"Even Large Corporations Struggle... 56% of Domestic Companies Call for Postponement of Mandatory ESG Disclosures"

KCCI Surveys ESG Officers of 100 Companies
"Urgent Need for Industry-Specific Detailed Guidelines and Instructions"

"There are no concrete guidelines or standard platforms, so companies have to measure and disclose emissions on their own. Investors cannot make mutual comparisons, and only companies bear all the risks related to disclosure information." - Executive A, ESG Officer at a Large Corporation

"It takes 3 to 4 years just to establish a company-wide system for measuring emissions. SCOPE 3 disclosures or consolidated SCOPE 1 and 2 disclosures are inevitably impossible at the moment." - Director B, ESG Officer at a Large Holding Company

"We lack internal ESG experts, so we are using external specialized institutions, but there are concerns about expertise and reliability. Compared to demand, supply is insufficient, making consulting·and certification costs burdensome." - IR Team Officer C at a Mid-sized Company

From 2025, companies with assets over 2 trillion won will be required to disclose domestic ESG information, but it has been revealed that even large corporations are still struggling to prepare for disclosure.

[Image source=GS Caltex]

The Korea Chamber of Commerce and Industry recently surveyed ESG officers from 100 domestic companies on their opinions about the domestic ESG disclosure system. The results showed that 56%?more than half?responded that "the ESG disclosure obligation and schedule should be postponed by at least one year, and a grace period (2 to 3 years) for exemption from responsibility should be set." The grace period means exempting companies from responsibility for ESG disclosure information until clear standards for emission measurement and verification are established.

Next, 27% of respondents said, "It is appropriate to mandate disclosure from 2025 for companies with assets over 2 trillion won, from 2030 for other listed companies, and to exclude KOSDAQ companies." Only 14% expressed the opinion that "companies with assets over 1 trillion won should start from 2027, and KOSDAQ companies with assets over 500 billion won should also be included."

Sequentially Increasing Targets and Levels of Sustainability Disclosure [Image Source=Capital Market Research Institute]

Preparation for ESG disclosure was found to be still insufficient. Among companies currently conducting voluntary ESG disclosure, 90.6% responded that they "utilize external specialized institutions," while only 9.4% disclosed "using internal personnel only." Only 14.0% of companies had their own ESG IT systems for disclosure. The investment in ESG disclosure costs was highest at "between 100 million and 200 million won" at 50.9%, and "over 200 million won" accounted for 28.3%.

Regarding 'Scope 3,' which covers indirect greenhouse gas emissions across the entire value chain including business sites and partners, companies unanimously said they lack capacity. Nearly half, 44%, of companies answered that they "do not disclose SCOPE 3 emissions." Those "currently disclosing" accounted for 32.0%, and companies "preparing" for disclosure were 24.0%.

More than half of the companies participating in the survey suggested "delaying the overall schedule" (61.0%). Large corporations emphasized that "SCOPE 3 disclosure is realistically difficult even for large companies." The opinion that "all items should be mandatory from 2027" was 30.0%, and 8.0% suggested "introducing 2 to 3 items that are not burdensome by industry first, then gradually expanding."

As the domestic ESG disclosure system is expected to be established based on ISSB disclosure standards, 74% favored "introducing the standards in a way that alleviates corporate burdens according to domestic circumstances rather than fully adopting ISSB standards." Only 26.0% supported "fully adopting ISSB standards for listed companies."

Regarding consolidated disclosures that include ESG information from subsidiaries and affiliates, companies expressed significant burdens. The opinion that "only individual company information should be disclosed first, with expansion considered later" was high at 77.0%. Only 22% said "disclosure should include all subsidiaries."

The Korea Chamber of Commerce and Industry published the booklet "Easy-to-Understand ESG" in July 2021 to assist small and medium-sized business owners who lack information on ESG management.
[Image source=Korea Chamber of Commerce and Industry]

Companies cited "difficulty measuring and collecting data from partner companies" (63.0%) and "lack of concrete detailed guidelines" (60.0%) as the biggest challenges related to ESG disclosure. This was followed by "lack of internal experts" (52.0%), "cost burden from using external specialized institutions" (46.0%), and "lack of IT/professional systems for disclosure" (37.0%).

When asked about policy tasks necessary for mandatory ESG disclosure, "providing detailed ESG disclosure guidelines and instructions by industry" (82.0%) was the most frequently chosen. Companies also requested solutions to personnel shortages such as "training and supply of ESG experts" (57.0%) and "support for internal personnel education" (34.0%), along with opinions like "support for consulting costs related to disclosure" (47.0%).

Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry, said, "Mandatory ESG disclosure should be promoted as a policy to enhance the global competitiveness of our companies," adding, "To ensure ESG disclosure leads to sustainable growth rather than regulation, sufficient grace periods must be provided, and clear and simplified standards should be presented."

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