees

Taiwan Corporate Governance Association 151 100% for exam fees

Taiwan Securities Association 144 100% for service fees

Others 8

（Unit: NT$ thousand）

- 114 - 5. Low-carbon operations indicators

Types Location 2013 2014 2015 2016 Comments

The scope was Headquarter Building 3,649,400 3,622,800 3,697,400 3,727,400 expanded in 2016 to include Dengfeng Building All 137 branches and Boai Building. in Taiwan 17,501,025 16,317,279 15,757,992 15,079,187 More people and Power more equipment Consumption are involved, and energy consump- （kWh） Total inventory tion has increased 21,150,425 19,940,079 19,455,392 33,705,829 as a result. The total energy Power cunsumption consumption is per square meters area 353.3 333.0 324.9 315.7 33,705,829 kWh.

The scope was Headquarter Building 19,401 19,879 21,536 26,514 expanded in 2016 to include Dengfeng Building All 137 branches and Boai Building. in Taiwan 75,904 81,001 66,807 62,130 More people and Water more equipment Consumption are involved, and water consumption （degree） Total inventory has increased as a 95,305 100,880 88,343 137,895 result. The total water consumption is 137,894.6 m3. Power cunsumption per square meters area 1.59 1.68 1.48 1.29

Total Fuel （gasoline/diesel） Headquarter Building 6,351.52 2,368.87 1,679.63 1,916.09 Consumption （L）

Weight Headquarter Building （kg) 131,840 114,664 121,098 113,340

CSR REPORT 2016 - 115 - 6. Comparative table of GRI (Global Reporting Initiative) G4 indicators of financial service sector

Aspect DMA/GRI Reference 3.2 FS1 Policies with specific environmental and Responsible social components applied to business lines. Lending and Investment 3.2 Procedures for assessing and screening FS2 Responsible environmental and social risks in business lines. Lending and Investment

Processes for monitoring clients’ implementation 3.2 of and compliance with environmental and FS3 Responsible social requirements included in agreements Lending and Investment DMA or transactions.

2.4.3 Process(es) for improving staff competency to Education and training FS4 implement the environmental and social policies 3.4.3 and procedures as applied to business lines. Promoting environmental Material sustainability product portfolio 2.1 Financial Inclusion 2.2 Interactions with clients/ investees/business Digital Finance FS5 partners regarding 3.2 environmental and social risks and opportunities. Responsible Lending and Investment 3.5 Supplier Management

2.1 Monetary value of products and services Financial Inclusion FS7 designed to deliver a specific social benefit for 2.2 each business line broken down by purpose. Digital Finance Category Monetary value of products and services designed to deliver a specific environmental 3.4.2 FS8 benefit for each business line broken down Supporting environmentally by purpose. friendly products

Coverage and frequency of audits to assess 3.2 Audit DMA FS9 implementation of environmental and social Responsible Lending and policies and risk assessment procedures. Investment

Percentage and number of companies held in 3.2 Active the institution’s portfolio with which the reporting Category FS10 Responsible Lending and participation organization has interacted on environmental or Investment social issues .

G4 Social─Product and service informatio, Local community

G4 Policies for the fair design and sale of financial 2.3.1 -Product FS15 products and services. Protecting customers' rights responsibility- Product and DMA service Initiatives to enhance financial literacy by type of 2.5.1 information FS16 beneficiary. Academic Education Series

FS13 Access points in low-populated or economically 2.1 G4 disadvantaged areas by type. Financial Inclusion -Society-Local Category community Initiatives to improve access to financial services 2.1 FS14 for disadvantaged people. Financial Inclusion

- 116 - 7. CSR best-practice principles for listed and OTC traded companies

Content Reference

Discloses the goal, entity applied to, and Strategy of Sustainable Chapter General Guideline 1 principals of best practices. development and the framework of Integrated Report

1.1 Corporate Governance Chapter Corporate Governance Regulate and promote corporate governance. 2 1.2 Code of Conduct and Ethnics

Chapter Environmental Protection Regulate practices for sustainability. 3.Environment 3

2.2 Happy Workplace 2.3 Chapter Social Responsibilities Regulate practices for social welfare. 4 Customer Service 3.5 Supplier Management

Chapter Disclosure Regulate and enhance disclosure of CSR. About this Report 5

Chapter 1.1 Appendix Regulate and improve the existing CSR system. 6 Corporate Governance

CSR REPORT 2016 - 117 - 8. Comparative table of ISO 26000 terms

Category Issue Reference

Organizational Governance Decision-making process and structures Business overview

2.4.1 Due diligence for preventing human rights risk Equal employment opportunities and employee rights

2.4.1 Human rights risk situations Equal employment opportunities and employee rights

1.2 Avoidance of complicity Code of Conduct and Ethics

2.4.2 Resolving grievances Compensation and benefits and employee assistance programs Human rights 2.4.1 Discrimination and vulnerable groups Equal employment opportunities and employee rights

2.4.1 Civil and political rights Equal employment opportunities and employee rights

2.4. Economic, social and cultural rights Happy Workplace

Fundamental principles and rights at work 2.4.1 Equal employment opportunities and employee rights

Employment and employment relationships 2.4.1 Equal employment opportunities and employee rights

2.4. Working environment and social protection Happy Workplace 2.4. Social communication Labor Practices Happy Workplace 2.4.4 Health and safety at work Workplace safety and employee health

Human development and training in the 2.4.3 workplace Education and training

3. Prevention of pollution Environment

3. Sustainable resource use Environment Environment 3. Climate change mitigation and adaptation Environment

Protection of the environment, 3. biodiversity and restoration of natural habitats Environment

1.2 Anti-corruption Code of Conduct and Ethics

1.2 Responsible political involvement Code of Conduct and Ethics 1.2 Fair competition Fair Operating Code of Conduct and Ethics Practices Promoting social responsibility in the value Business overview chain

1.2 Respect for property rights Code of Conduct and Ethics

Fair marketing, factual and unbiased 2.3.1 information and fair contractual practices Protecting customers' rights

2.3.1 Protecting consumers’ Health and safety Protecting customers' rights

Consumer 2.1 Financial Inclusion Sustainable consumption Issues 2.2 Digital Finance

Consumer service, support, 2.3.1 and complaint and dispute resolution Protecting customers' rights

2.3.2 Consumer data protection and privacy Customer Privacy Management

- 118 - Category Issue Reference

2.1 Financial Inclusion Access to essential services 2.2 Consumer Digital Finance Issues 2.3.1 Protecting customers' rights

Educational and awareness 2.3.1 Protecting customers' rights

Community involvement 2.5.2 Community involvement series

Education and culture 2.5 Social Inclusion

Employment creation and skills development 2.5.1 Community Academic Education Series Involvement and Technology development and access 2.5.1 Development Academic Education Series

Wealth and income creation 2.5.2 Community involvement series

Health 2.5.2 Community involvement series

Social investment 2.5.2 Community involvement series

9. Comparative table of terms in the UN Global Compact

Category Issue Reference

2.4.1 Businesses should support and respect the protection of internationally Equal employment proclaimed human rights. opportunities and employee rights

Human Rights Businesses should make sure that they are not complicit in human rights 3.5 abuses. Supplier Management

Businesses should uphold the freedom of association and the effective 2.4.1 recognition of the right to collective bargaining. Equal employment opportunities and employee rights

Labor 2.4.1 Businesses should uphold the effective abolition of child labour. Equal employment opportunities and employee rights

Businesses should uphold the elimination of discrimination in respect of 2.4.1 employment and occupation. Equal employment opportunities and employee rights

Businesses should support a precautionary approach to environmental 3. Environment challenges.

Businesses should undertake initiatives to promote greater environmental 3. Environment Environment responsibility.

Businesses should encourage the development and diffusion of 3.2 environmentally friendly technologies. Responsible Lending and Investment

Anti-Corruption Businesses should work against corruption in all its forms, including 1.2 extortion and bribery. Code of Conduct and Ethics

CSR REPORT 2016 - 119 - 10. Assurance opinion

- 120 - CSR REPORT 2016 - 121 - - 122 - CSR REPORT 2016 - 123 - Pure as Jade, Sturdy as Mountain.