South Korea's Financial Services Commission and the ruling Democratic Party held a policy meeting on the 8th at the National Assembly and finalized ESG disclosure rules requiring KOSPI-listed companies with consolidated assets of 10 trillion won or more to mandatorily disclose sustainability information in business reports starting in 2028. The threshold will be lowered to 5 trillion won in 2029, with a potential expansion to 2 trillion won in 2030 pending evaluation. The government lowered the initial 30 trillion won proposal to 10 trillion won to cover the KOSPI 200 index, addressing institutional investors' need for sufficient data points for diversified investment strategies, according to Kim Mi-jeong, Director of the FSC's Fair Market Division. The disclosure framework shifts from exchange-based voluntary reporting to mandatory legal filing under the Capital Markets Act.
FSC Sets 2028-2030 Implementation Timeline with Tiered Asset Thresholds
Companies with consolidated assets of 10 trillion won or more will begin mandatory ESG disclosure in 2028. The threshold lowers to 5 trillion won in 2029. The government will evaluate disclosure performance in 2028-2029 and consider expanding the requirement to companies with 2 trillion won or more in assets in 2030. The final plan applies to 291 companies (including subsidiaries) in 2028 and 3,171 companies in 2029.
Kim Mi-jeong stated the 30 trillion won threshold covered only 57 companies, insufficient for institutional investors requiring diversified portfolios. The 10 trillion won threshold covers the KOSPI 200 index, which the government identified as a realistic implementation scope.
Government Mandates Business Report Legal Filing for ESG Data
The government will implement mandatory legal disclosure through business reports immediately, abandoning the initial plan to transition from exchange-based voluntary disclosure to legal requirements. Companies will file ESG information under the Capital Markets Act starting in 2028.
FSC Introduces 3-Year Liability Exemption with Greenwashing Enforcement
The government will exempt all disclosed ESG information from civil damages, administrative sanctions, and criminal penalties under the Capital Markets Act for the first three years of implementation. Intentional greenwashing will remain subject to civil damages and administrative liability from the first year.
Kim Mi-jeong clarified that the 3-year exemption does not apply to intentional greenwashing cases. The Financial Supervisory Service's Corporate Disclosure Bureau will review disclosures from the first year, given the manageable number of companies initially subject to the rule. She stated that intentional greenwashing will be determined based on whether the company recognized the illegality of its actions, with enforcement standards developing as cases accumulate.
After the 3-year exemption period, a safe harbor provision will apply to information with inherent uncertainty—including forward-looking statements, estimated greenhouse gas emissions, and third-party data—exempting companies from liability if they provide reasonable grounds for such disclosures.
Scope 3 Emissions Disclosure Delayed to 2031-2033
Scope 3 emissions disclosure, covering supply chain emissions, will be delayed by three years. Companies with consolidated assets of 10 trillion won or more must disclose Scope 3 data starting in 2031, those with 5 trillion won or more in 2032, and those with 2 trillion won or more in 2033. Small companies in non-high-carbon sectors will be exempt from Scope 3 disclosure.
Korea Accounting Standards Board to Conduct Pilot Tests in 2026
The Korea Accounting Standards Board will conduct pilot tests in 2026 involving representative companies from major industries and experts to develop and publish best practice disclosure examples. The National Pension Service will increase its use of ESG disclosure information across fund management activities, including corporate engagement.
FSC Chairman Lee Eok-won stated that the disclosure roadmap clarifies the direction and goals, and the Commission will expedite implementation measures including Capital Markets Act amendments. He emphasized the government will prepare comprehensive support measures in cooperation with relevant ministries to enable reliable disclosure.
The government and the Democratic Party plan to draft Capital Markets Act amendments as early as this month.
FAQ
What did South Korea's Financial Services Commission announce on the 8th regarding ESG disclosure?
The FSC and the Democratic Party finalized rules requiring KOSPI-listed companies with consolidated assets of 10 trillion won or more to mandatorily disclose ESG information in business reports starting in 2028, with the threshold lowering to 5 trillion won in 2029.
Why did the government lower the asset threshold from 30 trillion won to 10 trillion won?
Kim Mi-jeong, Director of the FSC's Fair Market Division, stated that 30 trillion won covered only 57 companies, insufficient for institutional investors needing diversified portfolios, while 10 trillion won covers the KOSPI 200 index and provides adequate data points.
What liability protections will companies receive during the initial implementation period?
The government will exempt all ESG disclosure information from civil damages, administrative sanctions, and criminal penalties for the first three years, except for intentional greenwashing, which remains subject to civil damages and administrative liability from the first year.
