Are Taiwanese Companies Following Up on Carbon Reduction Since the 2015 Paris Agreement?

Are Taiwanese Companies Following Up on Carbon Reduction Since the 2015 Paris Agreement?

On December 12, 2015, 195 countries worldwide jointly adopted the Paris Agreement, the main objective of which is to make the average temperature of this century compared to the average temperature before the industrial revolution increase by no more than 2 ℃(3.6 °F). Although Taiwan is not one of the signatories, it is still contributing to this issue and moving towards the 2050 carbon neutrality target. In the past six years since the agreement, has Taiwan made progress in reducing carbon emissions? Or still stagnant? Therefore, this article uses a quantitative indicator, the carbon emission index, to examine whether the carbon emission reduction strategy is effective. The carbon emission index takes 2015 as the base period (the base period index is equal to 100), analyzing the carbon emission trends of the market and various industries since 2016. The higher the carbon emission index value, the less effective the carbon reduction strategy is.

Carbon Emission Data Observation

  1. Data Sources 
    The carbon emission data mainly comes from each company’s Sustainability Report(ESG report). Suppose the company does not upload the Sustainability Report, or the Sustainability Report does not disclose the carbon emission data. In that case, data will be obtained from the annual reports of shareholders’ meetings of each company provided by the Market Observation Post System.
  2. Each year may provide different information for the same year
    The carbon emissions data in most companies’ Sustainability Reports reveal current data and provide data for the previous year and even recent years. Take TCC’s (1101) Sustainability Report for 2020, for example, its carbon emissions data from 2017 to 2020. If the scope of carbon emission calculation is inconsistent between different reports, the quoted information will be distorted. Taking the two Sustainability Reports of RUENTEX (2915) in the year of 2018 and the year of 2019 as examples, the carbon emissions in 2018 were 35,586 (tons) and 454.08 (tons), respectively. The reason for such a large gap is that the calculation scope of the 2018 Sustainability Report is Yang Mei Factory, but the 2018 carbon emission value disclosed in the 2019 Sustainability Report is based on the office environment as the calculation scope.

In this article, we prioritize the data provided in the same Sustainability Report to calculate the change in carbon emissions per revenue unit to minimize errors.

Table 1: Carbon Emission Change of Different Cover Annual Sustainability Reports (Source: Market Observation Post System)

Are Taiwanese Companies Following Up on Carbon Reduction Since the 2015 Paris Agreement?

 Carbon Emission Index Compilation

The highlights of the index compilation are as follows:

  1. The 11 primary industry classifications of the SASB Industry Classification are used as the basis for classification. (For an introduction to SASB industry classification, please refer to 【TEJ New】#41)
  2. Constituent stocks are TSE/OTC companies that have disclosed their carbon emission information for the current year and last year. If not, the constituent stock will be excluded.
  3. Industry Unit Carbon Emission Indicator:
  • The base period is 2015, and the base period index is 100.
  • Carbon emissions per unit of revenue are calculated by the total carbon emissions and total revenue of constituent stocks. The change in carbon emissions per unit of revenue per year is then calculated further.
  • Calculate the carbon change per unit of revenue per year since 2015.

※Revenue and carbon emissions may have exceptional circumstances due to industry characteristics. For example, if the construction industry is using the complete contract method or the pharmaceutical industry is in the development stage, there may be carbon emissions but no revenue for the year. So, in addition to the carbon emissions per unit of revenue, we can also look at the industry’s total carbon emissions.

  1. Industry total carbon emission index:
  • The base period is 2015, and the base period index is 100.
  • Using the total carbon emissions of the constituent stocks, we can obtain the total carbon emissions change per year.
  • The continuous multiplied amount of each year’s carbon emission variation starting from the base year.
  1. Individual stock carbon emission index:

Similar to the above index algorithm, it will not be counted if a stock has Zero revenue/ Zero carbon emissions/ No carbon emission information announced for the year. 

Table 2: Each Industry Unit Carbon Emission Indicator from 2016 to 2020

Are Taiwanese Companies Following Up on Carbon Reduction Since the 2015 Paris Agreement?

Table 3: Industry Total Carbon Emission Index from 2016 to 2020

“The following is an analysis of the index results for several industries and individual companies.”

  • Financial sector

Carbon emissions in the financial sector increased compared to the base period, but the increase in revenue was more significant. After the unitization of carbon emissions, the value of the Industry Unit Carbon Emission Indicator is better than the base period. This result represents the financial sector considering revenue growth and carbon emissions management.

Except for 2016, Per Unit Carbon Emission Index was soaring high due to the expansion of the carbon emissions calculation scope of Cathay Gold (2882), CITIC Gold (2891), and Fubon Gold (2881). Under the strict supervision of the Financial Supervisory Commission in recent years, the implementation of environmental protection by the financial industry has been in progress. The following years have seen a year-on-year decline and a significant improvement.

  • Renewable energy and alternative energy industry

The 2020 Industry Unit Carbon Emission Indicator for the renewable and alternative energy industry is worse than the base period and is as high as 164.57. Except for the reason that there are too few adequate component stocks, YFY, the company with the highest industry carbon emission, has different variation amounts in its numerator and denominator of the per unit carbon emission rate, which makes the industry index coordinate with it.

  • Delta Electronics (2308)

Delta can be considered a model for environmental protection. With the company’s goal of using 100% renewable energy by 2030, the construction of green buildings on campus, and its inclusion in the Dow Jones Sustainability Index (DJSI World) for eleven consecutive years, Delta has become the best representative of energy conservation and carbon reduction. The performance of Delta’s Individual stock carbon emission index is quite impressive, with the value reduced by more than half compared to the base period.

  • Wisdom-KY (2637)

In 2018, Wise-KY’s carbon emissions per unit of revenue decreased from 0.1396 (tons/thousand dollars sales revenue) to 0.001566 (tons/thousand dollars sales revenue), resulting in a significant decrease in the Per Unit Carbon Emission Index 110.70 to 1.24 in that year. From the company’s 2018 Sustainability Report, we know that the substantial reduction in the Per Unit Carbon Emission Index for that year was due to the addition of Scope 3 to the Sustainability Report’s carbon emissions disclosures from 2018. Moreover, many carbon emissions data move from Scope 1 to Scope 3.


The statistical results show that the market’s total carbon emission index is greater than the base period. However, the per unit carbon emission indicator decreases from a base value of 100 in 2015 to a value of 84.19 in 2020, a decrease of about 3% per year, indicating that while pursuing revenue growth, TSE/OTC companies are effectively improving their carbon emissions.

Changes in the scope of the carbon emission index calculation will affect the interpretation of data. TEJ’s database discloses the full range of carbon emissions in scopes 1 to 3. The database distinguishes between the year of disclosure (the year of the Sustainability Reports) and the year of reporting and specifies the calculation scope. Users can understand whether each year is compared on the basis. 

TEJ has already used the degree of progress in carbon emissions as the environmental component of the TESG Sustainability Index. In the future, we will use the carbon emissions index to analyze the effectiveness of the carbon reduction strategies of enterprises and industries.