A group of institutional investors managing over $3.5 trillion in assets has urged Korea’s Financial Services Commission (FSC) to develop a clear roadmap for sustainability-related disclosures and implement a phased approach to climate disclosures by 2026.
The group of investors, which made the call through an open letter delivered to FSC by the Asia Investor Group on Climate Change (AIGCC), view climate disclosure as a critical tool to navigate the evolving landscape of climate-related risks and opportunities.
The open letter followed AIGCC’s response to the Korea Standards Board (KSSB) as part of a public consultation regarding its drafts of the Korea Sustainability Disclosure Standards.
“Having Korean reporting standards align with international frameworks will boost investor confidence in investing in Korean companies, fostering greater capital inflows and supporting sustainable economic growth,” said AIGCC’s CEO Rebecca Mikula-Wright.
The group of investors said they sent the letter to emphasise the urgent need for the FSC to finalise the overall sustainability-related disclosure roadmap, and mandate climate disclosure through a phased approach from 2026.
“We believe that climate disclosure is a fundamental necessity for investors to better understand climate-related risks and opportunities, and therefore, enable more capital flows,” the group said in the open letter.
The group expressed concern that the implementation of mandatory sustainability-related disclosure in Korea has been postponed until after 2026, with pending uncertainty on the exact year of implementation.
“If businesses in other markets are providing sustainability-related disclosure while such reporting is delayed for Korean companies, global investors will struggle with benchmarking corporate performance due to the lack of comparable data and transparency,” the group stressed.
They proposed that the FSC, by year-end 2024, announce a clear roadmap for the early implementation of mandatory sustainability-related disclosures; mandate climate-related disclosure for listed companies with total assets of over 2 trillion won by 2026; and publish an English version of the Korean Sustainability Disclosure Standards and mandate companies to likewise publish English versions of their sustainability disclosures.
The group added that expediting the timeline of mandatory sustainability-related disclosure would not overly burden large listed Korean companies since over half of them are already committed to voluntary sustainability reporting in 2023.
“We urge you to consider our proposals, and we are certain that these will lead to a “Climate Value-up” for Korean companies, shareholders, and the entire Korean market,” the group added.
AIGCC is a collaboration of institutional investors in 11 Asian markets focused on the impact of climate change on investors. The network has a strong international profile and engages with government pension and sovereign wealth funds, family offices, and endowments.
AIGCC members include AIA, Allianz Global Investors, CalPERS, BNP Paribas Asset Management, Franklin Templeton, Fidelity International, GIC, JP Morgan Asset Management, Mirae Asset, UBS, UOB, Sunlife, Mercer, Wellington Management, Willis Tower Watson, Fullerton, and Federated Hermes, among others.
