The Taipei Exchange Cares About Climate

Issues related to climate change have been receiving increased attention, and the concept of sustainability is expanding worldwide. Investors have realised that climate change is bringing about capital reallocation. In fact, financial and investment-related industries often pioneer such economic transformation. However, in order to further implement a green economy, the capital market needs to focus on developing the infrastructure to do so. As a key part of the market infrastructure of Taiwan, the Taipei Exchange (TPEx) has a strong influence on stakeholders, including enterprises and investors. Playing a pivotal role in supporting enterprise growth, TPEx is committed to assisting companies in their sustainable development transformation. Additionally, TPEx focuses on sustainable finance and has been a forerunner in practicing sustainable development.

TPEx promotes sustainable development through the capital market in many unique ways, specifically through the fields of corporate governance and bond markets. In terms of strengthening corporate governance, TPEx encourages companies to employ international standards and regulations such as IFRS Sustainability Disclosure Standards and those of the Sustainability Accounting Standards Board (SASB). These standards require Main Board companies to enhance their climate-related information in sustainability reports by disclosing risks and opportunities associated with climate change and sharing the corresponding measures taken. Accordingly, TPEx introduced the “IFRS Sustainability Disclosure Standards Alignment Section” to support companies in gaining an initial understanding of the impact of disclosing sustainability-related financial information. Moreover, TPEx developed a "Sustainability Roadmap Section" on its website and established a sustainable development roadmap consultation group. These initiatives provide Main Board companies with resources for addressing relevant issues and strengthening the disclosure of sustainability-related information. In the future, TPEx will continue to encourage Main Board companies to include climate risks to corporate governance, which could improve information transparency and enhance corporate responses to climate change. TPEx will also continue to support Main Board companies in setting their schedules for reducing carbon emissions to achieve Taiwan’s development goal for carbon reduction.

In terms of the bond market, TPEx launched a dedicated segment of the Sustainable Bond Market that consolidated the Green Bond, Sustainability Bond, and Social Bond in 2021. In 2022, the Sustainability-Linked Bond (SLB) was started and integrated into the Sustainable Bond Market. The SLB was set up to help enterprises obtain long-term, stable working capital and convey the importance of sustainable development to the market. The characteristics of the SLB, which does not restrict the use of funds, provide greater flexibility in their utilisation. Additionally, the principal and interest terms of these bonds are linked to sustainability-related performance targets. This approach effectively assists enterprises in fulfilling their ESG commitments within the framework of their overall sustainable development strategies. The issuers are diverse, encompassing domestic banks, branches of foreign banks in Taiwan, state-owned enterprises, domestic private production enterprises, and foreign financial institutions. The Sustainable Bond Market has effectively attracted a variety of issuers to participate in the domestic bond market.

TPEx has multifaceted initiatives for encouraging sustainable development. In addition to its commitment to supporting Main Board companies in this area, TPEx actively creates sustainable products and mechanisms. It guides enterprises and investors to prioritise sustainability through market mechanisms and encourages funds to focus on ESG transformation. In 2023, TPEx cooperated with FactSet and Entelligent, launching the groundbreaking “TPEx FactSet Smart Climate” index series. This is Taiwan’s first pure climate benchmark and index series. TPEx expects this initiative to pave the way for numerous related Exchange Traded Products (ETPs), which would offer investors innovative and powerful tools to prioritise sustainability in their portfolios. The series kick-off comes as the world confronts the significance of climate change and considers the role the business and investment communities can play in the transition to a low-carbon future. With this initiative, TPEx hopes that all stakeholders will gain insight into climate-transition risks and contribute to reshaping new climate-aware portfolios that are invested in a sustainable future.

In recent years, TPEx has integrated the concept of sustainable development into its daily business operations through the emphasis on coexistence with the environment and social prosperity. It has incorporated environmental protection into operational policies at all levels, adopted electronic administrative processes, promoted energy conservation, and reduced paper consumption. TPEx successfully transitioned to green electricity in January 2022. To meet the 2050 Taiwan net-zero transformation target and deepen its own ESG sustainable development efforts, TPEx established a sustainability committee in May 2022 and initiated the greenhouse gas inventory project in August. Furthermore, TPEx actively contributes to environmental protection and ecological conservation by planting trees in coastal and mountainous areas.

Philip Chen, chairman of TPEx, said: “Through these diverse means, TPEx promotes the sustainable development of its own ESG initiatives. Looking ahead, TPEx will remain dedicated to following ESG principles, sustainable development goals, corporate governance, and other relevant policies to assist enterprises in achieving a sustainable transformation with the goal of net-zero emissions. Together, we can promote the sustainable development of the capital market.”