The Financial Services Commission approved a revision to the Korea Exchange (KRX) disclosure rules on October 1 requiring listed companies to timely disclose information regarding the occurrence of industrial accidents to strengthen the management of financial risks associated with industrial accidents. The FSC also introduced a rule change proposal intended to strengthen the annual and semi-annual disclosure duties regarding the occurrence of industrial accidents. In addition, ESG rating institutions have made changes to their ESG rating guidance incorporating the occurrence of industrial accidents in the evaluation of corporate ESG practices.
First, the revised ESG rating guidance incorporating industrial accidents into the evaluation of corporate ESG practices will take effect from October 1.
Prior to this, socially controversial issues including the occurrence of industrial accidents were considered for evaluation by ESG rating institutions on a voluntary and non-binding basis. However, with the growing impact of industrial accidents on corporate valuations, it has become necessary to more closely manage this issue.
As such, ESG rating institutions have made an update to their ESG rating guidance incorporating major controversial issues, such as industrial accidents, into the evaluation of corporate ESG practices, effective from October 1.
Along this line, ESG rating institutions will also need to make efforts to enhance the quality and capacity in their rating services to more systematically reflect financial risks associated with industrial accidents and boost confidence on their ESG rating services.
The KRX will regularly make comparison and assessment on ESG rating institutions’ compliance with the updated guidance.
Second, listed companies will be subject to a timely disclosure of information regarding the occurrence of industrial accidents.
Currently, listed companies are required to file KRX disclosures only when accruing a significant loss in properties or assets. However, with investors becoming more interested in industrial accidents and due to the strengthening of administrative and judicial sanctions, companies may be heavily affected in terms of their business operations and investability with the occurrence of industrial accidents.
As such, the FSC has approved a revision to the KRX disclosure rules requiring listed companies to file KRX disclosure about the occurrence of an industrial accident on the same day that the company reports that fact to the Ministry of Employment and Labor. The same rule change also requires listed companies to file KRX disclosure about the court decision involving a violation of the Serious Accidents Punishment Act on the same day the court decision becomes available. This rule change will take effect from October 20.
Third, the annual and semi-annual disclosure duties will be strengthened with regard to the occurrence of industrial accidents.
Currently, annual and semi-annual business reports contain information about criminal penalties and administrative sanctions regarding industrial accidents. However, they lack information about the occurrence of industrial accidents, which leads to insufficient information for investors.
As such, a rule change is being introduced to require companies to include the occurrence of an industrial accident and response measures in their annual and semi-annual business report filing. This rule change proposal will enter a 40-day public comment period from October 1 to November 10 and go through a successive approval process before taking effect in January 2026.
* Please refer to the attached PDF for details.