On February 25, 2026, the Korean government unveiled a draft roadmap for the ESG (environmental, social, and governance) disclosure regime (the “Roadmap”) to mandate sustainability disclosures, thereby strengthening transparency in the capital markets and ensuring its alignment with international standards. The Roadmap was prepared and announced by the Financial Services Commission (“FSC”) with the participation of the Ministry of Trade, Industry and Resources, the Ministry of Climate, Energy and Environment, the Financial Supervisory Service, and the Korea Exchange (“KRX”). In the Roadmap, the FSC proposed to (i) phase in the sustainability disclosure requirements starting in 2028 (FY 2027) for KOSPI-listed companies with total assets of KRW 30 trillion or more (i.e., their disclosures must be made in accordance with the KRX Disclosure Regulation), and to (ii) allow subsidiaries meeting certain criteria to be exempt from the disclosure requirements for the first year only.
In addition, the Korea Sustainability Standards Board (“KSSB”) has finalized the Korean sustainability disclosure standards (the “Disclosure Standards”) for capital markets to ensure that companies disclose information useful for investors’ decision-making regarding the provision of financial resources to companies. The Disclosure Standards were developed based on IFRS S1 and S2, the standards introduced by the International Sustainability Standards Board (“ISSB”), after giving due consideration to alignment with international standards and their acceptability in Korea. The Disclosure Standards consist of a set of standards, including “General Requirements (No. 1)” and “Climate-related Disclosures (No. 2).” The Korean government plans to obtain feedback on the draft Roadmap by the end of March 2026, and finalize and announce the Roadmap in April 2026.
Key takeaways from the Roadmap and considerations for companies are outlined below.
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Key Takeaways from the Roadmap |
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Details |
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Disclosure Timing |
Disclosure requirements will be implemented in phases starting in 2028 for KOSPI-listed companies with consolidated assets of at least KRW 30 trillion. Subsequent implementation phases will be further discussed (e.g., implementation will be gradually expanded to include KOSPI-listed companies with total assets of at least KRW 10 trillion in 2029 (FY 2028), and any further expansion of coverage will be considered in light of international trends and companies’ readiness). |
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Entities Subject to Disclosure |
All consolidated subsidiaries are subject to disclosure requirements. However, subsidiaries meeting certain criteria (e.g., subsidiaries whose share of consolidated assets or sales is less than 10%) may be excluded from the scope of disclosure for the first year of disclosure only. |
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Disclosure Channel |
The disclosure will initially be made through stock exchange filings and will transition to statutory disclosures. (The timing of transition will be determined through stakeholder consultation) |
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Safe Harbor |
In the early phase of the disclosure regime, safe-harbor protection will be available for disclosures that use forecasts or estimates. If such information has been reasonably estimated using appropriate methodologies and external data, safe-harbor protection will apply even if errors are identified afterward. During the first year following the regime’s introduction, the government will focus on providing guidance rather than imposing sanctions for violations of disclosure requirements. |
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Disclosure Deadline |
In principle, disclosures must be made at the fiscal year-end closing (i.e., as of the end of March). However, given that greenhouse gas emissions data is verified around May under the Emissions Trading Scheme, such data may be disclosed at the semi-annual closing (i.e., mid-August). |
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Mandatory Verification |
Voluntary verification will be allowed in the early phase of the disclosure regime, and mandatory verification will be phased in subsequently. |
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Key Changes to the KSSB’s Disclosure Standards |
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Details |
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Disclosure Standards No. 101 |
No. 101 (Additional Disclosures Considering Policy Objectives) has been excluded from the Disclosure Standards. Disclosure Standards No. 1 (General Requirements) and No. 2 (Climate-related Disclosures) are mandatory. |
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Scope 3 |
Scope 3 emissions disclosure will be deferred for three years and will apply from 2031 (FY 2030). However, (i) small enterprises as defined under the Framework Act on Small and Medium Enterprises, and (ii) entities that are not in high-carbon emission industries will be exempt from disclosure requirements. The scope of exemptions will be re-examined after the disclosure regime has been smoothly implemented. |
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Key Implications and Considerations |
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Transition from stock exchange disclosures to statutory disclosures
Taking into account companies’ compliance burden, Korean financial authorities proposed using stock exchange disclosures initially and then gradually transitioning to statutory disclosures under the Financial Investment Services and Capital Markets Act (the “FSCMA”). However, the difference between stock exchange disclosures and statutory disclosures is not merely a matter of the location of disclosures, but it reflects a fundamental difference in compliance requirements.
Statutory disclosures are a stringent regulatory regime that focuses on investor protection and the quality of information, while stock exchange disclosures are a transitional measure designed to accommodate corporate readiness and preserve regulatory flexibility. Once the statutory disclosure framework is well established, the credibility of disclosed information and its accountability will likely be further strengthened.
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Voluntary Disclosures through Stock Exchanges |
Statutory Disclosures under the FSCMA |
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Legal Basis |
Regulation on Public Disclosure of Listed Companies |
Article 159 of the FSCMA (business reports) |
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Severity of Sanctions |
Designation as deficient disclosure company, penalty points |
Penalty surcharges, criminal penalty, liability for damages |
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Responsible Personnel |
Personnel responsible for disclosures and working-level employees |
Representative Director (CEO) and Board of Directors |
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Consequences of Deficient Disclosure |
A decline in market confidence |
Class actions and the regulatory investigation |
Sustainability information often involves forecasts or qualitative information that inherently involves uncertainties. Therefore, in order to ease the regulatory burden on companies and increase the acceptance of the disclosure regime, the financial authorities are actively considering the introduction of a safe harbor provision that would allow protection for disclosures based on forecasts or estimates, in the early stages of the disclosure system. However, a safe harbor is not an unconditional exemption from liability, but a mechanism based on demonstrated good faith. Accordingly, it is essential for companies to maintain robust supporting evidence and ensure procedural legitimacy.
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Implications of Disclosure Standard No. 1 (General Requirements)
KSSB’s Disclosure Standard No. 1 specifies general requirements for sustainability disclosures. In principle, companies are required to make disclosures simultaneously with their financial statements. However, exceptions are allowed where applicable laws or regulations provide otherwise. Accordingly, even though disclosures must be made at the fiscal year-end closing (i.e., as of the end of March), greenhouse gas emissions data may be disclosed at the semi-annual closing (i.e., mid-August), considering that greenhouse gas emissions are verified around May each year under the Emissions Trading Scheme.
As most companies’ data remains at the individual-entity level or is limited to each business site’s management system linked to the Emissions Trading Scheme, it will be a major challenge for companies to ensure the reliability of consolidated data, including data from overseas subsidiaries and unlisted subsidiaries, to a level comparable to financial statements.
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Implications of Disclosure Standard No. 2 (Climate-related Disclosures)
KSSB’s Disclosure Standard No. 2 requires companies to disclose the impact of climate-related risks on their financial position. This goes beyond a simple listing of data: companies must substantiate the coherent causal link showing how they embed and manage significant climate-related risks and opportunities within their management strategies. Moreover, with respect to strategies and metrics, companies should thoroughly assess the feasibility of their existing carbon neutral strategies and refine their emissions reduction targets, rather than merely presenting environmental metrics or reporting emissions.
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Recommendations for corporate response strategy
The sustainability disclosure regime is likely to increase companies’ legal liability exposure related to sustainability information disclosed externally. Therefore, to strengthen their enterprise‑wide defenses against potential legal disputes, companies should establish a compliance‑focused disclosure system that ensures the integrity of externally disclosed data and the accuracy of their statements.
Related Topics
#Sustainability #Roadmap #Roadmap for Sustainability Disclosures
