As the world moves toward more stringent environmental, social and governance (ESG) disclosure requirements, South Korean companies face increasing compliance burdens and potential loss of their competitive advantage in global markets.

Starting in 2025, South Korean companies valued above $1.48 billion (2 trillion won) must disclose their ESG performance, with the same requirement extending to all firms by 2027. This marks a significant shift from the South Korean government’s previously hands-off approach to sustainability disclosures, which allowed companies wide-ranging flexibilities in defining their ESG performance and raised concerns about greenwashing in reporting.