TEJ released its latest TESG rating results on May 2nd 2024. To align with the new regulations, five indicators related to ”Enhancing ESG Disclosure” were added, where the importance of information security still continues. Up to now, more than 20% of listed and OTC companies have established CISO (Chief Information Security Officer), indicating the emphasis companies put on Information Security and Transparency.
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In Taiwan, based on Taiwan Stock Exchange Corporation Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies and Taipei Exchange Rules Governing the Preparation and Filing of Sustainability Reports by TPEx Listed Companies, starting from 2023, companies in certain industries, including financial, chemical, foods, etc., are required to improve the disclosure on ESG in their Sustainability Report.
TESG index for this period, based on the principle of comparability, has selected five sustainable indicators to be included in the rating model: Percentage of Hazardous Waste Recycled, Food Safety Laboratory Expense for Revenue, Percentage of Personal Data Breaches, Percentage of Suppliers’ Audit, and Percentage of Products and E-waste Recycled. A total of 946 listed companies disclosed their 2022 sustainability reports. Among them, there is still room for improvement in the disclosure of sustainability indicators, and there still exist companies that have not disclosed but should have. The disclosure status of the five indicators are as follows:
Reasons companies may not disclose certain information includes Incomplete statistics, Data collection still being established, or Difficulty in recycling and reuse, which may lead to a lower TESG score in that category. For instance, suppose a technology company did not disclose the Percentage of Hazardous Waste Recycled and the Percentage of Products and E-waste Recycled as regulated, it would result in a lower score for TESG topic, Waste and Hazardous Materials Management as well as Business Model and Innovation, ultimately leading to a poorer overall rating.
On the other hand, companies that made disclosure on ESG indicators can increase their TESG ratings. For instance, 3645.TW (TMT) disclosed a 100% in Percentage of Hazardous Waste Recycled , resulting in an increase in the score of Waste and Hazardous Materials Management.
Currently, businesses are still in the initial stages of aligning with regulations. Hence, companies with a higher willingness to disclose information and greater transparency are awarded additional points in TESG. This approach will contribute to more transparent and positive development of sustainability indicators in the future.
FSC has stated that public listed companies should complete the establishment of information security personnel by the end of 2023, including the appointment of a dedicated CISO. Starting from 2023, TESG has incorporated whether a company has appointed a dedicated CISO into its rating model. The statistics show that the proportion of companies with a CISO has increased from 8.35% in May 2023 to 23.12% now, indicating an increase in the importance placed on information security management. In current TESG rating, companies such as Syntrend, Lianjia, and GlobalWafers have seen an improvement in their scores for Data Security due to the appointment of CISO, coupled with the gradual improvement of other variables, resulting in an upgrade in their rating.
TESG results are given semi-annually in May and November, while companies’ sustainability reports are given only once per year. Thus, during the data gap, a daily ERS is used for conversion scoring. ERS takes into account the intensity of events, recency, frequency, and time weighting to capture ESG event risks. It is incorporated into the TESG Sustainable Development Indicator Model, allowing TESG rating to reflect significant ESG events and enhance the sensitivity of the rating.
Taking the latest published ratings for example, the most recent sustainability report data used is from 2022. During the rating and data gap period, if a significant ESG event occurs, it is scored using the ERS, which is then reflected on the TESG rating. For instance, a director of a financial institution is suspected of misappropriating funds and gets penalized in 2024; therefore, TESG rating is downgraded by two levels.
In this rating, a total of 2,426 companies were evaluated, with 326 companies being upgraded and 369 companies being downgraded. It is noteworthy that there were 27 companies whose ratings changed by more than two levels compared to the last rating, accounting for 1.11% of all rated samples.
TESG Sustainability Index is based on 16 aspects under the three pillars of ESG, with over 70 variables used to establish a quantitative assessment model, providing an evaluation of the ESG performance of all public listed companies in Taiwan. TEJ continues to commit to providing the latest ESG information to assist financial institutions, investors, and corporations in making more accurate sustainability assessments.
Sustainable finance serves as both a safeguard and a driving force for corporate sustainable development. As global attention to sustainability issues and corresponding regulations intensify, stakeholders become more dependent on multifaceted ESG information to understand a company’s ESG progress. TEJ, with its robust information collection capabilities, ensures data structure integrity, allowing users to utilize structured data for internal analysis.
Having cultivated ESG information for many years, TEJ not only provides high-quality data but also leverages its extensive experience in big data and qualitative data analysis to develop decision-supporting TESG indicators and climate risk management tools like TCFD. TEJ’s ESG sustainability solutions offer a one-stop shop to meet the assessment and information needs for green financial objectives.
