Expansion of ESG Disclosures Focused on Large Corporations... Disclosure Rate of Small Listed Companies Only 6%

[Asia Economy Reporter Son Sun-hee] Starting in 2025, the disclosure of sustainability management reports, i.e., 'ESG (Environmental, Social, and Governance) disclosures,' will be mandatory for listed companies above a certain scale. It has been found that the related disclosure culture is spreading mainly among large listed conglomerates. However, companies with a market capitalization below 1 trillion KRW showed a single-digit ESG disclosure rate.

On the 27th, the Korea Exchange announced the results of its "Analysis of ESG Disclosure Status of Listed Companies on the KOSPI Market." Among KOSPI-listed companies, a total of 128 companies voluntarily participated in ESG disclosure this year, about 1.6 times more than last year (78 companies). This is more than three times the number from two years ago (38 companies).

Although the number of companies participating in ESG disclosure increased, the pattern varied by company size. Among the 128 companies, 113 companies, accounting for 88%, were large-scale corporations with assets of 2 trillion KRW or more, while only 15 companies had assets below 2 trillion KRW. The number of companies included in large business groups announced by the Fair Trade Commission (as of April 28, 2022) was 95, accounting for 74% of all disclosing companies.

The ESG disclosure ratio compared to all companies listed on the KOSPI market (821 companies) was about 16%. For companies with a market capitalization of 10 trillion KRW or more, 72% (21 out of 29 listed companies) disclosed ESG information, but only 6% (36 out of 644 companies) of companies with less than 1 trillion KRW market capitalization made disclosures.

By company group, Hyundai Motor Group had the most disclosing companies with 10, followed by Lotte (9 companies), SK (9 companies), LG (8 companies), and Hanwha (7 companies).

An analysis of 35 companies that disclosed sustainability management reports showed that most companies used the original sustainability management reporting standards announced by the global nonprofit organization 'GRI.' Additionally, as the mandatory reporting of greenhouse gas emissions under global public standards expanded, 24 companies disclosed Scope 3 greenhouse gas emissions. Furthermore, 26 companies presented short- and medium-term greenhouse gas emission targets to achieve '2050 Carbon Neutrality.'

The Korea Exchange stated, "In preparation for the mandatory disclosure of sustainability management reports in the future, we plan to expand and reorganize the current 'ESG Information Disclosure Guidance' next year and continue education and promotional activities to activate disclosures."