Takeaways

• South Korea is planning mandatory sustainability disclosures for major KOSPI-listed firms, starting with climate reporting from 2028 based on 2027 data.
• The rules align closely with ISSB global reporting standards, signaling stronger ESG transparency for investors.
• The framework includes a phased rollout, transitional reliefs, and voluntary assurance initially, allowing companies time to build reporting systems.

South Korea is moving closer to introducing ISSB-aligned climate disclosures for large publicly listed companies, as regulators seek to strengthen sustainability transparency and align the country with global reporting standards.

The Financial Services Commission (FSC) has launched a public consultation on a roadmap that would gradually introduce mandatory sustainability reporting for major firms listed on the Korea Composite Stock Price Index (KOSPI). The consultation accompanies the finalization of new sustainability reporting rules developed by the Korean Sustainability Standards Board (KSSB).

The new standards include KSSB 1: General Requirements for Sustainability-related Financial Disclosures and KSSB 2: Climate-related Disclosures, which closely mirror the ISSB’s IFRS S1 and IFRS S2 frameworks. These global standards are rapidly becoming the baseline for corporate climate reporting across several major economies.

Regulators are gathering market feedback before finalizing the roadmap in April 2026.

Read More: FCA Plans to Relax Climate Reporting Rules for Financial Firms

Large KOSPI Firms to Lead the Transition

Under the proposed plan, the first companies required to follow the new ISSB reporting standards would be the largest firms listed on the KOSPI, particularly those with consolidated assets exceeding KRW 30 trillion ($20.4 billion).

These companies would begin reporting sustainability information for the 2027 fiscal year, with disclosures published in 2028.

The requirement would expand a year later to companies with assets above KRW 10 trillion ($6.8 billion). Authorities also left open the possibility of extending South Korea sustainability reporting rules to smaller listed companies as reporting infrastructure improves.

The phased rollout mirrors a global regulatory trend in which governments are balancing investor demand for standardized climate disclosures with the practical challenges companies face in collecting and verifying sustainability data.

Climate Reporting Takes Priority

The roadmap adopts a climate-first approach, focusing initially on governance, climate risks, and emissions-related information before expanding to broader sustainability topics.

To ease the transition, the FSC has proposed several temporary relief measures. In the first year of reporting, subsidiaries representing less than 10 percent of a company’s consolidated assets would be exempt from disclosure requirements. Smaller firms within corporate supply chains would also be excluded initially.

Reporting of Scope 3 greenhouse gas emissions, often the most difficult element of climate reporting, would be postponed until fiscal year 2030. This provides companies with additional time to build the data systems needed to track emissions across complex value chains.

Gradual Rollout of Assurance and Enforcement Measures

The draft roadmap also outlines how compliance will be monitored. Third-party assurance for sustainability disclosures would begin as voluntary during the early implementation phase.

Regulators may later introduce mandatory assurance once corporate reporting systems and verification frameworks mature.

Enforcement is expected to take a measured approach. Instead of immediate penalties, authorities plan to focus first on regulatory guidance and market education, helping companies develop robust sustainability reporting processes.

Impact on Investors and Global ESG Standards

For global investors, the proposed KOSPI climate disclosure rules could significantly improve the comparability of climate risk data among major Korean corporations.

South Korea is home to major players in electronics, automotive, and heavy manufacturing sectors with complex supply chains and significant emissions footprints. Standardized reporting could therefore provide clearer insights into corporate transition strategies and climate-related financial risks.

Also Read: CSRD Recalibration Fails to Slow Firms Seeing Value in Sustainability Reporting

The initiative also reflects a broader global movement toward ISSB-aligned climate disclosures, as regulators seek to harmonize sustainability reporting across jurisdictions. Several markets, including Europe, the United Kingdom, Japan, and parts of the Asia-Pacific region, are already integrating ISSB frameworks into national regulations.

The consultation on the roadmap will remain open until March 31, 2026. If implemented as proposed, South Korea would join a growing group of economies embedding ISSB reporting standards into financial regulation, further accelerating global convergence in climate and sustainability reporting.

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Source: ESG NEWS