ESG management in the investment process

Diamond Biofund > ESG > Responsible Investment > ESG management in the investment process

ESG management in the investment process

Diamond Biofund has established the “Investment Operations Procedure” and “Investment Risk Control Procedure” to regulate the matters that must be followed in the investment process, from development, evaluation, decision-making, to post-investment management. The “Responsible Investment Policy” specifies that ESG and other sustainability factors should be considered in both investment evaluation and post-investment management, to manage ESG risks and enhance investment value. As of December 31, 2024, Diamond Biofund’s assets under management (AUM) were calculated using the amounts from the balance sheet under “Financial assets measured at fair value through profit or loss – current” and “Financial assets measured at fair value through profit or loss – non-current,” totaling NT$7,294,561 thousand.

Investment Process ESG Management in Investment Operations  
New project development and screening
  1. Focus on investments in the biotech and medical fields, including new drug development, advanced medical devices, innovative medical services, medical distribution, and agricultural biotechnology, etc.
  2. Carefully screen new investments, in principle, exclude investments in controversial industries or sensitive projects—such as those involving high pollution, high carbon emissions, significant social controversies, or material deficiencies in corporate governance and legal violations.
 100% coverage of investment positions
Evaluation and due diligence
  1. Conduct investment evaluation and due diligence, analyzing the core technology, R&D team, market competitiveness, related risks, etc., of the project and provide an investment evaluation report.
  2. Incorporate ESG factors into the investment analysis and decision-making process. When a potential investment target belongs to the biotech and healthcare sector, it shall comply with the Industry Investment ESG Guidelines.
  3. Require investment target to signoff an “ESG Declaration,” committing to comply with the ESG commitments.
    • Ethical Management and Business Conduct
    • Social Inclusion
    • Environmental and Ecological Protection
 100% coverage of investment positions
Investment decision-making
  1. The investment evaluation report, upon the President’s approval, is submitted to the Investment Committee for discussion and decision.
  2. Depending on the investment amount, the report is submitted to the Audit Committee and the Board of Directors for discussion and decision.
 100% coverage of investment positions
Post-investment management
  1. Assist portfolio companies in achieving operational goals, improving internal control and internal audit system, and implementing corporate governance, as well as supporting portfolio companies in developing their own sustainability strategies (such as conducting organizational greenhouse gas inventories and setting climate action targets), leveraging ESG-related opportunities, managing sustainability issues, and creating future value.
  2. Conduct annual checking based on the ESG commitment outlined in the “ESG Declaration.”
  3. If any violations of ESG commitment are found, the company has the right to request improvements from the investee. If, after continuous engagement, the corrective actions remain unsatisfactory, the level of engagement will be escalated. If repeated engagement efforts remain ineffective, the company may consider suspending, reducing, or divesting its investment position.
  4. In 2024, Diamond Biofund did not suspend, reduce, or divest any investment due to violations of ESG checking criteria.
 100% coverage of investment positions

ESG Management Process Flowchart for “New Project Development and Screening” and “Evaluation and Due Diligence”:

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ESG Due Diligence, Voting, and Engagement Actions

In addition to incorporating ESG considerations at all stages before investment, Diamond Biofund believes that implementing “Active Ownership” after investment is also crucial. The company positively influences the ESG promotion and development of its portfolio companies through regular communication and dialogue with the management teams, proposing resolutions at board or shareholder meetings, expressing opinions, or participating in voting. Diamond Biofund’s “Investment Risk Control Procedure” requires the investment department to conduct at least quarterly interviews with portfolio companies and compile a “Quarterly Investment Management Report.” Through on-site visits, conference calls, and participation in board or shareholder meetings, the company maintains close interaction with its portfolio companies, focusing on industry development, business strategies, financial information, corporate governance, environmental protection, and corporate social responsibility issues. In 2024, Diamond Biofund achieved 100% attendance at shareholder meetings and 100% attendance at board meetings of its portfolio companies.

2024 Status of ESG-Related Proposal Support at Portfolio companies Companies’ Shareholders’ Meetings

Type Number of Proposals Support Ratio
E Environmental Proposals 0 NA
S Social Proposals (e.g., Employee Compensation Related) 1 100%
G Governance Proposals (e.g., Board of Directors and Supervisors, Regulatory and Governance Related) 48 100%

 

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