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FSC, EPA, MOEA, MOTC, and MOI jointly issue "Taiwan Sustainable Taxonomy" to encourage financial institutions to support enterprises transition towards sustainable and low-carbon economy

2023-01-11
In support of the nation's goal of net-zero emissions by 2050, and to encourage financial institutions to assist enterprises' transition towards a sustainable and low-carbon economy, the FSC, the Environmental Protection Administration (EPA), the Ministry of Economic Affairs (MOEA), Ministry of Transportation and Communications (MOTC), and the Ministry of the Interior (MOI) jointly issued "Taiwan Sustainable Taxonomy" on 8 December 2022. The Taxonomy is intended to encourage companies to voluntarily disclose information on whether their primary economic activities are in compliance with the Taxonomy. In addition, financial institutions are encouraged to refer to the Taxonomy in assessing possible investment and financing deals, and to actively engage with enterprises.
The Taxonomy first addresses the goal of "climate change mitigation" by adopting a set of "technical screening criteria for substantial contribution," which shall not significantly harm other environmental goals (e.g. climate change adaptation, protection of water resources) and social safeguards. With respect to 16 ordinary economic activities and 13 forward-looking economic activities in sectors toward which Taiwanese financial institutions direct the most investments and financing — including manufacturing, building and construction, and transportation and storage — the Taxonomy provides a basis for identifying whether those activities qualify as sustainable.
In the early implementation phase, the principal focus will be on TWSE- and TPEx-listed companies, which will be encouraged to voluntarily disclose in their sustainability reports, annual reports, or official websites about the "eligibility" and "alignment" of their primary economic activities to the Taxonomy, whether they have adopted any concrete improvement or transition plans, and to provide one of five judgments (aligned; working on it; improving; not aligned; and not eligible) regarding the degree of sustainability of their primary economic activities. The FSC also encourages financial institutions — when they engage in investments or financing, or when they provide financial products that are on the use of the concepts of "green," "ESG," or "sustainability" — to refer to the Taxonomy for investment and financing assessment, decision making, product design, and engagement with companies, and to support enterprises transition towards a sustainable and low-carbon economy.
The FSC emphasizes that the Taxonomy currently does not cover all domestic industries or economic activities, nor does it apply to all domestic industries or economic activities. Where the ordinary economic activities and forward-looking economic activities currently set out in the Taxonomy do not apply to an enterprise, that doesn't mean that the enterprise's economic activities do not qualify as sustainable. The FSC hopes that the Taxonomy will enable financial institutions and investors to support enterprises and projects that value sustainability or are transitioning toward a low-carbon economy in a more efficient and reasonable way. At the same time, the FSC also hopes that the Taxonomy can guide enterprises toward the goal of sustainable transition.
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