"Han, Two Red Ratings" Climate Disclosure Again Criticized by Asian Investor Coalition

The Asia Investor Group on Climate Change (AIGCC), which has been urging South Korean financial authorities to expedite the schedule for mandatory sustainability disclosures, commonly referred to as 'climate disclosure,' has once again highlighted this issue. South Korea received red ratings in two areas, including the disclosure schedule, out of 12 detailed evaluation criteria. Amid legislative movements in various countries, analysts suggest that South Korea must present a clear roadmap to avoid falling behind in global corporate competition and to attract private capital for climate response.

On the 5th, AIGCC released a report evaluating the National Adaptation Plans (NAPs) of nine Asian countries, revealing these findings. AIGCC is a coalition of over 70 global pension funds and asset managers established to jointly address climate change.

Among the 12 detailed evaluation criteria based on seven investor expectations, South Korea received red ratings requiring caution in the following areas: ▲ Disclosure of physical risks to companies caused by climate change ? implementation before 2026 ▲ Cooperation with the private sector and financial institutions ? overview of the role of private companies. This means that although South Korea is promoting mandatory climate disclosure, its implementation is delayed until after 2026. Furthermore, despite the need for cooperation between the government and private companies, the South Korean government has yet to clearly define or actively promote the role of private companies. Among the nine countries evaluated, only South Korea, Hong Kong, and Singapore received two or more red ratings.

The report emphasized, "The funds needed for climate response cannot be covered by public funds alone; large-scale private capital is necessary. Each country's NAP forms the foundation for establishing policy certainty required to facilitate private capital flows." It added, "If governments establish clear roadmaps, they can attract billions of dollars in private capital for climate adaptation." The report also pointed out that only Indonesia and China have concretized pilot projects related to public-private partnerships for financing climate adaptation projects. In countries like South Korea, the role of investors in the NAP process remains unclear, and roadmaps have yet to be finalized.

Physical risks caused by climate change are now recognized as unavoidable risks in corporate management. As global investors increasingly demand sustainability disclosures, failure to respond appropriately could result in South Korean companies falling behind in global competition and hinder the activation of climate finance and green finance. This context explains why global asset managers belonging to AIGCC, such as British Columbia Investment Management Corporation (BCI), sent a letter to Kim Byung-hwan, Chairman of the Financial Services Commission, at the end of last year urging the establishment of a clear roadmap within the year and mandatory sustainability disclosures by 2026.

However, the Financial Services Commission has yet to present a clear roadmap. The only plan so far is to announce sustainability disclosure standards and a roadmap within the first half of this year, considering the actions of major countries. This approach is analyzed to reflect voices from economic organizations expressing concerns about corporate burdens and the possibility of policy shifts following the inauguration of the Donald Trump administration in the United States.

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