The Bureau of Labor Funds (BLF), under Taiwan's Ministry of Labor, has released its 2024-2025 Sustainability Report, in which it announced for the first time that, starting in 2030, it will stop making new investments in fossil fuel companies that are not actively transitioning. The BLF also plans to disclose financed emissions data for domestic and mandated foreign equities between 2026 and 2027, significantly accelerating its original timeline, which had planned for assessments to begin only after 2029. The BLF manages two of Taiwan's largest public funds, the Labor Pension Fund and the Labor Insurance Fund.

Following consultations with the Bureau of Public Service Pension Fund and Chunghwa Post - Taiwan's other two major public funds - the Environmental Justice Foundation (EJF) has received verbal commitments from both entities that they will adopt the same fossil fuel policy announced by the BLF and will formally include this commitment in their sustainability reports next year.

EJF has welcomed and commended this important commitment, noting that it reflects the funds' growing recognition of the threat that the climate crisis, fuelled by fossil fuels, poses to the stability of public finance.

EJF welcomes the fact that all four of Taiwan's major public funds are moving away from fossil fuels, demonstrating their commitment to safeguarding public capital and the environment. However, EJF emphasises that the policy's success depends on strong implementation to deliver real progress towards net zero. In particular, the funds must establish rigorous, meaningful assessment criteria and mechanisms to define “actively transitioning,” to prevent the regulatory mechanisms from becoming mere formalities - or worse, a vehicle for greenwashing.

Steve Trent, CEO and Founder of the Environmental Justice Foundation, said: “The climate crisis is threatening global economic and social stability. The Taiwanese government’s action to cease new investments in fossil fuels sets an example for government funds and public capital.”

Steve also added: “Taiwan has the ability and capacity to do more. We encourage Taiwan to adopt more ambitious fossil fuel exclusion policies, and to subject the definition of ‘active transition’ companies - those in which they intend to continue investing - to rigorous scrutiny. Only in this way can we truly strengthen the resilience of these funds, prevent greenwashing, and safeguard intergenerational justice.”

To position Taiwan's public funds and public capital as a global example in sustainable finance, EJF recommends the following:

• Disclose current exposure to the fossil fuel sector and establish a roadmap for a full phase-out: Conduct an inventory of, and disclose, current fossil fuel exposure to assess overall climate exposure and resilience. Alongside this, establish a timeline and targets to reduce and ultimately phase out these investments.
• Expand fossil fuel investment restrictions to more asset classes: Extend restrictions from equities to include bonds and other assets, to prevent fossil fuel companies from securing long-term capital through the bond market to maintain or expand high-carbon operations.
• Align the definition of the fossil fuel industry with domestic and international trends: The BLF currently defines fossil fuel companies as those with revenue from fossil fuels exceeding 50% in the most recent fiscal year. EJF recommends that the four public funds disclose the basis and data sources used to assess companies' revenue proportions, and lower this threshold to the 5%-30% range commonly adopted by Taiwan's domestic financial institutions. The funds should also use Taiwan's Green Stock Designation system, which sets 5% as the threshold for Level 1 Green Stock Designation, as a reference.
• Clearly define “active transition” to avoid greenwashing: The funds' competent authority should establish meaningful criteria for assessment, including alignment with the Paris Agreement's 1.5°C target through medium- to long-term pathways, credible transition plans, specific capital expenditure allocations, and demonstrated actual carbon reduction performance, while ceasing further expansion into fossil fuels.
• Incorporate asset managers' climate commitments and action as a key criterion in the selection of mandated investment managers: To ensure that managed portfolios also strengthen climate risk management, it is recommended that asset managers' own fossil fuel management and climate action be listed as an independent and important scoring criterion during the selection of mandated investments.
• Gradually expand the coverage of financed emissions to include all assets and disclose them by sector: Further disclose financed emissions by sector (such as petrochemicals, cement, steel, and oil, gas and power generation) to more accurately identify exposure and provide a reference point for expanding oversight of the industries in which the funds invest.

Media Contact: Chen Ting-yu, Senior Campaigner, Environmental Justice Foundation tingyu.chen@ejfoundation.org, 0960-111-932