Taiwan unveils plans to make ESG ratings available to all investors

Correction: This article was updated to remove references to MSCI. MSCI has not confirmed its involvement in the initiative. 

From July onwards, investors and issuers will be able to access Taiwanese ESG ratings data for free, in what is being billed as the world’s first “consolidated ESG ratings dashboard available for all market participants”.

Issuers and institutional investors will have unrestricted access to the ESG ratings and accompanying commentary of listed Taiwanese firms, while retail investors will only be able to access top-line ESG ratings.

So far, Sustainalytics, ISS and FTSE Russell have signed on to provide ESG ratings and analysis.

The data will be housed in a newly-launched, bilingual Investor Relations Platform operated by the Taiwan Depository & Cleaning Cooperation (TDCC), an independent regulator-appointed body which provides clearing and settlement services to Taiwanese exchanges.

Since January 2019, Taiwanese issuers have been able to access Sustainalytics ESG ratings via an earlier version of the platform.

The initiative aims to support the improvement of corporate sustainability practices by using ESG ratings as a benchmark for current performance, while providing a mechanism for companies to monitor data accuracy and improve the quality of ratings.

For investors, it is hoped that access to such ratings will encourage ESG integration, leading to increased demand for the full suite of Taiwanese ESG products offered by participating ESG data firms.

A TDCC spokesperson described the process of reaching an agreement with the data providers as “difficult”, but said that the initiative was key to “effectively encourage both issuers and institutions to incorporate ESG”.

Apart from ESG evaluations, the new platform will house annual reports, financial reports and AGM agendas as required by Taiwan’s listing regulations, in addition to updated corporate information on corporate governance policies and officer contact details. 

Taiwan is considered a leader on ESG disclosures compared to regional peers. Since last year, Taiwanese-listed companies have been required to disclose all deviations from a set of Corporate Social Responsibility best practices established by the Taiwan and Taipei exchanges. In addition, Taiwanese issuers in specific industries, and those with paid-up capital amounting to more than NT$10bn (€300m), have been required to publish standalone ESG reports in line with Global Reporting Initiative standards since 2015. Guidance for voluntary ESG disclosure was first introduced in 2010.

In 2019, TDCC partnered with ISS on a vote delivery system which automatically executes voting instructions on behalf of global ISS clients.

Separately, the Taiwan Futures Exchange will launch a futures contract based on a benchmark index of Taiwanese companies which meet the standards for the ESG-focused FTSE4Good Index Series by FTSE Russell. The new product, named F4G TIP TW ESG Index Futures, is due for release in June.