South Korean experts in the field of environmental, social, and governance (ESG) urged local businesses to prepare for global ESG disclosure standards and internalize ESG in their management for sustainable results.

“The recent establishment of ESG disclosure standards in major global economies, such as the United States and the European Union, is exerting significant pressure on local companies,” said Steven Kang, ESG Platform Leader at Samil PricewaterhouseCoopers (Samil PwC), one of Korea’s major accounting firms.

Kang also emphasized the importance of integrating global ESG disclosure standards into management for sustainable future performance.

His remarks were made at the ESG Club Forum hosted by Maeil Business Newspaper in Seoul on Thursday.

Samil PwC provided a comprehensive analysis of current and upcoming ESG disclosure regulatory trends, addressing both domestic and international perspectives.

Kwon Mi-yop, a partner at Samil PwC, highlighted the global trend towards mandatory sustainability disclosure by 2025, emphasizing the need for a comprehensive response from local companies.

When it comes to ESG disclosure standards, the European Financial Reporting Advisory Group (EFRAG) incorporates various stakeholders as users in its standards, providing comprehensive information.

The International Financial Reporting Standards (IFRS) and the U.S. Securities and Exchange Commission (SEC) standards, in the meantime, focus more narrowly on information essential for informed investment decisions.

All three standards, however, emphasize the importance of preparing information on a consolidated basis.

However, overseas units of Korean small and medium-sized enterprises (SMEs) still lack robust ESG data management, posing an urgent need for improvement.

Exploring potential ESG challenges, Lee Jin-Kyu from the Samil ESG Platform identified biodiversity as a critical issue.

Citing data from the World Economic Forum (WEF), Lee highlighted the 69 percent average decline in the population of major species since 1970, calling for biodiversity protection to be incorporated into business governance.

The Taskforce on Nature-related Financial Disclosures (TNFD), a set of disclosure recommendations for companies to report evolving nature-related impacts and risks, has gained prominence to be comparable to the Task Force on Climate-related Financial Disclosures (TCFD).

Compared with the TCFD, the TNFD, focusing on biodiversity, remains relatively unfamiliar in Korea.

By Kim Hee-soo and Han Yubin

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