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A group of institutional investors managing over $3.5 trillion in assets has called on Korea's Financial Services Commission (FSC) to establish a clear roadmap for sustainability-related disclosures and to implement a phased approach to climate disclosures by 2026, according to sources, Tuesday.

The significance of such a push stems from the participation of global institutional investors, according to the Asia Investor Group on Climate Change (AIGCC), which delivered the letter, Monday. Among these investors is Legal and General Investment Management, managing approximately $1.4 trillion, Schroders with $1.01 trillion and Fidelity International with $862 billion in assets.

"We are deeply concerned that the implementation of mandatory sustainability-related disclosures in Korea has been postponed until after 2026, with pending uncertainty on the exact year of implementation," the letter stated.

"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 a lack of comparable data and transparency. We believe this will not be conducive to the broader objective of the Korean Corporate Value-up and could even lead to a broader sense of the Korea discount phenomenon."

In April, Korea announced the draft of the guidelines for sustainability-related disclosures. But it did not disclose key details such as the timing of the mandatory disclosures, or whether Scope 3 greenhouse gas emissions (indirect emissions from a company's value chain such as employee's commuting) would need to be disclosed.

The process has been slow due to a lack of public interest and ongoing governmental issues, such as the Corporate Value-up Program, which aims to boost the stock market by improving corporate governance.

Meanwhile, the European Union, the United States, Singapore and Canada have already set timelines for mandatory sustainability disclosures between 2025 and 2027, with many investors already integrating climate risks and opportunities into their portfolio decisions. Companies are also urging the finalization of the guidelines as soon as possible so they can prepare accordingly.

The group of investors specifically called on the FSC to announce a clear roadmap of mandatory sustainability-related disclosures by the end of 2024 and mandate disclosure for listed companies with assets over 2 trillion won ($1.4 billion) by 2026. They also highlighted the importance of publishing an English version of Korea's disclosure standards and requiring companies to provide disclosures in English.

The investors emphasized that expediting the timeline for mandatory sustainability-related disclosures would not overly burden large listed Korean companies, as more than half of them have already committed to voluntary sustainability reporting in 2023.

"We are certain that these will lead to a 'Climate Value-up' for Korean companies, shareholders and the entire Korean market."

The AIGCC said it will continue to work with investors active in Korea through the Korea Working Group, established in July 2024.

"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. This would also enhance Korea's corporate transparency and competitiveness in the global capital market," AIGCC CEO Rebecca Mikula-Wright, said.