Taiwanese companies have made progress on the environment, social responsibility and governance (ESG), but they have room for improvement in information disclosure and substantial actions, Fidelity Investment Taiwan Ltd said on Wednesday.
Taiwan’s ranking in ESG performance among 11 Asian nations jumped from sixth in 2014 to fourth in 2016, the firm said, citing statistics in CG Watch, a report produced every two years by the Asian Corporate Governance Association (ACGA) and Hong Kong-based investment bank CLSA Ltd.
Due to more initiatives on corporate governance and ESG, alongside strong political support and better enforcement, Taiwan made progress, but still has room for improvement on enforcement, the report showed.
CG Watch covers 12 markets in the Asia-Pacific, and ACGA and CLSA have published eight reports since 2003. ACGA provides the market analysis while CLSA is responsible for the company survey portion of the report.
Taiwanese companies face the same problem as their Asian counterparts, which tend to regard ESG as another form of compliance or corporate social responsibility (CSR), Fidelity said.
Sustainable investment does not mean a sacrifice in portfolio returns, but only 5.6 percent of Asian companies have begun integrating the Principles for Responsible Investment (PRI) into their practices, Fidelity said.
PRI refers to a UN-supported framework by which all investors can incorporate ESG issues into their decision-making and ownership practices.
Assets integrated with PRI in Asia amounted to US$52.1 billion as of the end of 2016, while the same number in European markets reached US$12 trillion, Fidelity said, citing statistics in the Global Sustainability Investment Review.
In Taiwan, about 35 percent of investors do not understand ESG, compared with 33 percent of other Asian investors and 30 percent of global investors, Legg Mason Investment Taiwan Ltd said on Thursday, citing a poll conducted in July.
However, even in Asia, nine out of 10 investors said they would not consider investing in corporate projects related to ESG, as companies do not disclose enough information and the investment amount is higher than other projects, Legg Mason said.
“The biggest challenge is to set a reasonable key performance indicators on ESG,” Hiroki Sampei, head of engagement at Fidelity International Japan Ltd, told the Taipei Times on Wednesday.
In Japan, some companies have linked their ESG performance to employees’ bonuses to provide an incentive, Sampei said, adding that while more European companies are beginning to make chief sustainability officers responsible for ESG policies and enforcement, Asian companies tend to use their CSR department to carry out ESG policies. |
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