With global warming events and the COVID-19 pandemic greatly impacting our way of life and how we work, the TWSE has risen to the challenge of adapting to social and environmental changes, and continues to thrive and provide optimized market services. In 2022, the TWSE put forth the spirit of "innovation, sustainability, and resilience" to highlight its dedication to sustainability and responsibility as a member of the global community. To achieve net-zero emissions by 2050, the TWSE is deeply committed to constructing Taiwan's ESG ecosystem and pooling the resources of the capital market. It is our goal that by providing guidance to listed companies, non-profit organizations, peripheral agencies of securities and futures exchanges, plus issuers, we can all do our part to mitigate climate change and advance sustainable development. This report has been compiled in accordance with international reporting standards, including the GRI Standards, SASB, and the TCFD. The TWSE aims to implement our Five Major Sustainability Strategies1 and fulfill the Three Main Responsibilities2, ensuring that we contribute to promoting issuance, trading, corporate governance, information security, environmental sustainability, and social welfare. We have commissioned a third party to verify our Greenhouse Gas ("GHG") Inventory Report and produce an assurance report.
note 1: The Five Major Sustainability Strategies are: "Our Approach to Sustainability," "Respond to Sustainability Initiatives," "Promote International Cooperation," "Stability of the Securities Market," and "Innovative Instruments and Mechanisms."
note 2: The Three Main Responsibilities are: governance, environmental, and social.
Construct a low-carbon sustainable environment
The TWSE and its subsidiaries mainly provide financial and IT services, and the majority of energy consumption is by our offices and data centers. Although the company is not a heavy consumer of energy, we remain dedicated to building a low-carbon workplace through measures such as energy conservation, reducing paper usage, generating solar power, and purchasing green energy. The Taipei 101 tower, where we are headquartered, has been awarded the LEED Platinum certification as a green building. The TWSE fully cooperates with the building's green initiatives, including a waste recycling program, grey-water recycling system, and indoor air quality control. The First Data Center, the TWSE IT trading hub for the securities and futures markets, has also implemented environmentally friendly measures, such as updating and replacing equipment regularly, making the best possible use of energy consumption, and replacing all lighting in office areas with LED energy efficiency. Furthermore, in 2022 the TWSE has continued to replace its company cars with green cars, and will pursue the policy of paperless office in all of its locations. The TWSE is also undergoing a complete upgrade to green energy. Following the signing of a green energy procurement agreement with Taipei 101 in late 2022, all TWSE offices within the building will switch completely to green energy in Q2 2023, and the First Data Center will be run off of 50% green energy by Q4. Plans are in place to establish energy storage modules for solar power, replace and upgrade photovoltaic panels, and boost solar power generation from 1,056kWh in 2022 to an estimated 18,000kWh by the end of 2023. To play a part in reducing GHG emissions, the TWSE has led by example and conducted numerous training courses and seminars on energy conservation and carbon reduction, so that each of our employees may practice and promote sustainable living.
Develop sustainability indices and products
In response to climate change and to facilitate the development of green finance, the TWSE has designed innovative products to promote sustainability in recent years. In 2022, under the supervision of the TWSE, the subsidiary Taiwan Index Plus Corporation ("TIP") issued the "TIP Taiwan Sustainability Value Index," "TIP Customized Environmental Sustainability Dividend+ Index," and "TIP Customized Taiwan ESG Low Carbon 50 Index." A number of ESG-linked ETFs and ETNs highlighting green energy and low carbon were also launched this year. As of April 2023, there were six listed ETFs on the "ESG-related Index Product" section of the TWSE's official website, with a total AUM of over TWD 241 billion. There were seven ETFs and two ETNs tracking ESG-related indices totaling TWD 16 billion and TWD 2 billion, respectively. The TWSE will continue to be of service to firms in launching related products, while setting up a section on the TWSE official website devoted to sustainability-linked indices and products to promote the practice of sustainable investing. Among the three most recognized sustainability indices – the "FTSE4Good Emerging Index," the "Dow Jones Sustainability Emerging Markets Index," and the "MSCI Emerging Markets ESG Leaders Index" – Taiwan enterprises consistently rank in the top two spots with TWSE-listed companies accounting for 29%, 42.7%, and 20.68%, respectively, of the weightings3. This underscores Taiwan's superb achievements in sustainable development compared to other emerging economies and the recognition from the world's most trusted ESG indices.
note 3: Includes data of relevant websites as of April 2023.
Enhance sustainability disclosure
The TWSE's push for listed companies to publish sustainability reports and conduct Greenhouse gas assessment ("GHG assessment") has been quite effective. As of year-end 2022, there were 487 out of the 971 TWSE-listed companies that have issued sustainability reports, an increase of 13.26% over the 430 companies of the previous year. For the first time, over half of the listed companies have compiled and published sustainability reports. A majority of public companies also disclosed their Category 1 and Category 2 GHG emissions, a big milestone towards having all TWSE-listed companies completing GHG inventory reporting by 2027. Furthermore, to enhance ESG information disclosure, the TWSE completed the "Corporate ESG Information Disclosure Section" on the Market Observation Post System ("MOPS") website on June 30, 2022. The TWSE plans to upgrade the database into a comprehensive ESG InfoHub by mid 2023. The weighting of sustainable development in the Corporate Governance Evaluation will be increased, along with strengthening of qualitative indicators. In the long term, the ESG Evaluation will serve as guideposts for corporate engagement.
Merge ESG values into the market making system
The TWSE launched the market-making system in June 2021, boosting the trading volume of securities with great potential, outstanding quality, and low liquidity. Starting July 1, 2022, the TWSE incorporated ESG criteria to the market-making system, incentivizing market makers and securities firms to target high quality ESG stocks. As of year-end 2022, targeted securities were outperforming the market, with their average daily trading value more than double compared to levels from six months before ESG market-making incentives were put in place.
Safeguard market information security and resilience
FSC Chairperson Huang Tien-Mu has vigorously stressed that cyber security is critical to sound operations, and that information security and information management are the lifeblood of the industry. The TWSE worked in concert with the FSC to achieve major performance indicators in the "Financial Cyber Security Action Plan," and continues to strengthen information security and supervision under the "Financial Cyber Security Action Plan 2.0" launched in late 2022. By the end of 2022, six core departments had acquired ISO 27001 certification, the scope of which will be expanded in 2023 to cover all of the TWSE, and update to the latest standards in 2024. In 2022, the Security and Future Computer Emergency Response Team ("SF-CERT") issued 11 information security alerts, followed up on 293 information security incidents reported by market participants, and conducted numerous drills and training exercises. The SF-CERT also provides consultation to assist participants to respond to information security incidents. The TWSE aims to safeguard the security of market transactions by establishing regulations and incentives to encourage both listed companies and securities firms to bolster their information security protection capabilities.
Cultivate a happy workplace
At the TWSE, our employees are our most valuable assets. Labor-management meetings are convened on a monthly basis to promote harmony and facilitate communication. On top of the generous benefits package provided by the company, the Employee Welfare Committee offers a wide variety of benefits, including wedding and condolence allowances, as well as childbirth subsidies. Employees are also encouraged to enrich their lives by participating in the many social and sports clubs operating within the company. The TWSE is deeply committed to the physical and mental health of employees, so we offer regular physical examinations, one-on-one health consultations, sports activities, and seminars on healthcare as well as stress relief. With comprehensive policies to cultivate a friendly workplace and help employees achieve work-life balance, the overall turnover rate in 2022 is lower than 2%, not inclusive of those who have reached mandatory retirement age.
Support social and charitable causes
The TWSE is devoted to its longstanding support for disadvantaged groups, education for the socioeconomic underprivileged, employment guidance for college and university students, and sponsorship of sports and the arts. In 2022, over TWD200 million was donated through official channels to social welfare organizations. Support offered through campus assistance programs benefited 11,279 students from 322 schools in 2022. In addition, the TWSE donated to the social assistance funds of 22 county/city governments nationwide, hosted a charity concert, and contributed to the "Taiwan Foundation for Disaster Relief" to facilitate humanitarian aid for Ukraine. Through supporting charitable organizations and activities, the TWSE is committed to providing care for the disadvantaged, promoting educational training, and doing our utmost to offer warmth and stability to make Taiwan and the world a better place.
Partners today tomorrow and beyond
The TWSE has always viewed it as a sacred mission to pursue sustainable development and ensure a just, fair, and open market for all. This sustainability report covers the governance, environmental, and social practices adopted and implemented by the TWSE in pursuit of sustainability. On the governance side, the TWSE assesses international best practices; refines services in issuance, trading, and monitoring; designs innovative products along with indices; strengthens investor protection and education, plus promotes international communication and cooperation. To fulfill our environmental responsibilities, the TWSE leads by example in expanding the category of the GHG Inventory Report; adopts energy-saving and carbon reduction measures, and establishes carbon reduction targets; and urges listed companies to conduct GHG assessment and publish sustainability reports. To effect social change, the TWSE invites peripheral organizations to respond to sustainability initiatives, and together support various social, charitable, and arts activities. Sustainability targets must evolve with the times; likewise, sustainability practices are refined through insight and innovation. Under the FSC guidance, the TWSE remains steadfast in upholding the principles of innovation and sustainability, working together with peripheral organizations, listed companies, intermediaries, and stakeholders to enrich corporate governance. We believe that, together, we can lead society in achieving co-existence and coprosperity with the environment, while enhancing Taiwan's sustainable competitiveness among global markets.
