The South Korean government plans to make ESG (Environmental, Social, and Governance) disclosures mandatory for large corporations listed on the KOSPI index from 2028 onwards. This initiative was announced during a meeting chaired by the Financial Services Commission (FSC) chairman, Lee Ok-keun, where they presented a roadmap aimed at institutionalizing ESG disclosures. The new regulations will require companies with total assets exceeding 30 trillion won to start reporting ESG metrics, though exemptions will be considered for certain subsidiaries in the initial year.

In addition to expanding the number of companies subject to ESG reporting, the government also proposed a significant increase in the already ambitious climate finance goals, raising the previous target from 420 trillion won to 790 trillion won. The reporting framework will categorize greenhouse gas emissions into three scopes for better accountability: Scope 1 (direct emissions), Scope 2 (indirect emissions related to energy consumption), and Scope 3 (emissions along the value chain). Companies will need to report their emissions accordingly, although a three-year grace period is proposed before Scope 3 reporting becomes mandatory.

The ESG disclosure requirements will focus on four key areas: indicators and targets, governance, strategy, and risk management. These will encompass metrics such as total greenhouse gas emissions, internal carbon pricing, and climate-related objectives. The governance aspect will involve corporate systems for monitoring and managing climate risks, while strategy will address how climate-related risks and opportunities affect corporate decision-making. The FSC aims to implement a framework that ensures transparency in corporate sustainability efforts and fosters a transformative approach to finance in response to climate challenges.