South Korea’s government and the Democratic Party of Korea have finalized the “Sustainability Disclosure Institutionalization Plan,” which mandates ESG (Environmental, Social, and Governance) disclosures for KOSPI-listed companies with consolidated total assets exceeding 10 trillion won (approximately $6.7 billion) starting in 2028. This is a groundbreaking roadmap that significantly broadens the scope of application from the initially reviewed proposal and introduces disclosures directly through business reports under the Capital Markets Act rather than through exchange disclosures. The move is interpreted as a strong commitment to actively respond to the information demands of global institutional investors and to position climate and energy risk management as a core national strategic priority.
South Korea’s Financial Services Commission (FSC) announced the roadmap at a party-government consultation meeting held at the National Assembly Members’ Office Building in Yeouido, Seoul, on the 8th. The finalized plan represents a forward-looking revision of the feedback solicitation draft released on February 25 following inter-agency consultations.
The initial draft proposed a two-phase approach: first implementing mandatory disclosures through the Korea Exchange for KOSPI-listed companies with consolidated total assets exceeding 30 trillion won (approximately $20.0 billion) starting in 2028, then transitioning to statutory disclosures after a certain period. However, global institutional investors reportedly strongly urged the government to expand the scope of disclosure entities and accelerate the introduction of statutory disclosures to enhance the usefulness of investment information, which the government ultimately accepted.
FSC Chairman Lee Eok-won stated, “Through additional consultations with relevant ministries and stakeholder groups, the FSC has developed a revised roadmap aimed at encouraging proactive corporate disclosure compliance. We will pursue the ESG disclosure roadmap with a sense of urgency and, together with relevant ministries, prepare comprehensive support measures to ensure reliable disclosures.”
Under the finalized roadmap, mandatory ESG disclosures will begin with business reports for the 2027 fiscal year, filed in 2028. The first entities subject to the mandate are KOSPI-listed companies with consolidated total assets exceeding 10 trillion won. The requirement will expand to companies with consolidated assets exceeding 5 trillion won (approximately $3.3 billion) in 2029, and the government will review further expansion to companies exceeding 2 trillion won (approximately $1.3 billion) starting in 2030 after evaluating the disclosure landscape in 2028-2029. However, to ensure a soft landing for the system, an exception clause from the initial draft will be maintained, excluding subsidiaries whose assets and revenues each account for less than 10% of the consolidated total from the disclosure scope in the first year.
The disclosure channel has also been significantly strengthened. The party and government plan to pursue an amendment to the Capital Markets Act within the year to legislate the inclusion of ESG information directly in business reports. As a result, the number of entities subject to disclosure, including subsidiaries, is estimated to reach 291 companies in 2028 and 3,171 companies in 2029.
Liability exemption measures considering the burden on companies will also be actively introduced. For the first three years of mandatory disclosure, comprehensive exemptions from damages, administrative sanctions, and criminal penalties under the Capital Markets Act will apply to all disclosed information. However, liability for damages and administrative responsibility will still apply in cases of intentional greenwashing. Subsequently, a safe harbor provision will be implemented, exempting companies from liability for forward-looking information, estimated greenhouse gas emissions, and information obtained from third parties such as suppliers, provided the disclosure was made faithfully with reasonable grounds.
Third-party assurance to secure the reliability of disclosed information will become mandatory starting in 2030. This represents a two-year grace period from the initial disclosure mandate, considering that domestic and international assurance practices are not yet sufficiently established. Disclosure of Scope 3 emissions, which refers to greenhouse gas emissions across the entire value chain, will be sequentially deferred by three years depending on the entity category. The mandate begins in 2031 for companies with consolidated assets exceeding 10 trillion won, in 2032 for those exceeding 5 trillion won, and in 2033 for those exceeding 2 trillion won. Small enterprises under the Framework Act on Small and Medium Enterprises that are not in high-carbon emission industries are excluded from Scope 3 disclosure requirements.
Han Jeong-ae, Policy Committee Chair of the Democratic Party of Korea, said, “Sustainability disclosure is intended to promote management innovation, enabling companies to identify and analyze climate and other sustainability-related risks and opportunities, and to restructure their decision-making and risk management frameworks.”
The government also unveiled support measures to facilitate smooth corporate disclosure compliance. The Korea Accounting Standards Board will conduct pilot tests with representative companies from major industries this year. The Ministry of Climate, Energy and Environment plans to launch a “Korean-style Integrated Climate Risk Platform” by 2028 to support corporate climate risk analysis and will also prepare Scope 3 emissions calculation guidelines for 15 major export industries by the same year.
Measures to enhance the utilization of disclosed information will also be implemented in parallel. The National Pension Service will expand the use of ESG disclosure information across its fund management activities, including corporate engagement, and the government will verify and disclose whether institutional investors incorporate ESG factors into their stewardship responsibilities when reviewing the implementation of the Stewardship Code. Additionally, the government will review ways for financial companies to utilize disclosure information when providing transition finance.
This roadmap also serves as a response to the growing instability in energy prices triggered by conflicts in the Middle East, which has elevated climate and energy risk management as a core challenge for the sustainable growth of nations and corporations. Since first proposing a timeline for mandatory sustainability report disclosures in January 2021, the FSC has gradually adjusted and refined the plan in response to the pace of global discussions and changes in domestic and international economic conditions, culminating in this final version.
Market observers anticipate that this roadmap, designed to align with global standards, will accelerate the overhaul of ESG management systems among South Korean companies. In particular, large corporations with consolidated assets exceeding 10 trillion won must immediately begin building data collection and management infrastructure and overhauling internal control systems, as they will be required to include ESG information in their business reports starting from the settlement of the 2027 fiscal year. While the corporate disclosure burden is expected to increase further with the sequential introduction of third-party assurance and Scope 3 disclosures, the government’s consulting support and liability exemption measures are expected to serve as buffers to mitigate initial disruption.