The Taiwan Monthly

Oct. 2020

Corporate Governance

“Corporate Governance 3.0 – Sustainable Development Roadmap” Forum on upgraded corporate governance

The “Corporate Governance 3.0 – Sustainable Development Roadmap” issued by the Financial Supervisory Commission (“FSC”) on August 25 this year declared the official entry to the era of Corporate Governance 3.0 for Taiwan's capital market. To further highlight the essential contents of the latest trends on corporate governance and the sustainable development roadmap, the TWSE, alongside the Taipei Exchange (“TPEx”) held a summit at Howard Civil Service International House on September 21. Dr. Tien-Mu Huang, Chairman of the FSC, was invited to give a speech. The Forum was divided into three keynote speeches and two panel discussions which explored how to enhance the sustainable development of Taiwan’s corporate governance in accordance to the Corporate Governance Roadmap 3.0.

 

In his speech, Chairman Tien-Mu Huang highlighted the efforts that the FSC has put into promoting corporate governance over the last decade. The FSC first published the 5-year “Corporate Governance Roadmap” in 2013, which focused on implementation measures covering establishing corporate governance centers, performing corporate governance assessments and compiling corporate social responsibility reports. In continuing to strengthen Taiwan’s corporate governance, the new “Corporate Governance Roadmap (2018-2020) was issued in 2018, focusing on major reforms including: improving the effectiveness of corporate governance assessments, introducing corporate governance personnel systems, promoting shareholder activism among financial sectors, increasing the ratio of information disclosure in English, promoting candidate nomination systems and strengthening compliance with the laws and regulations. These implementation measures have all been facilitated with excellent results. In a bid to enhance the sustainable development of companies, the FSC issued the “Corporate Governance 3.0 – Sustainable Development Roadmap” to establish a comprehensive Environmental, Social and Corporate Governance (ESG) ecosystem, strengthening the international competitiveness of Taiwan’s capital market.

 

When delivering her keynote speech, Pony B.L. Huang, Head of the Corperate Governance Department, TWSE, introduced the “Corporate Governance 3.0 – Sustainable Development Roadmap” while elaborating on the five action plans: “Strengthening Board Duties and Functions and Enhancing Enterprise Sustainability,” “Enhancing Information Transparency and Promoting Sustainable Operations,” “Strengthening Communication with Stakeholders and Creating Open Dialogue,” “Advancing International Norms and Leading with Stewardship,” and “Deepening Corporate's Sustainable Governance Culture and Providing Diversified Products.” A total of 39 specific measures are set out to be promoted in three years.

 

To accompany the “Securities Investor and Futures Trader Protection Act” amended on August 1, 2020, Dhin-Ting Chiou,  Chairman of the Securities and Futures Investors Protection Center (“SFIPC”), explained the key points of the amendment in his speech, including representative litigation claims that may be brought against managers, outgoing directors and supervisors, the disqualification system that bans directors and supervisors from serving as directors or supervisors at any TWSE/TPEx listed company within three years after being dismissed. As a representative institution of public interests that exercises shareholder activism, the SFIPC is able to exert external constraints more effectively, improving the overall corporate governance practices in Taiwan.

 

In delivering his keynote speech, Niven Huang, Managing Director of KPMG Sustainability Consulting Co., Ltd., said that the responsible investment that became widely popular among international markets in the midst of COVID-19 is a real test for companies. In the global risk reports released by the World Economic Forum this year, the top five long-term risks over the coming decade are dominated by the environment, such as extreme weather failure of climate change mitigation and adaptation, biodiversity loss, natural disasters, and man-made environmental damage. While risks are also associated with the spread of infectious diseases, international investors have been active in practicing responsible investment, driving the growth of related asset performance. A number of Taiwanese companies have been listed on both Taiwan Index Plus and Dow Jones Sustainability Indices, reflecting their achievements.

 

Other than the three keynote speeches mentioned above, two panel discussions were also held. The first: “Enhancing shareholders’ activism and leading with stewardship.”  The panel was hosted by Clark C. Chen, Chairman of Taiwan Corporate Governance Association, and Chin-Ting Chiou, Chairman of Securities and Futures Investors Protection Center, Chung-Chun Tsai, Deputy Director of Bureau of Labor Funds, Jeff Chang, Chairman of Securities Investment Trust & Consulting Association (SITCA) and Han-Chiang Chu, President of Taiwan Depository & Clearing Corporation were all invited to attend the panel where opinions were exchanged targeting shareholders’ rights and how to guide institutional investors to implement stewardship. The second panel: “Enhancing Information Transparency and Promoting Sustainable Operations” was hosted by Eugene Chien, Chairman and President of Taiwan Institute for Sustainable Energy (TAISE). Exchange of insights and ideas were shared by representatives from a variety of sectors: Sophia Cheng, Chief Investment Officer of Cathay Financial Holdings, Tony Mo, Secretary General of Taiwan Business Council for Sustainable Development (Taiwan BCSD), and Niven Huang, Managing Director of KPMG Sustainability Consulting Co., Ltd. discussed issues such as strengthening the disclosure of important ESG-related financial information and the sustainable management of company boards.

 

The Forum was attended by nearly 700 directors and supervisors across TWSE/TPEx companies. Through the sharing and exchange between industry, government, and academia, the direction to promote the sustainable development roadmap was better understood by all. The Forum also encouraged all sectors to make an effort to enhance the quality of corporate governance in Taiwan’s capital market and further achieve the core vision of enforcing corporate governance, enhancing the sustainable development of companies, building effective ESG ecosystems and augmenting the global position of the Taiwan capital market.

 

For further inquiries, please contact Ms. Huang at 0819@twse.com.tw