ESG Evaluation System OverviewEvaluation System
1. Origin
In respond to the rapid development of corporate governance reform in neighboring countries, and to accelerate the implementation of corporate governance among Taiwan-listed companies, assist companies with sound development, plus boost market confidence, the Financial Supervisory Commission (FSC) launched the 5-year "Corporate Governance Roadmap" in December 2013. In particular, the implementation of Corporate Governance Evaluation (CGE) is one of the major projects of 2014 with the goal of assisting investors and companies in better understanding the performance of corporate governance (CG) by comparing the evaluation results among companies. It is also expected that this evaluation system can help guide companies to friendly competition by strengthening CG quality, further shaping and improving CG culture.
As environmental and social matters have gained international attention, the CGE has gradually broadened its scope. This expansion, driven by the FSC’s “Sustainable Development Action Plans for TWSE- and TPEx-Listed Companies (2023)”, aims to cultivate a sustainable value culture, identify listed companies' ESG performance, and offer investors a reference for their decisions. The CGE continuously refines existing indicators and incorporates environmental and social issues. In 2026, the evaluation has been transformed and renamed the "ESG Evaluation."
2. Evaluation System Introduction
(1) Evaluation Indicators
The structure for the Corporate Governance Evaluation indicators is mainly based on the six principles of corporate governance released by the Organization for Economic Co-operation and Development (OECD) in 2004. The structure references and adjusts five dimensions to these principles: "Protecting Shareholder Rights and Interests", "Treating Shareholders Equitably", "Enhancing Board Composition and Operation", "Increasing Information Transparency", and "Putting Corporate Social Responsibility into Practice". It further references the 2015 G20/OECD principles of corporate governance in 2018 whereby the dimensions of “Protecting Shareholder Rights and Interests” and “Treating Shareholders Equitably” were combined and the evaluation adjusted to four dimensions.
Subsequently, in transitioning to the ESG Evaluation, the aforementioned four major dimensions were adjusted in 2026 and to three major dimensions: “Environmental (E),” “Social (S),” and “Governance (G).” The indicator content of each dimension is researched and designed annually with reference to important domestic and international corporate governance and sustainability related benchmarks, development trends, in addition to laws and regulations.
The evaluation indicators refer to the "yes" or "no" method and will gradually include more elements of actual practice. The information assessed is based on data disclosed by companies as much as possible, allowing them to be more transparent and objective.
(2) Method for Announcing Indicators
The ESG Evaluation is conducted annually. The scope of the evaluation analysis is based on the status of corporate governance and sustainability (CG&S) practices of the preceding full fiscal year (i.e., the fiscal year under review), covering the period from January 1 to December 31. To facilitate this gradual CG&S enhancement and implementation by all TWSE and TPEx listed companies, the evaluation results are divided into seven tiers based on the scores achieved: the top 5%, 6% to 20%, 21% to 35%, 36% to 50%, 51% to 65%, 66% to 80%, and 81% to 100%. The evaluation results for TWSE and TPEx listed companies are announced separately.
Additionally, to enable the public to better understand the performance of the assessed companies within their respective industries, five major categories are established for grouping and ranking: (1) financial and insurance industry companies; (2) electronics industry companies with a market capitalization of NT$10 billion or more; (3) non-financial and non-electronics industry companies with a market capitalization of NT$10 billion or more; (4) companies with a market capitalization of NT$5 billion or more to NT$10 billion; and (5) companies with a market capitalization under NT$5 billion. Within these categories, TWSE and TPEx listed companies are combined and their rankings are announced in tiers based on their scores, to show each company’s performance whthin its industry among companies of similar market capitalization.
3. Future Prospects
(1) Application of Evaluation Results
(2) Evaluation Objectives
In respond to the rapid development of corporate governance reform in neighboring countries, and to accelerate the implementation of corporate governance among Taiwan-listed companies, assist companies with sound development, plus boost market confidence, the Financial Supervisory Commission (FSC) launched the 5-year "Corporate Governance Roadmap" in December 2013. In particular, the implementation of Corporate Governance Evaluation (CGE) is one of the major projects of 2014 with the goal of assisting investors and companies in better understanding the performance of corporate governance (CG) by comparing the evaluation results among companies. It is also expected that this evaluation system can help guide companies to friendly competition by strengthening CG quality, further shaping and improving CG culture.
As environmental and social matters have gained international attention, the CGE has gradually broadened its scope. This expansion, driven by the FSC’s “Sustainable Development Action Plans for TWSE- and TPEx-Listed Companies (2023)”, aims to cultivate a sustainable value culture, identify listed companies' ESG performance, and offer investors a reference for their decisions. The CGE continuously refines existing indicators and incorporates environmental and social issues. In 2026, the evaluation has been transformed and renamed the "ESG Evaluation."
2. Evaluation System Introduction
(1) Evaluation Indicators
The structure for the Corporate Governance Evaluation indicators is mainly based on the six principles of corporate governance released by the Organization for Economic Co-operation and Development (OECD) in 2004. The structure references and adjusts five dimensions to these principles: "Protecting Shareholder Rights and Interests", "Treating Shareholders Equitably", "Enhancing Board Composition and Operation", "Increasing Information Transparency", and "Putting Corporate Social Responsibility into Practice". It further references the 2015 G20/OECD principles of corporate governance in 2018 whereby the dimensions of “Protecting Shareholder Rights and Interests” and “Treating Shareholders Equitably” were combined and the evaluation adjusted to four dimensions.
Subsequently, in transitioning to the ESG Evaluation, the aforementioned four major dimensions were adjusted in 2026 and to three major dimensions: “Environmental (E),” “Social (S),” and “Governance (G).” The indicator content of each dimension is researched and designed annually with reference to important domestic and international corporate governance and sustainability related benchmarks, development trends, in addition to laws and regulations.
The evaluation indicators refer to the "yes" or "no" method and will gradually include more elements of actual practice. The information assessed is based on data disclosed by companies as much as possible, allowing them to be more transparent and objective.
(2) Method for Announcing Indicators
The ESG Evaluation is conducted annually. The scope of the evaluation analysis is based on the status of corporate governance and sustainability (CG&S) practices of the preceding full fiscal year (i.e., the fiscal year under review), covering the period from January 1 to December 31. To facilitate this gradual CG&S enhancement and implementation by all TWSE and TPEx listed companies, the evaluation results are divided into seven tiers based on the scores achieved: the top 5%, 6% to 20%, 21% to 35%, 36% to 50%, 51% to 65%, 66% to 80%, and 81% to 100%. The evaluation results for TWSE and TPEx listed companies are announced separately.
Additionally, to enable the public to better understand the performance of the assessed companies within their respective industries, five major categories are established for grouping and ranking: (1) financial and insurance industry companies; (2) electronics industry companies with a market capitalization of NT$10 billion or more; (3) non-financial and non-electronics industry companies with a market capitalization of NT$10 billion or more; (4) companies with a market capitalization of NT$5 billion or more to NT$10 billion; and (5) companies with a market capitalization under NT$5 billion. Within these categories, TWSE and TPEx listed companies are combined and their rankings are announced in tiers based on their scores, to show each company’s performance whthin its industry among companies of similar market capitalization.
3. Future Prospects
(1) Application of Evaluation Results
-
Compile a Corporate Governance Index
According to the "Corporate Governance Roadmap", the results of the first CGE were utilized to compile a corporate governance index from selected listed companies with outstanding corporate governance performance. The index will be regularly updated for the reference of investors. -
Differential Management
The evaluation results are related to differentiated management. To promote engaged competition and mutual learning between companies, the best performers in corporate governance are honored in the award ceremony；relevant supervisory measures are taken against companies with poor performance as appropriate to strengthen the implementation of corporate governance.
(2) Evaluation Objectives
-
Shape Corporate Governance and Sustainability Culture and Guide the Stable Development of Enterprises
With system assessments and indicator identification, the evaluation aims to work with enterprises so they might actively examine their internal risk through the reflection of market mechanisms, such as media, stockholders, institutional investors, and the announcement of evaluation results. Furthermore, it seeks to improve and enhance governance practices, and build on the determination to actively establish good corporate governance and sustainability (CG&S) mechanisms, thereby shaping a "bottom-up" CG&S culture. -
Reward Outperformers and Encourage Benchmarking
This evaluation endeavors to seek out corporations that actively improve CG&S and take the initiative to set measures for self-regulation beyond the requirements of the law. These companies will be commended and rewarded, making them role models from which other companies can learn. This incorporates the benchmark function and enables companies to not only achieve regulatory compliance, but also pursue the objective of the highest CG&S level. -
Meet International Standards and Enhance the International Image
In recent years, CG&S has gradually become a globally popular research topic. International organizations are also continuing to develop evaluation indicators based on corporate governance principles and sustainability trends. Therefore, another goal of the evaluation is to utilize internationally recognized principles and reference other evaluation indicators. Through this approach, Taiwan corporations can meet worldwide standards, enabling foreign investors and relevant institutions to gain a deeper understanding Taiwan's CG&S level. Furthermore, this will augment Taiwan's global visibility and enhance its international standing. -
Disclose Information, Expand Participation, and enhance Capital Market Quality
The design of the evaluation dimensions and indicators is based on various domestic and foreign CG&S indicators and regulations. Furthermore, external experts and scholars have been recruited to form an ESG Evaluation Committee to provide professional guidance, listen to feedback from all quarters, and expand the information sources referred to in formulating the evaluation indicators. After the announcement of the evaluation indicators, there were many promotional activities, thereby prompting companies and investors to emphasize the operations and results of the evaluation system. This will further raise the overall standard of corporate governance, achieving the objectives of disclosing information, expanding participation, and enhancing capital market quality.