Taskforce on ESG Finance Holds Meeting to Discuss Ways to Introduce ESG Disclosure SystemOct 16, 2023

The Financial Services Commission held the third meeting of the taskforce on promoting ESG finance on October 16. Set up in February this year, the taskforce on ESG finance consists of representatives from businesses, investors, academia, experts and relevant institutions, and is aimed at exploring various policy tasks on the issues encompassing ESG disclosure, assessment and investment. At today’s taskforce meeting, the authorities discussed the roadmap for introducing an ESG disclosure system in domestic market.


In opening remarks, FSC Vice Chairman Kim So-young spoke about the significance and the underlying principle of introducing an ESG disclosure system in Korea. The following is a summary of Vice Chairman Kim’s remarks.


First, introducing an ESG disclosure system in domestic market is important as this will help to improve domestic firms’ ability to adapt to the strengthened ESG regulatory environment overseas. As domestic firms are both directly and indirectly affected by global value chains, it is necessary to lay a regulatory foundation to help them adjust to the strengthening of relevant regulations in major overseas markets. Second, introducing an ESG disclosure system can make contributions for a sustainable growth of our economy and industries. This will also help our economy make a transition from the one centered on quantitative growth to the one driven by qualitative growth. Third, introducing an ESG disclosure system will induce domestic firms to seek more technological innovation in line with the shifting global paradigm toward digital transformation and low carbon society.


In this regard, establishing rules on ESG disclosure will take into account the standards set forth by major economies and international organizations and give ample considerations for particular characteristics of domestic market and businesses. Second, applying the ESG disclosure rules on businesses will take place in phases, starting with large listed companies first and then expanded to other smaller ones in a gradual manner. During the early stage, penalties for noncompliance will be kept to a minimum level. Third, taking into account the relevant regulatory timelines in major economies overseas, introducing an ESG disclosure system in domestic market will be postponed until after 2026. Since an ESG disclosure system will introduce new compliance requirements for businesses, this postponement will allow sufficient time for businesses to prepare for the change. A specific timeline for introducing an ESG disclosure system will be determined in the future after coordinating schedule with relevant ministries. Fourth, the authorities will actively provide assistance to help improve the ESG management capacity of domestic companies through provision of ESG disclosure guidelines and incentives for voluntary ESG disclosures.


In future taskforce meetings, the FSC will continue to explore various policy measures and issues related to ESG disclosure in close consultation with experts and relevant authorities.


* Please refer to the attached file for details.