'Financial Services Commission Prepares for Mandatory ESG Disclosure, Adds Korean Translation of SASB'

[Asia Economy Reporter Lee Seon-ae] Financial authorities will additionally release the Korean translation of the SASB standards. The SASB standards are 77 industry-specific sustainability disclosure standards established in 2018 by the U.S. Sustainability Accounting Standards Board (SASB), and are currently undergoing integration with the International Sustainability Standards Board (ISSB) disclosure standards.

The Financial Services Commission and the Korea Accounting Standards Board announced on the 8th, “In order for companies to prepare in advance for the global movement to establish sustainability disclosure standards and the domestic mandatory ESG (Environmental, Social, Governance) disclosure, we will additionally translate and release the SASB standards in Korean this year, following the initial release in November 2021.”

The Financial Services Commission and the Korea Accounting Standards Board plan to additionally translate into Korean 30 industry-specific standards and the Implementation Guide (SASB Standards Application Guidelines), considering the demand from domestic companies and industry characteristics. Previously, only 10 industry-specific standards, conceptual frameworks, and application guidelines were translated into Korean.

The ISSB, under the IFRS Foundation, announced a public draft of general and climate-related sustainability disclosure standards in March last year and is currently reviewing the final draft. The final standards will be announced in the first half of this year, and standards for other E fields such as biodiversity, as well as S and G fields, are expected to be sequentially developed in the future.

The Financial Services Commission and the Korea Accounting Standards Board explained that the ISSB’s public draft disclosure standards are largely based on the SASB standards. In particular, since it will take considerable time for the ISSB to fully establish and implement sustainability disclosure standards across the entire ESG field, it is evaluated that the SASB standards should be actively utilized until then.

Moreover, although the Financial Services Commission has announced a phased schedule for mandatory ESG disclosure domestically, the applicable companies, disclosure items, and standards have not yet been specified. Accordingly, companies are voluntarily preparing and disclosing sustainability management reports using various standards including the SASB standards.

A Financial Services Commission official stated, “With the additional release of the Korean translation, understanding of the SASB standards will improve, and as the application of the standards becomes easier, more reliable and thorough sustainability disclosures will be possible,” adding, “It is expected that companies’ voluntary ESG disclosures will also expand further.”

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