How to Disclose ESG Information

To achieve effective ESG information disclosure, companies need to adopt systematic and transparent strategies to ensure that their performance in the three core areas of Environmental Protection (E), Social Responsibility (S), and Corporate Governance (G) is clearly communicated to all stakeholders. By implementing a transparent and effective ESG disclosure mechanism, companies can enhance their reputation in the market and gain the trust of investors, consumers, and other stakeholders.

Here are the key steps to effectively disclose ESG information:

1. Establish an ESG Information Framework:Companies should establish a comprehensive and consistent ESG reporting framework. This includes clearly defining which indicators need to be disclosed and how to measure and report them. Companies can refer to internationally recognized reporting standards, such as the Global Reporting Initiative (GRI) standards or the Sustainability Accounting Standards Board (SASB) guidelines, to develop their reporting framework. This helps ensure that the disclosed information is consistent, comparable, and aligned with international best practices.

2. Quantify Data:Companies should ensure that the information disclosed is specific and quantifiable. This means regularly collecting and analyzing data related to ESG and providing clear numbers or examples in the reports to support their claims. Quantifiable data not only enhances the credibility of the report but also helps stakeholders better understand the company's performance and progress in ESG. For example, in the environmental aspect, companies can disclose their greenhouse gas emissions, the proportion of energy consumption, and the methods and outcomes of waste management.

3. Ensure Transparency:Information disclosure should be transparent and honest. Companies need to openly communicate the challenges and shortcomings in their ESG areas, not just highlight their successes. This honest approach helps build trust and demonstrates that the company is aware of its shortcomings and is actively seeking improvement. Effective transparent disclosure should include a description of the issues, improvement measures, and future goals and plans, allowing stakeholders to see the company's long-term commitment and efforts.

4. Continuously Information:Continuous improvement and updates are crucial parts of ESG information disclosure. Companies should regularly review their ESG disclosure strategies and make adjustments based on new regulatory requirements, market trends, and internal changes. This not only ensures that the company's information disclosure is up-to-date but also shows the company's ongoing commitment and focus on ESG.

The channels for ESG information disclosure are diverse. In addition to annual reports or sustainability reports, companies can also use their corporate websites, social media, press releases, and investor relations activities to communicate their ESG performance. This helps different stakeholders access relevant information based on their needs and habits, increasing the coverage and impact of the disclosure.

Challenges in the Disclosure Process

During the disclosure process, companies often face multiple challenges. One major issue is data collection and accuracy. When disclosing ESG information, companies typically need to gather data from various departments and sources, covering environmental impact, social responsibility, and corporate governance. Since different departments may use different data collection methods, ensuring data consistency and accuracy can be difficult. Additionally, some data may involve sensitive information or be difficult to quantify, further complicating data collection. If this data does not accurately reflect the company's actual situation, it could undermine the credibility of the disclosure and affect external stakeholders' trust in the company.

Compliance and standardization pressures are also significant challenges. As more countries increase their ESG disclosure requirements, multinational companies must navigate different markets' regulations and standards. These standards and regulations may differ in how data is interpreted and reported, requiring companies to adapt and ensure that their disclosures comply with local regulations.

Technological challenges are another unavoidable issue. As technology evolves, digital tools and platforms are becoming increasingly important in information disclosure. However, the complexity of these tools, coupled with internal technical limitations, can lead to difficulties in data management and publication processes. If companies fail to effectively utilize these technologies, it could affect the efficiency of disclosure and result in technical errors, ultimately compromising the quality and accuracy of the information.

Given these challenges, it is essential for companies to adopt a systematic strategy for ESG information disclosure. Therefore, it is recommended that companies seek assistance from ESG professionals when conducting related disclosure activities to ensure that the information disclosed is of high quality and credibility, thus enhancing market trust and confidence in the company.
  

International Trends in ESG Information Disclosure

As global attention to environmental, social responsibility, and corporate governance issues continues to grow, more countries and regions are introducing specific regulations and requirements that mandate or encourage companies to disclose ESG information. This trend reflects the expectations of society and investors regarding companies' performance in sustainable development.

In Europe, the EU has implemented the Non-Financial Reporting Directive (NFRD) since 2014, requiring large listed companies to disclose information on environmental, social, employee, anti-corruption, and corporate governance issues. Subsequently, the Corporate Sustainability Reporting Directive (CSRD) was proposed, further expanding the scope and requiring more detailed and standardized ESG information disclosure. These initiatives aim to increase corporate accountability and promote the achievement of broader sustainable development goals.

In the United States, the Securities and Exchange Commission (SEC) is also pushing for related regulations, particularly those related to climate change and greenhouse gas-related risk disclosure. The SEC plans to require companies to disclose more information on financial risks and opportunities related to climate change, reflecting the growing demand from investors for environmental risk management information. Given the significance of U.S. companies in the global market, these new regulations could have far-reaching effects on ESG disclosure standards worldwide.

While Asia has been slower to adopt ESG disclosure practices compared to Europe and the U.S., the trend has rapidly developed in recent years. Major financial markets in Hong Kong, Singapore, and Japan have introduced or are considering mandatory ESG reporting requirements. Regulatory authorities in these regions are gradually promoting the adoption of internationally recognized ESG disclosure standards to improve the comparability and transparency of information. In Taiwan, the Financial Supervisory Commission (FSC) launched the "Corporate Governance 3.0 - Sustainable Development Roadmap" policy in August 2020. The Taiwan Stock Exchange has also issued regulations for listed companies to prepare and submit sustainability reports, aligning with international trends and enhancing corporate sustainability to achieve the vision of strengthening international competitiveness.

As regulatory efforts increase globally and international standards are refined, ESG information disclosure will become more transparent and consistent in the future. Companies will need to proactively respond to this trend, ensuring compliance in global markets while meeting the expectations of investors and other stakeholders regarding corporate sustainability performance.

Related Links:

Taiwan Bar Association - ESG (Sustainable Development) Committee

ESG Video Introduction - Vice Chair Huang Yu-Wei, Taiwan Bar Association ESG Committee

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