The South Korean Financial Services Commission has postponed the implementation of ESG disclosure rules for the country’s listed firms until at least 2026. This decision was made in consideration of global developments and in response to calls from the business community. The FSC initially unveiled its plan for a mandatory ESG disclosure system for listed companies in early 2021, with the implementation set to roll out in phases commencing in 2025. “We have decided to postpone because some countries, including the US, have delayed their own implementation of mandatory ESG reporting,” the FSC said. This delay aims to provide businesses ample time to prepare for the upcoming changes. The FSC plans to collaborate with other government ministries to establish a new implementation timeline, considering international developments and concerns raised by South Korean businesses. The FSC emphasised that ESG disclosure rules will be introduced in stages, beginning with large listed companies before expanding to smaller entities. During the initial phases, penalties for non–compliance will be minimal, and regulators will actively support companies in enhancing their ESG management capabilities. Support will include ESG disclosure guidelines, ESG-related consulting, and incentives for voluntary ESG disclosures linked to financing from policy financial institutions, such as the Korea Development Bank. The FSC and the Korea Exchange (KRX) have also announced comprehensive revisions to their corporate governance reporting guidelines. These revisions incorporate institutional improvements and align with domestic and international governance standards, such as the updated G20/OECD Principles of Corporate Governance. Key amendments include advanced disclosure of dividends ahead of the ex-date, transparency in communications with minority shareholders and foreign investors, heightened focus on board diversity, clarification of remuneration decisions and executive liability insurance, as well as the disclosure of legal violations by executives over the last five years.
— Regulation Asia (@RegulationAsia) October 17, 2023