Financial Services Commission Holds 4th Meeting of the 'ESG Finance Promotion Team'

Disclosure of Risks and Opportunities Related to 'Climate'
Disclosure Should Also Include Policies Needed for Low Birthrate and Aging Population

The Financial Services Commission explained the key contents of the draft disclosure standards for domestic sustainability disclosure standards (ESG disclosure standards). Going forward, companies must disclose information related to 'climate' risks or opportunities that affect investors' decision-making to the market. They must also disclose information requiring policy support related to low birth rates and aging.

On the 22nd, the Financial Services Commission announced that it held the '4th Meeting of the ESG Finance Promotion Team' at the Government Seoul Office with these contents. The full draft will be disclosed on the 30th.

The 'ESG Finance Promotion Team' is a meeting body formed in February last year to systematically promote various policy tasks across ESG disclosure, evaluation, and investment, together with companies, investors, academia, experts, and related organizations.

The draft consists of concepts and △General Matters (Article 1) △Climate-related Disclosure Items (Article 2) △Additional Disclosure for Policy Purposes (Optional) (Article 101). The mandatory ESG disclosure will first be promoted in the 'climate' sector. Specifically, companies must disclose climate-related information according to four key elements (① Governance - ② Strategy - ③ Risk Management - ④ Metrics and Targets).

Specifically, companies must disclose their governance for managing climate risks and other factors, and their response 'strategy' to climate-related risks and opportunities. They must also disclose information that can evaluate the company's efforts in responding to climate-related risk and opportunity factors.

Additionally, disclosure standards have been prepared for matters requiring urgent policy support such as low birth rates and aging.

Kim So-young, Vice Chairman of the Financial Services Commission, regarding the basic direction of the draft, explained, "We sufficiently reflected global consistency by referring to standards of major countries and international organizations," and added, "To minimize the dual disclosure burden on companies, we referred to global standards interoperable with disclosure standards of the US, EU, etc., such as the ISSB standards."

Vice Chairman Kim stated, "After collecting opinions from companies and investors on the draft, we plan to prepare proposed disclosure standards by the Korea Sustainability Standards Board (KSSB)," and added, "We will also review the target companies for mandatory domestic ESG disclosure and the timing of its introduction."