TAIPEI (Taiwan News) — As of 2021, Taiwan boasted more than 1.59 million small and medium enterprises (SMEs), according to the Ministry of Economic Affairs’ 2022 White Paper on SMEs.

They account for more than 98% of all enterprises in Taiwan. These SMEs employ 9.2 million people, representing more than 80% of Taiwan’s total workforce and it is reasonable to conclude that none of these SMEs are listed companies.

In Taiwan, SMEs are the backbone of stable economic development and there is little sign of those numbers changing by any significant measure in the short term, or perhaps even the long term.

Taiwan listed companies with capital of NT$2 billion (US$63 million) are obliged to prepare environmental, social, and governance (ESG) reports this year and, as a matter of practical reality, that requirement only impacts a small percentage of the 959 companies listed on the Taiwan Stock Exchange, per 2021 data and the 782 companies listed on the Taipei Exchange, per 2020 data.

It would be incorrect to assume that all Taiwan’s SMEs are breathing a sigh of relief that the ESG reporting rules do not currently apply to their operations or any reports they provide to various regulatory agencies.

Many SMEs see ESG as an important way to build a loyal customer base and to differentiate themselves from their market competitors. SMEs can see that ESG creates value and can even lead to energy efficiency, a reduced carbon footprint, lower operating costs, and real value through energy savings.

Any SME can already, and arguably should, be implementing waste reduction, recycling programs, and looking to use responsible supply chains and products of sustainable suppliers. SMEs can support their fellow SMEs. Not everything in the business environment needs to be a competition.

One issue that occasionally impacts ESG is the impression that it is expensive to implement and expensive to maintain. That is simply not correct. A Taiwan SME can implement a perfectly sustainable ESG program by following these simple steps:

• Small steps – evaluate your emissions, eliminate single-use plastics, and adopt eco-friendly products and services. These steps require little cost and help get an SME started on its ESG journey.


• Involve your employees – the average Taiwanese employee is already aware of environmental issues. The sorting of household waste and recyclables is a day-to-day function of life in Taiwan, accompanied by musical garbage trucks. Invite environmentalists to speak to your employees. Arrange some sort of volunteer day (but do not require a “make-up” day as a result). Identify a local charity and see how management and the employees can make a local difference. These activities should be voluntary and, if possible, make them engaging and enjoyable.


• Work with other SMEs – collaborate with other small businesses to join forces, learn from each other, and implement complementary ESG strategies. Joining forces in this way does not weaken an SMEs' competitive edge, in fact, it may enhance community spirit and interaction.


• Use technology – Use the internet to explore ideas for low-cost or even free technology solutions in your local area or within your line of business for ESG compatible ideas.


• Broadcast your ESG message – SMEs should, just as large corporations, make sure that their employees, customers, and suppliers know what they are doing with regards to ESG. Disclosures of this nature help build trust and credibility and may even attract employees who value sustainable business practices. Human resources are an issue in Taiwan. Make your company attractive with a positive message that is seen and heard.

There are other tangible benefits to a SME adopting realistic ESG practices. Access to capital may become easier as many investors, including sustainable and impact-focused funds, consider ESG factors when making investment decisions. SMEs that align with ESG principles may attract a wider pool of investors. Additional market opportunities may present themselves as ESG-aware consumers are more likely to support businesses that align with their values. Incorporating ESG practices can open new market opportunities and customer segments for SMEs.

Sustainability, environmental responsibility and corporate sustainable responsibility are not new concepts. ESG may be a relatively new acronym, but it is not an acronym that necessarily comes with an added cost or compliance burden. Taiwan’s SMEs, given their number and importance to the economy, can help drive Taiwan’s transition to a low-carbon economy.