Government to Establish 'K-ESG Guidelines' Within the Year... Tax Credit for Training Expenses Targeting SMEs Planned

The 44th Emergency Economic Central Countermeasures Headquarters Meeting

Establishment of 'ESG Management and Investment Information Platform' by the End of This Year
Preparation of 'K-Taxonomy' to Promote Investment

Gradual Mandatory ESG Disclosure for KOSPI Listed Companies

Preferential Financial Projects and Procurement/Financial Incentives for Excellent Companies

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking while presiding over the 'Emergency Economic Central Countermeasures Headquarters Meeting' held at the Government Seoul Office in Jongno-gu, Seoul on the 26th. Photo by Hyunmin Kim kimhyun81@

[Sejong=Asia Economy Reporter Joo Sang-don] The government has decided to establish a 'Korean-style ESG Guideline' by the end of this year to spread ESG (Environment, Social, Governance) management, which is currently in the ecosystem formation stage. Additionally, a Korean-style green classification system (K-Taxonomy) to promote ESG investment will be prepared within the year, and tax credits for costs related to ESG management support for partner small and medium enterprises will also be pursued.

On the 26th, Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki chaired the '44th Emergency Economic Central Countermeasures Headquarters Meeting' at the Government Seoul Office, discussing the 'ESG Infrastructure Expansion Plan' containing these details.

Deputy Prime Minister Hong said, "Last year, 84 countries introduced ESG-related information disclosure systems, and as ESG factors have become core agendas in corporate management and investment, ESG is emerging as both an opportunity and a threat in the upcoming economic transformation." He added, "Accordingly, the government will prepare the K-ESG Guideline and K-Taxonomy within this year to activate ESG disclosure and investment."

◆Spread of ESG Management Across the Economic and Industrial Ecosystem= The government plans to prepare a cross-ministerial K-ESG Guideline to ease the initial entry burden for companies and activate disclosure. By analyzing evaluation systems of 13 major credible domestic and international institutions, the guideline will focus on core and common questions (around 60) and be prepared by December this year.

Furthermore, KOSPI-listed companies will be gradually mandated to disclose ESG-related reports, including corporate governance reports and sustainability management reports.

Efforts will also be made to strengthen ESG capabilities of small and medium-sized enterprises (SMEs) and mid-sized companies. First, in collaboration with economic organizations, a survey on the ESG management level, preparedness, vulnerable areas, and difficulties of SMEs and mid-sized companies will be conducted. Various 'ESG Management Self-Diagnosis' tools will be developed and provided to enable customized diagnosis and analysis according to company size and industry.

Incentives will be provided to excellent ESG companies. Starting in 2022, government awards and certification systems related to ESG will be utilized to offer preferential treatment in financial projects and procurement/financial benefits to outstanding companies. To strengthen collaboration between large and small-medium enterprises, areas requiring cooperation for ESG management implementation will be analyzed in the second half of this year, and the ESG industrial network will be expanded to encourage cooperation among companies. In particular, through the revision of the Enforcement Rules of the Restriction of Special Taxation Act in 2022, plans will be pursued to include personnel expenses for instructors and related guidance costs spent on ESG management education for employees of partner SMEs as targets for research and human resource development tax credits.

◆Activation of ESG Investment and Creation of a Healthy Market= To activate ESG bonds and funds, the government plans to prepare a Korean-style green classification system in the fourth quarter of this year, based on overseas classification systems such as the EU and ISO, while considering domestic economic and industrial conditions.

Additionally, to promote private issuance of social bonds, guidelines presenting issuance procedures, eligible projects, and methods for calculating social effects will be prepared by 2022. In the mid to long term, ESG bond guidelines will be revised by proposing sustainable bond principles based on green bond and social bond guidelines.

Efforts will also be made to diversify ESG financial products. Various ESG indices will be developed to encourage the launch of ESG index-linked investment products such as ESG-related ETFs, and the introduction of sustainability-linked bonds (SLB), a type of ESG bond (socially responsible investment bond), will be considered to spread the virtuous cycle of ESG management and investment.

To activate ESG investment in the public sector, including pension funds, evaluation items related to ESG investment will be expanded and newly established to promote ESG investment during fund management and pension fund investment pool operations. In the 2021 fiscal year fund management evaluation, a separate score for 'ESG investment' will be newly established under the 'efforts to secure publicness' evaluation. Furthermore, to activate ESG finance in policy financial institutions, ESG evaluation factors will be utilized when providing policy financial support, and customized products for excellent ESG companies will be offered.

◆Establishment of ESG Information Platform and Statistics= By the end of the year, an ESG management and investment platform providing ESG-related information to market participants will be established, and system interconnections will be promoted. A management support platform offering domestic and international ESG trends and issues, cross-ministerial policies and support projects, and self-diagnosis tools will be built to support the entire process of capacity building including 'information provision, education, capability diagnosis, and response strategy consulting.' Additionally, a platform providing ESG disclosure information of KOSPI-listed companies and investment information such as socially responsible investment bonds and ESG funds will also be established.

Expansion of an ESG-related database (DB) that can be referenced to understand the ESG response status of domestic companies and the relative level of individual companies will also be pursued. While maintaining the disclosed information of the Environmental Information Disclosure System and expanding disclosure of administrative data in the environmental field, industrial accident and employment-related data will be systematized and disclosed by industry and size, and an industrial safety-related statistics portal will be established.

The government plans to continuously supplement tasks through meetings with economic organizations and private experts. It will also check progress through inter-ministerial meetings and reflect major annual tasks in economic policy directions.

This content was produced with the assistance of AI translation services.