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Prepared by Victor L. Kane, PhD | MOFA Research Fellow | August 1, 2016

Email: vkane54@gmail.com

Rosemead, California USA

Corporate Social Responsibility

Development and Trends in

Taiwan (R.O.C.)

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TABLE OF CONTENTS

1. Foreword 2

1.1 Letter from the Research Director 2

2. Executive Summary 3

3. Study Background 6

3.1 Purpose of the Study 6

3.2 Methodology 6

4. An Overview of the CSR Landscape in Taiwan 10

4.1 Perceptions of current state and effectiveness of CSR 10

4.2 Regional differences 16

4.3 Differences across ownership models 16

4.4 Differences across industries 18

5. Drivers of CSR Development in Taiwan 19

5.1 Overview of incentives, drivers and obstacles to CSR development 19

5.2 The role of the media 20

5.3 The role of the government and compliance 21

5.4 The role of the Taiwan Stock Exchange 22

5.5 The role of industry associations 22

5.6 The role of international organizations 23

5.7 The role of international clients 24

5.8 The public 24

6. CSR Implementation by Corporations in Taiwan 25

6.1 CSR reports 25

6.2 Operational integration of CSR 26

7. The Future of CSR in Taiwan 28

8. References 31

9. Acknowledgement 32

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1. FOREWORD

1.1 Letter from the Research Director

As the 5th leading economy in Asia and one of the “Four Asian Tigers”, Taiwan (Republic of China)

offers one of the great models of economic development in the Asia Pacific. The growth of this

modern, industrialized economy has witnessed steady interest and growth in corporate social

responsibility (CSR) initiatives in this island country. In December of 2014, the Financial Supervisory

Commission (FSC) issued its “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed

Companies.” This issuance requires listed companies from the food processing, financial and chemical

sectors with paid-in capital of at least NT$10 billion to prepare CSR reports annually starting in June

2015. From this government mandate, and with support from the Taiwan Stock Exchange (TWSE), 2015

marked a watershed year for CSR reporting in Taiwan. Taiwan topped the worldwide rankings in 2015

for the number of CSR reports using the Global Reporting Initiative (GRI) G4 guidelines.

It is with this heightened interest in CSR development in Taiwan that the “Study on Corporate Social

Responsibility Development and Trends in Taiwan” contained herein was conceived. With a grant

from the Taiwan Ministry of Foreign Affairs (MOFA), the study got underway in May 2016. The study

examines the views and perceptions of various stakeholders in the Taiwan business community about

the current state and future course of CSR. As such, it is my hope that the findings will add to the

increasing level of knowledge about CSR in Taiwan and serve as a benchmark for other CSR studies in

the Asia Pacific.

It has been a great pleasure to have worked with my colleagues at Fo Guang University and Nanhua

University in Taiwan whose technical research and professional networking contributions were critical

to the success of this study. I would like to particularly extend my thanks to Ms. Adriana Amaya Arivas

for her relentless research support, and to Dr. Hector Ming-ta Tsai at Fo Guang University and Dr.

Wann-yih Wu at Nanhua University for their help in identifying the many companies and their

representatives who participated in the interviews and online survey.

I’m confident that CSR will play an important role in the future of Taiwan’s business community. The

already accumulated knowledge that CSR is not just beneficial for society and the environment but

also translates to increased value and profitability for the firm poses an optimistic future for the

growth of CSR in Taiwan.

Victor L. Kane, Ph.D. Chair & Associate Professor Business Administration University of the West Rosemead, California USA E-mail: victork@uwest.edu

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2. EXECUTIVE SUMMARY

Driven by the efforts of Taiwan’s Central Government and many non-state actors

including the public stock exchanges, industry associations, and international

organizations focusing on sustainability, corporate social responsibility (CSR) in Taiwan

has received increased attention and recognition in the business community. The study

findings contained herein provide a glimpse into the current state and possible future

trends of CSR based on the views and perceptions of the study participants who include

representatives from publicly listed companies, private companies, NGOs, industry

associations, and academic institutions. The key findings and insights presented in the

study are based on a review of the literature and research, the results of an online survey,

and qualitative analysis of comments from a series of interviews with corporate

executives/managers at leading companies, industry associations, and NGOs in Taiwan.

Overview of CSR Landscape

About one-third (35%) of respondents believe that CSR is either “very effective” or

“effective” in addressing social and environmental issues in Taiwan. However, what is

telling from these findings is that only 2% believe that CSR has been “very effective”, with

nearly half (49%) of respondents remaining neutral on this matter. Further, while the

majority (67%) say they are satisfied with the current state of CSR in the country, 16% said

they were dissatisfied. These findings suggest that there is much room for improvement in

CSR that may ultimately sway opinion toward a more favorable perception of CSR

effectiveness in the country.

Respondents believe that the most important CSR themes for companies in Taiwan are

corporate governance/ethics/transparency, workplace issues (i.e. working hours,

occupational health and safety), and economic (i.e. financial performance, investing in

local economic development). These themes are viewed as important areas requiring

attention by companies to improve their overall relationship and obligations to their

workers and other stakeholders as well as to the local communities in which they operate.

They believe that fair operating practices (i.e. anti-corruption, fair competition) and

human rights (e.g., non-discrimination, child labor) are considered the least important

priorities on the CSR agenda for companies.

Geographically, the Northern and Central regions of Taiwan are seen as the most

developed in terms of CSR knowledge and performance. This is not surprising given that

these regions (particularly the Northern region) contain the most advanced and well-

financed companies in the country.

Drivers and incentives

International clients with CSR requirements, public stock exchanges, international

organizations that promote CSR, and the government are all considered to be key drivers

of CSR development. Noteworthy is the perception that companies in the ICT sector,

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which represent a large part of the international supply chain in Taiwan, have been

strongly influenced by the manufacturers with whom they contract regarding CSR

specifications. Additionally, respondents believe that the Taiwan Stock Exchange (TWSE)

continues to play a key role in helping publicly listed companies comply with the Central

Government’s mandate to produce CSR reports. The strong influence of the Global

Reporting Initiative’s (GRI) G4 framework has also been a key driver for CSR development

and reporting not only in Taiwan but throughout the Asia Pacific region and beyond.

Positive coverage by the media is considered to be a key incentive for CSR development.

For example, the yearly CSR awards given by the CommonWealth and Global Views

Monthly magazines have figured prominently in promoting the reputations of the winning

companies and showcasing their successes in the area of CSR.

Lack of long-term CSR strategy/policy, insufficient support from top management, and

insufficient support from stakeholders/shareholders are ranked as the top obstacles

impeding companies from better implementing CSR strategies. Another key obstacle

mentioned is the lack of CSR professionals and low level of CSR knowledge.

Trends and Expectations

Most respondents are confident about the future of CSR in Taiwan. There is general

agreement that over the next decade CSR knowledge, communication, and

implementation will grow dramatically and that disparities between CSR development

levels in different regions of the country will continue to shrink.

Respondents are generally of the opinion that the government will remain a key driver of

future CSR development, but that this may only impact the larger companies operating in

Taiwan. While many believe that the small and medium enterprises (SMEs) can do just as

an effective job as the larger companies with respect to CSR, there is common agreement

that CSR programming rests heavily on financial resources to invest in CSR and

sustainability initiatives. This will likely be a key challenge for SMEs as they strive to

create value-driven CSR strategies and initiatives both within and outside their

companies.

Driven in part by rising public awareness and concerns, environmental performance, labor

rights/working conditions, and consumer safety/welfare are viewed as the most pressing

issues for businesses in Taiwan over the next five years. Corporate transparency/anti-

corruption/ethical behavior and community involvement/local development are also

considered important priorities on the CSR agenda.

Respondents recommend companies focus on enhancing their CSR strategy and following

through on CSR with better action plans and reports. In addition, corporate board

support/oversight and the assignment of a senior-level manager to the CSR function are

viewed as important elements for effective, long-term CSR strategy and implementation.

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The government is expected to strengthen the enforcement of related legislation, and

companies, NGOs, and industry associations are expected to increase collaboration on

CSR in the future. Partnerships between major brands and suppliers, large companies and

SMEs, and local and foreign corporations are all viewed as playing an important

collaborative role in driving the CSR development agenda forward.

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3. STUDY BACKGROUND

Corporate social responsibility (CSR) has been widely embraced by leading corporations

worldwide as a result of a myriad of forces coming together to propel CSR into the global

spotlight. These forces have included government and industry regulations, global

sustainability reporting guidelines, the rise in sustainable investing, pressure from society

and consumer advocacy groups, and the trend toward globalization. CSR has largely been

a Western phenomenon but over the past decade has taken on increasing importance

among the developed and developing nations in Asia – among them, the Republic of

China (referred to hereinafter as “Taiwan”).

In 2014 CSR Asia, a leading global advisory and research, in collaboration with the

Embassy of Sweden in Beijing, undertook a “Study on Corporate Social Responsibility

Development and Trends in China” (CSR Asia, 2014). This study gave rise to a proposal by

this author to submit a grant to the Ministry of Foreign Affairs (MOFA), Republic of

China, to conduct a similar study in Taiwan. The grant was approved in March 2016, and

the “Study on Corporate Social Responsibility Development and Trends in Taiwan”

formally got underway in May 2016.

3.1 Purpose of the study

The CSR study reported herein was undertaken to explore the landscape of CSR in Taiwan

and collect views about the current status and future directions of CSR among various

stakeholders representing a mix of organizations, including public and private companies,

NGOs, state-owned enterprises (SOEs), industry associations, consultancies and advisory

bodies, and academic institutions. The study focused specifically on stakeholder views and

perceptions about major CSR concerns and challenges, socially responsible performance

among businesses in Taiwan, drivers and obstacles to CSR development, and the future

course of CSR in Taiwan. By collecting similar information from the CSR Asia study in

China, it is hoped that the findings would serve as a framework for those interested in

comparing and contrasting CSR trends and issues between mainland China and the

Republic of China (Taiwan).

It is important to note that the report contained herein focuses only on the findings from

the Taiwan study and does not attempt to draw any comparisons or make any conclusions

from the CSR Asia “Study on Corporate Social Responsibility Development and Trends in

China”.

3.2 Methodology

The study results relied on both qualitative and quantitative research and was carried out

during the period from May through July 2016. Data were collected over a three-stage

process:

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Stage 1: Literature Review (May 2016)

The study began with a review of the existing literature and studies on CSR development

in Taiwan published in academic, consultancy, media, and conference proceedings. Since

the government and industry organizations commonly play an important role as drivers of

CSR development, the review also included CSR-related policies, legislation, regulations

and guidelines issued by the Taiwan Central Government and domestic industry

associations.

Stage 2: Individual Interviews (June 2016)

Participants with diverse profiles and backgrounds were invited to participate in

interviews conducted at their place of business. It was important to involve a diverse mix

of participants from a variety of organizations in order to ensure that a broad range of

views were represented. The purpose of the interviews was to collect in-depth views and

perceptions of CSR development and performance in Taiwan. The findings from the on-

site interviews helped to inform the content of the survey questionnaire in Stage 3.

A total of 12 interviews were conducted on-site with executives and managers (involving a

total of 18 participants), all of whom either have direct responsibility for CSR in their

organizations or are knowledgeable about the subject matter. The organizations include

publicly-traded enterprises (including subsidiaries of multinational corporations), private

corporations, industry associations focusing on sustainable business practices,

advisory/consulting arms of financial services organizations, and academic institutions. A

few executives had held previous positions in local and central government. The

professionals taking part in the individual interviews will be referred to as “interviewees”

hereinafter in this report.

Stage 3: Online Survey (July 2016)

A bilingual (Chinese and English) online survey was sent to a database of 655 people that

included CSR professionals/advisors, corporate and NGO managers/executives, and

academics who are considered to have knowledge of CSR practices in Taiwan and the

larger CSR community. The database was compiled from multiple sources including

publicly listed companies in the Taiwan Stock Exchange (TWSE), organizational members

of the Business Council for Sustainable Development (BCSD Taiwan) and Foundation of

Taiwan Industry Service (FTIS), and NGO contacts from executives participating in the

individual interviews. All efforts were made to compile a final database that did not

include duplicative target respondents listed across multiple database sources. During a

survey period of four weeks, 135 responses were received.

Participants in the online survey will all be referred to as “respondents” hereinafter in the

report.

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The organizational profile of the survey respondents is as follows.

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4. An overview of the CSR landscape in Taiwan

4.1 Perceptions of current state and effectiveness of CSR

The online survey results reveal that only a small minority (2%) believe that companies in

Taiwan are doing a “very effective” job, with about one-third (32%) saying they are doing

an “effective” job in addressing social/environmental issues in the country. The majority

(49%) have a neutral opinion, while others feel performance has “not been effective” (17%)

(Chart 4-1). Notably, only 17% indicated they are satisfied with the current level of CSR

development in Taiwan. The vast majority indicated they are either “disappointed” (16%)

or “neutral” (67%) about the current state of CSR development in the country (Chart 4-2).

A common view among the interviewees is that the majority of Taiwanese companies still

view CSR as either a proscribed mandate by the Central Government for certain publicly

listed companies, or a matter of improving public relations and marketing (and in some

cases a response to crisis management). However, there is a general expectation that

companies will improve their CSR knowledge and performance over the next decade (see

Section 7).

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In the interviews, participants noted that they had witnessed a significant increase in CSR

awareness and practices in Taiwan with many of the larger companies and MNCs taking

the lead in CSR implementation and reporting. Notably, in a “Non-Financial Reporting

Survey in Taiwan 2015” sponsored by the Global Reporting Initiative (GRI), the Business

Council for Sustainable Development (BCSD Taiwan), the Taiwan Stock Exchange

(TWSE), and the Taipei Exchange (TPEx), the findings indicated that the number of

reports using the GRI guidelines and the number in accordance with GRI G4 guidelines

ranked Taiwan at the head of the world rankings in 2015. In fact, over 80% of Taiwanese

companies’ reports used the GRI G4 reporting standards.

It is clear that the role of non-state actors – including the aforementioned organizations

above – are contributing to the overall level of awareness and commitment to CSR among

the larger enterprises in Taiwan. As many of the interviewees indicated, the challenge

going forward will be to raise awareness of CSR as a voluntary, long-term strategy and

reporting initiative among the many private SMEs in Taiwan. CSR programming is viewed

as a challenge for many SMEs since it requires capital to implement CSR initiatives and

therefore cuts into the profits of these businesses. As many interviewees noted, the

realization (and continued build-up of evidence) that CSR is indeed something that can

create value and help improve business performance is something that must be embraced

by executives and management at all levels in order for CSR to take a stronger foothold in

the Taiwan business community.

4.2 Key CSR issues

The online survey results show that the CSR issues considered to be the most important

for companies in Taiwan are “corporate governance/ethics/transparency”, “workplace

issues” (e.g., occupational health and safety, wages, working time) and “economics” (e.g.,

company financial performance, employment and impacts on local economy) (Chart 4-3).

When asked to rank the top three most important issues, “environment”, “workplace

issues”, and “corporate governance” topped the list (Chart 4-4). The online survey results

are consistent with the interviews wherein the participants frequently discussed the

importance of preserving the environment and conserving resources (particularly water)

as well as addressing wages and long working hours in many companies. Corporate

governance and transparency was often cited as particularly important in supporting CSR

values and strategies in the corporate environment.

Economic performance

Taiwan offers one of the great success stories of modern economic development. In 1960

Taiwan had GDP per capita and human development levels that placed it among the least

developed countries in the world. Subsequent decades saw economic growth and

industrialization that not only transformed Taiwan into one of Asia’s “Tiger Economies”,

but also provided an economic model that has been successfully replicated by other

regional economies.

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Taiwan’s success—from an underdeveloped and resource poor island, to a regional

economic powerhouse with a multiparty democratic system—comes from its national

commitment to investing in its people and industry. Its economy is export-oriented and

specialized in production of electronics and machinery. In fact, Taiwan is one of the

world’s largest suppliers of computer chips, LCD panels, DRAM computer memory,

networking equipment, and consumer electronics. Textile production, although in

decline, is another major industrial export sector.

It is no surprise, then, that economic development ranks among the top-three most

important CSR issues in the online survey (Chart 4-3). Economic development in the

context of CSR is viewed by participants as reflecting not only the financial performance of

the company, but also the extent to which the company can contribute to the economic

development and sustainability of local communities. In fact, the two are very much

related; sound financial performance and profitability is central in equipping a company

with financial and other capital resources to invest in local economies.

Environmental performance

Environmental performance of companies in Taiwan ranks as the most important CSR

issue in the online survey (Chart 4-4). Indeed, environmental performance (e.g., energy

and water conservation, use of alternative energy sources, reduction in CO2 emissions) is

one of the central components among GRI G4 sustainability measures used in CSR report

filings.

Due to the rapid increase in population and of economic development, the ecology and

natural environment of Taiwan have been gradually damaged by various pollution

problems threatening public health and living environment. In addition to cracking down

on pollutant emissions, the Central Government has implemented "emission permits" as

an active preventive measure. At the same time, efforts are being made to strengthen

waste disposal, prevent water and air pollution, control toxic materials, keep the

environment clean, boost environmental protection regulations, improve environmental

monitoring equipment, promote greening and beautification drives, and strengthen

ecological conservation.

Taiwan's rapidly growing factories and businesses, coupled with the fact that it has the

world's highest density of motorcycles and motor scooters, have had an enormous impact

on air quality in recent years. The Central Government has adopted a number of control

measures to effectively protect Taiwan's air quality: instituting expanded inspection and

control of fixed sources of air pollution and urging pollution sources to strengthen

abatement; mapping out plans for air pollution improvement on an industry-by-industry

basis, urging industries to complete pollution abatement projects; introducing control

permits for utilization and sale of high polluting fuels; implementing control permits for

sale of special chemicals under the Montreal Treaty; promoting a unified system of vehicle

emission standards, inspection and maintenance; encouraging the private sector to set up

free motorcycle exhaust testing centers; setting up automated online monitoring systems

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for fixed pollution sources to control emissions; and strengthening control of suspended

dust particles to reduce pollution indicators.

Labor conditions

Taiwan ranks among the top countries with the longest working day, based on statistics. On average, Taiwanese employees work about 2,200 hours annually - which is 20% more than Japan and the US; 30% more than the UK, and 50% more than Germany, according to government data.

One of the most important labor laws in Taiwan is the 1984 Labor Standards Law. It

supplies the basic legal definitions of worker, employer, wages, and contract, and outlines

the rights and obligations of workers and employers including protections against

unreasonable work hours and forced labor. Despite these legal safeguards, there have been

rising allegations about Taiwan’s ‘overworked culture’ highlighted by a number of high-

profile cases of worker deaths due to excessive overtime hours.

The concern over working hours and occupational health/safety often was expressed in discussions with participants during the interviews. Based on the survey findings, “workplace issues” was ranked among the top three most important CSR issues (Chart 4-4).

Business and Human Rights

In 2009, the Taiwanese legislature (known as the Legislative Yuan) passed, and former

President Ma Ying-jeou ratified, two United Nations treaties: The International Covenant

on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social

and Cultural Rights (ICESCR). The UN Secretary General rejected Taiwan’s request to

deposit the instruments of ratification because it is not a UN member state. The

government nevertheless passed the Implementation Act, which gives both treaties special

status in domestic law just below that of the Constitution.

The government issued Taiwan’s first official state report in April 2012, and then invited a

group of international experts to evaluate Taiwan’s compliance with the two covenants. Prior

to the review, the government and NGOs were not well versed in international human rights

processes, a product of Taiwan’s long separation from the UN. Now they are familiar with a

set of international documents and standards.

After three days of public hearings, on 1 March, 2012, the experts released their concluding

observations and recommendations, directed at enabling the government to better meet

the requirements of the two treaties. The international experts were impressed with the

government’s strong commitment, and they praised civil society’s very active engagement

in all aspects of the process for having helped them to gain a deeper understanding of

many complex issues. Taiwan’s onsite review sent a signal to the international community

that Taiwan’s people aspire to abide by international norms, regardless of Taiwan’s

diplomatic status.

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Based on the online survey results, only 8% of the respondents view human rights as an

important CSR issue (Chart 4-3), and only 5% rank it as among the top-three most

important CSR issues (Chart 4-4). These findings may suggest that respondents view

Taiwan as having made major advances in human rights over the past decade and is

therefore not a critical issue. Alternatively, one can surmise that human rights (except for

basic worker rights) is not viewed as a central responsibility of companies but rather more

appropriate for the country’s government to handle.

Anti-corruption in the private sector

Until recently, public officials have been the main focus of anti-corruption efforts, both in

Asia Pacific and other parts of the world. Recently, however, that focus has broadened to

include bribery in the private sector, largely due to market pressures. While private sector

bribery does not directly affect the public trust vested in the government, it directly

impacts fair competition standards and hampers economic development in many regions

including some Asia Pacific countries.

A few international instruments or organizations have addressed this issue. The best

example is Article 21 of the United Nations Convention Against Corruption, which

recommends (on a non-compulsory basis) that the State parties to the Convention take

measures to criminalize private sector bribery, as to both the offeror (“active” bribery) and

the recipient (“passive” bribery). Although this Convention is signed by all the Asia Pacific

countries, there has been no strong regional initiative focusing on this specific issue.

Anti-corruption initiatives in Taiwan in recent years have been focused primarily on the

public sector. On April 1, 2011, the Legislative Yuan, Taiwan's highest legislative body,

passed the Ministry of Justice Anti-Corruption Administration Organic Act. The nine-

article Act established a new agency under the Ministry of Justice (MOJ) that is

responsible for formulating, promoting, and coordinating Taiwan's anti-corruption

policies; investigating and prosecuting corruption cases; and supervising the ethics

divisions of government agencies. The Act also calls for the formation of a review

committee, comprising 11 to 15 members, to provide the agency with professional advice.

Despite anti-corruption legislation passed by the Legislative Yuan, Taiwan does not

currently have a specific anti-corruption law for the private sector.

“Fair operating practices”, which include anti-corruption and fair competition, are ranked

low as an important CSR issue in the online survey (Charts 4-3 and 4-4). Interviewees note

that companies tend to avoid this topic for fear that any efforts taken or information

disclosed related to anti-corruption could attract suspicion or increased scrutiny of their

business practices.

Community involvement

“Community involvement” in the form of philanthropy and local economic development

support was ranked the lowest in terms of being the most important CSR issue facing

companies in Taiwan (Chart 4-3). This rather low ranking may be explained in a number

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of ways. First, community involvement is often perceived as making financial donations to

the community which comprise a large part of CSR initiatives by companies in Taiwan.

Secondly, community involvement’s low ranking in importance may be driven by the

overriding perception that other areas of import – including corporate governance,

workplace issues, economic and the environment – have a more critical place on the CSR

agendas of companies.

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4.3 Regional differences

In the online survey, Northern Taiwan and Central Taiwan were ranked as the areas in

which CSR knowledge and performance of companies is considered to be the most

advanced in the country (Chart 4-5). This is most likely due to the higher concentration of

more advanced companies and MNC subsidiaries in these regions where CSR is also more

advanced in terms of knowledge and performance.

4.4 Differences across ownership models

There is a general impression among respondents that the international companies

(particularly the MNCs and their subsidiaries), along with NGOs/charitable organizations,

are doing better in terms of their CSR knowledge and performance than companies with

other types of ownership (local private companies and state-owned enterprises) (Chart 4-6).

This is not surprising given that many MNCs and/or their subsidiaries typically have greater

financial resources to devote to CSR (particularly for sustainability initiatives) and have

shown better ability at integrating CSR into their daily operations. For NGOs and charitable

organizations, their missions are directly related already to improving the general welfare of

society and applying their efforts towards specific societal ills in which their organizations

are more equipped to address (e.g., poverty, educational and housing resources, health

care).

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Among those respondents who believe that larger companies are better than SMEs with

respect to CSR knowledge and performance, the main reasons cited were “higher

expectations from the public”, “more financial and human resources”, and “more pressure

from the government” (Chart 4-7).

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4.5 Differences across industries

Respondents were asked about which industry sectors they believed are doing the best job

in terms of CSR knowledge and performance. The top three industry sectors are “Finance

& Insurance”, “Technology”, and “Electronics” (Chart 4-8). These findings are consistent

with comments from interviewees who acknowledge that these sectors not only have the

financial resources to invest in CSR programs (particularly the financial services sector),

but also represent dominant industries in Taiwan. The large, publicly listed financial

services companies are also required to prepare CSR reports pursuant to government and

stock exchange (TWSE) requirements and therefore are typically out in front in funding

and implementing CSR and sustainability practices. Some of the more prominent

financial/insurance companies in Taiwan have made great strides in providing funding to

support local community efforts in providing housing, education, and insurance to the

poor.

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5. Drivers of CSR Development in Taiwan

5.1 Overview of incentives, drivers and obstacles to CSR development

Based on the online survey results, “positive coverage by the media”, “requirements from

government policy”, and “requirements from international clients” are perceived as the

top three incentives for companies to implement CSR in Taiwan (Chart 5-1).

When queried about the key drivers of CSR development, respondents most often cited

“international clients with CSR requirements”, “Public stock exchanges”, and

“international organizations that promote CSR” (Chart 5-2).

“Lack of long-term CSR strategy/policy”, “insufficient support from top management”, and

“insufficient support from stakeholders/investors” rank as the top three obstacles for

companies in the implementation of CSR initiatives (Chart 5-3). These findings were

echoed by interviewees who overwhelmingly supported the notion that the ultimate

success of CSR development among companies of all sizes and types will be driven by top-

down support from their boards and senior management.

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5.2 The role of the media

The media has played a key role in bringing to the public not only negative press – such as

corporate scandals and environmental and food safety issues – but also showcasing

positive CSR progress in the country. In terms of negative corporate press, some high-

profile food scandals which rocked Taiwan over the past few years became prominent

news in the media. In 2011, some companies were found to be illegally using plasticizer to

replace palm oil as a clouding agent in bottled drinks. A subsequent widespread recall of

drinks from nearly 40,000 retailers in Taiwan was a huge blow to the island’s reputation as

a reliable food manufacturer hub in the Greater China region. In 2013 the health authority

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discovered that more than 12 cooking oil products were blended with inferior oil and

failed to label its contents. Other food safety incidents including chemical substances

found in processed meat, and toxic starch found in a wide range of dairy products also

contributed to consumers losing trust in the government and wondering about what they

can and cannot eat. In 2014, then President Ma Ying-jeou announced plans to create a

food safety agency in an effort to combat problems with tainted food and other food safety

concerns that have plagued Taiwan in recent years.

On the positive side, some media have played an important role in showcasing CSR

progress in the Taiwan business community. For example, CommonWealth, a well-known

magazine in Taiwan that reports on economic, social and political issues, began including

a CSR index in its “Most Admired Company” survey. In 2008, as a result of a global trend

putting more emphasis on the role of corporate citizens, it decided to conduct its own

independent CSR survey and released its ranking of Taiwan’s Top 50 corporate citizens.

The annual survey draws on a number of international indexes and measuring tools such

as the Global Compact, the OECD’s Guidelines for Multinational Enterprises, and the Dow

Jones Sustainability Index. The survey covers three separate groups: large enterprises with

an annual turnover above NT$20 billion, medium-size enterprises with an annual turnover

below NT$20 billion, and foreign enterprises. In 2015, the survey was expanded to include

a new category for “small giants” with annual revenue of less than NT$5 billion. Now the

CommonWealth awards, which previously selected 50 award winners, has been expanded

to the CSR Top 100.

Global Views Monthly (GVM), a well-known Chinese-language magazine in Taiwan that

covers social and political issues, also conducts an annual survey that honors the best CSR

companies. Together with the CommonWealth magazine, these media have helped to

raise overall awareness of CSR among both companies and the public and continue to

serve as both an incentive and driver of CSR development for companies of all sizes.

5.2 The role of the government and compliance

With the ever-increasing importance of CSR as a global trend, Taiwan’s Central Government

has played a key role in promoting and regulating CSR in the corporate sector. The

government has been educating public companies on the importance of corporate

governance since 1988. The Executive Yuan formed the “Corporate Governance Reform Task

Force” on January 7, 2003 to study various policies, such as practices enhancing the

independence of the Board, incentives for incremental establishment of functional

committees in corporate boards, issues of corporate governance best practices, and more

transparent corporate information.

Since forming the Corporate Governance Reform Task Force under the Executive Yuan in

2003, the Central Government has improved the legal infrastructure to support corporate

governance and CSR reporting. In December 2013, the Financial Supervisory Commission

(“FSC”) issued a five-year Corporate Governance Roadmap (“Roadmap”) with an eye

towards accelerating steps to promoting corporate governance, assisting sound corporate

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development, and safeguarding the interests of investors. One of the major projects of the

Roadmap was the implementation of corporate governance evaluation. The purpose was

to provide comparisons of corporate governance performance among all listed companies

so that investors and companies can better understand how well specific companies are

implementing corporate governance.

Issued in December 2014 by the FSC, the “Corporate Governance Best-Practice Principles

for TWSE/GTSM Listed Companies” has become a driving force for CSR development and

reporting. It requires listed companies from the food processing, financial and chemical

sectors with paid-in capital more than NT$10 billion, as well as companies which have over

50% of their total revenues coming from food and beverage businesses, to prepare CSR

reports annually starting in 2015.

FSC Chairman Tseng Ming-chung warned that the obligation to publish a CSR report will

be expanded to smaller listed enterprises with paid-in capital of more than NT$5 billion in

2017 that would force an estimated 100 more companies to “do their CSR homework” by

the end of 2016.

5.3 The role of the Taiwan Stock Exchange

In compliance with the FSC’s “Corporate Governance Best-Practice Principles for

TWSE/GTSM Listed Companies”, the Taiwan Stock Exchange (TWSE) codified these

measures by becoming the first market in Asia-Pacific to implement mandatory CSR

reporting, adhering to the Global Reporting Initiative G4 principles. As stated above, a list

of specified companies in the food processing, financial and chemical sectors with paid-in

capital of no less than NT$10 billion are now required to file an annual CSR report by the

end of June each year.

Noteworthy is that food processing companies must obtain external verification on their

CSR reporting. This requirement follows on the heels of some of the high-profile food

scandals that were reported earlier in this report.

Through its Corporate Governance Center, TWSE continues to offer corporate governance

conferences, training seminars for business communities, and information sharing

sessions to help the business community understand and report on its CSR priorities and

initiatives. TWSE expects that its CSR reporting measures will help Taiwan’s capital

market to attract more investors looking for sustainable investment opportunities.

5.4 The role of industry associations

International and domestic industry associations are ranked relatively low in the online

survey as drivers for CSR development in Taiwan (Chart 5-2). Importantly, however, there

are a few industry associations in Taiwan that have made major inroads in helping to

promote CSR and sustainability reporting among its organizational members. Noteworthy

is the Business Coalition of Sustainable Development (BCSD Taiwan), which aims to help

Taiwanese companies take the lead globally not only with the quantity of CSR reports but

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also with the quality and communication effectiveness of their content. BCSD Taiwan has

collected a total of 406 CSR reports issued by Taiwanese companies in 2015 in order to

analyze content within the framework of GRI G4 guidelines.

The Foundation of Taiwan Industry Services (FTIS) has also played a key role in advising

its organizational members on CSR content and reporting. These organizations, along

with the Central Government and TWSE, will continue to play a positive role in driving

CSR development by providing communication platforms, research, and advisory services.

5.5 The role of international organizations

“International organizations that promote CSR” are perceived to be an important driver of

CSR development (Chart-5-2). Such organizations as the Global Reporting Initiative (GRI),

the World Business Council for Sustainable Development (WBCSD), the International

Organization for Standardization (ISO), the UN Global Compact, and CSR Asia are just

some of the international organizations that are out in front in providing resources and

shaping the guidelines and frameworks for CSR and sustainability reporting worldwide.

5.6 The role of international clients

“International clients with CSR requirements” is perceived to be a key incentive and driver

of CSR in Taiwan (Charts 5-1 and 5-2). As many of the interviewees commented, the ICT

industry in Taiwan, a dominant sector in the country, has been strongly influenced by the

international firms with whom they contract to supply ICT components. Many of these

international manufacturers provide specifications to ICT suppliers in conformance with

manufacturing and sustainability guidelines.

Based on the online survey results, over half of the respondents (53%) said their

companies have received CSR requirements from international clients in the past two

years (Chart 5-3).

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5.7 The Public

“The role of the public” was perceived by respondents to have little influence on CSR

development (Charts 5-1 and 5-2). The perception is that the general public in Taiwan

tends to react to corporate scandals and issues when they arise and will only be active in

their organized response based on the severity of the problems that affect public safety,

such as food contaminants, environmental pollution, and work safety. Most respondents

believe that CSR is still largely a corporate-based concept and has not penetrated the

mainstream population. The emerging role of the print media in showcasing exemplary

CSR programs by Taiwanese companies – as highlighted earlier by CommonWealth and

Global Views Monthly CSR awards – will likely play a contributing role in the future in

raising the public’s awareness of CSR generally and the contributions of CSR award

winners specifically.

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6. CSR Implementation by Corporations in Taiwan

6.1 CSR reporting

The combined efforts of Taiwan’s Central Government, the Taiwan Stock Exchange

(TWSE), and several of the previously mentioned industry associations in promoting CSR

has clearly influenced the reporting activity of Taiwan’s publicly listed companies. As

indicated earlier in this report, the number of reports using GRI’s G4 guidelines ranked

Taiwan at the head of the world rankings in 2015 (“Non-Financial Reporting Survey in

Taiwan 2015”). Over 80% of the Taiwanese companies’ reports used the GRI G4 reporting

standards.

Consistent with this high reporting frequency, the online survey results indicate that a high

percentage of the responding companies are preparing CSR reports (82%), most on an

annual basis (94%), and most available on the company’s website (95%) (Charts 6-1, 6-2, and

6-3). In addition, three-quarters of respondents indicated that their CSR report is certified

or audited by an external organization (Chart 6-4).

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6.2 Operational integration of CSR

The integration of CSR strategy into daily operations of a company is critical to overall

successful CSR implementation. As many of the interview participants discussed, CSR

reporting is important but falls short if the company itself does not deploy resources to

operationalize the effort. Some participants believe that CSR reporting is merely in

response to Taiwan Central Government mandates and codification by TWSE and may be

disconnected from a company’s operational and long-term strategy for CSR.

In the online survey, all of the queried operational functions were viewed as well

integrated into the daily operations of companies. The most highly ranked functions in

terms of integration were “after-sales services”, “recycle/reuse/eco-efficiency” of resources,

and “human resources management” (Chart 6-4).

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7. THE FUTURE OF CSR IN TAIWAN

Respondents of the online survey express optimism about the future development of CSR

in Taiwan, with 87% believing that the level of CSR knowledge, implementation and

communication will grow dramatically in the next decade (Chart 7-1).

Slightly over half (56%) believe that the disparity of CSR development amongst the

different regions will diminish over the next decade (Chart 7-2).

Respondents believe that the most pressing concerns for companies over the next five

years will be the environment, labor rights and working conditions, and consumer issues

(Chart 7-3).

Areas in which companies are viewed as needing most improvement in strengthening

their CSR performance include:

-- Creating long-term CSR strategies

-- Creating and implementing CSR action plans, reports and follow-ups

-- Building CSR management and capacity building

These areas needing improvement were widely discussed in the interview phase of the

study and are highly consistent with the general evidence on CSR best practices showing

that management support (including relegating CSR oversight to a top manager in the

company) and tactical CSR planning and resource deployment are critical to successful

implementation.

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8. REFERENCES

A Study on Corporate Social Responsibility Development and Trends in China, CSR Asia,

2014, http://www.csr-asia.com/report/CSR-development-and-trends-in-China-FINAL-

hires.pdf.

Corporate Social Responsibility Overview, Taiwan Stock Exchange, Corporate Governance

Center, http://cgc.twse.com.tw/frontEN/responsibility.

Corporate Governance Roadmap 2013, Financial Supervisory Commission, Executive Yuan,

Republic of China.

Corporate Social Responsibility and Sustainability: Emerging Trends in Developing

Economies, Minyu Wu, Critical Studies on Corporate Responsibility, Governance and

Sustainability, Volume 8, 347-369, 2014.

Food safety in Taiwan is an important issue, The China Post (International Edition), July 10,

2016.

Non-Financial Reporting Survey in Taiwan 2015, BCSD Taiwan, Taiwan Stock Exchange,

Taipei Exchange.

Pollution, water supply need action, Taipei Times, April 11, 2013.

The 2016 Corporate Governance Evaluation System, Financial Supervisory Commission,

Executive Yuan, Republic of China, January 2016.

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9. ACKNOWLEDGEMENT

I am immensely grateful to all participants in the online survey and the interviews for

whom their support and feedback provided valuable data and insights for this report. I

would also like to thank the staff at the Ministry of Foreign Affairs (MOFA) for providing

guidance on the research fellowship and grant funding for this project.

A special thanks goes out to the following people who provided valuable technical and

networking support throughout the study:

Technical and Research Support

Adriana Amaya Arivas, Ph.D. Candidate, Department of International Business,

Chinese Culture University, Taipei, Taiwan

Dr. Hector Ming-ta Tsai, Head of General Affairs, Associate Professor, Department

of Management, Fo Guang University

Dr. Wann-Yih Wu, Professor & Dean, College of Management, Nanhua University,

Dalin, Chiayi, Taiwan

Networking Support

Wayne W. Wu, Secretary General, Business Council for Sustainable Development

(BCSD Taiwan), Taipei, Taiwan

Tony Mo, Deputy Secretary General, Business Council for Sustainable Development

(BCSD Taiwan), Taipei, Taiwan

Kenny Chang, Assistant Manager, Business Council for Sustainable Development

(BCSD Taiwan), Taipei, Taiwan

Vincent Yang, Manager Markets & Strategies, PricewaterhouseCoopers Taipei, Taiwan

Ken Lin, Corporate Governance Department, Taiwan Stock Exchange, Taipei, Taiwan

Cheng-hua Yuan, Vice President, Corporate Governance Department, Taiwan Stock

Exchange, Taipei, Taiwan

Chad Yuan, Deputy Executive Secretary, Corporate Governance Department, Taiwan Stock

Exchange, Taipei, Taiwan

Dinah Tai, Project Manager, Foundation of Taiwan Industry Services, Taipei, Taiwan

Jack Lin, Administrative Department Director, Chuan Lian Enterprise Co., Ltd., Taipei,

Taiwan