The Financial Supervisory Commission (FSC) yesterday required listed companies in the food, chemicals and financial sectors to issue corporate social responsibility (CSR) reports so the public can better understand their products and their impact on society and the environment.
Firms with capital of NT$10 billion (US$330.51 million) or more also have to meet the new requirement that is slated to go into practice next month, the commission said.
“The ongoing tainted oil scandal and the gas blasts [in Kaohsiung] merit the new measure,” FSC Chairman William Tseng (曾銘宗) told a media briefing.
Not only food makers, but also companies that derive more than 50 percent of their revenues from supplying food and beverages have to comply with the new policy, Tseng said, referring to hotels and restaurants.
The financial sector should also bear more social responsibility given their fast-growing profits in recent years, he said.
The CSR reports should shed light on a company’s investment strategy, products, remuneration policy and the impact of its operations on society and the environment, Tseng said.
Such annual reports will give companies extra motives to improve competitiveness and win public trust, he said.
A total of 203 listed companies need to publish CSR reports by December next year, if they cannot meet the first deadline set for June, Tseng said, adding that seven of them have already adopted the practice.
Currently, 142 local firms issue CSR reports with average earnings per share standing at NT$2.39 last year, 26 percent better than other listed firms at NT$1.89, Tseng said.
“The figures show more socially responsible firms are also more competitive and profitable,” he said.
The CSR reports should also include details on how companies treat their employees and carry out their social responsibility, Tseng said. Violators may be fined NT$1 million consecutive times, he said.
The commission has also settled for a soft stand in dealing with stock research reports by asking securities houses to file clarification filings if the media misquote the notes, said Wu Yui-chun (吳裕群), director-general of the commission’s Securities and Futures Bureau.
The bureau reiterated that brokerages should assert their intellectual rights over their research reports and could take action against media outlets for running the reports without permission.
However, Wu declined to elaborate on punishment for unruly brokerages that discuss the stock prices of individual companies.
Meanwhile, the commission has no plan to adopt the Shanghai-Hong Kong stock connect scheme in Taiwan in the foreseeable future due to concerns that the opening may facilitate fund outflows, according to Tseng.
Many market watchers have blamed the recent light stock turnover on the Shanghai-Hong Kong scheme that is due to take effect next month.
However, Tseng said he did not foresee drastic fund movements, as foreign institutional investors still accounted for 37 percent of overall trading as of Tuesday, with US$194 billion in funds.
“The FSC needs more time to evaluate the forthcoming Shanghai-Hong Kong stock connect and plans to stay put for the time being,” he said.
Separately, the commission has installed a mechanism for troubled life insurance companies to exit the market, Insurance Bureau Deputy Director-General Joanne Tseng (曾玉瓊) said yesterday.
The mechanism allows the agency to take over, liquidate or dissolve life insurance companies with capital adequacy ratios below 50 percent, compared with 200 percent for healthy insurers, she said.
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