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Taiwan leading the way in ESG disclosure

28 September, 2017

Peter Grauer, Chairman of Bloomberg LP (left), in conversation with Samson Ellis, Bloomberg News Taipei Bureau Chief (right), at the Sheu Yuan Dong Foundation & Bloomberg 2017 Corporate Governance Forum in Taiwan

 

Governance, sustainability and social impact are increasingly front and center of board and corporate leadership activities in Asia and Taiwan can be rightfully proud that it is number one in the region in disclosure on these critical areas.

 

According to the latest Bloomberg Environment, Social and Governance (ESG) disclosure scores, Taiwan ranks number one in ESG disclosure in Asia, ahead of markets including Australia and Japan. This highlights actions taken by companies from board and owner level down to embed governance and sustainability in their business models and corporate plans – and to disclose those transparently to all stakeholders.

 

It is also the result of concrete steps taken over the past decade by the Taiwan and Taipei Stock Exchanges and the Financial Supervisory Commission to make listed companies more aware of sustainability issues and to encourage them to report on their Corporate Social Responsibility (CSR) activities. This is happening at a time when Asian financial markets are more interconnected with global markets than ever before and as many Asian and Taiwanese companies take their brands worldwide.

 

Corporate governance models, long-term risk resilience and the changing role of business are front of mind for Chairmen, Boards and business owners around the world, regardless of their sector or the geography of their operations.

 

Intense regulatory requirements are driving a massive focus on compliance while technology is rapidly changing how companies do business and interact with their stakeholders in an increasingly interconnected business world. Companies must have the right people on their boards who understand these dynamics and how to assess and manage risks – market risk, operational risk, financial risk and, increasingly, cybersecurity.

 

Board composition has become a critical factor within this dynamic business environment. Surveys show conclusively that companies with greater leadership diversity end up achieving better overall results. Having a board and leadership team with a broad range of backgrounds, from gender to geography, ethnicity, expertise and professional background is now a business imperative.

 

Consumers, too, increasingly care about how companies conduct themselves and are acting with their wallets to pay more for products that are being produced responsibly by companies that deliver and promote a positive record on governance, diversity and sustainability. Of the world’s largest 250 companies, 92 per cent now report in some way on their social and environmental impact. The EU recently introduced a rule mandating companies to include sustainability and impact factors in their financial reporting.

 

Consumer focus on the reputation of companies for governance and sustainability is driving companies to engage with a more diverse set of stakeholders, in part driven by a media landscape that includes faster-paced coverage and social media that gives consumers new platforms to express their voice and wield influence over how companies operate and behave.

 

This is especially relevant in Taiwan, which serves as a technology hub for the region and the rest of the world. Often, complex supply chains and partner relationships encourage and necessitate Taiwan companies to take a multi-stakeholder approach in communicating good practices around sustainability, governance and other impacts, listening carefully to understand stakeholder expectations and then shaping their business practices to meet those expectations.

 

In fact, beyond consumers, investors and financial institutions are carefully scrutinising companies to ensure they are walking the talk on sustainability, social and governance programs. A growing number of investors are evaluating investment opportunities on this basis, with recent Bloomberg data showing that assets under management related to sustainable investing reached US$ 21.4 trillion.

 

Taiwan and Taiwanese companies have taken a leadership stance on governance, sustainability and social impact actions and reporting. Regulators and companies are furthering those efforts. Ensuring that boards and leadership teams are diverse, transparent, strong risk managers and highly engaged with a wide range of stakeholders will deliver continued progress.

 

Peter Grauer is Chairman of Bloomberg LP