Hall Chadwick ESG

  1. Hall Chadwick ESG

Have You Budgeted for ESG? Practical Advice on Three Major Cost Items for 2025

As ESG becomes central to business operations, Taiwan’s regulations will take another step forward in 2025. From carbon fees and sustainability disclosures to cross-department collaboration, finance departments must plan and allocate related budgets in advance. In the past, many companies saw ESG as an additional burden, which led to reports and frameworks that were merely procedural. However, the next wave of policy trends is gradually turning ESG into a quantifiable cost, an institutionalized process, and a subject of scrutiny. With new requirements — from listed company disclosure rules and carbon fee collections to sustainability-linked financial ratings — companies that fail to plan ESG spending early may face rising costs, higher capital expenses, or be rated as high-risk suppliers.
 

1. Environmental Expenses｜Carbon Audits, Energy Efficiency Improvements, and Carbon Fee Budgeting

1.1 Why Should You Budget for Environmental ESG Costs?

Starting in 2025, Taiwan will officially implement a carbon fee system. Even if your company is not on the first list of entities to be charged, you should plan ahead by budgeting for carbon risk and energy-saving expenses to avoid being caught unprepared later. These costs are closely tied to future standards for selecting green supply chain partners, ESG ratings, and carbon disclosure scores.

1.2 Suggested Budget Items

  • Carbon audit costs: Expenses for in-house implementation or outsourcing
  • Carbon management system setup/maintenance: Costs for maintaining data integration tools (such as third-party carbon tracking platforms or carbon APIs)
  • Estimated carbon fee calculation: Simulation based on emissions
    Example: “Estimated emissions of 10,000 tons × NT$300/ton” → Initial budget: NT$3 million
  • Energy-saving equipment investments: Costs for upgrades such as LED replacements, HVAC system upgrades, or process improvements (can be combined with government subsidies)
  • Subsidy application or tax deduction preparation costs: Includes application consulting, report preparation, and tax planning
Recommendation: Establish a “Carbon Contingency Budget Item” and incorporate it into the financial system starting in 2025. Refer to the Ministry of Environment’s website for the list of major emitters and related rate estimates.
Environmental Expenses
Image source: FREEPIK
 

2. Social and Governance Expenses｜Framework Design and ESG Training Costs

2.1 ESG Is More Than Reporting — It’s About Building Systems and Talent

When companies implement ESG, they must strengthen supply chain accountability, protect employee rights, and enhance board-level governance. These efforts require long-term investment in people and systems. In particular, costs related to the social and governance aspects often remain hidden within day-to-day operations and are frequently overlooked.

2.2 Suggested Budget Items

  • ESG consulting fees or internal design labor costs: Upfront expenses for system planning, risk assessments, and KPI setting
  • Training expenses: Costs for sustainability courses, cross-department ESG training, online learning resource licensing, etc.
  • Governance revision costs: Expenses for revising policies, establishing an ESG committee, or onboarding new board members
  • Supplier management system implementation: Fees for ESG assessment systems and data collection/survey platforms (such as Sedex, EcoVadis)
  • Internal audit labor costs: Time and resources for developing supplier audit mechanisms or internal compliance processes
Recommendation: Incorporate ESG training into annual training hour targets and include it in competency development plans. Treat system-based budgets as necessary for ongoing operations — not just as one-off project costs.
Social and Governance Expenses
Image source: FREEPIK
 

3. Disclosure and Audit Costs｜Systematizing Report Production and Data Verification

3.1 ESG Financial Data Will Be Disclosed in Annual Reports, with Audit Requirements Coming into Effect

According to the Financial Supervisory Commission, starting in 2025, listed companies in Taiwan will be required to disclose ESG financial information and include dedicated sections in their annual reports. This will significantly increase the demand for audits and reporting. Combined with the pressure to adopt international standards such as IFRS S1 and S2, future financial and ESG reports will need to be aligned and integrated.

3.2 Suggested Budget Items

  • Sustainability report writing and design costs: Expenses for content drafting, data consolidation, staff interviews, and layout/design
  • Third-party audit costs: Fees for auditing financial and non-financial indicators, estimated based on audit depth and scope
  • Information system integration costs: Connecting finance and sustainability data, expanding ERP modules, setting up BI systems, etc.
  • Disclosure standards training costs: Costs for training and consulting on IFRS S2, GRI, SASB, and other frameworks
  • Regulatory information tool costs: Subscriptions for ESG regulatory tracking systems and disclosure trend databases
Recommendation: Establish a cross-department “data integration map” to ensure consistent logic between ESG and financial data, making it easier to respond quickly to future audits.

Disclosure and Audit Costs
Image source: FREEPIK
 

4. Common Mistakes: Three Things Companies Often Overlook When Budgeting for ESG

  1. Only budgeting for report production while neglecting the internal system setup and training hours
  2. Underestimating the need for system upgrades and data integration, leading to higher patch-up costs later
  3. Failing to align budgets with cross-department consensus, resulting in execution gaps and implementation bottlenecks
Recommendation: When setting ESG budgets, hold a cross-department budget alignment meeting to clarify whether each expense aligns with its objective, and reserve a 10–15% contingency buffer.
 

5. Conclusion

ESG is no longer just a slogan — it’s an integral part of stable business operations.
It’s recommended that companies plan around three budget pillars: carbon, systems, and disclosure, to build a robust mid- to long-term ESG financial framework. The sooner ESG is incorporated into budgets, the better prepared a company will be for financing, audits, and supply chain management — turning sustainability into real value creation.


 



Is your company ready to meet the new ESG challenges?

Hall Chadwick Taiwan has extensive experience in ESG financial consulting and can assist your company in building a sustainability reporting framework that aligns with the latest regulatory requirements.
 If you have any questions regarding the 2025 ESG financial disclosure requirements, feel free to contact us.
  
 
Back