Press Releases

Lee Jae-myung and Kwon Young-guk "Fully Agree" on 7 Major ESG Policies… 

People Power Party and Reform New Party Remain Silent

- Candidate Stances Confirmed on 7 Key Policies, Including Sustainability Disclosure and Renewable Energy Siting

- KoSIF: "The Next Administration Must Provide a Predictable Policy Framework for ESG"

- The Korea Sustainability Investing Forum (KoSIF, Chairperson Young-ho Kim) disclosed the results of its "ESG, Climate, and Renewable Energy Policy Questionnaire" sent to presidential candidates for the 21st presidential election.

Candidate Jae-myung Lee of the Democratic Party of Korea and Candidate Young-guk Kwon of the Democratic Labor Party submitted official responses endorsing the policies, while the People Power Party and the Reform New Party failed to provide official answers.

KoSIF stated:

“At a time when climate crises and global supply chain uncertainties are intensifying, the next administration's approach to ESG will be a critical policy variable dictating the international competitiveness of our corporations and financial institutions. Even amidst social and economic turbulence, we urgently need structured discourse to institutionalize a sustainability-based framework.”

Accordingly, KoSIF dispatched a questionnaire comprising 7 core policy items to evaluate each candidate's baseline stance on ESG integration.

The 7 Core ESG & Climate Policy Items

The questionnaire was developed by aggregating feedback from corporations, financial institutions, and civil society to pinpoint the regulatory updates most critical to Korea's industrial competitiveness:

1. Enactment of an ESG Framework Act (Stance and implementation plans).

2. Establishing an Accelerated Roadmap for Mandatory Sustainability Disclosures.

3. Reforming the Stewardship Code to enhance enforcement and fiduciary duties.

4. Integrating Climate Risk into Financial Institutions' Asset Soundness Evaluations and issuing supervisory guidance.

5. Transitioning Public Financial Institutions' Asset Portfolios to Net-Zero.

6. Establishing a Dedicated Green Finance Corporation.

7. Introducing a Planned Siting System Dedicated to Power Purchase Agreements (PPAs) to facilitate corporate renewable energy procurement.

Both Candidate Jae-myung Lee and Candidate Young-guk Kwon expressed full agreement across all 7 policy pillars.

Mandatory Sustainability Disclosures Set for Deep Discourse Under New Administration

As international capital markets rapidly increase demands for corporate ESG data—particularly climate-related metrics—mandating sustainability disclosures has emerged as a top-tier policy priority. However, South Korea still lacks standardized statutory criteria, leaving domestic firms reliant on voluntary reporting. This has drawn persistent criticism regarding the data's reliability and comparability.

Both candidates voiced strong support for amending the Capital Markets Act and establishing a definitive disclosure roadmap to address these deficiencies:

⦁ Candidate Jae-myung Lee is reviewing a phased expansion of mandatory disclosures, starting with listed enterprises with total assets of KRW 2 trillion or more. While a precise calendar was not finalized, he stated he would move swiftly in close consultation with key market stakeholders.

⦁ Candidate Young-guk Kwon targeted 2027 for full implementation, proposing an expanded scope that encompasses not only listed entities but also unlisted corporations with total assets exceeding KRW 2 trillion.

With Candidate Lee Jae-myung's victory, extensive policy debates surrounding the specific scope, phase-in methodologies, and enforcement timelines for mandatory corporate disclosures are projected to take center stage upon the administration's official launch. Given that these updates require rewriting statutory foundations like the Capital Markets Act, the legislative role of the National Assembly will be paramount.

Notably, Candidate Moon-soo Kim did not respond to the inquiry. However, during the 22nd general election, the People Power Party previously expressed a cautious, reserved stance, noting they would "determine the timing, target corporations, and implementation methods based on upcoming ESG disclosure standards after gathering consensus from experts and industry stakeholders."

Overcoming Structural Bottlenecks in Renewable Energy Siting and PPA Procurement

The International Energy Agency (IEA) projects that renewable energy will account for over 35% of global electricity generation. As multinational corporations increasingly mandate clean energy utilization across their entire supply chains, securing renewable energy has transitioned into a core metric of corporate survival.

However, South Korean firms face severe structural constraints in securing renewable energy, primarily due to a lack of available sites and high price uncertainty. This is clearly reflected in the massive gap between their domestic and international clean energy adoption.

According to the 2024 CDP report, South Korean companies participating in the RE100 initiative achieved an impressive average renewable energy utilization rate of 59% at their overseas facilities. In stark contrast, that figure dropped to a mere 12% at their operations within South Korea.

The gap is even more pronounced when looking at Power Purchase Agreements (PPAs)—a key mechanism where companies sign long-term contracts to buy electricity directly from renewable energy developers to guarantee a stable power supply. Currently, corporate PPAs account for a microscopic 0.3% of total renewable energy procurement in South Korea, underscoring the urgent need for comprehensive institutional reform.

Aligning the Financial Sector with Climate Realities

As natural disasters and industrial transitions accelerate climate-induced financial risks, global supervisory authorities are aggressively incorporating physical and transition risks into financial stability frameworks. Conversely, South Korean private financial firms face no mandatory obligation to incorporate climate risks into asset soundness evaluations. While the Financial Supervisory Service (FSS) and the Bank of Korea have initiated pilot "Climate Stress Tests," these metrics have yet to be codified into official asset soundness regulations.

Public financial institutions similarly lag behind, frequently lacking verified Net-Zero portfolio targets or financed emissions reduction pathways.

Candidate Commitments on Climate Finance Reform

⦁ Candidate Jae-myung Lee stated he is evaluating diverse precautionary frameworks aimed at boosting the financial sector’s climate resilience and risk management capabilities. For public finance, he proposed diversifying administrative indices—such as introducing mandated financed emissions measurements—to elevate systemic sustainability.

⦁ Candidate Young-guk Kwon committed to a hard implementation deadline, targeting a comprehensive institutional rollout by 2026.

⦁ Broader Frameworks: Both candidates also signaled full alignment on enacting an ESG Framework Act, revising the Stewardship Code, and creating a Green Finance Corporation.

Reflecting on the questionnaire results, Jong-oh Lee, CIO of KoSIF, remarked:

"While the Democratic Party of Korea and the Democratic Labor Party candidates offered clear, affirmative stances on pivotal ESG policies, it is highly regrettable that the People Power Party—the second-largest party in the legislature—and the Reform New Party chose not to submit official responses.

Because ESG directly impacts global supply chain compliance, foreign capital attraction, corporate governance, and the entire financial architecture, it must be approached as a bipartisan economic imperative. The next administration must foster cross-party collaboration and present a highly predictable, consistent policy direction to give our markets stability. Securing the continuity of these frameworks requires broad social dialogue and responsible participation across the political spectrum." [END]

Inquiries: Jong-O Lee CIO (argos68@kosif.org), Dajeong Kim  Senior Researcher (kimdj@kosif.org)