ESG Risk | ESG Set to Change from 2026: What If It Becomes a Second Set of Financial Statements?

In Korea as well, ESG is rapidly moving from a mid- to long-term policy task to a standard reflected directly in the corporate disclosure framework.

Even before taking office, the Lee Jae-myung administration presented responding to the climate crisis and the decarbonization of the industrial structure as core pledges, setting the strengthening of ESG as a clear policy premise, and it has since been giving concrete shape to its institutional design, centered on the early implementation of mandatory ESG disclosure and the overhaul of the evaluation framework.

In particular, the finalization of ESG disclosure standards and the presentation of a roadmap are perceived not as "a system to be introduced someday" but as a practical disclosure task for which companies must check their readiness.

This shows that ESG is shifting from an optional management activity to a management standard that must be incorporated into financial and disclosure frameworks in advance.

In line with the domestic policy stance, countries are adopting ESG disclosure systems or aligning their existing systems using the ISSB (IFRS S1 and S2) as a common standard.

This is a change that converts ESG information into a disclosure item that must be prepared in accordance with set standards.

As disclosure items, calculation methods, and scope of application are standardized, companies are placed in an environment in which they must submit ESG information as data that can be compared and analyzed in the same way as financial information.

As a result, ESG disclosure comes to function not as a perfunctory sustainability report but as material that explains a company's financial condition and risks.

The reason ESG information is called a "second set of financial statements" is that, after 2026, ESG disclosure becomes subject to verification not as mere explanatory material but as figures connected to actual costs and profit or loss.

A representative example is the EU Carbon Border Adjustment Mechanism (CBAM).

CBAM has required quarterly reporting of carbon emissions during the transitional period (October 1, 2023, to December 31, 2025), and from January 1, 2026, it enters the definitive period, fundamentally changing the character of ESG data.

Changes in the CBAM Structure

After the definitive period, in principle, only "actual emissions data (Actual Data)" calculated by an accredited method is recognized, and where it is difficult to secure accurate measured data, this can lead to direct sanction risks such as administrative fines and delays in or refusals of import approval.

In addition, from 2026, the obligation to purchase and surrender CBAM certificates linked to the EU ETS (Emissions Trading System) price, based on the carbon embedded in products, begins to take full effect in stages.

Although this is nominally a purchase of certificates, in substance it operates as a cost structure equivalent to a tariff that is directly reflected in export unit prices and margins.

In this way, ESG disclosure centered on CBAM requires management at the same level as the financial statements, within a structure that proceeds from data accuracy → external verification → reflection in cost and profit or loss.

ESG risks for the most part do not arise suddenly at year-end or just before disclosure.

Carbon emissions, supply chains, and human rights and safety issues accumulate from the time they arise, and it is difficult to secure consistency with the financial statements by retroactively adjusting the figures.

In other words, even if the timing for mandatory ESG disclosure in Korea has not been finalized, it is necessary to prepare to the extent that one "can explain it immediately once it becomes mandatory".

After 2026, ESG risks need to be managed not as individual issues but as risk units directly connected to the financial statements.

In particular, the following items require simultaneous financial and legal verification at the disclosure stage.

The moment these items are recorded in an ESG report, they become subject to review that also encompasses consistency with the financial statements and the possibility of legal liability.

Accordingly, ESG risk management is shifting from being the work of an individual department to a matter that must be handled within the company's overall risk management framework.

Rather than treating ESG as a separate reporting area, companies need to prepare to incorporate it into their finance and legal management framework.

What is especially important is establishing a structure in which the company can internally explain who calculated the ESG data, by what standards it was calculated, and how it connects to the financial figures.

This constitutes a minimum management requirement for reducing subsequent risks arising from disclosure errors or distortions, and for maintaining the trust of investors and financial institutions, not only for external audits and regulatory response.