Corporate Sustainability Reporting: From Diversity to Precise Communication | Latest Information | ASUS ESG website, ASUS ESG goal

As global attention to sustainable development increases, publishing sustainability reports has become an international trend for corporations. Sustainability reports serve as an important bridge for stakeholders to understand a company's sustainable management actions. Through sustainability reports, companies can communicate their ESG (Environmental, Social, and Governance) management performance, enhance information transparency and corporate image, and build trust with stakeholders. From a corporate management perspective, sustainability reports also help identify potential risks arising from sustainability issues, reducing negative impacts on operations. At the same time, the process of compiling sustainability reports helps companies review their sustainability performance, examine and improve their sustainability strategies, and drive corporate development towards creating positive impact.

The GRI Standards, published by the Global Reporting Initiative, are the most mainstream reporting framework globally. They emphasize that sustainability reports are intended for communication with corporate stakeholders, thus covering almost all current ESG issues.

GRI was established in 1997 and began publishing sustainability reporting framework guidelines in 2000, which have undergone five revisions. According to "The KPMG Survey of Sustainability Reporting 2020", over 95% of the top 100 companies in various countries have adopted the GRI Standards. In Taiwan, since 2014, the Financial Supervisory Commission has required companies in the food industry, chemical industry, financial and insurance industry, and listed companies with capital of NT$10 billion, NT$5 billion, and NT$2 billion or more to publish sustainability reports in stages. Additionally, according to the "Taiwan Stock Exchange Corporation Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies," companies should refer to the GRI Standards when compiling sustainability reports.

For a long time, the GRI Standards have been the most widely adopted sustainability reporting framework internationally, with the core disclosure spirit of demonstrating corporate ESG management performance. However, for issues of concern to the capital market - such as what risks sustainability issues may pose to corporate operations, what business opportunities they may bring, how these risks and opportunities impact the company's financial condition, operating performance, and future development, and what strategies the company uses to properly respond - these are difficult to demonstrate through the GRI Standards framework. This also leads companies to easily fall into the comparison of ESG performance, placing excessive limited resources on ESG performance that does not benefit operational growth, inadvertently reducing long-term competitive advantage.

Therefore, in the ecosystem of sustainability information disclosure, reporting frameworks targeting investors as the communication audience have gradually developed. In 2018, the Sustainability Accounting Standards Board published the "SASB ® Standards," announcing a disclosure framework covering 5 dimensions (Social Capital, Human Capital, Business Model & Innovation, Leadership & Governance, Environment), 77 industry-based and 26 general ESG issues. SASB further extracts from GRI the performance indicators relevant and important to the industry in which the company operates, and based on the different characteristics of various industries, the indicators required by SASB for disclosure in each industry are not the same.

However, both GRI and SASB mainly focus on disclosing past ESG performance of companies. For investors in the capital market, past ESG performance does not help them assess whether the company will face ESG risks and potential financial impacts in the future, nor judge whether the company is well-prepared for business opportunities derived from ESG trends. In view of this, the Task Force on Climate-related Financial Disclosures (TCFD) framework, published in 2017, aims to guide companies in disclosing future climate-related risk and opportunity management measures and financial impacts, attempting to integrate sustainability and financial information to provide stakeholders (mainly investors) with an assessment of the potential financial impacts of climate risks and opportunities on the company and whether it has built response capabilities.

The recent wave of sustainability reporting framework development in the past three years is related to the increasing importance of sustainable finance. Over the past 20 years, ESG-related investments have continued to grow globally. Bloomberg Intelligence's "ESG Outlook Report" released in 2021 points out that as the capital market provides funding support to drive the net-zero transition, how to guide market funds into economic activities with sustainable development potential will be a major issue facing the future capital market.

Sustainable finance has become a mainstream strategy in recent years to drive industries to create positive environmental and social impacts. Driven by this purpose, whether companies can provide investors with valuable and comparable sustainability information has become particularly important. In the past, companies freely chose the content and framework for sustainability information disclosure. For investors, although there is a lot of sustainability information in the capital market, there is a lack of truly meaningful information that can assist in decision-making.

Taking the European Union as an example, in December 2019, the European Commission resolved and announced the "European Green Deal" as a blueprint for Europe to achieve climate neutrality by 2050, expecting to inject 70 million euros of funding annually. Under the framework of the EU Green Deal, the EU has formulated the EU Taxonomy, establishing unified standards for sustainable economic activities to promote capital market investment in economic activities most needed to promote green transformation. The EU also passed the Corporate Sustainability Reporting Directive (CSRD) in 2022, requiring EU companies of a certain size and third-country companies operating within the EU to disclose management policies, indicators, and targets for specific environmental, social, and governance topics in accordance with the European Sustainability Reporting Standards (ESRS), while environmental issues must disclose potential financial impacts.

In addition to the EU, the International Financial Reporting Standards (IFRS) Foundation also announced the establishment of the International Sustainability Standards Board (ISSB) in 2021, aiming to establish a set of globally applicable standards for disclosing sustainability-related risks and opportunities (IFRS Sustainability Disclosure Standards) to provide information needed by investors and the capital market.

The IFRS Sustainability Disclosure Standards are based on existing frameworks, using the four core elements of TCFD (climate-related financial disclosure): "Governance," "Strategy," "Risk Management," and "Metrics and Targets" as the disclosure framework. The SASB Standards also play an important role in the IFRS Sustainability Disclosure Standards. IFRS S1 suggests referring to the relevant industry SASB Standards when identifying sustainability-related risks and opportunities, emphasizing that companies need to consider industry characteristics when identifying and analyzing material climate risks and opportunities. The "industry-based disclosure requirements " in IFRS S2 are also extracted from the SASB Accounting Standards. Similarly focusing on climate risks, opportunities, and financial impacts as the core, IFRS S2 can be seen as an advanced version of TCFD. When assessing the financial impacts brought by climate risks and opportunities, IFRS S2 requires evaluating both current and future (short, medium, and long-term) impacts, and emphasizes the use of all reasonable and verifiable information available when identifying risks and opportunities to avoid excessive estimated information. It is hoped that through the financial impact information assessed by the standards, it can truly be used by the company's management system, avoiding greenwashing.

The IFRS Sustainability Disclosure Standards will officially take effect on January 1, 2024. Currently, " IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information " and "IFRS S2 Climate-related Disclosures" have been published. Various countries have also begun to draft ways to adopt the IFRS Sustainability Disclosure Standards and conduct public consultations. Taiwan's Financial Supervisory Commission has announced plans for listed companies to align with the international IFRS Sustainability Disclosure Standards in August 2023, requiring all listed companies to disclose information required by the IFRS Sustainability Disclosure Standards in their annual reports starting from the 2026 accounting year, implemented in three phases.

ASUS has been publishing sustainability reports since 2009. As external stakeholders pay more attention to corporate sustainability performance, we have also found that it is now difficult to satisfy the expectations of all stakeholders with a single sustainability report based on a single reporting framework. Although the financialization of sustainability information is an important development direction for sustainability reporting frameworks in recent years, filling the gap where sustainability report information could not be used by investors in the past, there is essentially no superiority or inferiority between sustainability reporting frameworks. Instead, companies need to clarify the purpose and target audience of communication, choose appropriate reporting frameworks, plan the depth and breadth of communication information, and make good use of different media such as sustainability reports, websites, social media, or internal corporate communication channels to effectively convey sustainability information.

The core spirit of ASUS in promoting sustainability is “Using Digitized Data and Scientific Management Practices to Support Sustainable Value Creation through Core Competencies." The data and information communicated in sustainability reports should not exist solely for the purpose of compiling sustainability reports. Companies should identify indicators with management significance from various standards as references for internal performance management. Only then can they pursue stakeholder recognition while helping to improve internal sustainability management, transforming sustainability into corporate competitiveness.