TSMC, discrimination litigation and sustainability reporting

Research methodology This case was developed using secondary data sources. Primary case materials were drawn from official public filings, specifically TSMC’s annual Form 20-F and sustainability reports, both publicly accessible online. Supplementary context was gathered from news coverage and publicly available media coverage on TSMC’s US operations. Applicable financial reporting standards, specifically International Accounting Standard (IAS) 37, Provisions, Contingent Liabilities and Contingent Assets, issued by the International Accounting Standards Board (IASB) and industry-specific disclosure standards issued by the Sustainability Accounting Standards Board (SASB) were also consulted and are included as appendices to the case.Instructor Note on SASB/ISSB Governance: SASB is no longer an independent organization. In August 2022, the Value Reporting Foundation, which housed SASB, was consolidated into the IFRS Foundation, and responsibility for the SASB Standards transferred to the International Sustainability Standards Board (ISSB). The industry-based SASB Standards remain in use and are now maintained by the ISSB. For simplicity and to facilitate students’ reading and research, the terms “SASB” and “SASB Standards” are retained throughout the case and teaching note.The protagonist, Wen-Chang Hao, is a composite character created for teaching purposes. Her title, responsibilities and organizational position are based on the publicly available LinkedIn profile of an individual holding a comparable role within TSMC’s sustainability function, as well as TSMC’s public sustainability disclosures and corporate governance documentation. No individual by this name has been identified as holding this position at TSMC, and the character’s deliberations and decisions are constructed for pedagogical purposes rather than drawn from any primary or firsthand source. Case overview/synopsis Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry with over 70% global market share, confronted a disclosure decision as Wen-Chang Hao, Global Sustainability Engagement and Strategy Manager, drafted the company’s 2025 Sustainability Report for its internal May 2026 deadline. Two active US class-action lawsuits had emerged against TSMC’s US operations: one alleging racial and national-origin discrimination involving more than 30 plaintiffs in the Arizona plant, and a second filed in April 2026 alleging systemic gender discrimination potentially affecting thousands of current and former female employees. Neither lawsuit had been identified as a named legal contingency in TSMC’s most recently submitted Form 20-F.Hao’s decision represented a double materiality problem. Financial reporting standards permitted the omission of both lawsuits in the absence of a reliable damage estimate, while TSMC’s voluntary sustainability/ESG frameworks created no binding obligation to disclose. Yet the gap between the two reporting channels, one silent on workforce litigation, the other publicly celebrating global sustainability/ESG leadership, raised substantive questions that Hao had to resolve: whether to acknowledge the pending litigation in the 2025 Sustainability Report, at what level of specificity and in which sections, and how to frame any disclosure relative to the annual report and financial statement’s treatment of the same matters. Complexity academic level This case addresses loss contingency recognition, materiality judgment and ESG disclosure across financial and nonfinancial reporting channels. It is appropriate for upper-level undergraduate and graduate courses, depending on the depth of analysis and instructor emphasis. It is suitable for courses including Intermediate Accounting, Auditing, Sustainability Accounting and Human Resource Management. It may also be used in International Business courses, particularly in discussions of multinational reporting environments and the cross-functional implications of workforce-related challenges and risks. The case is recommended for use mid-to-late in the term, after students have been introduced to either contingent liability standards (in accounting courses) or stakeholder theory and materiality frameworks (in Sustainability/ESG or IB courses).The case was pilot-tested in an undergraduate International Business course with approximately 25 students majoring in accounting, finance or management participating in the discussion. Student engagement and feedback informed subsequent refinements to the case materials and teaching notes.