Samjong KPMG Presents Response Measures and Roadmap for ESG Disclosure Obligations Compliance

Samjong KPMG has presented corporate response measures and a roadmap in preparation for the phased mandatory ESG (Environmental, Social, Governance) disclosures for domestic listed companies starting in 2025.

On the 24th, Samjong KPMG announced the publication of a report titled "In the Era of Mandatory ESG Information Disclosure, What Should Companies Prepare?" ESG information disclosure refers to the concept of effectively reflecting non-financial information such as a company's ESG performance in sustainability reports and disclosing it to the capital market, similar to how companies disclose financial performance through financial statements. Companies are required to mandatorily disclose information related to sustainability risks and opportunities in accordance with the global standardization of sustainability disclosure criteria. ESG disclosure content is used as key decision-making material by various stakeholders including governments, investors, and customers.

The report emphasized that to effectively respond to the various challenges of ESG information disclosure, it is important to establish organization, methodology, processes, and IT infrastructure, particularly IT systems that ensure the timeliness of disclosed information and the accuracy of ESG data. It stated that indicators, data, report management, and progress rates must be managed in real-time according to global ESG disclosure standards, and special attention should be given to enabling management that connects overseas subsidiaries and affiliates.

The report advised that as a strategy for responding to ESG information disclosure, companies should simultaneously build an information disclosure response system as soon as possible while advancing ESG sophistication. First, companies need to identify whether they are subject to disclosure requirements, including overseas subsidiaries and affiliates, according to each regulation. Since the scope of information required and the range of users differ by disclosure standard, it is necessary to establish differentiated disclosure systems that selectively or comprehensively manage companies subject to single or multiple standards.

Samjong KPMG also proposed a three-step roadmap for domestic companies to respond to global ESG information disclosure obligations. The first step involves diagnosing readiness for new disclosure standards and establishing response strategies. After confirming the applicable regulations for the company, subsidiaries, and major overseas affiliates, companies should assess readiness for each regulation and understand the management and data retention status of disclosure indicators required by each regulation. Since global ESG disclosure regulations require consolidated disclosures, companies must also collect and manage ESG data of subsidiaries under the same standards to prepare for consolidated disclosure.

The second step is to establish an IT system for systematic management of disclosure data. Companies should build IT systems capable of effectively collecting, managing, and monitoring internal and external ESG-related data necessary for disclosure. However, when building an ESG disclosure system, it is advisable to define the functional requirements of the ESG information system first and then proceed with integration with existing legacy and ERP (Enterprise Resource Planning) systems.

The third step is to establish internal control processes and R&R (Roles and Responsibilities) for ESG information disclosure. It is necessary to establish an ESG disclosure governance system centered on internal ESG-related departments, disclosure practitioners, and responsible executives, extending to the CFO and audit committee levels. The internal audit organization should manage ESG data audits and greenwashing risks, the CFO should act as the chief disclosure officer ensuring the reliability of generated ESG information and its linkage with financial information, and the audit committee should serve as the final supervisory body for ESG reporting.

Lee Dong-seok, Vice President and ESG Business Group Leader at Samjong KPMG, stated, "As companies face the obligation to disclose ESG information reliably with quantitative data based on clear grounds, the capability to respond to mandatory ESG information disclosure will determine the sustainable growth of companies in the future." He added, "Companies need to consider not only building ESG information disclosure governance systems including business, processes, personnel, systems, and data but also creating ESG opportunities."

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