The Democratic Party of Korea has settled on moving up the application date for Scope 3, the carbon emissions across the entire supply chain, among ESG disclosure items. The key point is that it leaves open a path to shorten the implementation date by up to two years by reducing the grace period originally set at three years. Rep. Park Sang-hyuk, a member of the National Assembly's National Policy Committee, plans to introduce a Capital Markets Act amendment containing these provisions, as confirmed through political circles on March 13. Rep. Kang Jun-hyeon, the committee's ruling party secretary, said he would hold a party-government meeting with the Financial Services Commission and other government bodies during March to discuss the proposal.
The baseline is the roadmap released by the Financial Services Commission last month. The roadmap has three main elements: applying ESG disclosure starting in 2028 to KOSPI-listed companies with total assets of 30 trillion won or more, implementing it through Korea Exchange disclosure rather than statutory disclosure, and granting a three-year grace period for Scope 3. The amendment changes two of these items. It would set the disclosure method as statutory disclosure and align the Scope 3 grace period with the one year set by the International Sustainability Standards Board (ISSB).
If the grace period is reduced from three years to one year, the Scope 3 mandate date moves two years, from 2031 to 2029. Whether this calculation refers to the first applicable fiscal year or the year the report is submitted has not been settled. Which rules will be used to fix the disclosure date is also understood to be under review.
The difference in the severity of sanctions is also considerable. Violations of statutory disclosure are subject to penalty surcharges and criminal punishment, while exchange disclosure carries sanction charges and fines. The amendment focuses on easing this burden through a safe harbor provision grounded in law. As for the scope of companies subject to disclosure, a plan to widen it in stages to cover all listed companies above a certain size is under review.
Europe implemented this system earlier. A team led by Professor Maximilian Muller, who specializes in financial accounting at the University of Cologne, analyzed more than 1,100 reports filed under the EU Corporate Sustainability Reporting Directive (CSRD) and found that the length of sustainability reports increased by about 30% after the directive took effect. The comparison years and sample composition were not presented alongside the finding. In Germany, a plan to impose fines of up to 10 million euros, about 14.5 billion won, for CSRD violations is under discussion.
The verification system is also some distance from complete. Third-party verification of CSRD reports is handled by the so-called Big Four accounting firms, PwC, KPMG, EY and Deloitte, and the level of verification remains at limited assurance, short of reasonable assurance. Companies bear an obligation to disclose their reports but not an obligation to submit them in a machine-readable digital format. The European Commission plans to finalize a digital taxonomy and push forward with work to organize the data systematically.
The point Korean companies will face immediately is the calculation methodology. For Scope 1 and 2 emissions, practical standards have been presented that give priority to direct measurement at the facility and workplace level and allow estimates only where data is lacking. Scope 3 widens this range to suppliers, logistics and the product use stage, so the number of items that cannot be filled by a company's own measuring instruments increases. If the grace period is two years shorter, the time to fill that gap shrinks by the same amount.
Variables remain. Whether the amendment will actually be introduced and whether the Financial Services Commission will adjust the two pillars of its roadmap will only take shape after the party-government meeting to be held during March. How far the safe harbor exempts errors made without intent can also only be assessed once the bill's text is available.
Whether the implementation date stays at 2031 or moves up to 2029 depends on the outcome of these two discussions. In the meantime, what companies need to prepare is the route for obtaining emissions data from their suppliers.
