Samjong KPMG: "Domestic Companies Proactively Strengthening ESG Disclosures"

Analysis of Sustainability Reports from 216 Listed Companies
Proportion of Companies Referencing ISSB and KSSB Rises to 18%

It has been found that domestic companies are proactively strengthening their disclosure systems and content in preparation for the upcoming mandatory sustainability disclosures.

Samjong KPMG announced on January 6 that it had published the 'ESG Insight' report, which comprehensively analyzes the reporting standards, disclosure topics, and disclosure levels of the 2024 sustainability reports of 216 companies listed on the Korea Exchange.

According to the report, the proportion of companies that said they prepared their sustainability reports with reference to the International Sustainability Standards Board (ISSB) or the Korea Sustainability Standards Board (KSSB) of the Korea Accounting Standards Board rose to 18%, an increase from the previous year.

The level of disclosure related to climate change has generally improved. The vast majority (99%) of the companies surveyed applied a double materiality assessment, while about 60% analyzed the physical risks caused by climate change, and 50% analyzed the impact of transition risks. This shows that companies are recognizing climate risks more concretely at the management level.

Disclosure related to biodiversity, which is emerging as a next-generation disclosure topic, is also expanding. Among the companies surveyed, four companies (2%) published a separate TNFD (Taskforce on Nature-related Financial Disclosures) report, and 51 companies (24%) disclosed the entire LEAP (Locate, Evaluate, Assess, Prepare) process, which is the core framework of TNFD.

However, despite the overall improvement in disclosure levels, it was pointed out that many companies are still using ISSB and KSSB only as references, resulting in insufficient consistency, which remains a challenge to be addressed. In particular, to meet the requirements of ISSB and KSSB, it is necessary to further strengthen investor-oriented disclosures, such as how sustainability-related factors affect a company's financial information.

Samjong KPMG identified 'natural capital,' 'social inequality,' and 'transition finance' as key content for future domestic and international sustainability reports. Regarding natural capital, the report noted that there is a global trend toward quantifying the impact of corporate activities on nature and reflecting it in policy and investment decisions. Accordingly, companies need to strengthen their capabilities to restore the health and sustainability of ecosystems.

In addition, TISFD (Taskforce on Inequality-related Financial Disclosures), which addresses the financial impact of social inequality, warned that social issues such as low wages and discrimination could, over the long term, increase reputational and legal risks and negatively affect corporate value.

Transition finance refers to the concept of supporting the process of high-carbon industries such as steel, petrochemicals, and cement in transitioning to low-carbon processes through financial means. In Korea, where carbon-intensive industries account for a large proportion, transition finance is regarded as a key tool for achieving carbon neutrality. To this end, it was emphasized that companies should disclose credible transition plans and that financial institutions should establish internal standards and risk management systems to evaluate them.

Samjong KPMG analyzed global corporate disclosure cases applying the ESRS (European Sustainability Reporting Standards) published in 2024 and advised domestic companies to secure sufficient preparation time and turn disclosure into a strategic opportunity. Since most companies took more than a year to prepare their first report based on the CSRD (Corporate Sustainability Reporting Directive) of the European Union, Samjong KPMG explained that domestic companies also need to establish a group-level, phased, and strategic information disclosure system in preparation for mandatory disclosure requirements.

Kim Jingui, Head of Consulting at Samjong KPMG, said, "Domestic companies should utilize disclosure frameworks such as the CSRD and ISSB not merely as regulations but as means of communication with key stakeholders, including investors, and as strategic opportunities." He added, "Only companies that are sufficiently prepared in advance will be able to secure a competitive advantage in a sustainable future."