International responsible investment institutions and domestic large corporations issued conflicting requests in the same week over the draft mandatory sustainability disclosure roadmap released by the Financial Services Commission on February 25. Three institutions, the PRI (Principles for Responsible Investment), ACGA (Asian Corporate Governance Association) and KoSIF (Korea Sustainability Investing Forum), said they delivered a joint letter on March 24 calling for the draft to be strengthened. The Federation of Korean Entrepreneurs, meanwhile, put the difficulty of securing staff and data front and center in a survey of how KOSPI-listed companies with total assets of 10 trillion won or more but less than 30 trillion won are responding to the disclosure requirements. Public comment on the draft closes at the end of March.
The draft is built in two stages. It applies first to KOSPI-listed companies with large consolidated total assets and proceeds in sequence, beginning with Korea Exchange disclosure and later moving to statutory disclosure. Among the emissions categories, Scope 3, which covers the entire supply chain, was given a separate grace period. The Financial Services Commission is understood to have first made public its plan to mandate ESG disclosure in 2021.
The joint letter called for domestic standards to be aligned without divergence from IFRS S1 and S2, the sustainability disclosure standards in the International Financial Reporting Standards family, for the implementation timetable to be drawn up without ambiguity and without lowering the targets, and for disclosure to be placed within statutory disclosure rather than left to the exchange's voluntary sphere. The letter was delivered jointly to the Financial Services Commission, the Korea Accounting Institute (KSSB) and the National Assembly ESG Forum.
The three institutions assessed the announcement of the roadmap itself as a step that removed uncertainty from the market. At the same time, they viewed the level of the draft as falling short of the expectations of domestic and international investors. Their request is that large listed companies and systemically important institutions be brought under the mandate early in order to secure comparability across the economy. They also asked that it be specified when voluntary disclosure items outside climate disclosure will become mandatory.
The PRI is an association of responsible investors with more than 5,000 signatories representing 139.6 trillion dollars in assets. Investors belonging to ACGA manage more than 40 trillion dollars in assets. The reference dates for both figures precede the disclosure. Those calling for a stronger draft also acknowledged that a phased approach may be valid for items that are complex to calculate, such as Scope 3 emissions and transition plans.
Of the 36 companies in the Federation's survey, 27 responded. Those saying preparation would be possible in time for the mandate came to 70.4 percent. However, 55.6 percent do not have dedicated disclosure staff and combine the work with other duties, rising to 58.3 percent among manufacturers. The gap between the share saying they will be ready and the reality of their staffing is the survey's central figure.
On Scope 3, responses split in half. Those saying they could meet the government's timetable came to 48.1 percent, and those saying it would be possible only after 2033 came to 51.9 percent. Among manufacturers, 66.7 percent asked for a grace period. The reason cited most often for needing a grace period was suppliers' lack of measurement capacity and the resulting decline in data reliability, at 83.3 percent (multiple responses allowed).
The support companies want from the government split evenly between providing specific industry-by-industry guidelines at 44.4 percent and building a standard platform for data collection at 44.4 percent. Song Jae-hyung, head of the Federation's sustainability management office, said active government support is needed for securing specialist personnel and for measuring and obtaining supply chain emissions data. Both the demand to strengthen disclosure and the plea that preparation is overwhelming turn on the quality of supply chain data.
On March 23, the third academic symposium of the Korea Investor Forum, "ESG Legislation Trends and Investor Protection," was held at the FKI Conference Center in Seoul. Experts in management, accounting and law attended, including Choi Joong-kyung, a trustee of the IFRS Foundation, and Chung Suk-woo, head of the Korea Investor Forum. Discussion in academic and accounting circles over a design that runs through international standards and domestic legislation also continued in the same week.
The final version is due to be confirmed in April. Depending on how the confirmed version adjusts the draft's application timetable and the Scope 3 grace period, companies above 30 trillion won will be calculating when to draw up their first reports, and those in the 10 trillion to 30 trillion won range when to change their system of double-duty staffing. Six days remain until the day the comment window closes.
