A regional comparison of ESG regulations: Taiwan

    By Tseng Ken-Ying and Helen Huang Hai-Ning, Lee and Li
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    Taiwan’s climate agenda has sparked attention recently. The Greenhouse Gases Reduction and Management Act, the primary regulatory framework for controlling greenhouse gas emissions in Taiwan, has undergone a comprehensive reform and was officially renamed the Climate Change Response Act (CCRA) on 10 January 2023. This renaming signifies a pivotal shift in Taiwan’s approach, extending beyond solely targeting greenhouse gas emissions to encompass a holistic strategy for combatting climate change.

    Specific industries are now required to meticulously account for, report and verify their greenhouse gas emissions. The Environmental Protection Administration of Taiwan delineates a list of industry-specific businesses classified as major greenhouse gas emission sources, called The Businesses Subject to Accounting and Registration of Greenhouse Gases Emission Sources, and mandates these businesses to report their greenhouse gas emissions. Any business that exceeds 25,000 tonnes of greenhouse gas emissions per year must also submit an annual report detailing its emissions from the preceding year.

    2050 PATHWAY

    Tseng Ken-Ying, Lee and Li
    Tseng Ken-Ying
    Lee and Li
    Tel: +886 2 2763 8000 Ext. 2179
    Email: kenying@leeandli.com

    Taiwan has witnessed a growing recognition of environmental, social and governance (ESG) factors and their profound impact. The government’s commitment to promoting renewable energy, decarbonisation and green finance, and achieving the net-zero goals outlined in Taiwan’s Pathway to Net-Zero Emissions in 2050, has gained significant momentum. A noteworthy example of this commitment is the Green Finance Action Plan, which has undergone regular updates since 2017, with quarterly reviews. Recently, the plan reached its third iteration and successfully completed its review in the final quarter of 2022.

    In light of the prevailing circumstances, the rebranding of the CCRA signifies Taiwan’s unwavering commitment to decarbonisation, with the ultimate objective of achieving net-zero greenhouse gas emissions by 2050.

    The Environmental Protection Administration is expected to promulgate and announce 12 sub-regulations associated with the CCRA in the second half of 2023, and in 2024. These regulations will address critical aspects such as carbon inventory, carbon fee collection, registration management, certification and inspection institutions, and the management of greenhouse gas funds. The government’s primary objectives remain centred on promoting green energy, decarbonisation and green finance, and realising the goals outlined in the 2050 pathway.


    As part of the net-zero efforts, the Financial Supervisory Commission of Taiwan has been diligently formulating guidelines on sustainable economic activities. These guidelines aim to aid investors and stakeholders in discerning sustainable practices and defining activities that significantly impact the environment, while thwarting greenwashing attempts.

    Helen Huang Hai-Ning, Lee and Li
    Helen Huang Hai-Ning
    Senior Associate
    Lee and Li
    Tel: +886 2 2763 8000 Ext. 2508
    Email: helenhuang@leeandli.com

    Given Taiwan’s prominent role as an export-oriented island and a crucial player in the global supply chain, the integration of ESG principles into business practices has become increasingly vital to meet the stringent requirements imposed by global brands.

    Consequently, the demand for a robust framework that guides companies through this transition, effectively meeting the escalating expectations surrounding ESG matters, is imperative. It is foreseeable that the focus on ESG issues will continue to escalate and ultimately become ubiquitous across industries.

    With regard to the disclosure of ESG-related information, the Financial Supervisory Commission has formulated the Taipei Exchange (TPEx) Rules Governing the Preparation and Filing of Sustainability Reports by Listed Companies.

    This regulatory framework obliges listed companies to submit annual ESG reports. In a significant development in September 2022, the TPEx introduced ESG performance indicators to strengthen the disclosure of ESG information. This step enables stakeholders to gain a comprehensive understanding of a company’s operations, accomplishments and plans for sustainable development.

    Additionally, listed companies on the TPEx are now required to issue ESG reports based on the guidelines set out by the Global Reporting Initiative, and are urged to refer to the standards published by the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures.

    The Corporate Governance 3.0 – Sustainable Development Roadmap underscores the promotion of stewardship-related information disclosure by institutional investors, fostering enhanced governance within listed companies.

    The Green Finance Action Plan 3.0 also encourages financial institutions and enterprises to incorporate guidelines for recognising sustainable economic activities into their strategic planning and investment and financing evaluations.

    Overall, the Financial Supervisory Commission is actively developing guidelines on sustainable economic activities to assist investors and stakeholders in identifying sustainable practices. These guidelines aim to define environmentally impactful activities while preventing instances of greenwashing.

    As ESG principles continue to gain prominence in daily business operations, concerted efforts are being made to ensure that ESG and sustainability values are accurately reflected.

    To enhance ESG transparency, the government plans to establish a consolidated ESG platform for public companies in 2024. The mandatory reporting and disclosure framework for ESG information, based on guidelines from the Global Reporting Initiative, continues to be a significant focal point for companies and financial institutions in Taiwan.

    With the implementation of the Sustainability Finance Evaluation scheme, it is anticipated that more financial institutions will voluntarily participate in evaluation, thus fostering a mature investment market with robust ESG-related information disclosure.


    While Taiwan has already taken proactive measures in the development of ESG, sustainable finance and impact investing initiatives, there is a pressing need for more comprehensive guidelines from financial authorities, particularly concerning the reporting and disclosure of information.

    To effectively redirect finance towards sustainability and social impact, it is crucial for public actors to support private players in the financial sector. The responsibility and costs associated with reporting on environmental and social objectives should not rest solely on individual companies.

    Public authorities should provide clear reporting and disclosure guidelines, along with affordable tools for collecting relevant data on social and environmental activities. These tools would facilitate standardised assessments of ESG performance and could be accessed through user-friendly platforms that facilitate the exchange of computational and financial tools. Such an approach would instill confidence in those who remain uncertain about the impact and viability of sustainable investments.

    It is also important to develop specific benchmarks tailored to the local social and environmental landscape. This would enhance the accuracy of performance evaluations and non-financial impact assessments of financial products, while reducing risk-margin factors. In the Taiwan market, innovative programmes such as social impact bonds and fiscal incentives for investments in distressed communities are still being tested for viability and success.

    The flexibility provided by business organisation laws enables ingenuity and the flow of impact capital into private investment. Founders and owners can structure their operations and governance with flexibility, modifying fiduciary duties for non-corporate organisations based on the preferences of founders and investors. This flexibility will continue to be a positive factor for sustainable and impact investing.

    As there are currently no specific regulations on social finance or purpose-driven companies, our primary recommendation regarding legal models is to adopt tailor-made structures that align with the intentions of founders and investors, and contribute to sustainable relationships with stakeholders.

    This is crucial to avoid fiscal audits or issues with tax authorities. Additionally, the existing tax legislation does not provide incentives for donations or investments that do not solely aim for profit generation.

    In conclusion, Taiwan’s transition towards a green economy and the integration of ESG principles into its financial ecosystem demonstrates a progressive approach to addressing the challenges posed by climate change. With the renamed act, Taiwan’s commitment to decarbonisation and sustainability has been further reinforced.

    Through various regulatory measures, reporting requirements and disclosure frameworks, Taiwan aims to foster a transparent and responsible business environment, aligned with international standards. However, continual collaboration between public authorities, private sector actors and financial institutions is crucial.

    Lee and Li

    Lee and Li

    8/F, No. 555, Sec. 4, Zhongxiao E. Rd
    Taipei – 11072, Taiwan

    Tel: +886 2 2763 8000



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