TWSE Market Insights

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Since the release of the “Stewardship Principles for Institutional Investors” in 2016, the TWSE has continuously encouraged institutional investors to pay attention to the operational status of their investees, hoping to strengthen corporate governance through market mechanisms, create a virtuous cycle between investees and institutional investors, and enhance each other’s value. As of the end of December 2024, a total of 150 institutional investors have signed a stewardship principle commitment, including 38 investment trust companies, 39 insurance companies, 34 banking institutions, 27 securities firms, 4 government funds, and 8 others.

To actively promote the continuous improvement of stewardship implementation by institutional investors, the TWSE has formed the Stewardship Principles for Institutional Investors Advisory Committee and established a public evaluation mechanism. It conducts an evaluation each year to create a list of top performers in stewardship information disclosure. In addition, to align the evaluation standards with international standards and continuously improve their discriminability, the TWSE regularly revises the evaluation standards based on domestic and international stewardship trends, regulations, policies, and feedback from various parties each year. Furthermore, it consistently promotes institutional investors’ improvement in the quality of their stewardship practices and information disclosure.

The evaluation criteria for 2024 were divided into the first dimension “Policy and Compliance Statement” and the second dimension “Practice and Disclosure,” with a total of 30 evaluation criteria. The former includes the disclosure of the stewardship policy, conflict of interest policy, and voting policy, while the latter covers topics such as stewardship report elements, engagement case execution and disclosure, voting disclosure, and website disclosure. Given that most institutional investors have demonstrated considerable maturity in questions related to “Policy and Compliance Statement” in recent years and have taken important topics of international stewardship into consideration, such as engagement execution and voting disclosure, a weighting mechanism was introduced in 2024 to adjust the weights of the first and second dimensions to 0.8 times and 1.2 times, respectively. This adjustment aims to promote the integration of Taiwan’s stewardship with the international community and improve the discriminability of evaluation standards.

1. Evaluation objects and scope

The evaluation objects are institutional investors who have signed the “Stewardship Principles for Institutional Investors” commitment, covering domestic and foreign banks, securities firms, futures firms, insurance companies, fund management companies, and government investment institutions, which are divided into the domestic group and the foreign group for evaluation. The scope of evaluation for domestic institutional investors includes stewardship activities and disclosures carried out domestically or with domestic companies. The evaluatees may entrust their overseas groups or other professional institutions to carry out related activities and provide compliance statements, reports, and voting information in Chinese; however, the global stewardship information from their overseas groups or professional institutions is not included in the evaluation scope. The scope of evaluation for foreign institutional investors includes their stewardship activities and disclosure content.

2. Evaluation timeline

(1) Filing of stewardship information

The institutional investors to be evaluated should disclose their annual stewardship practices (including their stewardship reports and voting records) and related contents on their official website before the end of September 2024, and respond to relevant information on the webpage provided by the TWSE.

(2) Execution of the evaluation

The Corporate Governance Center reviewed the relevant information disclosed on the website of each institutional investor evaluated, and gave each evaluation indicator a rating of 3 points (evaluation result A: good), 2 points (evaluation result B: fair), or 1 point (evaluation result C: to be improved) based on the rating reference pattern of the “Evaluation Criteria for the List of Good Performers in Stewardship Information Disclosure.” In addition, to encourage institutional investors to strengthen their stewardship through specific measures, additional bonus questions were adopted for seven evaluation criteria in 2024, and those who had the evaluation result A: good were given 4 points.

(3) Announcement of the list determined by the Committee

In December 2024, the Stewardship Principles for Institutional Investors Advisory Committee held a meeting to discuss and determine the list of good performers in institutional investor stewardship information disclosure. The list was already published on the website of the Corporate Governance Center on December 31, 2024, with a total of 36 domestic investors and 5 foreign investors (note).

1. Distribution of institutional investors’ scores in the past three years

Compared with the results of the 2022 and 2023 evaluations, the 2024 evaluation scores have continued to improve. In the observation of evaluation criteria, most institutional investors have already formulated policies related to stewardship. The evaluation criteria were revised and adjusted in 2024 to promote the improvement in engagement. Some institutional investors have already provided fairly complete disclosure in their stewardship reports in accordance with the adjustment criteria, such as elevating the communication level of engagement from the investor relations window and spokesperson to the chairman, general manager, and independent directors. As for the setting of engagement milestones, in addition to fully calculating the number of milestone companies at each stage and their proportion to the total asset size, a further comparison is made between this year and the previous year. Overall, the number of institutional investors with a total score of 70 or above reached 117, accounting for nearly 80% of the evaluated companies. This indicates that, with the promotion of the evaluation, various institutional investors have actively improved their disclosure of relevant information and further enforced stewardship practices.

2. Items with good performance in 2024

According to observations from recent evaluations, the items with good performance are mostly in the “stewardship policy” aspect, including evaluation criteria such as “Explain that the institutional investor has examined its role in the investment chain, its business nature, and how to protect the rights and interests of customers and beneficiaries,” “Contents of the execution of stewardship actions, such as paying attention to the investee company, interacting with the management, participating in shareholders’ meetings, and voting frequency,” and “Explain the disclosure method and frequency of fulfilling stewardship,” with the average score close to full marks. This indicates that such institutional investors have better disclosure quality in their business nature, roles in the investment chain, and stewardship status. In addition, many institutional investors have fully elaborated on their conflict of interest policies and voting policies on evaluation criteria such as “Explain the content and purpose of conflict of interest management policies” and “State that the institutional investor does not absolutely support the proposals put forward by the management team, as well as their motives and standards for opposing the proposals.”

In summary, it is evident that under the guidance of the TWSE year by year, the stewardship policies formulated by institutional investors have become more comprehensive, and the performance in “Policy and Compliance Statement” related questions has reached a highly mature level.

3. Items with performance to be improved in 2024

Although most institutional investors have made full disclosures in response to questions related to “Policy and Compliance Statement,” there has been a significant increase in the evaluation criteria in the more challenging “Practice and Disclosure” aspect for 2024. Additionally, institutional investors still need to improve their performance in areas such as “Voting Disclosure” and “Engagement Case Execution and Disclosure.” These include “Description in the stewardship report on the impact of interaction and engagement on the investee company and its stakeholders, and the disclosure of the cross-asset category,” “List major proposals and explain the reasons for or against them or abstention, and the plan for further action if dissatisfied with the proposal results,” and “Description in the stewardship report on the topics, reasons, and scope of interaction and engagement with the investee company.” The evidence supporting engagement topics should be provided, including specific quantitative targets or examples of the investee company’s peers,” “Description in the stewardship report on the policies and cases of cooperation with other institutional investors, as well as relevant cases of the expansion of and leverage on institutional investors’ influence jointly with advocacy organizations participating in ESG topics,” and “Description in the stewardship report on the progress of engagement with the investee company and setting milestones at each stage.” These items have shown relatively lagging performance, and the following are the observations from this year’s evaluation：

(1)  “Description in the stewardship report on the impact of interaction and engagement on the investee company and its stakeholders, and the disclosure of the cross-asset category”

The evaluation criteria require a description of cases of impact, and the specific listing of the impact on the investee company and its various stakeholders, such as shareholders, customers, suppliers, employees, and the general public. However, there are still some institutional investors who have not listed the impact on various stakeholders in detail. In addition, a requirement for cross-asset category disclosure was added to this question in 2024, so the overall performance is relatively behind.

(2) “List major proposals and explain the reasons for or against them or abstention, and the plan for further action if dissatisfied with the proposal results”

The evaluation criteria require an explanation of process for the judgment of major proposals, as well as a disclosure of whether the proposal is satisfactory or not and the follow-up action plan, in order to obtain an A rating. Based on the observation, some institutional investors still failed to provide a detailed description of the process and follow-up plan, resulting in lower scores for the evaluation criteria.

(3) “Description in the stewardship report on topics, reasons, and scope of interaction with the investee company, and engagement contents. The evidence supporting engagement topics should be provided, including specific quantitative targets or examples of the investee company’s peers”

The disclosure of evidence of support was added to this question in 2024, including specific quantitative targets or examples of the investee company’s peers, such as the board of directors’ gender ratio, director remuneration policy, and greenhouse gas emissions, as well as the new requirement for cross-asset category disclosure. Therefore, the overall score is relatively low.

(4) “Description in the stewardship report on the policies and cases of cooperation with other institutional investors, as well as relevant cases of expansion of and leverage on institutional investors’ influence jointly with advocacy organizations participated in for ESG topics”

In addition to the disclosure of policies with other institutional investors and specific cooperation cases, a description of relevant follow-up plans was added to this question in 2024.During the evaluation, it was found that some institutional investors have not yet engaged with their investee companies in conjunction with their group entities or external institutional investors (for example, only participating in ESG related advocacy organizations) or have not explained relevant plans following the engagement. Therefore, the evaluation result A was not achieved, resulting in a lower average score.

(5) “Description in the stewardship report on the progress of engagement with the investee company and setting milestones at each stage”

This question requires setting milestones for the engagement progress at each stage, with at least four stages included. For example, the first stage involves proposing engagement topics to the investee company; the second stage requires the investee company’s acknowledgment of the existence of these topics; the third stage entails the investee company’s formulation of response strategies for the topics; and the fourth stage consists of the investee company’s practical measures to achieve the engagement goals. In addition, the number of engagement companies for each milestone and their proportion to the total asset scale need to be calculated. As this question was added in 2024, and there were still many institutional investors who only set milestones, but did not calculate the number of engagement companies for each milestone and their proportion to the total asset scale, the overall performance relatively lagged behind.

4. Example of Good Stewardship Report Disclosure

According to the observation, the score of the first dimension “Policy and Compliance Statement” is generally higher than that of the second dimension “Practice and Disclosure.” Given the significant revision of the second dimension in 2024, this chapter summarizes the good practical examples of Taiwan’s institutional investors for the evaluation categories that need to be improved to serve as a reference for all parties, with the aim of promoting mutual learning and healthy competition among institutional investors, and further improving domestic institutional investors’ stewardship report disclosure quality.

(1) Engagement policy and relevant case disclosure

XX Securities fully disclosed its engagement policy and described the relevant case, and clearly disclosed its investment in Company A which included stocks and bonds. It also joined XX Bank, a subsidiary of the same financial holding company, for an engagement with Company A regarding carbon reduction targets.

Table 1：Example of “Engagement policy and relevant case disclosure” by a domestic securities firm

Item	Content
Engagement policy	XX Securities complied with international standards and the sustainable financial policy signed by its financial holding company, and followed the requirements of stewardship rules and international initiatives to implement engagement; besides this, the asset categories of the engagement are not limited to stocks. It proactively held a dialogue with the TWSE regarding violations of sustainability requirements or damage to shareholder value, and, depending on the situation, collaborated with other investors or participated in initiatives to expand its influence.
Engagement company	Company A (XX Securities holds its stocks and bonds)
Case overview	To implement its group’s SBTi goals, XX Securities sent a questionnaire to communicate the carbon reduction policy, and jointly visited Company A with XX Bank, suggesting that Company A join SBTi to promote the net-zero transformation of the supply chain.
Whether the engagement meets the predetermined goals	Company A expected to set a carbon reduction target in 2024 and submit an SBTi application in 2025, and has planned a carbon reduction path up to 2026; these are in line with the goals predetermined by the TWSE.
Follow-up or action plan	Continuously monitoring the news and inquiring about policies or regulations announced by regulatory authorities, as well as whether Company A has been disciplined due to significant environmental protection deficiencies, in order to accurately evaluate the operational status and ESG development of the investee company.
Impact on future investment decisions	Company A has demonstrated specific response measures, and did not have any significant negative ESG events, and XX Securities continues to hold the stock and bond investment positions of Company A.

(2) Attending the shareholders’ meeting of the investee company

XX Bank clearly disclosed its attendance at the shareholders’ meeting and expressed opinions on carbon reduction progress, biodiversity, and carbon inventory during the meeting. After the meeting, it also disclosed its speech record and responses from various companies：

Table 2：Example of domestic bank’s “attendance at the shareholders’ meeting of the investee company”

XX Bank’s speech record： In 2023, the Bank participated in the voting on XX proposals from XX companies and personally attended the meetings of XX companies. Electronic voting was adopted for the remainder, resulting in a voting rate of 100%.The Bank attended the shareholders’ meetings of three high carbon emission companies A, B and C and delivered speeches covering topics such as carbon reduction progress, biodiversity, and carbon inventory, all of which were addressed by the companies.
Company	Company response
Company A	We have set carbon reduction targets for 2025 and 2030, committed to joining SBTi, and disclosed information on biodiversity and climate risk management in the report.
Company B	We expect to achieve the goal of reducing carbon emissions by X% by 2025 from that in 2018 (the baseline year), and continue to promote the carbon reduction action plan with energy efficiency improvement as the focus. In addition, in line with Taiwan’s promotion of the net-zero carbon emission policy, we have set a XX% emission reduction target by 2030 from that in the baseline year.
Company C	We plan to use the ISO 14064 standard for examination and obtain third-party verification, and plan to achieve net-zero emission by 2050, while continuously evaluating the adoption of SBTi standard.

(3) Listing material proposals and explain the reasons for, against, or abstention

XX Life Insurance provided a complete explanation of the key elements for judging material proposals, and listed material proposals with the reasons for or against them or abstention. It also provided a detailed description of the follow-up plan if dissatisfied with the outcome of the proposal.

Table 3：Example of the domestic insurance company’s “listing material proposals and the reasons for or against it or abstention”

Voting decision	Reasons
Against	1. Significant impact on shareholder equity: The proposal is unfavorable to shareholder equity and investment value due to the change in capital structure. 2. The important information fails to be truthfully disclosed in financial statements, resulting in a negative impact on shareholder equity. 3. Doubt of violating ethical corporate management: The proposal may involve a high risk of conflict of interest. 4. The matters discussed at the shareholders’ meeting may hinder the sustainable development of the company or violate the company’s “responsible investment policy.”
For	If there are no doubts as expressed by the dissenting votes above, then the voting rights shall be exercised with an affirmative vote due to the respect for the investee company’s professional operation and the promotion of its effective development,.
Abstention	According to Article 146-1 of the Insurance Act.

In order to enable institutional investors to grasp the international stewardship trend, understand the key points of the revised evaluation standards, and connect various stakeholders to further expand the stewardship industry chain, the TWSE planned and held multiple stewardship related advocacy meetings, symposiums, forums, and other promotional activities for different audiences in 2024. The following is the status of such promotional activities：

(1) Institutional Investor Perspectives Forum: To promote the engagement mechanism between listed companies and institutional investors, the TWSE invited professional institutions such as HSBC Group, BlackRock, and ISS Corporate in June 2024 to share with representatives of listed companies the investment decision-making perspectives of institutional investors, as well as related issues such as corporate governance, information disclosure, and sustainable development. About 300 representatives including directors and general managers of domestic listed companies participated in the event, which expected that listed companies could take this opportunity to understand the needs of foreign investors, and that they could be guided to actively promote sustainable development strategies, and create a fair, efficient, and sustainable capital market.

(2) International Trend Symposium on Stewardship of Institutional Investors

To enable domestic institutional investors to fully understand the latest developments in stewardship in various Asian countries, the TWSE held a symposium in June 2024 and invited Amar Gill, Secretary General of the Asian Corporate Governance Association (ACGA), to share the comparison of scores in the “CG Watch 2023” report of the ACGA, acknowledge Taiwan’s efforts in sustainability and regulatory reform, and share the items which prompted the progress of Japan’s market ranking. Shih-Chiao Lin, Vice President of Cathay Life, shared with the participants the experience of Cathay Life in implementing responsible investment, enforcing engagement, exercising voting rights, and enhancing stewardship information disclosure. Nearly 100 representatives of domestic institutional investors participated in this symposium, and the on-site interaction was enthusiastic, demonstrating the institutional investors’ active implementation of stewardship and their spirit of shareholder activism.

(3) Promotion Conference for Evaluation of the List of Good Performers on Institutional Investors’ Stewardship Information Disclosure

To ensure that the signatories of the “Stewardship Principles for Institutional Investors” commitment fully understand the planning and revision of the evaluation standards for the 2024 List of Good Performers in Stewardship Information Disclosure, the TWSE held a promotion conference in July 2024 to explain the good cases of stewardship information disclosure and promote domestic institutional investors’ improvement in stewardship quality. Representatives from BlackRock’s stewardship team, Taiwan Index Plus Corporation (TIP), and Taiwan Depository & Clearing Corp. were invited to share stewardship and engagement cases, case-by-case voting result disclosure services, and IR ESG Engagement Platform planning, and the on-site interaction was enthusiastic. Nearly 100 representatives of domestic institutional investors participated in this promotional conference.

(4) IR Engagement Service Platform Launch Ceremony

In December 2024, the TWSE held the IR Engagement Service Platform Launch Ceremony together with TIP at the Forum for Sustainable Development Committee and Sustainable Development Directors and invited representatives of TIP to share the new plans for the IR Engagement Service Platform, including the three core services of providing briefings to institutional investors, ESG information value addition, and IR engagement matching. The functions are designed from the users’ perspective, with the goal of solving the pain points of enterprises and institutional investors in the handling of engagement. All information on the platform is available in both Chinese and English to allow users (such as foreign investors) to quickly grasp and interpret relevant information. About 350 corporate representatives attended the symposium, and the response was enthusiastic. As of the end of 2024, the registered members of the IR Engagement Service Platform include 463 TWSE/TPEx listed companies and 45 institutional investors, and the bookings for 53 listed companies’ briefings to institutional investors have been completed.

According to the “CG Watch 2023” report released by the Asian Corporate Governance Association (ACGA) at the end of 2023, Taiwan tied with Singapore for the third place in the corporate governance rankings of 12 Asian countries, only behind Australia and Japan, achieving its best performance in history. Institutional investors are a crucial part of the corporate governance ecosystem. In order to promote the engagement mechanism between institutional investors and investee companies, the evaluation criteria for 2024 have been significantly revised and adjusted from those in previous years. Although some institutional investors have already provided fairly complete disclosures in their stewardship reports, there is still room for improvement in the cross-asset category disclosure, joint engagement, and explanation of voting reasons. Under the guidance of the regulatory authorities, the TWSE will continue to organize promotional activities such as advocacy meetings, symposiums, and forums, and plan to provide more detailed guidance to industry players with lower rankings. We will strive to assist institutional investors in strengthening their writing of the stewardship report, improving information disclosure transparency, and aligning with international stewardship standards in order to improve the overall quality of stewardship of the capital market.

 

Note：

TWSE Corporate Governance Center > Stewardship Principles > Information Published by TWSE：https://cgc.twse.com.tw/stewardshipInfo/listEn