South Korea’s financial authorities on Thursday unveiled a comprehensive policy framework that obligates listed firms to disclose corporate information on investment activities related to environmental, social and governance standards, so-called ESG, in phases.

Under the envisioned scheme jointly released by the policymaking Financial Services Commission, the market watchdog Financial Supervisory Service and the country’s sole bourse operator Korea Exchange, companies listed on the benchmark Kospi with total assets valued over 2 trillion won ($1.81 billion) or more are requested to release their ESG data from 2025 until 2030, when the requirement will be expanded to all listed companies. 

The data subject for disclosure includes response plans for environmental crises such as COVID-19, efforts to improve labor-management relations and a governance structure based on transparency.

In the meantime, the KRX will encourage voluntary disclosure of ESG data to listed companies by publishing guidelines and suggesting cases overseas.

The latest regulatory move came amid growing calls that retail investors have limited access to ESG information. 

“As the COVID-19 crisis prolongs with an increase in economic uncertainty, business climate has rapidly changed, raising the importance of more precise and swift corporate information reporting,” said FSC Vice Chairman Doh Kyu-sang.

“In the wake of a rising global trend of ESG information reporting as well as sustainable approach to investing triggered by the pandemic, (the FSC) will continue to promote institutional frameworks to foster ESG investments.”

Some 100 firms make internal reports on ESG management, but only 20 have submitted ESG reports to the bourse operator on a regular basis, the FSC said.

ESG investment in South Korea is a growing trend has been carried out mostly by public funds.

The figure stood at 33.2 trillion won as of 2019. The state-run National Pension Service accounted for nearly 90 percent of total ESG transactions in the country, data showed. 

Meanwhile, the FSC also pledged to reduce the amount of corporate information that the listed companies are required to publish in their quarterly reports, by up to 40 percent. Responding to a retail stock influx that recently pushed the benchmark Kospi above 3,000 points, the authority also vowed to publish a guidebook for retail investors on how to read business reports, including a glossary of technical terms.

By Choi Jae-hee (cjh@heraldcorp.com)