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F4G TIP TW ESG Index receives TWD$42 billion from LPF discretionary investment plan
The Taiwan Stock Exchange (TWSE) is pleased to announce that its subsidiary, Taiwan Index Plus Corporation (TIP), published the FTSE4Good TIP Taiwan ESG Index (F4G TIP TW ESG Index) on December 18, 2017, and the index has been officially named a domestic investment benchmark in the discretionary investment plan for the Labor Pension Fund by the Bureau of Labor Funds of the Ministry of Labor. A sum of TWD$42.0 billion will be released under the plan to seven selected institutions to invest in the index on behalf of LPF.
The F4G TIP TW ESG Index is the first ESG investing index in Taiwan that selects its constituents according to a combination of Environmental, Social, and Governance factors and financial indicators. The index is compiled by TIP and FTSE Russell, and defines qualified stocks as the TWSE listed stocks in the FTSE4Good Emerging Index. Actual constituents are selected by financial indicators. The FTSE4Good Emerging Index is constructed with FTSE Russell's ESG Ratings Model, which uses more than 300 Indicators covering three pillars, Environmental, Social, and Corporate Governance, and 14 Themes (Environmental 5, Social 5, and Corporate Governance 4) to evaluate overall ESG performance of exchange listed companies.
Sustainable investing, or socially responsible investing, has been growing rapidly in financial markets around the world in recent years. According to a study by Global Sustainable Investment Alliance (GSIA), sustainable investing assets are approaching US$23 trillion, encompassing 26% of assets under management globally. The figures reflect a strong demand for this type of investment in capital markets around the world. In response to global development and market demand, the TWSE launched the F4G TIP TW ESG Index after the Taiwan RAFI EMP 99 Index, the Taiwan HC 100 Index, and the TWSE CG 100 Index. The Index goal is to enhance domestic investor choice in local businesses to facilitate sustainable investment growth and development in Taiwan.
Meanwhile, institutional investors in Taiwan have been paying more attention to and practicing responsible investing for a number of years. The Bureau of Labor Funds(BLF), as a representative of pension funds in Taiwan, has included the Taiwan RAFI EMP 99 Index, the Taiwan HC 100 Index, and the F4G TIP TW ESG Index in its discretionary investment plans. In addition, the BLF is first to sign the TWSE Stewardship Principles for Institutional Investors, and allocated US$2.4 billion last year to global ESG hybrid index passive equity type discretionary investment in foreign equity securities. The BLF is always campaigning for socially responsible investing. In addition to contributing to stable long term returns for funds, the concept is one of the key drivers behind socially responsible investing activities in Taiwan and sustainable development for Taiwanese businesses. The launch of the F4G TIP TW ESG Index and its adoption by BLF represent a new milestone in the development of socially responsible investing in Taiwan.