TAIPEI (Taiwan News) — The Financial Supervisory Commission (FSC) confirmed in June it would adopt the International Organization of Securities Commissions’ (IOSCO) newly endorsed International Financial Reporting Standard (IFRS) sustainability and climate-related disclosure standards.
IOSCO is an association of organizations that regulate the world’s securities and futures markets. Members are typically primary securities and/or futures regulators in a national jurisdiction or the main financial regulator of each country.
With respect to Taiwan, that is the FSC. The Taiwan Stock Exchange, the Taipei Exchange, and the Taiwan Futures Exchange are affiliate members of IOSCO.
IOSCO said the new standards are a “major step towards consistent, comparable, and reliable sustainability information” and that they are appropriate to serve as a global framework for capital markets to develop the use of sustainability-related financial information.
The IFRS are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board.
IOSCO said that it is now calling on its 130 member jurisdictions, which together regulate more than 95% of global financial markets, to consider the incorporation of the new standards into their regulatory frameworks.
IOSCO’s endorsement follows the recent publication by the IFRS Foundation’s International Sustainability Standards Board (ISSB) of its new global standards for sustainability and climate reporting, IFRS S1 and IFRS S2.
IFRS S1
Standard S1 emphasizes the connection between sustainability information and financial statements, stating that the information provided (including reporting entities, materiality criteria, and significant assumptions) must be consistent with the financial statements. It also requires sustainability information to be reported simultaneously with financial statements to facilitate comprehensive consideration of a company’s value by investors.
IFRS S2
Standard S2, while incorporating relevant recommendations from the Task Force on Climate-related Financial Disclosures (TCFD), strengthens disclosures related to transition plans, climate resilience, and greenhouse gas emissions. Additionally, it includes industry-specific disclosure indicators.
These sustainability disclosure standards aim to provide internationally consistent disclosure norms, enhance comparability of sustainability information, and prevent greenwashing. Taiwan endorses the recommendations of the TCFD.
Alongside IOSCO’s endorsement, the IFRS Foundation announced the publication of an outline of its upcoming Adoption Guide for regulators, planned for release later this year, outlining the mechanisms it is developing to support regulatory implementation of the new standards. This guide, once published, can assist the FSC with its phased adoption approach.
FSC’s Phased Adoption Approach
The FSC has already introduced a sustainability development action plan for listed companies to actively promote sustainability information disclosure.
To further align with international standards and provide investors with reliable sustainability information, the FSC has established a working group to translate the IFRS sustainability disclosure standards, analyze the differences between these standards and existing sustainability reporting practices, and create best practice examples and related guidelines for reference by the public.
The FSC has said that companies adopting IFRS sustainability disclosure standards to compile sustainability information will do so in phases. Initially, the FSC plans for listed (and OTC) companies with a capitalization of over NT$10 billion (US$317 million) to prepare sustainability information by 2026 and disclose it externally in 2027.
The FSC is also currently working on issues related to the standards and implementation timeline for sustainability disclosure, and is actively seeking feedback from stakeholders. After consolidating feedback from various parties, the FSC will officially release relevant information to the public.
Adoption and implementation of global standards assists Taiwanese businesses in the international arena and should assist in making Taiwan’s capital markets attractive for international investment.
