South Korea's Financial Services Commission (FSC) will require KOSPI-listed companies with consolidated assets of 10 trillion won or more to disclose sustainability information starting in 2028. The mandate applies to 107 companies and requires them to include carbon emissions, reduction targets, and climate change impacts on revenue, production facilities, and supply chains in their business reports under the Capital Markets Act. The policy accelerates the FSC's February draft proposal, which had suggested starting with companies holding 30 trillion won in assets in 2028 before expanding to 10 trillion won firms in 2029. Business groups have criticized the plan, stating that imposing mandatory statutory disclosure without a trial period and holding companies liable for misstatements or omissions on uncertain climate projections is excessive.
FSC Expands Disclosure Scope to 259 Companies by 2030
The FSC's plan extends the mandate annually after 2028. In 2029, companies with assets of 5 trillion won or more (157 companies) will be covered. In 2030, the threshold drops to 2 trillion won, bringing 259 companies into scope. The February draft had indicated that post-2029 timelines would be determined based on international trends and corporate readiness, but the current proposal specifies expansion targets through 2030.
Business Reports Replace Exchange Disclosures Under Current Plan
The FSC's February draft proposed using exchange disclosures initially, with a transition to statutory reporting after the system stabilized. The current plan prioritizes inclusion in business reports from the outset. Business reports are core statutory disclosure documents used by investors to assess corporate value. Once sustainability data is included, information on carbon emissions, reduction targets, and climate risks will be subject to the same liability standards as other material disclosures, including penalties for false statements or omissions.
Companies Face Liability for Climate Data Misstatements
Under the Capital Markets Act, companies that misstate or omit material information in business reports may face fines, civil liability, and in some cases criminal charges. Business groups have called for an initial trial period using exchange disclosures to allow for data accumulation and internal control development before transitioning to statutory reporting. They argue that climate disclosures involve future projections and estimates — such as the impact of carbon pricing, regulatory changes, temperature scenarios, and customer transition speeds on revenue, costs, production, and supply chains — which carry high uncertainty. Discrepancies between disclosed projections and actual outcomes could lead to disputes over false or incomplete reporting.
Scope 3 Emissions Disclosure Begins in 2031
Starting in 2031, companies must disclose Scope 3 emissions, which include carbon generated not only by the company's direct operations but also by supplier processes, raw material production, logistics, employee business travel and commuting, and consumer use and disposal of products. Because Scope 3 data extends beyond internal company records, even large corporations are expected to face implementation challenges. The establishment of certification bodies for emissions data is also an unresolved issue.
FAQ
What is the timeline for South Korea's sustainability disclosure mandate?
The FSC will require KOSPI companies with assets of 10 trillion won or more to begin disclosures in 2028 (107 companies), expand to 5 trillion won firms in 2029 (157 companies), and include 2 trillion won companies in 2030 (259 companies). Scope 3 emissions reporting starts in 2031.
Why are companies concerned about liability under the new disclosure rules?
Business groups state that climate projections involve high uncertainty and depend on factors like carbon pricing, regulatory changes, and temperature scenarios. Including such estimates in business reports subjects them to the Capital Markets Act's liability framework, which imposes fines, civil damages, and potential criminal charges for false statements or material omissions.
