The Taiwan Monthly

Jul. 2024

ESG

The 10th corporate governance evaluation award ceremony has successfully completed

    The Taiwan Stock Exchange held the “10th Corporate Governance Evaluation Awards Ceremony” jointly with the Taipei Exchange at 2:30 pm today (June 13, 2024) to praise the top 5% of TWSE-listed and TPEx-listed companies, as well as the top 5% of middle-sized TWSE-listed and TPEx-listed companies in the 2023 Evaluation. In addition, the awards to the top 1% of small-cap and the most improved TWSE-listed and TPEx-listed companies were added this time to encourage small-sized TWSE-listed and TPEx-listed companies with good performance and companies actively improving their corporate governance. In addition to inviting Jin-Lung Peng, Chairperson of the FSC to attend and serve as the award presenter, the organizers invited leaders of the competent authorities and peripheral securities units to participate in the grand event.

 

    Sherman Lin, Chairman of the Taiwan Stock Exchange Corporation, stated in his speech that it has been ten years since the establishment of the Corporate Governance Evaluation in 2014. In the past decade, not only large companies, but also many small- and medium-sized companies have been working very hard to meet the requirements of evaluation indicators, and have showed brilliant performance despite the challenge of limited resources. There are also many companies that have been striving to move forward, actively focusing their efforts and making significant progress. Therefore, in order to reward these companies, awards were added this year to the top 1% of small companies with a market cap of less than NTD5 billion, as well as the companies with the most progress this year, so that everyone can see their efforts and achievements in corporate governance and sustainable development.

 

    Chairman Sherman Lin also stated that good corporate governance is the most important foundation for a sound capital market. Since 2013, the regulatory authorities have successively released a series of “Corporate Governance Roadmap,” “Sustainable Development Guidemap for TWSE- and TPEx-Listed Companies,” and “Sustainable Development Action Plans for TWSE- and TPEx-Listed Companies (2023)” to formulate key measures in a step by step manner to lead TWSE-listed and TPEx-listed companies to implement corporate governance and sustainable development. The Corporate Governance Evaluation has always been an important driving force for policy implementation, and through the revision of evaluation indicators, enterprises are encouraged to proactively set up various improvement measures that exceed regulatory requirements, and through benign competition, the spontaneous strengthening of corporate governance is promoted within the enterprise to shape a corporate culture that actively enhances sustainable development.

 

    Jin-Lung Peng, Chairperson of the FSC, stated in his speech that the first version of the Corporate Governance Roadmap was released by the FSC in 2013, which has been 10 years since then. The progress in various evaluation indicators also shows that the implementation of corporate governance has achieved certain results. Among them, Chairperson Peng pointed out three key points focus of the Corporate Governance Evaluation:

 

1. Guiding Enterprises to adopt good corporate governance measures: The spirit of the Corporate Governance Evaluation is to guide enterprises to adopt and implement various solid corporate governance measures, and gradually incorporate them into regulations after most companies meet the targets, so as to become a common standard followed by the entire market. The goal is that the evaluation system may enable companies to actively examine the risks they face internally and seek solutions to improve and enhance governance, and then guide the sustainable and stable development of enterprises to enhance the overall level of corporate governance in Taiwan’s capital market.

2. Serving as a reference for investors’ decision-making: The evaluation of all TWSE-listed and TPEx-listed companies enables investors to understand the corporate governance performance of various companies, in order to serve as a reference for investment decision making. For example, the Bureau of Labor Funds and domestic asset managers often add the results of the Corporate Governance Evaluation to their investment references. At present, the constituents of the “TWSE Corporate Governance 100 Index” and the “TPEx Corporate Governance Index” compiled by the TWSE and TPEx, respectively, are selected from the top 20% TWSE-listed and TPEx-listed companies in the Corporate Governance Evaluation results. These indices have shown better gains than the weighted index during the same period from the time of their issuance until the end of April 2024, indicating that companies with good corporate governance are more favored by investors, and this has a substantial encouraging effect on TWSE-listed and TPEx-listed companies with good corporate governance evaluation performance.

3. Responding to the global net zero trend: Given the severe global climate change situation and the continuing increase in carbon reduction requirements in the international supply chain, it is imperative for enterprises to upgrade and transform in response to sustainable development. In order to actively respond to the global sustainable development action and national net zero emission targets, the Corporate Governance Evaluation has incorporated many new indicators, including encouraging TWSE-listed and TPEx-listed companies to disclose policies that link the salaries of senior managers to ESG performance, submitting sustainability reports to the board of directors for approval, and formulating greenhouse gas reduction management policies. The implementation of various promotion measures must rely on good corporate governance as the foundation, which is also the original intention of promoting the Corporate Governance Evaluation System. The objective is that through a fair competition mechanism and mutual learning among enterprises, TWSE-listed and TPEx-listed companies can promote corporate governance and emphasize the internalization of sustainable development as a fundamental factor in business management.

 

      The TWSE aims to recognize the efforts of outstanding companies in improving corporate governance through this award ceremony, and expects to assess international trends in the future by adding environmental and social indicators  weights in the evaluation. The evaluation will gradually transform into an “ESG Evaluation” in 2026 to drive the sustainable transformation of enterprises and assist them in achieving sustainable development goals to construct a sustainable value culture in the capital market.

 

For further information, please contact Mr. Fan at 1394@twse.com.tw