South Korea is taking a major step in sustainability reporting by aligning its regulatory framework with the IFRS Foundation’s International Sustainability Standards Board (ISSB). This move reflects the global trend of converging sustainability disclosure frameworks and signals a shift toward mandatory, investor-focused ESG reporting in Asia.

South Korea’s Approach to Sustainability Reporting

Rather than creating an independent regime, South Korean regulators are directly aligning domestic standards with IFRS S1 and S2. This approach aims to enhance international comparability and investor confidence.

Key elements include:

• Financial Services Commission (FSC): Leading the mandatory disclosure roadmap aligned with ISSB standards.
• Korea Sustainability Standards Board (KSSB): Developing national standards – KSSB 1 (General Requirements) and KSSB 2 (Climate Disclosures).
• Mandatory reporting: Large KOSPI-listed firms must publish ISSB-aligned sustainability disclosures.
• Reporting framework: Structured around governance, strategy, risk management, metrics, and targets.

Implementation Timeline

South Korea is rolling out mandatory sustainability reporting in phases:

• FY2027: Firms with assets over KRW 30 trillion must comply.
• FY2029: Scope expands to firms with assets above KRW 10 trillion.
• Emissions disclosures: Scope 1 & 2 initially, with Scope 3 disclosures introduced from 2031.
• Voluntary ESG adoption: Supported via K-ESG Guidelines by the Ministry of Trade, Industry, and Energy.
• Sustainable finance alignment: Overseen by the Ministry of Environment through the Korea Green Taxonomy.

Why This Matters

• Enhances cross-border comparability for global investors.
• Integrates climate and sustainability risks into financial disclosures.
• Strengthens expectations on governance, internal controls, and emissions transparency.
• Highlights Asia’s growing alignment with ISSB-led reporting standards.

South Korea’s roadmap illustrates a broader systemic shift – moving sustainability reporting from voluntary ESG initiatives to regulated, investor-oriented financial disclosure regimes.

Organizations preparing for this transition will need robust data systems, accountable emissions oversight, and reporting processes designed for assurance to meet rising regulatory and investor expectations.

Looking to align with ISSB-based sustainability standards?

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