Institutional Investors Welcome ESG Roadmap Announcement... Call for Four-Week Advance Notice of Shareholders' Meeting Agendas

ICGN and Democratic Party K-Capital Market Special Committee Forum

"Rapid Pace of Change... Shareholders' Meeting Agendas Should Be Announced Earlier"

Foreign institutional investors have expressed optimism about changes such as the introduction of ESG (Environmental, Social, and Governance) disclosure requirements in Korea. However, they pointed out that the notice for general shareholders' meetings should be given at least four weeks in advance so that investors have sufficient time to review the agenda items.

At the 'ICGN & K-Capital Market Special Committee Global Institutional Investors Roundtable' held on the 15th at the National Assembly Members' Office Building, co-hosted by the International Corporate Governance Network (ICGN) and the Democratic Party of Korea's K Capital Market Special Committee, participants including Professor Woochan Kim of Korea University, who served as the chair of the discussion (third from the left in the front row), and Namwoo Lee, Chairman of the Korea Corporate Governance Forum, who gave the presentation (fourth), are taking a commemorative photo. Photo by Seungwook Park

On April 15, at the 'ICGN & K-Capital Market Special Committee Global Institutional Investors Roundtable' held at the National Assembly Members' Office Building, Jen Sisson, CEO of the International Corporate Governance Network (ICGN), said, "With Korea's capital market reform gaining momentum, we have high expectations for the move to mandate ESG disclosures," and added, "It will be important to see how these measures are implemented in practice going forward."

The Financial Services Commission plans to finalize the ESG disclosure roadmap this month. This comes five years after discussions began in 2021. These requirements will be phased in from 2028, starting with KOSPI-listed companies with more than KRW 30 trillion in consolidated assets. Scope 3 (greenhouse gas emissions across the entire value chain) disclosure will be required from 2031.

There was also optimism regarding three amendments to the Commercial Act and the Stewardship Code. Sage Kawajo, a director at ICGN, said, "The speed of change in Korea is remarkable," and added, "We hope this momentum continues, and ICGN also aims to make a positive contribution to these changes."

There was criticism of the practice of issuing notices for general shareholders' meetings at short notice. Hyunyoung Hwang, a research fellow at the Capital Market Institute who gave a presentation at the event, said, "Among corporations with a December fiscal year-end, 70.3% (1,743 companies) held their general shareholders' meetings on March 26, 27, or 31. The meeting notice is typically issued two weeks before the meeting, and the business report and audit report needed to review the agenda items are released just one week prior," and continued, "Institutional investors such as the National Pension Service must analyze hundreds of agenda items within one week, and foreign institutions often exercise their voting rights without properly reviewing the business or audit reports, so improvements are necessary."

In response, CEO Sisson stated, "There is a need to extend the medium-term goal for the notice period of general shareholders' meetings from two weeks to four weeks," and further emphasized, "From the perspective of institutional investors, who participate in hundreds of proposals and tens of thousands of meetings, it is also crucial to properly establish electronic voting systems."

Opinions were divided regarding proxy advisory firms, which influence the voting decisions of overseas institutional investors. Namwoo Lee, Chairman of the Korea Corporate Governance Forum, said, "Overseas proxy advisory firms such as ISS often lack understanding of the proposals, and due to an absolute shortage of time and personnel, their recommendations can be inconsistent. At the very least, they should be required to report to the financial supervisory authorities." However, CEO Sisson argued, "Imposing regulations on overseas proxy advisory firms could complicate matters. Since advisory firms are merely service providers, it is more important to focus on the Stewardship Code instead."

ICGN is a global investor network that sets international standards for corporate governance and investor stewardship, with more than 300 asset management and advisory firms from 40 countries as members.

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