South Korea to Mandate ESG Disclosure for Firms Over 10 Trillion Won

South Korea will require KOSPI-listed companies with consolidated assets above 10 trillion won to make mandatory ESG disclosures starting in 2028, after the government and ruling Democratic Party significantly expanded the scope of a disclosure system first proposed in February. The threshold will drop further to 5 trillion won in 2029 and to 2 trillion won in 2030, following an evaluation of how the system performs in its first two years. The Financial Services Commission plans to draft amendments to the Capital Markets Act this month and aims to pass the legislation through the National Assembly by the end of the year.

 

A Sharply Expanded Scope

 

The final plan is considerably stronger than the framework the Financial Services Commission floated in February. That earlier proposal began with mandatory exchange-level disclosure for companies above 30 trillion won in assets starting in 2028, shifting to full legal disclosure only after a transition period. The revised plan compresses that timeline and lowers the initial threshold to a third of the original figure, moving straight to disclosure obligations under the Capital Markets Act rather than easing in through exchange rules first.

The Commission said the change reflects a shift in strategy: rather than waiting for companies' disclosure practices to mature naturally, it decided to use the legal framework itself to build that capability faster. The stated aim is to secure the sustainability data that global institutional investors need for their investment decisions sooner, and to have financial statements and sustainability information appear together within the same business report rather than in separate disclosures.

 

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How Many Companies Are Affected

 

The scale of the expansion becomes clearer in the company counts. An estimated 107 listed companies will fall under the disclosure requirement in 2028, rising to 157 in 2029. When major subsidiaries are included, the number of entities brought into the disclosure scope jumps sharply, to 291 in 2028 and 3,171 in 2029, an order-of-magnitude increase driven by consolidated reporting requirements extending down through corporate groups. The Commission said it lowered the initial threshold from 30 trillion won to 10 trillion won specifically to ensure institutional investors have sufficient disclosure data to work with from the outset.

 

The Liability Question at the Centre of Business Concern

 

The part of the plan drawing the most concern from companies is the disclosure channel itself. Once ESG information is embedded in the business report rather than issued separately, carbon emissions figures, reduction targets, and assessments of how climate change affects sales, production facilities and supply chains become subject to the same legal standards against false statements or material omissions that apply to financial disclosures. Because much of that information is inherently forward-looking or estimated rather than historical fact, businesses argue the legal exposure is disproportionate to the nature of the data being disclosed.

 

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The Commission has built in a transitional safeguard to address that risk. For the first three years after the requirement takes effect, all publicly disclosed ESG information will be exempted from compensation claims, administrative sanctions and criminal punishment under the Capital Markets Act. Financial Services Commission chairman Lee Eok-won said the immunity would be granted to the extent it does not undermine the underlying responsibility to disclose, and framed the goal as creating conditions that support companies' overseas expansion and ability to attract investment.

Business groups have pushed back that the exemption may not go far enough, arguing that because so much of the required data is predictive or estimated, the legal risk could still weigh heavily on companies even with temporary immunity in place, and have called for stronger guarantees alongside practical implementation support as the rules take effect.