Korea delays ESG reporting rules for firms to 2026 or later

South Korea will postpone implementation of environmental, social and governance (ESG) disclosure rules for the country’s listed firms from 2025 to 2026 or later, the Financial Services Commission (FSC) said on Monday.  

The regulator said it has made the decision because some countries, including the US, have delayed their implementation of mandatory ESG reporting.

The FSC has also considered that the global sustainability disclosure standards by the International Sustainability Standards Board (ISSB), the basis for the domestic regulations, were just released in June and the country’s business community has called for a postponement in enforcing the rules.

Mandatory ESG reporting is a company’s periodic disclosure of its businesses that may impact ESG issues, as well as the ESG risks that may affect its performance. The purpose of disclosure is to enhance the transparency of the company’s operations so that stakeholders can make better decisions.

The FSC said in May it will begin implementing the disclosure system in 2025, focusing on Kospi-listed firms with more than 2 trillion won ($1.5 billion) in assets, and expand it to all companies on Korea's main bourse by 2030. The core standards for disclosure will be in the climate sector, where international consensus has formed, it noted at the time.

The FSC said it will hold discussions with ESG policy-related government bureaus to confirm the timing of the rule's introduction. To set up the disclosure standards, it will review relevant rules in other countries and at international organizations, and consider Korean businesses' concerns about the mandates, the regulator added.

It will begin imposing the rules on large companies first and gradually expand implementation, the FSS said. It will also minimize relevant sanctions during the early stages after introduction, the FSS added.

The government plans to give companies incentives when they seek financing from state-run banks for their ESG reporting, as well as support companies’ ESG-related consulting.

“Korean companies, which are part of global value chains, need national support for mandatory ESG reporting to adapt themselves to overseas regulations and become more competitive,” said FSC Vice Chairman Kim So young.

“The introduction of the reporting system will strengthen local companies’ technological innovation and ESG management amid global paradigm shifts like the digital transformation and the transition to a low-carbon economy,” Kim added.

Write to Han-Gyeol Seon at always@hankyung.com
Jihyun Kim edited this article.