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Regulatory update
Taiwan is taking significant steps to enhance its sustainability reporting by implementing a clear framework that aligns with global standards. This initiative seeks to improve transparency and accountability in corporate ESG practices.
Beginning in 2024, large companies with capital exceeding NT$2bn will be required to produce ESG reports. This is a significant step towards ensuring that companies disclose their sustainability practices. By 2025, the requirement will extend to all listed companies, who must submit sustainability reports for 2024. The goal is to have all publicly traded companies in Taiwan comply with ESG disclosure regulations by 2025.
To ensure that the ESG reports are consistent and comparable, companies must adhere to internationally recognised frameworks to ensure consistency and comparability. These include:
- Global Reporting Initiative (GRI): Provides guidelines for reporting sustainability impacts and performance.
- Task Force on Climate-related Financial Disclosures (TCFD): Focuses on the disclosure of climate-related risks and opportunities.
- Sustainability Accounting Standards Board (SASB): Offers industry-specific sustainability reporting standards highlighting financially material ESG factors.
Starting in 2026, listed companies in Taiwan with capital exceeding NT$10bn will be required to adopt the ISSB’s S1 and S2 standards, which focus on general sustainability and climate-related disclosures. This adoption threshold is expected to be gradually lowered to encourage more companies to align with global sustainability reporting standards.
These measures reflect Taiwan’s commitment to transparency, consistency, and global alignment in corporate sustainability.
Key market insights:
Environmental sustainability is gaining increased attention in Taiwan. The country recently passed the Climate Change Response Act, replacing its previous Greenhouse Gas Reduction and Management Act, to accommodate the EU’s Carbon Border Adjustment Mechanism. This act includes new legislation on carbon fees and a carbon trading system
However, ESG encompasses not only environmental sustainability but also corporate governance and social responsibility.
In recent years, Taiwan's Financial Supervisory Commission has actively encouraged companies to embrace corporate sustainability, contributing to the gradual maturation of Taiwan's ESG landscape. Despite this progress, challenges remain—particularly around effective policy implementation and shifts in corporate culture. As global ESG standards evolve, Taiwan continues to seek more effective solutions to address these challenges and strengthen its commitment to sustainable practices.
Taiwan has set ambitious climate goals to cut carbon emissions by 25% from 2005 levels by 2030 and achieve net-zero emissions by 2050. To support these targets, legislation on carbon fees has been enacted
Taiwan's carbon fee is designed to serve as an economic incentive rather than just a revenue-generating tool. Starting in 2025, Taiwan will embark on a new phase of carbon pricing that combines public and private investments to promote green growth.
In the first phase, carbon fees will apply to major emitters, primarily in the power, gas supply, and manufacturing sectors, which emit over 25,000 tonnes of carbon dioxide equivalent annually. Approximately 500 facilities fall under this category, contributing to about 54% of Taiwan's total emissions. Over time, the emission threshold for carbon fees will be reduced in stages, first from 25,000 tonnes to 15,000 tonnes and eventually to 10,000 tonnes.
Carbon fee collection timeline
- Rate determination: Taiwan’s Ministry of Environment set the initial carbon fee rate on October 7, 2024. The rate takes effect on January 1, 2025, with a trial application in May 2025 (without payments). The first payments will be due in May 2026, covering emissions from 2025.
- Fee structure: The standard carbon fee is NT$300 per tonne of carbon dioxide equivalent. Companies meeting specific self-reduction plans may qualify for reduced rates of NT$50 or NT$100 per tonne.
- Annual declaration: Companies will declare emissions and pay applicable fees by the end of May each year, based on the prior year’s emissions.
- Long-term fee adjustments: To align with global carbon pricing, the review committee recommends gradual fee increases, with post-2030 rates potentially reaching NT$1,200 to NT$1,800 per tonne.
Benson Liang, Partner, Risk and ESG, RSM Taiwan
