From 2025, listed companies with a certain size or larger must disclose ESG (environmental, social, governance) activities. In 2030, it will expand to all listed companies on the securities market. The stewardship code of institutional investors (the guidelines for exercising voting rights) is also changed in the direction of strengthening ESG. As ESG investment becomes the mainstream in the global market, companies’ ESG management is also expected to accelerate.
On the 14th, the Financial Services Commission announced a’Comprehensive Improvement Plan for the Corporate Disclosure System’ containing these details. The Financial Services Commission plans to make ESG disclosure mandatory in stages by 2030. This month, it was decided to induce voluntary disclosure by presenting guidelines containing the principles and procedures for ESG information disclosure. After that, companies listed on the securities market with assets of a certain size or more will be obligated to disclose ESGs in 2025, and all other companies listed on the securities market from 2030.
The stewardship code introduced at the end of 2016 also decided to review the revision in the direction of specifying the responsibility of the ESG-related trustee (operator) in its fifth year.
The financial authorities’ efforts to strengthen ESG disclosure reflect the reality that companies’ efforts to respond to the climate crisis and strengthen social responsibility have emerged as a’global standard’.
Only 38 domestic ESG disclosure companies, including Samsung
Responsible investment that prioritizes non-financial factors such as ESG (environmental, social and governance) is spreading worldwide, starting with the Corona 19 incident. In a 2019 global investment bank (IB) Morgan Stanley survey of 110 global institutional investors, 80% said they were already making ESG investments, and 15% said they are actively considering investing in ESG in the future.
In Korea, ESG responsible investment is gradually expanding, centering on pension funds such as the national pension. However, the level of ESG information disclosure by domestic companies is not properly established. Gyu-sang Doh, Vice Chairman of the Financial Services Commission, said, “It is necessary to preemptively lay the institutional foundation in line with the global trend of expanding ESG information disclosure and responsible investment.” Last year, only 38 companies, including Samsung Electronics and POSCO, published a sustainability report containing ESG activities in Korea.
The financial authorities decided to strengthen the management and supervision of voting advisors. Voting rights advisors have increased their influence by presenting opinions on agendas at the general shareholders’ meeting, such as dividends, divisions, and mergers of listed companies for institutional investors. The authorities decided to enact guidelines on the use of voting advisors within this year and also review plans to introduce a registration and reporting system for advisors in the mid to long term.
Disclosure blind spots that revealed problems in terms of investor protection were to be reduced. Listed companies with special exceptions to technology were required to disclose detailed management details of the remaining amount after financing. This is to prevent cases of not being disclosed in time even after investing in insolvent private equity funds and reporting losses. The obligation to disclose such as foreign exchange risk and payment capacity of domestically listed foreign companies (holding companies) will also be expanded.
A plan has also been prepared to relieve the burden of unnecessary disclosure on companies. The quarterly report, which followed the business report format as it was, will be prepared in a separate format to reduce the burden of preparation by 40%. In order to help investors use the disclosure information, the business report system was improved to make it easier to understand and the electronic disclosure system (dart) was improved.
Reporter Oh Hyeong-ju/Koo Eun-seo [email protected]
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