TWSE Market Insights

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There has been a trend of sustainability disclosure in the global capital market in recent years. In August 2023, the Financial Supervisory Commission released the “Roadmap for Taiwan listed companies to align with IFRS Sustainability Disclosure Standards” to plan that starting from the fiscal year 2026, TWSE and TPEx listed companies shall apply IFRS Sustainability Disclosure Standards in three stages based on the size of their paid-in capital.

When introducing IFRS Sustainability Disclosure Standards, the company should consider the characteristics of its industry, its own scale, degree of impact, and resources available for investment, and develop an appropriate introduction plan accordingly. The TWSE and the TPEx announced in July 2024 the “Reference Example for the Introduction Plan of International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards for XXX Company” to assist companies in the smooth introduction and quarterly reporting to the board on the management and execution status. This reference example is designed based on stage-1 companies (with a paid-in capital of over NT$10 billion) which will start applying IFRS Sustainability Disclosure Standards in the fiscal year 2026, and divides the introduction work into four stages from planning to improvement work after completion of sustainability information chapter filing: analysis and planning, design and execution, introduction, and adjustment and improvement. Each stage has designated items to be executed and items recommended to be executed, in order to assist companies in understanding the detailed tasks that need to be executed in each stage. A brief description of the work items that companies need to implement (or are recommended to be executed) in each stage is as follows：

In this stage, the company shall first establish a cross-departmental task force to adopt IFRS Sustainability Disclosure Standards and assist in the implementation of the standards. The primary tasks of the task force in this stage include preliminary identification of material differences between the current sustainability information and the requirements of IFRS Sustainability Disclosure Standards as well as the impact, identification of the reporting entity, and development of an introduction plan. To preliminarily identify the material differences between the current sustainability information and the requirements of IFRS Sustainability Disclosure Standards and the impact, the company may make good use of the sustainability information currently prepared (such as that prepared under GRI, TCFD, or SASB) to supplement the additional information required to be disclosed under IFRS Sustainability Disclosure Standards. In terms of identifying the reporting entity, the company shall not only confirm that the reporting entity is consistent with the entity of the consolidated financial report, but also actively communicate with its subsidiaries to ensure smooth implementation of the introduction plan in all stages.

In addition, the reference example recommends that the company conduct a preliminary evaluation of the potential impact on its operations due to the introduction of IFRS Sustainability Disclosure Standards (including the company workflow, financial and non-financial reporting, information system, supply chain management process, internal control, and daily operations of various departments) in this stage, as well as evaluate the resources and budget required to promote the introduction plan and the training required for relevant members’ businesses, and schedule and execute training accordingly. 

This stage is crucial for the company to adopt IFRS Sustainability Disclosure Standards. After reviewing the introduction plan in accordance with regulatory requirements, opinions from internal and external professionals, and evaluation results from the planning stage, and making appropriate adjustments (when appropriate), the company shall begin to identify sustainability-related risks,(Note1) opportunities, and financial impacts, as well as evaluate material sustainability-related financial information. When identifying risks and opportunities related to sustainability, the company shall refer to the industry disclosure themes in the Sustainability Accounting Standards Board (SASB) Standards and assess their applicability, and determine the value chain scope associated with each sustainability risk and opportunity. When identifying the financial impact of such risks and opportunities on the company, the company shall not only examine the current financial impact during the reporting period, but also the expected financial impact in the short, medium, and long term, and finally evaluate and disclose material information accordingly. Furthermore, the company shall identify the data within the reporting boundaries and value chain that needs to be collected based on the sustainability-related material financial information being evaluated, assess the appropriateness of the data, and plan the timeline accordingly.

In this stage, the company shall also propose solutions based on the preliminary evaluation of the impact on the company’s operations due to the introduction of the Standards in stage 1, and identify areas where the company’s relevant processes and systems need to be adjusted according to the evaluation results and solutions, and then carry out necessary adjustments and testing. In addition, the reference example suggests that the company develop its own IFRS sustainability information template to facilitate smooth future preparation.

Note1：In the first year of applying IFRS Sustainability Disclosure Standards, the company may choose to only disclose information on climate related risks and opportunities, without the need to cover all sustainability risk and opportunity information.

In this stage, the company shall prepare a sustainability information chapter for its annual report in accordance with IFRS Sustainability Disclosure Standards. This step can not only assist the company in conducting process analysis and finding improvement solutions based on trial compilation experience to serve as a basis for improving the reporting process during official announcement and filing, but also help the company to preliminarily examine whether adjustments need to be made to the sustainable performance evaluation. The company shall continuously update the internal control operation manual related to IFRS sustainability information and provide training, in order to produce timely and reliable sustainability information more efficiently.

In the final stage of the introduction plan, the company shall disclose relevant information in the sustainability information chapter of the annual report for the year 2026, and complete the announcement and filing along with the financial report for the same year within 75 days after the end of the accounting year. Afterwards, the company may re-examine the performance evaluation adjusted in stage 3 and review whether there are any items that need to be further adjusted based on the feedback from investors, lenders and creditors, and continues to analyze and improve the IFRS sustainability information process.

In order to smoothly align with IFRS Sustainability Disclosure Standards as scheduled, the TWSE has released a reference example for the introduction plan and established an execution schedule for the plan, in order to assist companies in establishing their own introduction plans. The execution progress shall be reported quarterly to the board of directors, and subsequently filed to the TWSE within the reporting period. In addition, stage-2 companies (with a paid-in capital of over NT$5 billion but less than NT$10 billion) and stage-3 companies (with a paid-in capital of less than NT$5 billion) to which the standards will be applicable in 2027 and 2028 respectively can refer to the example of the introduction plan to plan their introduction schedule in advance, and monitor the progress quarterly according to the planned schedule.

In addition to the reference example for the introduction plan, the TWSE has held relevant advocacy meetings and released practical guidelines and Q&As successively, and the TPEx has aggregated data on the “IFRS Sustainability Disclosure Standards Compliance Zone” webpage to introduce more resources for companies to use, thereby improving the quality of sustainability information disclosure and establishing trust and confidence in the use of corporate sustainability reporting by all sectors.