Nine of Taiwan’s 100 largest companies did not publish Sustainability Reports

Over 680 Taiwan sustainability reports published, more than 30% of $2 to $5 billion companies ahead in corporate sustainability.

It is noteworthy that nine of Taiwan’s top 100 companies by revenue still have not published sustainability reports, and over 80% of Taiwanese companies have not conducted carbon footprint verification even whena consensus has been reached for the global carbon market.

62.9% set up corporate sustainability committees, yet 90% do not link to compensation and performance. Global Carbon Market Consensus Reached, Over 80% of Taiwanese Companies Still Have Not Conducted Carbon Footprint Verification. Integrated disclosure has become a trend: 36.8% of Taiwan companies refer to TCFD and 18.3% refer to the SASB framework

Despite the hard hit on economy brought on by COVID-19, the ESG (environmental, social, and governance) trend has remained unstoppable worldwide. The latest research published by CSRone, Taiwan’s leading sustainability brand, and the Sinyi School of NCCU College of Commerce on March 25 showed that the number of sustainability reports published by Taiwanese companies exceeded 680 for the first time in 2021.

This analysis report is the work of 40 researchers analyzing 898 indicators in six months’ time and was officially released at the CSRone annual event.

Gennie Yen, CSRone Founder and CEO, expressed that in recent years, while mankind learn to coexist with the virus, people are simultaneously experiencing multiple natural and human-made disasters such as floods, droughts, dis-information and warfare. These events have not only prompted humanity and businesses to reflect on the values and meaning of individual existence, but have also accelerated the pace of global sustainable transformation.

[Key finding 1]

Over 680 Taiwan sustainability reports published, more than 30% of $2 to $5 billion companies ahead in corporate

The research team collected 685 sustainability reports published by Taiwanese companies, academic institutions, and non-profit organizations, and specifically analyzed 653 reports openly published by businesses in depth. The study found that 92.6% were published by listed companies (68.1% listed and 24.5% OTC), and 34.3% of the $2-5 billion companies voluntarily published their sustainability information without regulatory requirements.

To build a solid ESG ecosystem in Taiwan, the FSC officially initiated the “Corporate Governance 3.0 – Sustainable Development Blueprint” in 2020, requiring listed enterprises over NT$2 billion to publish sustainability reports starting 2023. The research team’s data showed that as of December 2021, 271 TWSE or TPEx-listed companies will be subject to the new requirements.

This year, a total of 93 companies published sustainability reports before the regulatory implementation, accounting for 34.3% of companies in this range, demonstrating the determination of these 93 companies to get ahead of the game.

[Key finding 2]

EPS and ROE of companies publishing sustainability reports have outperformed the market for the seventh consecutive year

Report found that TWSE and TPEx-listed companies that publish sustainability reports have recorded better EPS and ROE than the market for the seventh consecutive years. In 2021, the average EPS of companies that published sustainability reports was NT$4.36 whereas the EPS for TWSE and TPEx-listed companies as a whole was NT$2.79 and for companies without sustainability reports, it was NT$1.98. The average ROE of companies that published sustainability reports was 9.30% whereas the ROE for TWSE and TPEx-listed companies as a whole was 3.98% and for companies without sustainability reports, it was 1.23%.

The research team pointed out that for companies that have published sustainability reports, the transparent disclosure of ESG information based on international frameworks and the subsequent annual improvements have already enhanced their operation compared to the ones without sustainability reports.

[Key finding 3]

Slipped through the net! Nine of Taiwan’s 100 largest companies by revenue did not publish sustainability reports

All 45 companies recognized as the Top 5% TWSE-listed companies based on the “7th Corporate Governance Evaluation” released by TWSE and TPEx in 2021 published sustainability reports. This shows that companies that have performed well in the Evaluation placed a high priority on sustainability issues and paid close attention to them.

It is noteworthy that nine of the Taiwan’s top 100 companies by revenue still have not published sustainability reports as of the end of the study.

[Key finding 4]

62.9% set up corporate sustainability committees, yet 90% do not link to compensation and performance

In recent years, internationally renowned sustainability evaluations have included the connection of senior management compensation and ESG performance in their ratings in order to encourage companies to internalize sustainability development goals and accelerate related actions. Multinational companies such as Apple, Shell, McDonald’s, and Unilever have all adopted this approach to encourage senior executives to lead their teams by integrating ESG values while excelling financial performance.

The study found that while as many as 62.9% (411 companies) of Taiwan’s 2021 companies have already set up sustainability committees to promote sustainability initiatives through a “top down” approach, only 7.9% (52 companies) included the connection between sustainability performance and compensation.

[Key finding 5]

Global Carbon Market Consensus Reached, Over 80% of Taiwanese Companies Still Have Not Conducted Carbon Footprint Verification

Conducting carbon footprint verification (CFV) and publicly revealing risk profile is key to a company’s low-carbon transformation. Nevertheless, the process toward carbon neutrality remains highly complicated for businesses and tracking carbon footprint is even more difficult. The study found that 82.8% (541 companies) of Taiwan’s companies have not completed CFVs. As governments and large corporations start to raise carbon emission standards and move towards carbon neutrality, Taiwanese companies may face the predicament of diminishing overseas orders if they do not accelerate efforts to reduce carbon emission.

In addition, the Taiwan FSC announced a “Sustainable Development Roadmap for Listed Companies” on March 3, requiring all listed companies to complete a greenhouse gas inventory by 2027 and obtain a greenhouse gas verification by 2029. The research team found that, while facing the increasingly higher regulatory requirements, more than 80% (524 companies) of Taiwan’s corporate sustainability reports published in 2021 have already completed their greenhouse gas inventories. Yet, only 10.6% of the companies included third-party verifications in their reports.

[Key finding 6]

97% disclosed “supplier management policies” and 45% did not disclose “management and evaluation of supplier risks”

Data shows that although 97% (634 companies) of the 653 Taiwanese companies disclosed “supplier management policies,” 45% did not disclose “management and evaluation of supplier risks” in their 2021 reports, showing room for improvement regarding disclosure of supplier risks. Companies should improve identifying, tracking, and managing their supply chain sustainability risks in order to build a truly sturdy and sustainable value chain.

In view of COVID-19 in 2021, 53.4% (349 companies) “advised suppliers on sustainable practices,” implementing sustainability and social responsibility in supplier management. Additionally, 10.4% (68 companies) cooperated with suppliers on sustainability projects. Although the percentage is slightly lower than last year, this still demonstrates that businesses are willing to work with suppliers to overcome challenges and create positive corporate influence.

[Key finding 7]

Integrated disclosure has become a trend: 36.8% of Taiwan companies refer to TCFD and 18.3% refer to the SASB framework.

In response to government regulations, 98.6% of Taiwanese companies have adopted the GRI Standards for sustainability reports.

To strengthen communication between enterprises and stakeholders and with increased emphasis on the integration of financial and non-financial information in the international capital market, the FSC recently formulated the “Corporate Governance 3.0 – Sustainable Development Blueprint,” gradually requiring specific industries and listed companies with specific capitalization to publish sustainability reports following the Task Force on Climate-Related Financial Disclosures (TCFD) or the Sustainability Accounting Standards Board (SASB) frameworks.

As of the end of this study, the percentage of companies following the TCFD standard reached 36.8% (240 companies, increased by 13.3% compared to last year, and the number of companies following the SASB framework reached 18.3% (120 companies), significant jump from last year’s 3.2%. CSRone indicated that ESG and financial reporting information will soon be integrated for disclosure and businesses should strategize and prepare for this trend.