ESG management requires the consideration of various factors from the perspectives of the environment, society, and governance. Among them, “Environment (E)” – more specifically a response to climate change – has been drawing attention as a key agenda for ESG management. Many countries (including Korea) are in the process of establishing and implementing various disclosure systems to ensure that, with respect to companies’ climate change-related risks and opportunities, information is delivered to stakeholders (including investors) in a reliable and effective manner.
International climate disclosure standards may have a direct impact on companies that are either operating in the relevant country or listed on the relevant stock market. Even if Korean companies are not directly subject to the relevant regulations, Korean companies that are in a cooperative/transactional relationship with overseas companies will be indirectly affected by such regulations. Furthermore, even if the climate disclosure standards are not legally binding, it is highly likely that such standards will have an influence on other ESG disclosure standards given the demand for global consistency in climate disclosure standards. Therefore, it is necessary for Korean companies to closely monitor the details of domestic and overseas climate disclosure standards, as well as policy trends, and examine the need for preparing countermeasures. The following are the domestic and overseas climate disclosure standards that are currently being discussed.
1. |
International Trends |
(1) |
Overview of Comparison Between Climate Disclosure Standards |
Classification |
US SEC Climate Disclosure Regulations |
EU CSRD |
ISSB’s IFRS S2 (Climate Disclosure Standards) |
Announcement Date or Effective Date |
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Subject of Application and Timing |
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Key Disclosure Requirements |
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Characteristics |
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(2) |
US SEC Climate-Related Disclosure Regulations |
(3) |
EU CSRD and ESRS E1 (Part of the First Set of ESRS) |
(4) |
ISSB’s IFRS S2 Disclosure Standards |
2. |
Domestic Trends |
(1) |
Overview of Climate Disclosure Standards |
Classification |
ESG Information Disclosure System |
Environmental Information Disclosure System |
Responsible Agency |
FSC |
MOE |
Effective Date |
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Key Disclosure Requirements |
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(2) |
Discussions on Establishment of ESG Disclosure Standards in Korea |
(3) |
Reform of Environmental Information Disclosure System |
3. |
Implications for Korean Companies |
[1] For reference, the ESG disclosure requirement was planned to be gradually expanded to (i) KOSPI-listed companies with assets of KRW 2 trillion or more (starting from 2025), (ii) KOSPI-listed companies with assets of KRW 1 trillion or more (starting from 2027), (iii) KOSPI-listed companies with assets of KRW 500 billion or more (starting from 2029), and (iv) ultimately, all KOSPI-listed companies.
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