Press Releases

"Concerns Grow over Signs of Domestic Sustainability Disclosure
Being Delayed to 2029"

- FSC’s 5th "ESG Finance Task Force" Meeting Sparks Strong Criticism from KoSIF

- The Trump Administration May Weaponize ESG Issues as Selective Trade Barriers

- The EU Has Already Institutionalized a Sustainable Economic Foundation; Delaying Disclosures Will Cripple South Korea's Export Competitiveness

The Korea Sustainability Investing Forum (KoSIF) expressed profound concern following the 5th meeting of the "ESG Finance Task Force" hosted by the Financial Services Commission (FSC) today on the 23rd. Based on the meeting outcomes, KoSIF flagged indications that the current administration might be considering 2029 as the initial mandatory timeline for domestic sustainability disclosures. In an official commentary, the forum warned, "This represents a critical policy misjudgment that will severely undermine our corporations' international competitiveness and long-term capital procurement capabilities.“

According to the FSC's official press release, the text explicitly noted a "need to discuss the initial disclosure timelines for corporations facing high investor information demands, taking into account mandatory disclosures for non-EU companies." The EU's recent 'Omnibus Package'—a regulatory easing measure—deferred mandatory sustainability disclosures for non-EU corporations until 2029. KoSIF analyzed that the FSC's language "can be interpreted as virtually mirroring 2029 (fiscal year 2028) as the benchmark for South Korea's initial disclosure timeline," stressing that "using this specific buffer as the anchor for domestic implementation would be an irreversible strategic error.“

KoSIF strongly urged the financial regulator to resist the intense lobbying and defensive logic of select conglomerates and industry associations. Instead, the forum insisted the FSC must introduce an accelerated roadmap that brings the initial disclosure deadline forward as much as possible. Currently, major business lobbies are exploiting South Korea's specialized industrial structure—specifically its heavy reliance on manufacturing and exports—to argue that early mandatory disclosures will degrade industrial competitiveness. Consequently, they are demanding watered-down disclosure standards, maximum timeline deferrals, and a minimized pool of target corporations.

Dismissing these corporate arguments as short-sighted, KoSIF countered that the National Assembly must swiftly pass the pending amendments to the Capital Markets Act to mandate statutory disclosures starting in 2027. This aligns with global trends, as initial disclosure enforcement deadlines for major global economies are heavily concentrated between 2025 and 2027.

Why South Korea's Export Structure Mandates Accelerated Disclosures

KoSIF completely inverted the industry's defense, asserting that South Korea's high manufacturing density and extreme export dependence—China (19.5%), the United States (18.7%), the EU (10.0%), and Japan (4%)—are precisely why the government must accelerate mandatory disclosures. The forum highlighted three inescapable external market realities:

⦁ Selective Trade Barrier Weaponization by the Trump 2.0 Administration: While the incoming Trump administration generally rejects broader ESG frameworks, it is highly likely to selectively weaponize sustainability themes like climate and human rights into targeted trade barriers if they serve "America First" agendas. Bipartisan momentum confirms this: the Clean Competition Act (CCA) introduced by Democrats and the Foreign Pollution Fee Act (FPFA) introduced by Republicans both enjoy overwhelming, cross-party support in the U.S. Congress.

⦁ The EU's Embedded Sustainable Infrastructure: Although the EU is adjusting its regulatory velocity via the Omnibus Package, this must not be used to justify a domestic disclosure holiday. The EU has systematically overhauled its statutory and policy landscape for years, establishing a highly stable, deeply rooted sustainable economic infrastructure. As a result, the ESG competitiveness of EU firms will not erode. Believing the Omnibus Package buys South Korean firms a safe window to delay compliance is a fatal miscalculation.

⦁ Sustained Global Supply Chain Mandates: Independent of localized state regulations, multinational corporations are continuously intensifying sustainability compliance demands across their global supply networks.

The Danger of "Galapagos Isolation" from Global Capital

KoSIF warned that if South Korea's mandatory disclosure framework is delayed until 2029, domestic enterprises risk becoming completely isolated—resembling a "Galapagos Island"—from international sustainable investment capital.

The Scale of Capital at Risk

⦁ Global Sustainable Investment Asset Pool: USD 30.3 trillion (GSIA, year-end 2022).

⦁ Fiduciary Alignment: Nearly 5,000 global asset owners and managers currently operating as signatories to the Principles for Responsible Investment (PRI).

⦁ Financed Disclosure Mandates: CDP-signatory financial institutions representing USD 142 trillion in assets under management continuously demanding hard corporate disclosures across climate, water security, and deforestation.

If domestic disclosures lag behind, South Korean corporations face structural divestment and avoidance by these massive global capital blocks. On a macro level, this policy delay will trigger a systemic economic contraction, reducing foreign capital inflows while accelerating capital flight.

KoSIF concluded by demanding that the Financial Services Commission look holistically at global market realpolitik and take immediate, decisive action to advance the initial implementation schedule for domestic sustainability disclosures. [END]