"Mandatory ESG Disclosure Should Be Delayed by 3-4 Years," Korea Employers Federation Conveys Opinion to Authorities

The Korea Employers Federation announced on the 10th that it has submitted an opinion to the Financial Services Commission and other related ministries, stating that the mandatory ESG (Environmental, Social, and Governance) disclosure scheduled for 2025 under the previous government should be delayed by at least 3 to 4 years.

The Financial Services Commission is planning a roadmap to apply the sustainability disclosure standards issued by the International Financial Reporting Standards (IFRS) Foundation to Korean companies. The Federation argued, "It is necessary to broadly reflect the opinions of companies, which are the subjects of disclosure," and added, "If introduced prematurely without a sufficiently established national disclosure system, the industrial field and capital market will experience confusion."

In the case of domestic manufacturing companies, which have supply chains across various overseas locations, it is considered difficult to collect reliable data including business sites in developing countries with weak infrastructure. The climate-related IFRS disclosure standards require the disclosure of carbon emissions not only for subsidiaries but also for equity-method investees without actual control.

There are concerns that it will take considerable time to periodically collect and verify source data in accordance with disclosure standards from business sites worldwide. The Federation stated, "Building a carbon emission aggregation and disclosure system for each consolidated subsidiary’s business site takes at least 3 to 4 years from technical design through pilot testing to verification," and added, "Considering invisible processes such as securing personnel to manage vast amounts of data, establishing dedicated organizations, setting up verification systems, and providing education and training, even 3 to 4 years is insufficient."

The lack of domestic carbon emission certification and verification infrastructure was also cited as a reason to delay the system’s introduction. Currently, there are 13 carbon emission verification companies in Korea, and about 200 individuals hold verification certificates. Since the conditions for procuring renewable energy are poor compared to overseas, the Federation pointed out that if the high carbon emissions of Korean companies are revealed through disclosure, it could negatively affect the credibility of both companies and the nation.

Lee Dong-geun, Vice Chairman of the Korea Employers Federation, said, "Currently, only Singapore has presented a concrete roadmap," and added, "The mandatory disclosure timeline should be delayed by at least 3 to 4 years, and during this period, the situation in major countries should be monitored to prepare thoroughly."

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