South Korea’s Financial Services Commission (FSC) will delay the implementation of environmental, social and governance (ESG) disclosure rules for the country’s listed firms from 2025 to 2026 or later.
Since an ESG disclosure system will introduce new compliance requirements for businesses, the FSC says, the postponement will allow businesses sufficient time to prepare for the change.
A specific timeline for introducing an ESG disclosure system, FSC vice-chairman Kim So-young states, will be determined after coordinating a schedule with relevant ministries. However, no timeline was given.
The FSC’s taskforce on ESG finance, established in February this year and made up of representatives from business, the investment community, academia and other relevant institutions, is aimed at exploring various policy tasks on the issues encompassing ESG disclosure, assessment and investment.
The introduction of an ESG disclosure system in the South Korean domestic market, Kim highlighted at the taskforce’s October 16 meeting, was vital as it would help to improve the ability of domestic firms to adapt to the strengthened international ESG regulatory environment.
Applying any future ESG disclosure rules on businesses, Kim notes, will take place in phases, starting initially with large listed companies and then expanding to cover other smaller businesses. During their early-stage introduction, he adds, penalties for non-compliance will be kept to a minimum level.
Once established, the ESG disclosure system, he shares, will also induce domestic South Korean firms to seek more technological innovation, in line with the shifting global move towards digital transformation and a low-carbon society.
The introduction of the country’s own ESG disclosure system will create opportunities for sustainable growth of the South Korean economy and industries, Kim states, while also helping the domestic economy make a transition from one centered on quantitative growth to one driven by qualitative growth.