South Korea Moves ESG Reporting Into Statutory Corporate Disclosure

Key Takeaways

• Mandatory ESG Reporting Begins in 2028: South Korea will require KOSPI-listed companies with at least $6.65 billion (KRW10 trillion) in consolidated assets to begin statutory sustainability disclosures starting with FY2027 reports filed in 2028.
• Reporting Scope Expands in Phases: The disclosure threshold will fall to $3.32 billion (KRW5 trillion) in 2029, with authorities considering an expansion to companies with $1.33 billion (KRW2 trillion) in consolidated assets after reviewing the initial rollout.
• Temporary Safe Harbor Reduces Legal Risk: Companies will receive broad protection from damages, administrative sanctions, and criminal penalties for sustainability disclosures during the first three years of mandatory reporting, except in cases of intentional greenwashing.
• Scope 3 and Assurance Requirements Are Deferred: Mandatory third-party verification will begin in 2030, while Scope 3 greenhouse gas emissions disclosures will be phased in between 2031 and 2033 depending on company size.
• Government Couples Regulation With Compliance Support: Alongside the new reporting requirements, South Korea will provide guidance, digital infrastructure, consulting programs, and climate-risk tools to help companies prepare for mandatory ESG disclosure.

Deep Dive

South Korea has accelerated its plans for mandatory corporate sustainability reporting, requiring the country's largest listed companies to begin ESG disclosures in 2028 while pairing the new obligations with temporary legal protections and a broad government support program designed to ease implementation.

The roadmap moves forward an earlier disclosure timetable and signals a broader shift in how sustainability information will be treated. Rather than remaining a voluntary reporting exercise, ESG disclosures will become part of statutory corporate business reports under the Financial Investment Services and Capital Markets Act (FSCMA), with legislation expected to be introduced this month.  

Beginning with fiscal year 2027 reports filed in 2028, KOSPI-listed companies with at least $6.65 billion (KRW10 trillion) in consolidated assets will be required to disclose sustainability information. The threshold will drop to $3.32 billion (KRW5 trillion) in 2029, while regulators will evaluate whether to extend the requirement to companies with $1.33 billion (KRW2 trillion) in consolidated assets beginning in 2030 after reviewing implementation during the first two years.

The phased approach would rapidly expand the number of companies covered. Government estimates indicate that 291 companies, including applicable affiliates, will fall under the reporting requirement in 2028. By 2029, that number is expected to reach 3,171. During the first reporting year, companies will be permitted to exclude consolidated affiliates representing less than 10% of both total assets and sales to facilitate the transition to consolidated ESG reporting.

Liability Protections Intended to Encourage Early Reporting

The government also unveiled a temporary safe harbor intended to reduce concerns that legal exposure could discourage companies from making good-faith sustainability disclosures while reporting practices mature.

For the first three years after the mandate takes effect, companies will be exempt from damages, administrative sanctions, and criminal penalties under the FSCMA for sustainability disclosures. The protection will not extend to intentional greenwashing, which authorities said will remain subject to enforcement in order to preserve confidence in the reporting regime.

Once that initial period ends, a narrower safe harbor will remain available for disclosures involving inherently uncertain information, including forward-looking climate risks, greenhouse gas estimates, and data obtained from third parties or business partners, provided companies prepare those disclosures in good faith using reasonable grounds and best judgment.

While mandatory reporting begins in 2028, regulators will delay third-party assurance until 2030, giving time for verification providers and supporting regulatory frameworks to develop before independent assurance becomes compulsory. The government said detailed rules governing verification requirements and service providers will be developed through future revisions to the FSCMA.

The roadmap also postpones mandatory disclosure of Scope 3 greenhouse gas emissions, acknowledging the challenges companies face in collecting emissions data throughout their value chains.

Companies with at least $6.65 billion (KRW10 trillion) in consolidated assets will begin Scope 3 reporting in 2031. Those above $3.32 billion (KRW5 trillion) will follow in 2032, while companies with at least $1.33 billion (KRW2 trillion) in consolidated assets, if brought into the reporting regime, would begin in 2033. Small businesses that qualify under Korea's Framework Act on Small and Medium Enterprises and are not classified as high-carbon emitters will be exempt from the requirement.

Government Focuses on Building Reporting Capacity

The announcement places considerable emphasis on preparing companies before enforcement fully matures. Government agencies outlined plans for pilot disclosure programs, practical reporting guidance, a national climate-risk analysis platform scheduled for 2028, sector-specific Scope 3 guidance covering 15 major export industries, expanded life-cycle inventory databases, ESG consulting services, and new digital infrastructure designed to simplify sustainability data collection across industrial supply chains.

Officials also signaled that sustainability disclosures will play a larger role within Korea's financial system. The National Pension Service plans to expand its use of ESG disclosure data in investment management, while regulators will examine whether institutional investors' stewardship codes sufficiently encourage consideration of ESG factors when fulfilling fiduciary responsibilities. Authorities also intend to explore broader use of sustainability disclosures in supporting transition finance.

The government said it will move quickly to implement the framework, with revisions to the FSCMA expected to be drafted this month. A working group comprising government ministries, businesses, and private-sector experts will oversee legislative development, design the third-party verification framework, and continue monitoring corporate readiness as South Korea prepares to make sustainability reporting part of its statutory disclosure regime.

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