TWSE Market Insights

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Looking back on the Taiwan stock market in 2020, undaunted by the COVID-19 pandemic, the index rebounded strongly after a slight correction at the beginning of the year, and the number of new accounts and average daily trading amount reached new highs. In addition, the Taiwan Stock Exchange (TWSE) introduced new systems such as trade-by-trade matching, which further stimulated a high volume of daily trades. Benefiting from the bullish effect, the overall financial indicators of the securities industry, such as return on assets and return on equity, showed a long awaited prosperity as a result.

Like having received a shot in the arm, securities firms’ proportion of brokerage fee to the overall revenue and annual profit margin continued to perform well in the following year, and the long unseen bull market resurged. Sensing the booming development of Taiwan’s capital market and the need for the securities and futures industry to give back to the society after reaping fruitful results, the regulatory authority of the securities market released the “Transition Strategies of Sustainable Development for Securities and Futures Sectors” on March 8, 2022.

The original intention of the release of this transformation implementation strategy by the Financial Supervisory Commission (FSC) is to encourage industry players to give back some of their profits to investors and society through various channels and activities; secondly, it serves as a reminder to industry players to pay attention not only to their impressive financial report figures, but also to the global trend of attention to environmental, social, and governance issues, and to actively engage in creating a market environment with sustainable value, and work together to plan a road map for Taiwan’s ecosystem for sustainability transformation.

For careful planning, the Securities and Futures Bureau (SFB), FSC had already convened peripheral units such as the TWSE, the Taipei Exchange (TPEx), the Taiwan Depository & Clearing Corporation (TDCC), the Taiwan Futures Exchange (TFE), the Taiwan Securities Association (TSA), the Chinese National Futures Association (CNFA), and the Securities Investment Trust and Consulting Association (SITCA) on February 21, 2022 to explain the 5 major goals, 3 major driving mechanisms, 10 strategies, and 27 specific measures involved in the “Transition Strategies of Sustainable Development for Securities and Futures Sectors” prior to the announcement of the transformation implementation strategy. In addition, it discussed with various peripheral units attending the meeting regarding how to divide tasks according to their business responsibilities, and instructed them to implement control over the progress of securities and futures industry players, as well as promptly reporting the handling of matters.

After considering the aforementioned transformation strategy “Mechanism 1: Improving the Governance Structure for Sustainable Development of the Securities and Futures Industry/Strategy 1: Establishing Sustainable Development Value and a Culture of Valuing ESG/Specific Measure 2” (note: organizing symposiums and seminars for directors, supervisors, and senior managers to strengthen the advocacy, and inviting experts and industry players to share ESG related issues), as well as the resolution of the “Securities and Futures Industry Sustainable Development Strategy Project Launch Meeting,” the TWSE invited peripheral units on March 31, 2022 to hold a “Cisco Webex Online Video Conference on the Advocacy and Planning of Securities and Futures Industry’s Sustainable Development” on April 15, 2022. After consultation, the following consensus was reached：

1. Each peripheral unit should achieve the annual advocacy symposium target assigned by the competent authority, and 6 major units are divided into 5 groups. Other than the joint symposiums organized by the TFE and the CNFA, the TWSE, the TPEx, the TSA, and the SITCA shall handle them separately. Each group shall hold one symposium in the first year, and a total of five symposiums shall be held for the first year. The number of symposiums shall gradually increase year by year thereafter.
2. The advocacy symposium shall focus on advocating the following topics：

   • International development trends and important supervision standards.

   • Road maps and plans related to domestic corporate governance, sustainable development, and information security protection.

   • Sharing of domestic and international practical cases in the financial industry.

3. The TWSE is responsible for updating, adjusting, and reporting to the competent authority at any time based on the processing schedule and other information provided by each unit.
4. The peripheral units attending the symposium shall display in a prominent location of their official website homepage the information related to organizing the Sustainable Development Advocacy Symposium for the public to understand.

In order to assist Taiwanese securities and futures industry players in achieving a balanced development and coordinated coexistence in business development, environmental protection, and ecological system, all peripheral units of the securities and futures market have committed to making all efforts. However, the goal of “making the securities and futures industry a role model of Taiwan’s ESG gene evolution” is not achievable overnight. Therefore, in a period of three years, all units shall work together to guide the industry to transform step by step, and gradually construct the value and culture of sustainable development. It is hoped that the global competitiveness of Taiwan’s capital market can be enhanced through the implementation of sustainability transformation strategies, in order to demonstrate the importance and value of Taiwan on the international stage, and achieve a perfect triple win for the capital market, industry players, and investors.

To play a demonstrative role, the TWSE, as the most senior institution among the peripheral units of the securities and futures market, naturally takes on the responsibility of carrying on the past and starting the future, and actively plays the role of the first baton in the relay race. Based on the “Transition Strategies of Sustainable Development for Securities and Futures Sectors,” the first sustainable development and transformation advocacy symposium was held immediately on May 13, 2022 in accordance with the predetermined goals for the 2022–2024 schedule. Except for a few securities firms that have already been listed on the TWSE or TPEx and have a considerable understanding of the regulatory requirements for corporate social responsibility and sustainable development, most other businesses are experiencing sustainability related issues for the first time, and may feel inexplicable pressure.

To ease the emotions of the industry, the Intermediaries Service Department of the TWSE, the sponsor, has gone through several rounds of dry running in the advocacy theme arrangement, hoping to achieve the effect of personalized teaching. Accordingly, at the first ESG advocacy symposium in 2022, the sponsor invited the BCSD and BSI Taiwan to present the topics of “International Trends of Sustainable Development and Development of Domestic Policies and supervision” and “Strengthening the Information Security Protection Mechanism of the Securities and Futures Industry” respectively. In addition, the senior officer of the SFB also took the time to give guidance and delivered a speech on the vision of promoting corporate sustainable development in Taiwan, saying that the world had changed a lot in recent years, and other than extreme climate variability, issues including the COVID-19 pandemic and the Russo-Ukrainian war have had a great impact on the global economy. Sustainable development is a universal value, and the domestic securities and futures industry, with significant profit growth in recent years, should fulfill their social responsibilities and pay attention to the trends of sustainability issues. According to the World Economic Forum’s estimation, the sustainability transformation in response to climate change alone can create a huge business opportunity of USD 3.6 trillion, and industry players are therefore encouraged to invest extensively in sustainability businesses.

The ESG debut was highly anticipated by the industry, and securities firms that signed contracts with the TWSE to use the centralized securities trading market carefully appointed their directors, supervisors, and senior executives to attend. Nearly 300 industry players participated in this advocacy event, and the atmosphere was warm. Other peripheral units of the securities and futures market have also designated their personnel responsible for sustainable development, and participated as observers to prepare in advance for the other four advocacy symposiums to be held later in the year. It is widely recognized that the first symposium concluded successfully, laying a solid foundation for subsequent advocacy activities.

In 2023, the TWSE continued to lead other peripheral units of the securities and futures market to gradually deepen the advocacy of sustainable development and transformation issues. However, the FSC instructed to have the overall performance target for the year increased to 6 sessions, which led to the discussion on whether the existing staffing of the “6 major units divided into 5 groups” should be reorganized accordingly. In order to reduce disturbances, the TWSE once again volunteered to undertake the additional advocacy sessions for the year, and proceeded after the approval from the SFB. In this way, although the Intermediaries Service Department responsible for organizing the symposiums inevitably needed to invest more manpower, materials, and resources, it was able to maintain the same annual processing quota allocated to other peripheral units and reduce the burden of some business.

The ESG advocacy plan for the year 2023 was to hold one session on April 28 and August 24 respectively in Taipei, focusing not only on the regulatory perspective but also on practical experience sharing. In terms of the regulatory perspective, Hsi-Ho Huang, Head of the Securities Firms Division, SFB, took the lead in two advocacy events. He introduced the “Legal Compliance Framework for Securities Firms’ Sustainable Development,” and introduced the cooperation to various peripheral units of the securities and futures market to improve sustainable development governance, play an intermediary role in assisting enterprises in sustainable development, enhance the value in the disclosure of sustainable development information, as well as emphasizing ESG culture, and implementing accountability and the norms for functional committees, stock selection for proprietary trading, preparation and declaration of sustainable development reports, and carbon inventory checks. In terms of information security protection issues, he mentioned that the Securities Association had formulated information security self-discipline standards covering emerging technology information security, cyber system security protection standards, network security protection, supply chain management, and information operation resilience. Securities firms should organize tasks and allocate appropriate manpower based on the standards to identify their core businesses and corresponding core systems, and conduct an operational impact analysis. Division Head Huang also emphasized that securities firms with control over venture capital enterprises and private equity funds should encourage the venture capital enterprises or private equity funds they invested in to refer to the stewardship principles, assist the investees in promoting sustainable development, and regularly report the implementation results to the board of directors.

As for the practical operation aspect, Cathay Financial Holdings was invited to hold the first advocacy symposium with the topic of “Sustainable and Responsible Investment Practice of Cathay Financial Holdings,” and introduced the group’s sustainability core thinking of working together with stakeholders to create long-term mutual benefits and prosperity, and promoted its sustainable operation through working groups on responsible investment, sustainable governance, responsible products, employee happiness, green operation, and social prosperity. It also introduced the banking, insurance, and asset management businesses of the group, and how the group applied the principles of sustainable insurance, equator, responsible banking, and responsible investment to construct a sustainable framework that aligns with international standards and Taiwan’s government regulations.

To further introduce practical sustainability operations, the TWSE decided to increase the proportion of related courses in the second advocacy session of the year in August 2023.SinoPac Financial Holdings first took the stage with the topic of “Assisting Taiwan’s Net Zero with Sustainable Finance,” shared the experience of establishing a net-zero task force, incorporating ESG into the group’s strategic focus, promoting sustainability through compliance, optimization, reshaping, and leadership, as well as establishing key strategies for net-zero transformation, enhancing climate change and net-zero awareness of all employees, and incorporating sustainability into senior management performance indicators. The group is also committed to exerting its financial influence and working together with upstream and downstream enterprises to achieve low-carbon transformation.

In its topic of “Analyzing and Evaluating Climate Change and ESG Risks,” PricewaterhouseCoopers Sustainability Services Company, Ltd. also introduced various aspects of promoting corporate ESG governance and how to identify ESG risks, and mentioned that more than 20% of enterprises around the globe have committed to net-zero emissions, and among U.S. enterprises, more than half of their boards have included ESG in their routine agendas. As for how domestic enterprises should conduct risk management, it is recommended to first affirm regulatory requirements and their own status of compliance with various sustainability issues, in order to evaluate the risks and threats and effectively control risks and prevent damages from occurring.

The FSC, the regulatory authority in charge of securities and futures markets, also sent representatives to attend the 2023 Securities Industry Sustainability Transformation Advocacy Meeting hosted by the TWSE to encourage industry players’ participation. At the first advocacy meeting in April, the representative of the regulatory authority delivered a speech on the continuous promotion of sustainable development in the domestic securities industry, pointing out that in the past, most domestic enterprises regarded financial statements as the main indicator of business performance, but now the mainstream thinking in the world tends to attach more importance to ethical corporate management. In other words, sustainable development is indispensable for enterprises to win the trust of the public. Under the trend of advanced countries in the world fully promoting sustainable development, the government also declared the goal of “net-zero emission by 2050.”Since the FSC’s promotion of sustainable development and transformation of the securities and futures industry in more than a year, relevant regulatory frameworks have been gradually established. For securities firms to develop business while improving the ecosystem and locking in market positioning and business opportunities, the key is for senior management to play a positive role from top to bottom, internalize sustainable development into the corporate spirit, create long-term values for stakeholders, enhance corporate resilience, and seize transformation opportunities.

At the second Sustainable Development Advocacy Symposium hosted by the TWSE in the year, the appointed official of the regulatory authority stated that climate change has become a key project for promoting sustainable development internationally. In order to reduce the impact of extreme weather on the economy, the Taiwan government has also listed green finance as a key strategy for the net-zero emission road map, and formulated the Climate Change Response Act to specifically legalize the net-zero emission target by 2050.Securities firms are an indispensable part of net-zero work. At the moment when sustainable development becomes a universal value, the securities industry must pay more attention to this issue to meet the requirements of the times. The FSC will also continue assisting industry players in their transformation and actively align with the international standards, in the hope that the securities industry may develop a complete sustainable development management system incorporated into its own corporate culture.

In 2023, the TWSE not only increased its regular advocacy sessions for sustainable development and transformation, but also held a special lecture to support the FSC’s promotion of the “accountability system” that has been implemented in advanced foreign markets for many years. According to “Mechanism 1: Improving the Governance Structure for Sustainable Development of the Securities and Futures Industry/Strategy 3” of the “Transition Strategies of Sustainable Development for Securities and Futures Sectors,” industry players should implement an accountability system for the board of directors and management. Therefore, 2023 is also the first year of the accountability system in Taiwan’s securities and futures market.

The new system is generally unfamiliar to securities and futures industry players. Although its substantive meaning can be seen in various current regulations, it has not been widely reflected in the wording of laws and regulations in the past, and the specific definition is also lacking. In this regard, the TWSE is actively studying how to incorporate it in “Specific Measure 9: Strengthening the Accountability System for the Responsible Persons of Securities and Futures Industry on Information Security Protection, Fair Hospitality, and Legal Compliance” under the aforementioned Strategy 3, so as to further revise the corporate governance best-practice principles of the three industries under the securities and futures industry in collaboration with the TFE and the SITCA to include the three major regulatory contents：

1. Regarding current major issues, including information security protection, fair hospitality, and legal compliance, as they involve various departments of the securities and futures industry, the securities and futures industry must designate personnel and departments to coordinate and contact relevant departments.
2. To ensure that the board of directors implements the accountability mechanism and fulfills its functions, in addition to passive qualifications, the chairman of a securities firm or futures commission merchant should possess certain positive qualifications.
3. The board of directors should ensure the division of responsibilities and hierarchical accountability, and the senior management should supervise the implementation by various business departments.

Given that the deadline for establishing an accountability system is the end of June of that year, the TWSE invited the TPEx to jointly hold a “Conference for Promoting Securities Firms to Establish an Accountability System” on May 23, 2023, targeting relevant business supervisors and operators of 36 underperforming industry players. The organizers advocated in the conference themes such as “Legal Compliance Framework for Securities Firms’ Accountability System” and “Revision of Securities Firms’ Corporate Governance Best-Practice Principles.” The speakers analyzed how to establish an accountability system based on the management cycle of “plan, execute, inspect, and act” for issues such as information security protection, fair hospitality, and legal compliance.

Another highlight of this advocacy conference was the invitation of several outstanding benchmark companies, such as Yuanta Securities and Cathay Securities, to publicly explain their process of establishing a manager accountability system and actual operation, and to share common problems and experiences in progress reporting. Through such practical cases of their peers, securities firms lagging behind might refer to successful peer experiences and quickly solve the difficulties they faced in establishing relevant systems.

After increasing the annual target of the 2023 Securities and Futures Market Sustainability Transformation Advocacy Symposium to 6 sessions, the target is further extended to 7 sessions in 2024.The TWSE also took on the responsibility of increasing the number of sessions as usual, and planned at the beginning of the year to invite scholars and experts from all fields to hold at least three advocacy symposiums, in order to promote the transformation of securities industry players into sustainable enterprises between the 2nd and 4th quarters of the year.

The FSC appointed a representative to deliver a speech at the first session. The SFB’s senior official stated that ESG is the English abbreviation for sustainable development, with governance (G) being the most fundamental and core concept, and therefore placed last. To achieve the government’s 2050 net-zero target, enterprises must master three key elements: first, internalizing sustainability into corporate culture; secondly, incorporating carbon management into operating costs and developing relevant risk management strategies; thirdly, implementing it step by step based on the predetermined strategy. Regarding the two disclosure standards S1 (General Sustainability Related Disclosure Requirements) and S2 (Climate Related Disclosure Requirements) released by referring to the International Sustainability Standards Board (ISSB) under the International Financial Reporting Standards (IFRS), Taiwan will prioritize the full disclosure by TWSE and TPEx listed companies with a capital of NT$10 billion or more starting from the 2026 fiscal year, and then gradually expand the scope of applicable objects as appropriate.

To balance theory and practice, the topics of this advocacy symposium covered the two major aspects of regulations and practical operations. On the regulatory aspect, the Institute of Natural Resources Management, National Taipei University introduced the “Taiwan Carbon Credit Trading Market” and the direction of future efforts. Externally, the government should align with international standards, leverage on Taiwan’s unique characteristics, and lead Taiwanese enterprises in global carbon reduction efforts. Internally, efforts should be made to promote the effectiveness of carbon reduction costs, including reducing costs such as carbon fees for contract performance, incremental deduction for environmental impact assessment, and supply chain carbon reduction, in order to stimulate the development of domestic carbon reduction technology and create opportunities for net-zero transformation. Taiwan can also learn from the relevant experiences of Japan and South Korea, strengthen international carbon reduction cooperation, and introduce high-quality international voluntary carbon credits on the market. On the practical aspect, KPMG Sustainability Consulting Co., Ltd. focused on the topic of “Trends, Practices, and Challenges of Low-Carbon Corporate Transformation,” and shared the company’s experience and insights in assisting domestic businesses to successfully introduce environmental protection and sustainable management systems.

The representative of the SFB, FSC stated at the second advocacy symposium in 2024 that at the time of promoting the “Corporate Governance 3.0 – Sustainable Development Roadmap,” the SFB had adopted the core concepts of “strengthening the functions of the board of directors, and enhancing sustainable corporate value,” “improving information transparency, and promoting sustainable operation,” “strengthening stakeholder communication, and creating good interactive channels,” “aligning with international norms, and guiding corporate stewardship,” and “deepening the corporate sustainable governance culture, and providing diversified products.” In the future, the SFB will continue to work with relevant government agencies, NGOs, and industrial and commercial organizations, securities peripheral units, banks, life insurance companies, securities and SITE and SICE associations, TWSE and TPEx listed companies, accounting firms, and third-party verification agencies to jointly assist domestic TWSE and TPEx listed companies and the securities industry in moving toward sustainable development and enhancing international competitiveness.

According to survey data, consumers’ awareness of sustainable development has generally increased by 84% over the past 10 years, and the contribution of sustainable development to corporate reputation has increased nearly three-fold, reaching 45%. As for brand assets, the contribution of sustainable development has reached 6%.A study by the Stern School of Business at New York University found that half of the market growth in consumer goods over the past five years came from products that advocate sustainable development. Morgan Stanley also pointed out that there is a positive correlation between ESG index and financial performance, and the market has reflected that ESG has a positive impact on business development. Currently, the responsibility of marketing executives is to implement ESG, and CEOs of major companies around the world believe that sustainable development plays a crucial role in the future success of their companies.

In view of this, for the second ESG advocacy symposium in 2024, the organizer specially selected a topic that is different from the past ones, and invited the internationally renowned market research and consulting firm Kantar to the first half of the event. With the company’s database that gathers global resources, as well as its long-term experience in providing analysis and research on consumers and markets in various fields, and in assisting various industries in finding their growth momentum, Kantar shared its latest 2023 Sustainability Sector Index with the topic of “Global and Taiwan Data Insights – Value and Challenges of Corporate Sustainability Transformation,” and explained that in order to truly face the future, securities firms should carefully respond to sustainability transformation issues, adjust to the continuous changes in society and the market, and create more powerful and more valuable brands. After its in-depth investigation, Kantar discovered the following phenomena, and made suggestions on specific steps simultaneously：

1. Sustainability thinking tendency: (1) 70% of the public believes that purchasing sustainability related products is a way to showcase themselves (a global average of 51%). (2) 65% of Taiwanese people are very concerned about environmental and social news (the global average is 54%).
2. Ranking of concerns about sustainability issues: (1) Climate change. (2) Air pollution. (3) Extreme weather. (4) Overexploitation of natural resources. (5) Economic inequality.
3. Four steps for enterprises to ensure successful and sustainable transformation: (1) Brand strategy. (2) Sustainable innovation. (3) Effectiveness monitoring. (4) Communication through advertisements.

The second half of this advocacy symposium featured a presentation on the topic of “Securities Fraud Liability of Sustainability Reports” by a professor from the Law School of Soochow University, who used classic examples to analyze whether it may constitute a violation of Paragraph 1, Article 20 of the Securities and Exchange Act if a TWSE/TPEx listed company or securities firm prepares a sustainability report that contains untrue or false information or has information concealed. According to this regulation, the offering, issuance, private placement, or trading of securities shall not involve acts that are false or fraudulent, or may mislead others. Given that the Securities and Exchange Act only applies to financial reports and business documents filed or announced by issuers in accordance with the provisions of this Act, and there are clear provisions prohibiting falsity or concealment, Taiwanese courts have no practical opinions on the responsibility for falsifying sustainability reports. Therefore, Section 10 (b) of the U.S. Securities Exchange Act of 1934 and Rule 10b-5 authorized under Section 10 (b) regarding securities fraud in securities misconduct may be referred to. For example, the Puffery Doctrine in U.S. Securities Act may be applied to analyze the difference between “hard information” that can be used to verify the truth based on historical events, and “soft information” based on the speculation of future vision, and determine the corresponding legal responsibilities when it affects the judgment of rational investors. According to the judgment of the Supreme Court of Taiwan in 2006 with the reference code Tai-Shang No. 2385 regarding the determination of the nature of financial forecasts, even if there are some subjective forward-looking statements in the sustainability report, if they are supported by evidence and not fabricated, they will not constitute securities fraud liability.

The third ESG advocacy symposium of 2024 hosted by the TWSE, also the final event of the year, focused on net-zero emission as the topic of discussion. Firstly, the Center for Green Economy under Chung-Hua Institution for Economic Research elaborated on the topic of “Carbon Pricing in Climate Act: Carbon Fees and Credits,” including issues related to climate governance, the risk of net-zero transformation, carbon pricing tools in response to climate change, Taiwan’s voluntary carbon reduction project, the promotion of Taiwan’s carbon fee system, and the positioning of carbon pricing under green growth. Based on the global consensus of net-zero emission, enterprises are bound to incur transformation costs in response to policies and regulations established by domestic and foreign governments to meet low-carbon requirements, supply chain requirements, and changes in consumer preferences. The characteristic of Taiwan’s carbon fee system is to create autonomous reduction incentives through the price difference between general and preferential rates, in order to reduce the uncertainty of reduction effectiveness, and gradually increase reduction incentives through the gradual increase of general rates. As for those on the control list who have a high risk of carbon leakage, a risk discount will be granted as an adjustment mechanism during the transformation period on the premise of proposing an autonomous reduction plan and committing to carbon reduction, in order to reduce the risk of carbon leakage. In addition, the Ministry of Environment will cooperate with the FSC, and work with the Ministry of Economic Affairs to strive for funds from the insurance and financial industries for long-term investment in Taiwan’s various industries for in-depth power saving and net-zero measures, and in the resource recycling industry, in order to accelerate Taiwan’s net-zero achievement and environmental sustainability. Taiwan will also integrate domestic and international carbon reduction demand, and work with high carbon emitters, venture capitalists, financial institutions, and energy companies to obtain international-level new carbon reduction technologies with substantive carbon reduction operators as targets, in order to assist in the acceleration of global and Taiwan’s carbon reduction efforts.

The Taiwan Carbon Solution Exchange (TCX) was also invited to the event to explain its functions and prospects. Focusing on the topic of “Carbon Trading Strategies under the Net-Zero Trend,” it introduced various issues by category, including mandatory and voluntary carbon credits, carbon as a cost or business opportunity, how enterprises can perform carbon management, and how the Carbon Solution Exchange can help them. Taking the carbon pricing mechanism as an example, it is divided into mandatory and voluntary. The former refers to governments of various countries using cap-and-trade emission as a carbon management policy tool based on their own carbon reduction or carbon neutrality goals, such as the carbon environment tax and fee levied by Taiwan’s Ministry of Environment. The voluntary mechanism means that besides cap-and-trade, the country allows non-regulated individuals to obtain carbon through reduction projects; the carbon credit under this mechanism is the carbon reduction credit line, representing the certified carbon reduction effect. To achieve Taiwan’s 2050 net-zero goal, the TCX was jointly invested and established by the TWSE and the National Development Fund. The purpose of its establishment is to promote national and corporate carbon reduction through the carbon trading market, while assisting in achieving a balance between economic growth and development. At present, the TCX uses the voluntary reduction quota and offset project quota approved by the Ministry of Environment as the trading targets for the domestic reduction quota. Starting from the end of last year, the reduction quotas approved by international certification agencies such as VERRA and GoldStandard have also been used as trading targets for the foreign reduction quota.

To express recognition of the TWSE’s active cooperation with the regulatory authority in promoting sustainable development and transformation, the senior official of the SFB, FSC specially attended the event and delivered a speech, stating that the regulatory authority has been continuously promoting the sustainable development and transformation of domestic enterprises for a long time, and adopted the “Corporate Governance 3.0 – Sustainable Development Roadmap,” which focuses on “strengthening the functions of the board of directors, and enhancing sustainable corporate value,” and “improving information transparency, and promoting sustainable operation.” As for the “Green Finance Action Plan 3.0,” international trends were referred to in a hope to improve the quality and transparency of ESG information disclosure, establish a prototype of sustainability classification standards, guide financial institutions to invest in and finance the green energy industry, support green and sustainable development, and cultivate financial institutions’ resilience to climate change risks, in order to establish a framework and foundation that can promote the effective operation of a green and sustainable financial market.

In addition, to continue promoting enterprises’ active practice of sustainable development, the FSC released the “Sustainable Development Action Plans for TWSE and TPEx Listed Companies” in 2023, with “governance,” “transparency,” “digitalization,” and “innovation” as the four main axes to construct aspects including “leading the net-zero of enterprises,” “deepening the culture of sustainable corporate governance,” “improving sustainable information disclosure,” and “promoting ESG evaluation and digitization.” By referring to the two major disclosure standards (the “General Sustainability Disclosure Requirements” and the “Climate related Disclosure Requirements”) published by the International Sustainability Standards Board (ISSB) under IFRS (International Financial Reporting Standards Foundation), the regulatory authority has planned that from the 2026 fiscal year onwards, TWSE and TPEx listed companies with a capital of NT$10 billion or more must apply the aforementioned standards for full disclosure, and the scope of applicable objects will gradually expand as appropriate. The representative of the regulatory authority also highly praised the TWSE’s planning of diverse and high-quality sustainability issues from 2022 to 2024, and its active invitation of scholars and experts for promotion to securities industry players.

The TWSE had previously planned to intensively hold a total of three sustainability advocacy symposiums between the second and third quarters of 2024.From 2022 to 2024, various peripheral units in the securities and futures market have jointly organized 19 advocacy events. Among them, the TWSE totally held seven advocacy events in the past three years in response to the FSC’s sustainability transformation implementation strategy, which is more than twice as many as those by the other peripheral units, and accounts for 36.8% of the total number of events held by all units.

The TWSE also significantly revised the “Corporate Governance Best-Practice Principles for Securities Firms” between 2022 and 2023, adding regulations related to the board of directors’ adoption of sustainable development policies, establishment of a dedicated unit for sustainable development, handling of information security protection, utilization of the external expert function, strengthening the accountability system for responsible persons, regularly submitting evaluations of dedicated units to the board of directors, continuing education courses for directors and supervisors, and the preparation and filing of sustainability reports. The revised regulations were released for implementation in February 2023.

Through its long-term and unremitting efforts, the TWSE has not only assisted securities firms that have signed contracts to use the centralized securities trading market to successfully complete the phased task of sustainable development transformation, but also continued to work together with the FSC and securities firms to support the deepening of sustainable development and promote financial sustainability with local characteristics. In the future, the TWSE should also consolidate the foundation of legal compliance, and gradually guide industry players to establish a sustainable development management system that can last for a long time, in order to integrate with the international capital market, enhance global competitiveness, and showcase Taiwan’s unique ESG value on the world financial stage.