Korea requires major companies to disclose ESG activities from 2025

Big companies listed on South Korea’s major stock market will be required to disclose their business activities related to environmental, social and governance (ESG) matters from 2025.

The government said on Jan. 14 that the mandatory public disclosure of ESG activities will be expanded to all companies listed on Korea's main bourse from 2030 in a bid to align them with global business standards for corporate social responsibility.

Under strengthened disclosure rules announced by the Financial Services Commission, Kospi-listed companies with total assets valued at 2 trillion won ($1.81 billion) and more will be asked to make public their EGS activity information starting from 2025.

To do this, the financial regulator plans to work out the guidelines for revealing ESG-related activities by the end of January to help companies start unveiling such information voluntarily through their annual sustainability reports and regulatory filing systems.

Korean companies have increasingly been embracing ESG as a key part of their business activities although such initiatives have often been led by state-owned firms and government-directed financial institutions.

The country’s largest pension fund, the National Pension Service, recently declared that it would invest half of its assets into ESG companies by 2022. The pension fund has also decided to incorporate ESG criteria when mandating external managers for equity and bond investments.

Of major companies that made internal reports on ESG management in 2020, only 38 firms, including Samsung Electronics Co. and POSCO, made such activities public through regulatory filings.

TIGHTER ESG RULES GLOBALLY

According to a Morgan Stanley survey of 110 global institutional investors in 2019, some 80% said they were engaged in ESG investments and 15% responded that they were seriously considering such investments in the future.

Companies around the globe will be subject to tighter environmental and financial regulations in their business activities. US President-Elect Joe Biden has vowed to impose a “carbon adjustment fee” on imports from countries that fail to cut emissions in a bid to strengthen his climate change commitment.

On Thursday, SK Hynix Inc., the chipmaking unit of SK Group, said it has issued $1 billion in green bonds for its ESG projects.

SK Group is one of the Korean conglomerates actively pursuing ESG management by investing in projects related to eco-friendly and sustainable growth.

Meanwhile, the government also said on Thursday that it plans to cut listed companies’ paperwork by up to 40% when they publish quarterly reports through regulatory filings.

Write to Hyeong-Ju Oh and Eun-Seo Koo at ohj@hankyung.com
In-Soo Nam edited this article.