TAIPEI (Taiwan News) — The Taiwan Stock Exchange (TWSE) introduced a new Environmental, Social, and Governance (ESG) reporting mandate for listed companies on both the TWSE and the Taipei Exchange (TPEx) in June last year.
Under this new mandate, companies are required to publicly disclose relevant information about their ESG practices and how they are developing their ESG practices on an annual basis. At the time of the announcement, TWSE said the mandate was in response to growing demands from investors for more ESG-related disclosures and that is certainly true of Taiwanese investors.
It is also expected the disclosure mandate (in combination with the sustainability development road map launched by the Financial Supervisory Commission (FSC) in March 2022 to curb greenhouse-gas emissions) will ultimately strengthen investor confidence and attract additional domestic and foreign investment in Taiwan.
We are almost at the end of June and it’s time for an ESG reporting health check for Taiwan’s listed companies and any unlisted companies brave enough to have taken on the ESG challenge? How is the report preparation going? Automated or still mostly manual? How about the ability to show to TWSE, TPEx, FSC or interested investors that you have made substantial positive progress in developing your ESG practices?
We will approach this like any health check and ask a series of questions to which this writer would be most interested in the responses:
- Are you using an automated ESG scoring solution? If so, was it developed in-house or purchased from a 3rd party vendor?
- If you have an automated solution, is it working to your satisfaction? Even more basically, do you understand how it works?
- What key performance indicators have you established to ensure it is working efficiently and within your expectations?
- If you are still relying on a manual system, why? Too expensive to switch to an automated system? Not enough support from the “Governance” side of the ESG equation in your institution?
- If there is not enough governance support, what are you as the sustainability officer doing about that? Are you still relying on a questionnaire approach which potentially allows for all manner of unconfirmed responses?
- Do you think any of your respondents, being your customers or suppliers, may be “greenwashing” their answers — making those answers appear better than reality?
- If you are still relying on a manual system, understand the risks and, if possible, automate your report preparation.
- Where are you pulling your data from in terms of creating your report? In-house data? Third party data? How reliable is your data?
- Do you appreciate that most data has a “burn or shelf life” of about six months and that data can be intentionally or unintentionally corrupted? How are you ensuring the integrity of your data and that it is up to date?
- Whatever your solution, automated or manual, do you know the range of your data mapping? Is it purely within Taiwan? Do you have no non-Taiwanese suppliers? No region or global suppliers?
- Do you track against the UN Sustainability Goals – those 17 sustainability goals that the Taiwan government recognizes as important? Those 17 goals track all manner of goals that, according to the UN, are meant to transform our world, such as no poverty, gender equality, affordable and clean energy, decent work and economic growth, sustainable cities and communities, responsible consumption and production and climate action (to name but a few).
- How would you score your own institution on these goals? How would your supply chain score? If you aren't tracking against the 17 sustainability goals, start now. Don't delay.
- Is your supply chain transparent? Can you measure the ESG impact throughout all supply chain tiers within your business? How do you do it? Again, is it automated or do you rely on a manual process? Do you ever personally inspect your supply chain to verify their answers?
- If relevant to your business, you do support the Sustainable Finance Disclosure Regulation (SFDR), don’t you? Implemented on March 10, 2021, it is the only standard in the world to disclose and examine the degree of ESG implementation of financial products. It has the support of Taiwan Bureau of Public Service Pension Fund.
Enough questions for one article but some suggestions for any institution struggling with its ESG reporting mandate:
- Actively prevent customer and supplier greenwashing
- Track against the U.N. Sustainability Goals
- Gain transparency into your supply chains
There are many other steps that can be taken, and advice that can be sourced and implemented, but there is no excuse for inaction on ESG reporting.