Events Recap

1. Policy Forum by Korea Sustainability Investing Forum: "High Expectations for the Passage of the ESG Framework Act in the 22nd National Assembly”

[Business Post] "An ESG Framework Act is vital to establishing a robust ecosystem for the ESG market. Our recent survey of political parties revealed highly positive views toward introducing this framework act."

Jong-oh Lee, CIO of the Korea Sustainability Investing Forum (KoSIF), explained that the political sector's perspective on the ESG Framework Act has significantly shifted compared to the past, noting that KoSIF has consistently advocated for the necessity of a basic act on corporate social responsibility since the 2016 general election.

On the 29th, KoSIF hosted the policy forum titled "The Era of Great Transformation: ESG Policy Forum" at the FKI Tower Conference Center in Yeouido, Seoul. The event was attended by policy working-level officials from major opposition parties—with the exception of the New Progressive Coalition—while the ruling People Power Party (PPP) did not participate.

During the forum, KoSIF disclosed the official responses received from each political party regarding a 14-item ESG policy questionnaire dispatched in early February. Among the major political parties, all except the New Reform Party submitted their responses.

The responding parties declared their stances on various items within the ESG policy package, detailing their execution timelines and strategies if they approved, or providing their reasoning if they opposed.

On the first question—whether they support or oppose the enactment of the ESG Framework Act—all major political parties voted in favor, with the sole exception of the ruling People Power Party.

The ESG Framework Act is designed to enhance the public's quality of life by incentivizing companies to embrace ESG management and building a sustainable business foundation. The act encompasses provisions for mandatory ESG disclosures and the establishment of official ESG verification bodies.

The People Power Party countered that while they oppose codifying this into a legally binding mandate, they agree on the fundamental necessity of policy tools that promote ESG management.

The PPP argued that because the ESG Framework Act lacks international precedents and is highly likely to act as a regulatory burden on enterprises if mandated, it is more appropriate to operate the framework through voluntary, self-regulatory mechanisms.

The People Power Party also adopted a more reserved stance compared to other parties regarding the timeline for mandatory ESG information disclosure.

The Democratic Party of Korea and the New Progressive Coalition responded that they would push for an advanced mandatory ESG disclosure timeline within the term of the 22nd National Assembly, while the Green Justice Party stated they aim to implement it by 2026.

Currently, the mandatory ESG disclosure timeline for KOSPI-listed companies is scheduled for 2030.

CIO Jong-oh Lee explained that because global ESG disclosure standards are generally applied much earlier than South Korea's timeline, KoSIF has strongly advocated for accelerating the domestic mandate.

For instance, the European Union (EU) will enforce its Corporate Sustainability Reporting Directive (CSRD) starting from the 2025 fiscal year, mandating sustainability disclosures. In the United States, the Securities and Exchange Commission (SEC) recently approved its Climate Disclosure Rule, finalizing the introduction of mandatory climate reporting for listed companies.

Regarding other agendas—such as enacting a Korean Supply Chain Due Diligence Act, mandating sustainable public procurement, and establishing Korean Sustainable Finance Disclosure Regulations—opposition parties generally expressed favorable views, whereas the People Power Party opposed or reserved its judgment.

Howbeit, all political parties delivered a unanimous positive response regarding the necessity of establishing a Korean Sustainable Finance Action Plan and roadmap.

The People Power Party presented an objective to formulate a green finance roadmap through rigorous research, while simultaneously seeking strategies to align it with the government's Corporate Value-up Program.

CIO Lee explained, "The People Power Party responded that they will focus on globalizing and advancing domestic financial institutions through the Value-up Program announced by the current administration. This implies they intend to drive this initiative once the 22nd National Assembly is convened and a Special Committee on Climate is established.“

Overall, major political parties demonstrated a significantly more positive outlook toward the necessity of driving ESG policies compared to the previous general election.

CIO Lee stated, "If the other political parties can effectively persuade the People Power Party, we highly anticipate the passage of the ESG Framework Act. Not all regulations are inherently negative; I hope this act serves as a catalyst to sharpen South Korea's global competitiveness.“

Policy researchers from each political party who attended the forum shared their insights during the panel discussion:

Tae-woo Park (Policy Director of the Progressive Party): "Seeking ways to coexist and live together is the essence of social responsibility. We must expand these policies more rapidly and aggressively, and implement them with a profound sense of accountability.“

Hang-ju Park (Head of the Climate Crisis Response Center at the Green Justice Party): "We must ensure that the ESG Framework Act does not repeat the past failures of the Act on the Registration and Evaluation of Chemical Substances. I am deeply concerned that this bill might be diluted or rolled back under the pretext of protecting small and medium-sized enterprises (SMEs)."

Seung-mun Kwon (Research Fellow at the Institute for Democracy, Democratic Party of Korea): "When enacting the ESG Framework Act, it will be crucial to clearly delineate and define the respective roles of the financial sector and the government."

Young-ho Kim, Chairperson of KoSIF, concluded:

"The world is currently deeply engaged in climate politics. In South Korea, campaigns are underway to encourage ordinary citizens to become 'climate voters' who cast their ballots based on climate policies. I firmly believe this will serve as a momentum for ESG to emerge as a critical, mainstream issue within Korean society."

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비즈니스포스트 손영호 기자 @widsg@businesspost.co.kr

Inquiries: Jong-O Lee CIO (argos68@kosif.org), Yumin Jung Senior Researcher (yumin@kosif.org)