Hankyung Association, 'Draft Sustainability Disclosure Economic Sector Opinions'
"Deletion of Scope 3 Carbon Emissions and Other Additional Disclosure Provisions"
A survey revealed that one in four companies believes the mandatory disclosure of Environmental, Social, and Governance (ESG) information, scheduled to be enforced in two years, should be postponed by five years. In particular, companies argued that the 'Scope 3' carbon emissions item, which requires disclosure of all greenhouse gas emissions generated not only during their own product manufacturing process but also after disposal, as well as emissions from suppliers and distribution channels, should be excluded from the disclosure requirements. Among listed companies with assets exceeding 2 trillion won, nine out of ten stated that "calculating Scope 3 carbon emissions is impossible."
The Korea Economic Association announced on the 21st that it submitted "Economic Sector Opinions on the Draft Sustainability Disclosure Standards" to the Korea Accounting Standards Board (KASB), which is the institution responsible for gathering opinions on disclosure standards. On April 30, the Sustainability Standards Board (KSSB) had approved and released a draft ESG disclosure standard including Scope 3 emissions.
The Korea Economic Association argued that since the sustainability disclosure obligation applies not only to large corporations but also to small and medium-sized enterprises (SMEs) and mid-sized companies within the supply chain, a sufficient preparation period is necessary before the system is implemented. A significant number of listed companies with assets over 2 trillion won expressed the need for more than five years of preparation. According to a survey conducted by the association in March among 103 listed companies with assets exceeding 2 trillion won, 28 companies (27.2%) said the introduction of the sustainability disclosure system should be "after 2029." Only two companies (2%) responded that "disclosure itself is difficult."
The association also insisted that if estimation or assumptions are required for sustainability disclosure data, a sufficient testing period should be provided to build the necessary systems. This is because controversies over disclosure standards continue in advanced countries. Additionally, there is a growing "anti-ESG" sentiment, with global investment institutions like BlackRock turning negative on ESG. In this context, the association stated that hastily setting disclosure standards in Korea is undesirable from the perspective of securing international competitiveness for companies.
The Korea Economic Association proposed that the disclosure method be pursued as voluntary disclosure rather than legally mandatory disclosure. They noted that even under a voluntary disclosure system, legal burdens can still be imposed on companies. For example, if a company engages in fraudulent transactions or fraud through false or deficient disclosures, it can be regulated to bear liability for damages, fines, and criminal responsibility.
They argued that the Scope 3 carbon emissions item should be excluded from the disclosure requirements. In the March survey, 93 out of 103 listed companies with assets over 2 trillion won (90.3%) answered that accurately measuring Scope 3 emissions is impossible. The United States also removed the Scope 3 emissions disclosure clause from the final draft of its climate disclosure regulations, although it was included in the initial draft.
Other recommended items should also be excluded. The draft includes "policy-purpose recommended disclosure items," such as information for promoting family-friendly management, preventing forced labor, and industrial safety. The association stated that requiring companies to mandatorily disclose information necessary for policy objectives set by relevant ministries and committees does not align with international standards and could increase corporate burdens, so these items should be deleted.
The Korea Economic Association said, "Rather than aiming solely to introduce sustainability disclosure, it is more important to utilize the system to enhance Korea’s and companies’ competitiveness and to ensure its long-term establishment in the field." They added, "Since sustainability disclosure affects SMEs and mid-sized companies as well, sufficient preparation time and support must precede its implementation."
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