FSC to announce roadmap for ESG disclosure system in third quarter

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South Korea’s financial regulator is planning to release a roadmap for an environmental, social responsibility and corporate governance (ESG) disclosure system in the third quarter of this year, as the country is in the process to phase in the mandatory system starting in 2025.

The Financial Services Commission (FSC) made the announcement at a seminar held at the Korea Exchange in Seoul on Wednesday.

“The ESG disclosure system along with a retirement pension system is a topic that must be examined in order for us to live in the new normal era of a sustainable economy,” said FSC Vice Chairman Kim So-young.

The ESG disclosure system roadmap will include details on companies subject to mandatory ESG disclosure, domestic criteria for ESG disclosure and a third-party verification system.

Companies subject to mandatory ESG disclosure will start with KOSPI-listed companies with more than 2 trillion won ($1.5 billion) in assets in 2025 and will be expanded to include companies with 1 trillion won in assets by 2027, 500 billion won in assets by 2029 and all KOSPI-listed firms by 2030.

The FSC also plans to review the need to introduce mandatory ESG disclosure for KOSDAQ-listed companies, focusing on large companies.

Regarding ESG disclosure standards for domestic companies, the FSC will initially focus on climate, where there is international consensus.

Later, the disclosure standards will be expanded to other environmental, social responsibility (S), and corporate governance areas.

It will also consider mandating verification of disclosed ESG information by an independent organization to ensure the information reliability.