South Korea

Sustainability reporting by companies is currently voluntary. However, in response to the evolving global ESG disclosure environment, mandatory sustainability reporting requirements are expected to be phased in for larger listed companies. The Korea Sustainability Standards Board (KSSB) finalised sustainability disclosure standards (KSSB Disclosure Standards) based on the ISSB Standards in February 2026. On 8 July 2026, the government announced the final plan for the institutionalisation of mandatory sustainability disclosures based on the KSSB Disclosure Standards from 2028.

Separately, corporate governance reports, which cover 10 core principles of corporate governance, were first introduced as a voluntary disclosure regime in 2017 and have since been expanded in phases. From 2026, all companies listed on the main board of the Korea Exchange (KOSPI) are required to issue corporate governance reports.

There is a voluntary disclosure regulation on the publication of sustainability reports by companies listed in Korea. Under Article 8, Paragraph 7(e) of the Enforcement Rules of KOSPI Market Disclosure Regulation of the Korea Exchange (KRX), sustainability reports are included as voluntary disclosure items. Accordingly, listed companies are currently publishing sustainability reports voluntarily. In 2021, KRX released the “ESG Disclosure Guidelines” to encourage companies to voluntarily disclose ESG information.

As noted above, the government announced the final roadmap for the phased introduction of mandatory sustainability disclosure based on the KSSB Disclosure Standards, starting from 2028 for larger KOSPI-listed companies.

The corporate governance report mentioned above adopts a comply-or-explain approach. Other than this, there are currently no ESG-related disclosure requirements that apply on a mandatory or comply-or-explain basis.

However, as mentioned above, KSSB-based sustainability disclosure is expected to be phased in as mandatory disclosure from 2028.

The voluntary “ESG Disclosure Guidelines” released by KRX require disclosure of environmental, social and governance aspects.

The finalised KSSB Disclosure Standards consist of two parts:

1. No. 1 (General Requirements for Sustainability-related Financial Information Disclosures); and
2. No. 2 (Climate-related Disclosures).

Specifically, Standard No. 1 sets out the conceptual foundation and general requirements applicable to sustainability-related financial information disclosures, while Standard No. 2 sets out disclosure requirements for climate-related risks and opportunities. Under Standard No. 1, companies are expected to disclose sustainability-related risks and opportunities that could reasonably be expected to affect their prospects. Standard No. 2 further specifies the disclosure requirements for climate-related risks and opportunities, using the four core elements of governance, strategy, risk management, and metrics and targets. The final roadmap announced by the government adopts a climate-first approach, whereby the mandatory regime will commence with climate-related disclosures, with other sustainability topics remaining voluntary (with no timeline yet announced for when they may become mandatory).

The voluntary “ESG Disclosure Guidelines” published by KRX summarise and provide companies with key ESG factors based on GRI Standards.

The finalised KSSB Disclosure Standards are substantially based on IFRS S1 and IFRS S2, with modifications (such as extended transition relief for Scope 3 reporting) to reflect the circumstances of domestic companies. The KSSB has stated that it established these disclosure standards to provide sustainability-related financial information useful to investors, taking into consideration international harmonisation and acceptability for companies.

IFRS S2 does not apply directly in Korea. However, the KSSB incorporated the IFRS S2 December 2025 Amendments into KSSB Disclosure Standard No. 2. These include amendments allowing Scope 3 Category 15 GHG emissions to be limited to financed emissions, easing the requirement to use GICS for financed emissions disclosures, and permitting the use of other measurement methods or global warming potential values where required by a jurisdictional authority. These changes are intended to reduce practical burdens on companies and improve the acceptability of the domestic standards.

The finalised KSSB Disclosure Standards are based on the ISSB Standards and therefore adopt a single materiality approach, requiring disclosure of information that is material to investors.

The definition of “material information” in the KSSB Disclosure Standards is consistent with the definition in K-IFRS, the accounting standards aligned with IFRS by the Korea Accounting Standards Board. Accordingly, the KSSB Disclosure Standards state that information is material if omitting, misstating or obscuring such information could reasonably be expected to influence decisions that primary users of reports make on the basis of those reports.

Given that sustainability reporting is currently voluntary, disclosure of GHG emissions is not mandatory.

In accordance with Article 16-8 of the Environmental Technology and Industry Support Act, listed companies with total assets of KRW 2 trillion or more on a consolidated basis, among others, are required to register and submit environmental information through the Environmental Information Disclosure System.

The system categorises disclosures into mandatory and voluntary topics, with disclosure of GHG emissions (Scope 1, Scope 2 and Scope 3 emissions) being voluntary. However, under the finalised roadmap, the KSSB Disclosure Standards will be phased in from 2028 and covered companies will be required to disclose Scope 1 and Scope 2 GHG emissions. Disclosure of Scope 3 GHG emissions is expected to be subject to a three-year grace period and apply from 2031 for companies with total consolidated assets of KRW 10 trillion or more.

There are no national laws or regulations that directly require third-party verification or assurance of the content of ESG disclosures; however, most companies voluntarily obtain third-party assurance at their own expense.

Under the government’s roadmap on the institutionalisation of sustainability disclosures, mandatory assurance will commence in 2030, two years after the commencement of the mandatory sustainability disclosure regime, with a detailed framework to be developed. 

Yes, many companies voluntarily disclose their ESG information using various international reporting frameworks and standards (such as the GRI Standards, SASB Standards and TCFD Recommendations), and the number of companies publishing sustainability reports has increased significantly. According to the KRX ESG portal, 131 companies had published sustainability reports in 2022, and this number increased to 225 in 2025.

In April 2021, the Ministry of Environment established the Korean Green Taxonomy under the Environmental Technology and Environmental Industry Support Act. In December 2021, the Ministry released the “Korean Green Taxonomy (K-Taxonomy) Guideline”, which outlines principles and criteria for categorising green economic activities within the K-Taxonomy framework. Whilst this guideline is not legally binding, it sets out the standards for identifying green economic activities that contribute to six environmental objectives, including climate change mitigation, climate change adaptation and broader environmental improvement, and is currently applied to various financial instruments, including green bonds and green lending.

The guideline was revised in December 2022, adding nuclear power and climate change adaptation-related economic activities to the list of green economic activities, and a detailed K-Taxonomy explanation document was released.

In December 2025, the K-Taxonomy was further revised, with the revised taxonomy applying from 1 January 2026. The list of eligible green economic activities was expanded from 84 to 100, with key changes focused on GHG mitigation and climate change adaptation. Major updates include the further segmentation of renewable energy generation by source, such as solar and wind power, and the introduction of new industrial decarbonisation activities, including emissions-reduction activities for semiconductor and display manufacturing processes.

As mentioned above, the finalised KSSB Disclosure Standards are based on IFRS S1 and IFRS S2. The KSSB Disclosure Standards focus on interoperability with the ISSB framework, adopting consistent disclosure elements such as governance, strategy, risk management, and metrics and targets. General Requirements (No. 1) and Climate-related Disclosures (No. 2), which correspond to IFRS S1 and IFRS S2 respectively, form the first set of finalised KSSB Disclosure Standards. The proposed Additional Disclosures (No. 101) included in the exposure draft was not adopted.

Regarding the scope and timeline, in July 2026, the Financial Services Commission announced the final plan for the institutionalisation of the sustainability disclosure regime. Under the final plan, mandatory sustainability disclosure based on the KSSB Disclosure Standards will begin from 2028 (FY2027), starting with KOSPI-listed companies with total consolidated assets of KRW 10 trillion or more, and will be expanded to KOSPI-listed companies with total consolidated assets of KRW 5 trillion or more from 2029. A further expansion to KOSPI-listed companies with total consolidated assets of KRW 2 trillion or more from 2030 will be considered after assessing the implementation of the regime in 2028 and 2029. To ease the disclosure burden on companies, disclosure of Scope 3 GHG emissions will be subject to a three-year grace period for each category of covered companies, first applying from 2031 for companies with total consolidated assets of KRW 10 trillion or more.

The reorganisation of the Environmental Information Disclosure System has been discussed in Korea but has not yet resulted in final reforms.

Taking into account changes in the global regulatory environment and domestic companies’ readiness to comply, the pace of institutionalisation appears to have been generally calibrated. Until the phased introduction of mandatory KSSB-based sustainability disclosure from 2028, the government is expected to focus more on monitoring companies’ readiness and improving disclosure infrastructure than on introducing substantial new legal obligations.

Yes. Korea has adopted a statutory 2030 GHG reduction target to reduce its GHG emissions by 40% by 2030 (compared to levels in 2018), under the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis and its Enforcement Decree.

On 11 November 2025, the Korean government finalised its 2035 NDC, targeting a 53-61% reduction in net GHG emissions by 2035 compared to 2018 levels, and submitted it to the UNFCCC.

Since the new government took office in June 2025, it has adopted “responding to the climate crisis and achieving a sustainable energy transition” as a standalone policy agenda. Key policy directions include phasing out coal-fired power generation by 2040, accelerating an energy transition centred on renewable energy, and supporting industrial decarbonisation, including hydrogen-based steelmaking.

A sectoral roadmap reflecting the 2035 NDC is expected to be further developed through the process of preparing the Second National Basic Plan for Carbon Neutrality and Green Growth (2026-2045).

In May 2012, the Emissions Trading Act was enacted, and in January 2015, the KRX launched the emissions trading market (K-ETS). Based on the Emissions Trading Act, the K-ETS is a mandatory compliance market applicable to “business entities eligible for allocation”.

In short, the K-ETS applies to companies across a broad range of sectors whose average annual GHG emissions during the preceding three years are not less than 125,000 tCO2e, or that have at least one place of business with average annual GHG emissions of not less than 25,000 tCO2e during the preceding three years.

As of June 2026, the fourth allocation period (2026-2030) is underway. Under the fourth national allocation plan finalised in November 2025, 772 entities have been designated as entities eligible for allocation. From the fourth allocation period, the paid allocation ratio for the power generation sector will increase in phases from 15% in 2026 to 50% in 2030, which is expected to increase the effective carbon cost borne by covered companies.

In addition to the mandatory compliance market under the K-ETS, Korea also has voluntary carbon market initiatives. In April 2026, the government launched the “Korean Voluntary Carbon Market Alliance”, with the Korea Chamber of Commerce and Industry acting as the secretariat, and announced plans to pursue legislation on voluntary carbon markets and to establish a carbon credit exchange within the KRX by the end of the year.

Korea currently has no carbon tax imposed directly by reference to emission levels.

As the EU’s CBAM entered its definitive period in January 2026, Korean companies exporting covered products, including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, to the EU may face carbon-cost implications through the CBAM certificate purchase obligations imposed on EU importers. In response, the Korean government has been operating inter-ministerial support measures and briefings to assist companies affected by CBAM.

It is currently not mandatory for companies to develop, implement or disclose a climate-related transition plan.

The finalised KSSB Disclosure Standards do not require companies to develop or implement a transition plan. However, under KSSB Disclosure Standard No. 2 (Climate-related Disclosures), where a company has a climate-related transition plan, it is required to disclose information about that plan, including key assumptions and dependencies on which the plan relies.

Korea currently has no mandatory requirements for companies to set or meet climate-related targets. However, under KSSB Disclosure Standard No. 2 (Climate-related Disclosures), where a company has set climate-related targets voluntarily, or is required to meet climate-related targets under applicable laws or regulations, it is required to disclose those targets, including GHG emissions targets. The required disclosures include the metric used to set the target, the objective of the target, the part of the company to which the target applies, the period over which the target applies, milestones and any interim targets.

Korea has two main mandatory requirements relating to the circular economy.

First, EPR schemes have been implemented pursuant to the Act on the Promotion of Saving and Recycling of Resources. Manufacturers and importers of certain products and packaging materials are required to recycle at least a specified percentage of the volume released to the market. If they fail to meet the required recycling obligations, they must pay recycling charges in proportion to the shortfall. The main covered items include packaging materials, such as paper packs, metal cans, glass bottles and synthetic resin packaging, as well as batteries, tyres and lubricants. In addition, following amendments to the Enforcement Decree of the Act on Resources Circulation of Electrical and Electronic Equipment and Vehicles, effective from 1 January 2026, the scope of covered products has been expanded to all electrical and electronic products.

Second, the Act on Promotion of Transition to Circular Economy and Society covers the entire lifecycle of designated products^[1], including product design, production and disposal. Waste disposal charges are imposed where recyclable waste is incinerated or landfilled.

As regards eco-design, there are currently no mandatory eco-design requirements in Korea. However, in response to the EU Ecodesign for Sustainable Products Regulation, the Korean government is pursuing the introduction of a Korean-style eco-design regime. In April 2026, the Ministry of Climate, Energy and Environment launched an eco-design forum and commenced legislative preparations, selecting five priority areas for review: textiles and apparel, tyres, electrical and electronic products, steel and aluminium, and green transition infrastructure.

Korea currently does not have mandatory value-chain due diligence requirements equivalent to the EU’s CSDDD.

However, legislation is currently being pursued. In June 2025, the Bill on the Protection of Human Rights and the Environment for Sustainable Management of Companies was introduced to the National Assembly, and as of June 2026, it remains under committee review. The bill would apply to companies with 500 or more employees or annual revenue of KRW 200 billion or more, and would require covered companies to identify and assess human rights and environmental risks across their supply chains, establish response measures and make related disclosures. However, a bill with a similar purpose was previously discarded upon the expiration of the term of the preceding National Assembly. It therefore remains unclear if the bill will be enacted.

The K-Taxonomy provides criteria for defining economic activities that contribute to six environmental objectives, including GHG mitigation, as green or transition activities. As of June 2026, a total of 100 economic activities is classified under the K-Taxonomy, which is used as a reference for determining eligibility for green bond issuance and policy finance.

In February 2026, the Financial Services Commission announced measures to promote climate finance, formalising a plan to provide a total of KRW 790 trillion in climate finance over the ten-year period from 2026 to 2035.

Policy financial institutions, including the Korea Development Bank, the Industrial Bank of Korea and the Export-Import Bank of Korea, will act as key providers of such finance, with more than 70% of the total support targeted at SMEs and mid-sized companies. In addition, five major commercial banks are expected to set their own carbon-neutrality targets by 2030 and participate in the expansion of climate finance.

Korea also plans to introduce Korean-style transition finance to support hard-to-abate sectors that may find it difficult to fully satisfy the K-Taxonomy requirements. Under this framework, companies that establish and comply with sector-specific carbon-reduction roadmaps may receive financial support, including loans, guarantees and investments. Sectoral carbon reduction implementation roadmaps are expected to be prepared by relevant government ministries, including the Ministry of Climate, Energy and Environment and the Ministry of Trade, Industry and Energy, together with the Financial Services Commission.

Blended finance initiatives are also being implemented to mobilise private capital. The Future Energy Fund, a KRW 9 trillion fund jointly financed by the banking sector, will support investment in renewable energy facilities. In addition, the Climate Technology Fund, a KRW 3 trillion fund financed by the five major commercial banks and the Industrial Bank of Korea, is expected to support climate-tech companies through 2030.

Korea is currently in the process of gradually developing and refining sector-specific frameworks in areas such as climate disclosure, transition finance, the circular economy and corporate due diligence. Although there is not yet a single integrated legal framework covering these areas, the Lee Jae-myung administration has previously proposed an ESG Framework Act as a policy pledge, and legislation to integrate Korea’s currently fragmented ESG-related regimes may be pursued in the future.

1. According to the Korea Environmental Industry & Technology Institute (KEITI), during the 2025 National Assembly audit, 13,122 cases of unfair environmental labelling and advertising were detected over a recent five-year period. A significant number of these cases were identified through monitoring of online distribution channels. The most common types of violations involved false or exaggerated environmental claims, such as claiming that products were “eco-friendly” without objective evidence of environmental improvement, or claiming that products were “low-carbon” or “eco-friendly” merely because they used recycled materials. According to the reported enforcement statistics, the detected cases have primarily resulted in administrative guidance, with a smaller number resulting in corrective measures.
2. In April 2025, the Korea Fair Trade Commission (KFTC) issued warnings against several major fashion brands including Zara, 8Seconds, Spao, Musinsa Standard and Topten for greenwashing. These companies were found to have used terms such as “eco,” “sustainable,” and “eco-friendly materials” to advertise products like synthetic leather that lack environmental benefits, potentially misleading consumers. However, the KFTC decided not to impose fines, taking into account the companies' voluntary corrective actions, such as removing the misleading claims.
3. In April 2025, POSCO and POSCO Holdings received a corrective order from the KFTC for advertising unverified products as “eco-friendly”. The KFTC concluded that such advertising could mislead consumers into believing that the products in question are environmentally friendly, and that the associated brands may be mistaken as offering products with enhanced environmental benefits.
4. In March 2024, Climate Solutions filed a complaint against eight companies (SK Corporation, SK Siltron, SKC, SK i-Technology, SK Telecom, SK hynix, POSCO, and POSCO Holdings) for violations of the Labelling and Advertising Act and the Environmental Technology Industry Act. The complaint alleges that these companies falsely advertised that by paying the Green Premium, a system that verifies the use of renewable energy by charging an additional fee on top of the electricity bill, they had reduced GHG emissions. Climate Solutions claims that the Green Premium does not actually reduce GHG emissions and that advertising it as such is misleading. The complaint was submitted to the KFTC and the KEITI with no publicly available decision or enforcement outcome thus far.
5. In February 2023, the Ministry of Environment issued administrative guidance against SK Enmove's advertisement of carbon-neutral lubricants. SK Enmove had launched engine oils and advertised them as carbon-neutral because they were made by purchasing carbon credits from Verra, a U.S. carbon credit certifier. However, the advertisements were criticised as greenwashing, as carbon credits alone cannot permanently eliminate carbon from petroleum products. In response, the Ministry of Environment issued an advance notice of corrective order in December 2022. However, given that the advertisement and product sales had already been suspended, it was ultimately merely administrative guidance, which is not enforceable and merely serves as a recommendation to be careful about the use of related terms in the future. The KFTC decided not to prosecute.
6. In March 2022, the KFTC decided not to prosecute SK E&S for an advertisement that claimed to “usher in the era of eco-friendly LNG” after an environmental organisation filed a complaint. The KFTC ruled that the advertisement was not false or exaggerated because it was about future plans.

The Act on Fair Labelling and Advertising restricts unfair labels and advertisements in general, and the “Guidelines for Examination of Environmentally Related Labels and Advertisements” stipulate specific examination criteria for unfair labels and advertisements related to the environment, including greenwashing.

In addition, through amendments to the Enforcement Rule of the Environmental Technology and Industry Support Act, which took effect on 1 October 2025, the scope of greenwashing regulation and available enforcement measures have been expanded. The amended rules impose obligations on online commerce intermediaries to directly delete or modify content found to involve unfair environmental labelling or advertising.

The amendments also provide a legal basis for the Minister of Climate, Energy and Environment to disclose information on violating businesses and intermediaries that fail to take required measures. In addition, new provisions allow the cancellation of environmental label certification where a certified business violates environmental-related laws and regulations.

The “Guidelines for Labelling and Advertising of Eco-friendly Business Activities” provide examples of greenwashing.

Relevant grounds include:

1. breaches of the “Guidelines for Labelling and Advertising of Eco-friendly Business Activities” – e.g. by providing false or exaggerated information about the environmental performance of a product or a firm’s disclosures;
2. breaches of the Act on Fair Labelling and Advertising and the Guidelines for Examination of Environmentally Related Labels and Advertisements – e.g. by providing false or exaggerated information about the environmental performance of a product; and
3. liability under the Financial Investment Services and Capital Markets Act – e.g. by providing materially false or misleading information in listing documents or other corporate disclosure documents.

On 2 June 2026, the Ministry of Climate, Energy and Environment pre-announced a partial amendment to the Notice on the Management System for Environmental Labelling and Advertising. The key focus of the proposed amendment is to systematise the substantiation regime, which is a core procedure for determining whether an environmental claim is supported.

Under the proposed amendment, the procedures and standards for requesting and submitting substantiation materials to support environmental claims are expected to be clarified, including submission procedures, submission deadlines, drafting principles and detailed criteria for each method of substantiation. This indicates regulators remain focused on combatting greenwashing in Korea.