The International Sustainability Standards Board (ISSB) under the IFRS Foundation released the IFRS S1 "General Requirements for Disclosure of Sustainability-related Financial Information" (hereafter referred to as S1) and IFRS S2 "Climate-related Disclosures" (hereafter referred to as S2) on June 26th of this year (2023). These IFRS sustainability disclosure standards provide internationally consistent disclosure baseline, increasing the comparability of sustainability information and preventing "greenwashing." The International Organization of Securities Commissions (IOSCO), on July 25th of the same year, issued endorsement and called on 130 securities regulators worldwide to adopt these standards, providing consistent and comparable sustainability-related financial disclosures for investors. 

The FSC has gathered responses from listed companies through a questionnaire survey. On August 8th of this year, the FSC held a meeting for "Promotion of Aligning Taiwan Sustainability Reporting with IFRS Sustainability Disclosure Standards" and invited various stakeholders, including relevant government agencies (the National Development Council, the Environmental Protection Administration, and Ministry of Economic Affairs Industrial Bureau), listed companies, sustainability-related associations, audit firms, attestation institutions, academics and experts to discuss the proposed "Roadmap for Taiwan listed companies to align with IFRS Sustainability Disclosure Standards." Focus topics included the alignment approach, target entities and timeline, location of disclosure, and disclosure content.

After deliberating the opinions and feedbacks from the meeting, the FSC releases the "Roadmap for Taiwan listed companies to align with IFRS Sustainability Disclosure Standards". The aim is to further align with international standards, continually enhance the quality and comparability of sustainability information reporting, and strengthen trust in the capital markets. The key points are as follows:
1.Alignment Approach: Considering the comparability with international sustainability information, the FSC is going to adopt IFRS Sustainability Disclosure Standards, which will become effective after endorsed by the FSC. Starting from 2026, the initial application of IFRS Sustainability Disclosure Standards shall include IFRS S1 and IFRS S2. From 2027 onwards, the FSC will continue assessing and endorsing each up-coming standards issued by ISSB, based on the development of IFRS Sustainability Standards.
2.Applicable Entities and Timeline: Considering the capacities and capabilities of Taiwan listed companies, the FSC will take a phase-in approach to adopt IFRS Sustainability Disclosure Standards starting from FY2026. 
Phase  I: The large cap (with capital over NT$ 10 bn) listed companies will be required to compile FY2026 information and report in 2027 in accordance with IFRS Sustainability Disclosure Standards.
Phase Ⅱ: The listed companies with capital over NT$ 5 bn and less than NT$ 10 bn will be required to compile FY2027 information and report in 2028 in accordance with IFRS Sustainability Disclosure Standards.
Phase III : The other listed companies will be required to compile FY2028 information and report in 2029 in accordance with IFRS Sustainability Disclosure Standards.
3.Location and Timing of Disclosures: In recent years, greenwashing risks has become an international focus issue. The landscape of sustainability reporting has shifted from voluntary sustainability reports to mandatory legal reports. Thus, the FSC will amend “    Regulations Governing Information to be Published in Annual Reports of Public Companies”, requiring companies to disclose sustainability information in accordance with IFRS Sustainability Disclosure Standards in their annual reports, and to publish the sustainability information at the same time as the financial statements.
4.Disclosure Content: Considering the difference in capability for listed companies to disclose sustainability-related information, the FSC decided to provide sufficient flexibility for companies to prepare for adoption of IFRS Sustainability Disclosure Standards and use the transition reliefs (such as considering only climate issues in the first year, temporary exemption from the disclosure of Scope 3 greenhouse gas emissions and comparative information in the initial year of application, and different method for measuring greenhouse gas emissions prescribed by the FSC). In addition, qualitative information can be disclosed for matters involving a highly degree of uncertainty and quantification difficulty, such as the anticipated financial impacts of climate-related risks, climate scenario analysis and resilience assessment, companies can provide qualitative information commensurate with their skills, resources, and capabilities. Moreover, for disclosures using estimation (such as the amount and percentage of assets or business activities vulnerable to climate-related risks and opportunities, as well as measurement of Scope 3 greenhouse gas emissions), companies can use the data and inputs based on reasonable and supportable information that is available at the reporting date without undue costs.

In reference to Taiwan's past experience in promoting IFRS Accounting Standards, the FSC has established a taskforce to promote the alignments with IFRS Sustainability Standards in early August (with an execution period scheduled from 2023 to 2027) to build up the capacities of listed companies. This taskforce comprises four working groups respectively responsible for ISSB standards adoption, implementation, regulations adjustments, and promotion and education. The Securities and Futures Bureau (SFB) of the FSC will coordinate the four working groups alongside the Accounting Research and Development Foundation (ARDF), Taiwan Stock Exchange (TWSE), and Taipei Exchange (TPEx) to continue its works, which will include translating IFRS sustainability Disclosure Standards, conducting analyses of differences compared to current sustainability reporting requirements, developing best practices, and providing related guidance. Additionally, an IFRS Sustainability Standards Alignment website will be established, where relevant resources and information will be made available for public.

Any comments are welcome to be submitted through written procedure using the link provided below:
https://fscmail.fsc.gov.tw/pop30/mailboxhome

Annex 1 Roadmap for Taiwan Listed Companies to Align with IFRS Sustainability Disclosure Standards
Annex 2 Snapshot of Roadmap for Taiwan Listed Companies to Align with IFRS Sustainability Disclosure Standards

Contact unit: Section Chief Huang, Accounting and Auditing Supervision Division, Securities and Futures Bureau
Tel: (02) 2774-7124
For questions, please write to: FSCmail