Samjong KPMG "Need to Check Appropriateness of ESG Disclosures Centered on Audit Committees"

[Asia Economy Reporter Park Jihwan] As the importance of ESG (Environmental, Social, and Governance) in corporate management is highlighted, there is a claim that audit committees should review the appropriateness of related disclosures, including ESG reports, and link ESG activities to corporate risk management.

Samjong KPMG, through the 'Audit Committee Journal No. 17' published on the 8th, urged that as ESG disclosures become gradually mandatory, audit committees should faithfully operate internal controls centered on the appropriateness of disclosures.

Last month, the Financial Services Commission announced a plan to gradually mandate ESG disclosures for listed companies. Listed companies with assets exceeding 2 trillion won (planned) must disclose a 'Sustainability Management Report' including ESG activities starting in 2025, and from 2030, the disclosure obligation is expected to expand to all listed companies.

Samjong KPMG advised that audit committees should thoroughly review the appropriateness of related disclosures, including ESG reports, financial statements, business reports, as well as ESG introduced through corporate advertising and promotional activities.

They emphasized that ESG activities should be linked to corporate risk management, and that the evaluation procedures of ESG functions should be appropriate and properly reflected in the performance evaluations of responsible executives and employees. They also urged verification of any violations of domestic and international ESG-related laws and regulations or conflicts with regulatory requirements.

Kim Yukyung, leader of the Audit Committee Support Center (ACI) at Samjong KPMG, explained, "According to external audit laws, audit committees must evaluate the operation status of internal accounting control systems and report to the board of directors. With supervisory authorities emphasizing the timely submission of financial statements by companies, the audit committee's role and responsibility in supervising internal accounting control systems are becoming more significant."

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