Resources

KoSIF Issue Brief  - Current Status and Tasks of Water Risk and Disclosure for Korean Companies

Water risk in Korea’s core industries has moved beyond an environmental issue to become a real financial threat. Mandatory requirements such as EU ESRS E3 are combining with information requests from capital markets (TNFD, IFRS, etc.) and growing requirements from global customers to create a multi-layered disclosure environment. In response, this KoSIF Issue Brief presents an integrated approach and its implications for improving reporting efficiency.

Drawing on CDP data, the brief shows that water risk has escalated into a core financial risk directly tied to corporate financing and production stability. It also analyzes how Korean industry, which remains at the stage of voluntary disclosure, is responding to tightening global requirements, and the potential competitiveness gap that may follow.

Through this brief, corporate leadership and disclosure practitioners will gain a clear understanding of the latest pressure from global regulation and capital markets on water disclosure. They will see how a single tool, CDP Water Security, can meet the core requirements of multiple frameworks at once, instead of responding to each fragmented framework individually. They will also identify strategic opportunities to lower financing costs by linking water disclosure data to products such as sustainability-linked loans (SLLs).

[Table of Contents]

1. Growing Demand for Water Disclosure from Global Stakeholders

   - Water Disclosure Requests from Major Global Companies

   - Water Disclosure Requests from Global Financial Institutions and Investors

   Current Status of Water Risk

   Financial Impact of Water Risk

   Trends in Water Disclosure Regulation

   - Global: Mandatory ESRS E3 Water Disclosure and Alignment with TNFD and ISRS

   - Korea: Primarily Voluntary Disclosure

   Implications: Response Prioirities for Korean Companies

   - CDP Water Security

   - Conclusion

   Reference 

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[Key Findings]

• • - Structural exposure to water risk: According to 2025 CDP data, 49% of Korean respondents withdraw water in water-stressed areas, and 77% identified substantive water risks. In pharmaceutical/health (88.5%), industrials (61.2%), and IT (60.4%), more than half of water is withdrawn in water-stressed areas.
  • - Limited financial quantification: The average financial impact per reported water risk is about 33 million KRW, far below the roughly 11.4 billion KRW per climate change risk, indicating that awareness of water risk is still at an early stage.
  • - Global mandatory vs. Korean voluntary disclosure: The EU CSRD (ESRS E3) extends mandatory water disclosure to non-EU companies, while IFRS S2 and the voluntary TNFD framework add further pressure. Korea has no integrated, mandatory water disclosure rules for private-sector companies.
  • - Efficiency through an integrated response tool: CDP Water Security can meet approximately 50–80% of the core requirements of ESRS E3, GRI 303, and TNFD through a single questionnaire, making it the most realistic and cost-effective response.

Inquiry: Nahyun Nam, Senior Researcher (nhn5505@kosif.org)