South Korea Accelerates Alignment with Global ESG Standards: Major KOSPI Firms to Face Mandatory Climate Disclosures from 2028

South Korea is steadily moving into an era of mandatory sustainability reporting. The Financial Services Commission (FSC) has recently released a draft roadmap proposing that, starting in 2028 (based on 2027 fiscal year data), KOSPI-listed companies with assets exceeding KRW 30 trillion (approximately USD 20.4 billion) will be required to disclose sustainability-related information in accordance with domestic standards closely aligned with the International Sustainability Standards Board (ISSB).

This initiative represents a significant step in deepening Korea’s integration with global corporate disclosure standards. The Korean Sustainability Standards Board (KSSB) has officially finalized two key standards — KSSB 1: General Requirements for Sustainability-related Financial Disclosures and KSSB 2: Climate-related Disclosures — which closely correspond to the ISSB’s IFRS S1 and IFRS S2 frameworks. If approved, South Korea will join other major Asian economies in embedding ISSB standards into its national regulatory system.

The draft roadmap adopts a phased implementation approach. The first phase will target the country’s largest listed companies — KOSPI firms with consolidated assets above KRW 30 trillion. One year later, the threshold will be lowered to companies with assets exceeding KRW 10 trillion, with potential further expansion to smaller listed companies in subsequent stages.

To alleviate the initial compliance burden, regulators have introduced several transitional relief measures. A “climate-first” principle will be applied, with early disclosures focusing primarily on climate-related risks, governance, strategy, and management. Broader sustainability topics will be incorporated progressively as the system matures. Notably, Scope 3 greenhouse gas emissions reporting — often the most challenging aspect — will be granted an extended transition period and will not become mandatory until fiscal year 2030.

At the group level, exemptions will apply in the first reporting year: subsidiaries representing less than 10% of consolidated group assets, along with small companies in corporate value chains, will be temporarily excluded from reporting obligations. These flexible arrangements are designed to help companies gradually develop robust data collection and disclosure systems.

On assurance and enforcement, South Korea is taking a measured, step-by-step approach. Third-party assurance will initially remain voluntary. Regulators will consider introducing mandatory assurance at a later stage, depending on international developments and domestic readiness. Early enforcement will emphasize guidance and market education rather than immediate penalties.

Korea’s reform aligns closely with the global sustainable reporting trend. Europe, the United Kingdom, Japan, and several Asia-Pacific jurisdictions have already actively incorporated ISSB frameworks into their domestic regulations. Analysts note that for global investors, standardized climate disclosures from major KOSPI companies will greatly improve transparency and comparability. For Korean corporations, this signals a structural shift in corporate governance, extending beyond traditional financial reporting to include climate and sustainability strategies as core requirements.

The roadmap is currently open for public consultation until March 31, 2026. The Financial Services Commission plans to finalize the framework in April 2026. If implemented as proposed, South Korea will officially launch this landmark disclosure regime in 2028.

Overall, the reform demonstrates the Korean regulators’ pragmatic balance between international alignment and corporate practicality, while further accelerating the global convergence of climate and sustainability reporting standards.