Press Releases

 FSC’s ESG Disclosure Roadmap Critiqued as a "Policy Contradiction"—National Assembly and Private Climate Think Tanks Propose Amendments and Alternatives

- Draft Roadmap Clashes with Major Initiatives: Climate Finance, Transition Finance, the Corporate Value-up Program, the Stewardship Code, and K-GX

- Demands Broadening Initial Target Entities, Establishing Statutory Disclosures, Shortening Scope 3 Grace Period to 1 Year, and Locking in an Assurance Roadmap

- Joint Press Conference Hosted by 6 Organizations: Emergency Action Group of Parliamentarians for Climate Action, National Assembly ESG Forum Co-Chair Byoungdug Min, KoSIF, GITI, Plan 1.5, and BigWave

Critics from the National Assembly alongside climate and ESG think tanks argue that the "Draft ESG Mandatory Disclosure Roadmap" released by the Financial Services Commission (FSC) on the 25 of last month not only lags behind global trends and speeds but actively clashes with various government-driven initiatives, including K-GX (Korea’s Great Green Transformation). They urged an immediate overhaul of the roadmap and presented detailed, constructive alternatives.

In particular, the groups called for specific amendments to the draft roadmap, including expanding the initial scope of mandated enterprises, shortening the grace period for Scope 3 emissions, and swiftly establishing a statutory disclosure framework.

The Emergency Action Group of Parliamentarians for Climate Action, National Assembly ESG Forum Co-Chair Byoungdug Min, and a coalition of climate and ESG think tanks—the Korea Sustainability Investing Forum (KoSIF), the Green Investment Transition Institute (GITI), Plan 1.5, and the youth climate group BigWave—held a joint press conference on the 26th at the National Assembly Communication Building to critique the flaws of the draft roadmap and offer rational alternatives.

The FSC's current proposal mandates climate disclosures starting in 2028 (FY27) strictly for KOSPI-listed companies with consolidated total assets of 30 trillion won or higher. It plans to run these initially as stock exchange disclosures for a designated period before transitioning them into statutory disclosures within annual business reports. For Scope 3 emissions (indirect value chain emissions), the FSC suggested a 3-year grace period, pushing mandatory reporting out to 2031 (FY30).

However, the organizations participating in the press conference heavily criticized the proposal, calling it "a plan meticulously engineered to reflect only the 'short-term burdens' of corporations, relying solely on South Korea’s unique landscape as an export-driven economy with a heavy manufacturing core." They added that the draft "falls vastly behind global benchmarks across all criteria, including disclosure timeline, target entities, disclosure channels, and Scope 3 reporting." They warned that "if this draft is finalized in its current state, it will fail to sharpen corporate climate competitiveness through institutional overhauls and industrial transitions in the climate-economy era. It will also fail to realize the 'Korea Premium' by strengthening capital market transparency, ultimately introducing critical structural risks to our economy." Essentially, domestic enterprises risk being bypassed in the international ESG finance market and falling behind in global supply chain competition.

The participating coalitions highlighted a severe "policy contradiction" within the draft roadmap, noting that it acts as a structural drag on other state-driven ESG initiatives. They argued that the proposal explicitly contradicts the administration's emphasis on activating climate finance, accelerating industrial and corporate overhauls through transition finance, and enhancing corporate value by reforming and strengthening the efficacy of the Corporate Value-up Program and the Stewardship Code. It also fundamentally misaligns with the broader national vision of establishing South Korea as a green-civilized country through K-GX. To effectively drive these flagship programs, a transparent, reliable, and comparable ecosystem of ESG information must be built rapidly; instead, the FSC has put forward a deeply disappointing framework.

Disclosure Timeline and Scope: Proposing a Lower Threshold Starting at 5 Trillion Won in Consolidated Total Assets

The coalition initially raised intense concerns regarding the disclosure timeline and target entities. The number of KOSPI-listed companies matching the 30 trillion won consolidated asset threshold stands at a mere 58 enterprises, and financial institutions comprise 29 of those slots. This narrow scope completely fails to encapsulate the vast majority of carbon-heavy corporations and industries that urgently need to transition.

Conversely, jurisdictions like the EU, the UK, Canada, Japan, China, and Australia have established much earlier timelines and target a significantly larger volume of enterprises for their initial mandates. Notably, South Korea’s direct supply chain competitor, Japan, will expand its mandate to roughly 172 companies in 2027 (FY26) and 343 companies in 2028 (FY27). China's mandatory framework will encompass approximately 458 companies right from its initial implementation phase in 2026 (FY25).

Jong-oh Lee, CIO of KoSIF, expressed deep concern:

"The core issue is that while almost all major economies plan to fully round out their scheduled disclosure frameworks by 2030, South Korea will not expand mandates to all KOSPI-listed companies until 2033 (FY32) at the absolute earliest. In this extended ESG information vacuum, international ESG capital will inevitably migrate toward enterprises operating in countries with transparent, mature disclosure systems. Considering that 67% of targeted firms already publish sustainability reports, 62.3% respond to the CDP, and 174 companies are already integrated into the GHG emissions trading scheme and target management systems, our stance is that mandatory disclosures should initiate with KOSPI-listed firms holding 2 trillion won or higher in consolidated assets (approx. 223 companies). However, if corporate readiness and feasibility are the sticking points, the government must aggressively review an alternative threshold of 5 trillion won or higher (approx. 156 companies).“

The 5 trillion won threshold serves as the official baseline used by the Fair Trade Commission (FTC) to designate "large business groups subject to public disclosure" and accurately captures South Korea’s structurally vital, large-cap blue-chip corporations.

Scope 3: Proposing a 1-Year Grace Period Coupled with Safe Harbor Protections

Scope 3 emissions account for an average of 75% to 80% of a corporation's total aggregate greenhouse gas footprint, making them the ultimate focal point for combatting the climate crisis. Citing the administrative difficulties of measurement and calculation, the FSC proposed delaying mandatory Scope 3 reporting via a 3-year grace period until 2031 (FY30). However, the ISSB recommends a 1-year grace period, and the EU grants no grace period at all. Aside from Canada's 3-year buffer, the UK, Australia, and Japan have capped their grace periods at 1 year, while California allows between 180 days to 1 year. China plans to initiate disclosures by encouraging voluntary reporting before mandating it across all target enterprises by 2030.

Furthermore, evidence indicates that domestic firms do possess the internal capacity to execute Scope 3 disclosures. The number of South Korean companies reporting Scope 3 data to the CDP has surged dramatically from 127 in 2023, to 158 in 2024, and reaching 222 companies in 2025. On average, these participating firms are already calculating and reporting data across 8 of the 15 total Scope 3 categories.

Suyeon Han, a policy activist at Plan 1.5, emphasized:

"The FSC's 3-year grace period for Scope 3 completely misaligns with its stated objective of maintaining international alignment. Most countries did not opt for a 'start loose, tighten later' approach for Scope 3; instead, they adopted frameworks that secure high legal predictability from the very beginning. Excluding Scope 3 data makes it impossible to accurately assess a corporation's true climate impact or its climate-driven financial vulnerabilities. This layout carries an extremely high risk of signaling to global investors that South Korea's ESG disclosure data cannot be trusted. We propose a 1-year grace period in line with global standards, paired with robust safe harbor provisions to protect firms from errors in estimation-based data, provided they demonstrate reasonable efforts in their calculations.“

Disclosure Channels: Proposing a Maximum 1-Year Exchange Buffer Before Statutory Transition

The participating organizations also leveled heavy criticism against the FSC’s proposed layout for disclosure channels, which relies on a multi-year stock exchange hosting phase before transitioning to statutory annual business reports. Stock exchange disclosures are structurally "weak disclosures" rooted in a contractual relationship between the Korea Exchange (KRX) and listed entities; consequently, the reliability of the data is inherently lower than that of statutory filings. Exchange-hosted disclosures carry no criminal penalties (such as imprisonment or fines) for misstatements and are considerably loose regarding administrative penalties, market sanctions, and civil liabilities. This loose oversight naturally increases the risk of corporate greenwashing.

Furthermore, exchange disclosures have weak structural linkages to formal financial statements. Because global investors demand statutory disclosures from the outset, major jurisdictions—including the EU, the UK, Canada, Australia, and Japan—have firmly integrated statutory reporting into their initial rollouts.

Youngju Jeong, a researcher at the Green Investment Transition Institute (GITI), stated:

"When comprehensively weighing the need to enhance data quality, eliminate greenwashing risks, accelerate industry-wide transitions, and secure investor confidence, a statutory disclosure framework must be locked in from day one. If the FSC insists on utilizing an exchange-hosted buffer period to ease corporate adjustment friction, that timeframe must be strictly limited. Structurally, the system could be engineered to cap the exchange buffer at a single year for each phase of targeted entities before systematically transitioning them to statutory mandates. Concurrently, amendments to the Financial Investment Services and Capital Markets Act (Capital Markets Act) must be passed within the first half of this year to cement a solid legal foundation for statutory disclosures.“

Mandatory Third-Party Assurance is Vital to Lock in ESG Information Credibility

Third-party assurance is the foundational tool for verifying and elevating the reliability of disclosed ESG metrics. However, the FSC completely omitted a concrete timeline for mandatory assurance in its draft roadmap. The current draft merely outlines a plan to allow voluntary assurance during the initial rollout, with vague intentions to introduce phased mandates later based on international regulatory shifts.

Min Kim, representative of the youth climate group BigWave, stated:

"The vast majority of major economies have unveiled structured, step-by-step roadmaps that debut limited assurance either simultaneously with their initial mandates or within a 1-year buffer, before steadily transitioning toward reasonable assurance. Even China and Japan—our direct supply chain competitors—are launching mandatory limited assurance starting in FY26 and FY28, respectively. South Korea’s reliance on voluntary reporting coupled with the complete absence of a concrete timeline fails entirely to capture global regulatory flows. We demand the inclusion of an explicit assurance time horizon. The mandatory ESG disclosure framework must be redesigned to sharpen our enterprises' net-zero competitiveness, thereby offering a clear vision of green jobs and eco-friendly investments for youth and future generations.“

The coalition concluded by stressing that "ESG disclosure is not a mere exercise in public data reporting; it is an imperative innovation and transition required for economic survival. Delaying mandatory ESG disclosures does not protect corporations; rather, it erodes their mid-to-long-term competitiveness, severs their access to global supply chains, and triggers capital flight. We strongly urge the government to actively review and integrate the rational alternatives we have presented today.“

Moving forward, the participating groups plan to deliver these alternative proposals directly to the National Assembly and the Presidential Office to ensure that the final roadmap, scheduled for confirmation in April, serves as an effective mechanism to catalyze the competitiveness of South Korean enterprises and industries. They intend to maintain active public campaigns and engagement activities to secure these overhauls.[END]

 Inquiries: Jong-O Lee CIO (argos68@kosif.org), Hanjin Yu  Team Lead (hwcharisma89@kosif.org)