 |
| gettyimagesbank |
Corporations say they are not ready
By Lee Yeon-woo
Financial authorities are gearing up to require companies with over 2 trillion won ($1.5 billion) in assets to submit sustainability reports starting in 2025. However, such efforts are making slow progress as companies are now urging the regulators to extend the period, citing a lack of clear guidelines and costs.
On Tuesday, the Federation of Korea Industries (FKI), one of the largest business lobby groups here, emphasized that more time is necessary to enhance the credibility of environmental, social and corporate governance (ESG) disclosures and to reduce market confusion.
"It's challenging to discern what kind of information needs to be collected and to what degree it should be disclosed, given the absence of clear roadmaps or guidelines for disclosure. For a 2025 release, they would need to start gathering data by next year," said Lee Han-sang, head of the Korea Accounting Institute Board, during a meeting hosted by the FKI.
A few weeks ago, the Korea Enterprises Federation (KEF), another business lobby group, publicly requested that the Financial Services Commission (FSC) postpone the deadline by three to four years.
"It takes a significant amount of time for corporations to establish a system that can regularly collect and verify related data across their worldwide branches. Additionally, given the small scale of the domestic carbon credit market, excessive costs are inevitable in the early stages of disclosures," KEF noted.
It also pointed out that the announcement of international financial reporting standards (IFRS) was delayed by six months from its initial projections at the end of the previous year.
Despite the calls for a delay, the FSC has consistently maintained that it is not considering postponing the obligatory disclosure. The commission is expected to establish a roadmap for the disclosure during the fourth quarter of this year.
A key reason that influences the FSC's decision, is that such a delay could signal to foreign investors, who place a high emphasis on this issue, that Korea is not committed to ESG principles. This could also hinder the country's economic growth, which heavily relies on exports, as it goes against the global trend, according to market watchers.
After the IFRS announced the standard in June, the EU approved plans for a European version regarding ESG disclosures in July. The U.S. Securities and Exchange Commission is also set to release its final draft within this year.
"While forming an ESG disclosure system, the government will consider not only the global debate but also the characteristics of the domestic industrial structure and the preparedness of corporations," said Kim So-young, vice chairman of the FSC, during a seminar hosted by FSC last month.
In 2021, the FSC revealed its plan to incrementally mandate ESG disclosures for KOSPI-listed companies with assets exceeding 2 trillion won, starting in 2025. This requirement is set to extend to all KOSPI-listed firms by 2030.
![[INTERVIEW] Virtual K-pop group MAVE: is more than just pretty pixels](https://img.koreatimes.co.kr/upload/thumbnailV2/bcc387606cf7451c94f51a5978960c9f.jpg/dims/resize/178/optimize)
