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ESG Infrastructure Advancement Plan

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  • ESG Policy in Korea
  • ESG Infrastructure Advancement Plan
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ESG
  • Environmental
  • Social
  • Governance

The global ESG landscape is rapidly changing with the International Sustainability Standards Board (ISSB) discussing the international standardization of ESG disclosures and companies around the world focusing on ESG management and investment. In order to upgrade the ESG infrastructure under a concrete plan, the Korean government ministries jointly developed the ESG Infrastructure Advancement Plan in December 2022. Based on the plan, the Korean government plans to expedite the construction of ESG infrastructure and actively support the private-led development of the ESG ecosystem.

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ESG Policy in Korea: Basic Directions

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  • Policy objective - Promote the private-led development of ESG ecosystem to improve the competitiveness of Korean businesses and build a sustainable economy.
  • Key strategy - Expedite the establishment of infrastructure to foster the ESG ecosystem
  • Policy tasks
    • 1. Establishment of the ESG disclosure system : Organize the national ESG disclosure system and strengthen the linkages between ESG announcement and disclosure systems
    • 2. Supporting the ESG management of SMEs : Support SMEs' transition to ESG management, Provide tailored support to small and medium-sized exporters and suppliers in areas of supply chain due diligence and others.
    • 3. Vitalization of ESG investments : Lay the foundation for promoting the ESG bond issuance and investment.,Establish the guidance for ESG rating agencies and strengthen support for ESG evaluation.
    • 4. Establishment of ESG information and manpower training systems : Strengthen the foundation for promoting the provision and use of ESG information, Train ESG specialists
    • 5. ESG led by the public sector : Promote the ESG management of public institutions. The pension fund to increase ESG investments.
  • Implementation system
    • 6. Public-Private Consultative Council for ESG (tentative name) : (Members) Chaired by the Vice Economy Minister and joined by the vice ministers of related ministries and private specialists
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1Establishment of the ESG disclosure system
Organize Korea’s ESG announcement system in consideration of global standards and domestic conditions while lifting the burden of ESG disclosure for companies.
Actively participate in discussions on international standardization of ESG disclosure by listing Koreans members in ISSB and joining as a member of the Sustainability Standards Advisory Forum (SSAF)* to effectively communicate Korea’s position. Reorganize Korea’s ESG disclosure system** by considering ISSB international standards and domestic industrial conditions to improve the transparency and comparability of Korean companies’ ESG management.
The government plans to ease the burden on companies by strengthening the linkage between the ESG disclosure system and each ministry’s information disclosure system by unifying terms in similar or overlapping provisions and defining the conditions for fulfilling the disclosure obligations.
* Sustainability Standards Advisory Forum : ISSB’s official advisory forum
** Introduce Korea’s ESG disclosure standards by modifying the guidance for ESG information disclosure and the Capital Markets Act, and establish a specific plan for the mandatory disclosure of ESG.
2Supporting small and medium-sized enterprises
Strengthen the incentives to promote the voluntary spreading of ESG management across small and medium-sized enterprises and provide tailored support to help exporters and suppliers prepare for supply chain due diligence. Provide training and consulting to support SMEs’ transition to ESG management and offer incentives. Enable SMEs to better respond to ESG by helping SMEs exporting and supplying to global companies timely prepare for EU’s widening of supply chain due diligence.
* Implement more consulting projects for training in-house experts, establishing safety and health management systems, and improving work environment.
3Vitalization of ESG investments
Upgrade the ESG Bond Guidelines to promote the private sector’s ESG bonds and investments, and introduce the Guidance for ESG Rating Agencies to improve fairness and transparency of ESG evaluation. The K-Taxonomy will be revised and reflected in the Green Bond Guidelines, the Social Bond Guidelines will be introduced, and the ESG index will be diversified by developing the Paris Agreement Index** and others to promote investment. The Guidance for ESG Rating Agencies will be introduced as minimum voluntary compliance standards for information disclosure and internal control in ESG evaluation.
4Establishment of ESG information and manpower training systems
The ESG information platform will be built to improve the use and usability of ESG information users, and specialists will be trained to support the spread of ESG in the public sector. Integrated information will be provided by linking the ESG management supporting platform, investment platforms and environmental information disclosure systems (by providing links). ESG specialists will be trained by introducing ESG courses (curricula) at specialized graduate schools and major regional graduate schools and by reviewing the opening of long-term degree programs based on training needs.
5ESG management and investment led by the public sector
Public institutions and the pension fund will lead the public sector’s ESG management and investment to induce the private sector’s voluntary adoption of ESG. First, the public sector’s ESG management capabilities will be strengthened by organizing the ESG Committee and adding ESG disclosure items. Korea Development Bank will expand the ESG financial support to public financial institutions by introducing net zero programs and the carbon spread.
6Implementation system
The government will establish the ESG Council involving public and private sectors to facilitate close communications with the private sector. The ESG Council will serve as a communication channel facilitating organic cooperation of ministries and collecting diverse feedback. Through the council, the government will review the progress of upgrading the ESG infrastructure and implement ESG policies. Chaired by the Vice Economy Minister, the council will involve vice ministers of related ministries and private specialists and held a kick-off meeting in early 2023.
* Ministry of Economy and Finance, Ministry of Trade, Industry and Energy, Ministry of Environment, Ministry of SMEs and Startups, Ministry of Employment and Labor, Ministry of Interior and Safety, Financial Services Commission, Fair Trade Commission, etc.