【Key Discovery】
1. 44.6% of Taiwanese companies subject to the new regulations have not yet published sustainability reports, and 2 of the top 100 companies in terms of revenue have not yet published sustainability reports.
2. The EPS and ROE performance of companies that publish sustainability reports have been better than the market for the past eight years
3. About 65.8% of companies have set up corporate sustainability committees on a regular basis, but 90% do not link compensation to performance. 4. Global "carbon intelligence" is popular, but more than 77% of Taiwanese companies have not conducted carbon footprint audits. 5. 97.3% of companies have established supplier management policies, but only 63.4% assess supply chain risks.
The latest survey released by CSRone, a leading domestic sustainability think tank, and Xinyi College of the College of Business at National Chengchi University on March 24 showed that the number of sustainability reports published in Taiwan exceeded 800 for the first time in 2022. Of particular note is that two of Taiwan's top 100 companies by revenue still have not published sustainability reports.
This analysis report mobilized nearly 50 researchers, took 6 months to analyze 946 indicators, and was officially released at the CSRone Sustainability Think Tank's annual event, the "9th Taiwan Sustainability Report Analysis Conference". The analysis conference was co-organized by CSRone Sustainability Think Tank, CITIC Sustainability Development Services Company, Xinyi College of the College of Commerce of National Chengchi University, and the Taiwan Institute of Sustainable Energy (TAISE).
Strategic partners include Nanshan Life Insurance; cooperative partners include BSI Taiwan Branch, Cathay Life Insurance, Epson Taiwan, E.Sun Financial Holdings, Taiwan Cement, WritePath Cloud Translation, Yuanta Securities, etc. In addition, there are international partners such as CECP, Climate Group, and GRI for cross-border support.
At the opening ceremony, CSRone Sustainable Think Tank founder and general manager Yan Defen said that in recent years, the disasters brought by climate change have increasingly manifested themselves in all aspects of life: geopolitics disrupts the layout of the supply chain, the imbalance of supply and demand in the energy market, and the rising inflation rate are impacting the economy at all levels. However, "enterprises build resilience in the midst of change and continue to move forward in the midst of change." Although crises often come uninvited, they are also the best opportunity to test the resilience of corporate organizations, turn crises into safety, and survive in desperate situations.
[Key Finding 1] 44.6% of Taiwanese companies subject to the new regulations have not published sustainability reports, and 2 of the top 100 companies in terms of revenue have not yet published sustainability reports
In order to build a sound sustainable development (ESG) ecosystem in Taiwan, the Financial Supervisory Commission officially announced the launch of the "Corporate Governance 3.0-Sustainable Development Blueprint" in 2020 and expanded the scope of compiling sustainable reports. All industries and organizations have felt this unstoppable "information disclosure wave". The research team collected 810 sustainability reports published by Taiwanese companies, colleges and universities, non-profit organizations, etc., and conducted in-depth analysis of 777 reports published by companies.
The survey found that 90.3% of the reports were published by listed companies (64.6% for listed companies and 25.7% for OTC companies). During the collection period, the research team analyzed the top 100 companies in Taiwan by revenue and found that there were still 2 companies on the list that had not yet published their sustainability reports. On the other hand, according to statistics, as of the end of February 2022, there were 278 listed companies with a capital of 2 billion to 5 billion that were subject to the new regulations, but 124 of them had not yet published their sustainability reports, accounting for 44.6% of the companies in this capital range.
It is particularly noteworthy that in October 2021, the Global Sustainability Reporting Institute (GRI) released the GRI Universal Standards 2021, which officially came into effect on January 1 this year. In the analysis of this year's research team, it was found that only 1.6% of companies (13 companies) took the lead in adapting to the new international framework standards and published sustainability reports, of which 87.6% completed third-party verification.
[Key Finding 2] EPS and ROE performance of companies that publish sustainability reports have outperformed the market for eight consecutive years
CSRone Sustainability Think Tank has been investigating corporate financial data for the eighth year, using financial indicators such as "Earnings Per Share (EPS)" and "Return on Equity (ROE)", which are common key investment decision indicators in the market, to analyze the relationship between Taiwan companies' publishing of sustainability reports and their financial performance.
Through the chart data of the past three years, we can find that Taiwanese companies that publish sustainability reports have better EPS performance, and the gap with all companies is gradually widening; the ROE performance of this group has been higher than the market for many years. For listed companies that do not publish sustainability reports, their ROE and EPS performance have been lower than the market for 8 consecutive years.
[Key Finding 3] 65.8% of companies routinely set up corporate sustainability committees, but 90% do not link compensation to performance
In recent years, internationally renowned sustainability rating indicators have included the link between corporate executive compensation and ESG performance in their rating items in order to encourage companies to internalize sustainable development goals and accelerate related actions. Senior executives are encouraged to integrate ESG values to lead their teams while creating financial performance. Sustainability risk identification and management can effectively build a more resilient board governance structure. With the 2022 corporate governance assessment announcement including "linking director and manager performance evaluation with remuneration" as one of the observation indicators, this governance trend is gradually showing a trend in our country.
This research survey found that among the 777 companies in Taiwan that published sustainability reports in 2022, as many as 65.8% (511 companies in total) have set up sustainability committees on a regular basis to promote sustainable actions through a "top-down" approach, and about 9.8% (76 companies in total) disclosed that they linked sustainable performance with compensation. CSRone Sustainability Think Tank believes that even though business managers are paying more and more attention to sustainable transformation issues and trends, they still need to carefully evaluate the methods of internal organizational changes and the necessity of setting up full-time personnel such as Chief Sustainability Officers (CSOs) to avoid companies losing their way and increasing operating costs while blindly chasing trends.
[Key Finding 4] Global "Carbon Intelligence" is on the rise! 29% of Taiwanese companies responded to the net zero target, but 77.9% still have not conducted a carbon footprint inventory
The climate crisis has been escalating in recent years, and the impact of climate events such as floods, droughts, forest fires, and blizzards has become increasingly severe. Even more frightening is that the global average temperature is rising at an unprecedented rate, and the risk of humanity facing an irreversible critical point is increasing. Faced with the eager expectations of the world to take climate action, many countries and companies have set "net-zero" or "carbon neutral" commitments. In March 2022, the Taiwan government also vowed to achieve the 2050 net-zero goal and proposed the "Taiwan 2050 Net-Zero Emissions Pathway Blueprint", which will implement a number of strategies such as improving energy efficiency and promoting the use of renewable energy to achieve the net-zero goal.
In 2022, the research team disclosed the "carbon" related indicators published by Taiwanese companies for the first time. This year, the analysis researchers further observed and analyzed 777 sustainability reports. The analysis found that the proportion of companies mentioning "carbon neutrality (23.6%)", "carbon rights (12.6%)", and "internal carbon pricing (8.9%)" all showed an upward trend compared with the previous year, among which "carbon neutrality" had the highest mention rate. However, looking at the information disclosed by various companies, most companies that have disclosed carbon-related implementation results only account for 1.2% to 2.4%, and as many as 77.9% have not yet conducted a carbon footprint inventory.
The research team also pointed out that as many as 229 reports (29.5%) in the analysis scope have responded to the net zero path set by government agencies, or pledged their own net zero goals and explained their measures in the report. Among the 229 reports, only 33.6% adopted the Science-Based Carbon Reduction Target (SBTi) to formulate carbon reduction paths and targets, indicating that most companies still lack specific plans for net zero emissions and carbon reduction actions.
[Key Finding 5] 97.3% of companies have established supplier management policies, but only 63.4% assess supply chain risks
With the rise of international carbon reduction trends, labor-capital relations, human rights protection and other issues, companies are gradually expanding and improving the sustainability policy requirements for suppliers to ensure that suppliers implement various goals such as carbon reduction and human rights management during the production process. According to statistics, 97.3% (756) of the 777 Taiwanese companies have established and disclosed supplier management policies, but only 63.4% (493) manage and evaluate supplier risks. Therefore, the importance of sustainable management of supply partners is increasing year by year, and companies must pay more attention to managing the potential risks of suppliers.
【2023 Ninth Taiwan Sustainability Report Analysis Conference News】
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