KOR

Research Staff

Research Staff

Lee, Inhyung Senior Research Fellow Capital Markets
Research Field

Profile

TEL
82-2-3771-0646
E-mail
ihlee@kcmi.re.kr
Education
BA in International Economics, Seoul National University, 1986
MA in Economics, Brown University, 1988
Ph.D in Economics, Brown University, 1992
Professional Experience
Director of Research, Financial Markets, LG Economic Research Institute, (1995~1998)
Associate Professor, College of Business Administration, University of Suwon,
Senior Research Fellow (2008~2014)
Vice President of Korea Capital Market Institute (2014~2019)

Publications

Opinion

Need for Sustainability Disclosure by Funds / Nov. 08, 2022
Korea has no administrative sanction applicable to a fund that claims to support ESG value but falls short of conducting investment practices suggested by such value. As a result, some funds may engage in greenwashing intentionally. To avoid this, the EU and US have recently attempted to make it mandatory for financial products to disclose ESG-related information, which sets a good example for Korea to follow. In this respect, it is worth considering the following measures.Information should be disclosed based on the principle of proportionality, meaning that how much impact sustainability factors have on investment decisions determines the level of information to be disclosed. To this end, funds need to elaborate on what sustainability factors are considered and how to apply such factors in the investment strategy. Fund management firms should report their sustainability analysis capability in terms of retention of professionals and data. If a firm relies on a third-party provider for ESG ratings, data, and analytic tools, a due diligence process for the service provider should be arranged as part of its fiduciary duty. In addition, funds should select a benchmark that aligns with environmental, social and corporate governance features pursued by them and provide a detailed explanation of the principle and methodology of benchmark index calculation within the scope permitted by intellectual property rights. Lastly, if a fund carries out shareholder activities for a particular ESG agenda, it should clarify the agenda and goal of its shareholder activities—whether it is normative or for profit seeking—and inform investors of specific activities and whether the goal is achieved.
Sustainability Information Disclosure based on Financial Materiality Standards / May. 31, 2022
The IFRS released exposure drafts of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosure on March 31, 2022. The drafts, in principle, require companies to contain material information that investors believe could affect enterprise value in their sustainability report. The IFRS has also clarified that material information should be selected based on the SASB Standards, unless otherwise specified by the IFRS. It is estimated that around a quarter of the material information as prescribed by the SASB Standards is disclosed by companies listed in the KRX with asset size of KRW 2 trillion or more. In this regard, financial materiality standards need to be more carefully reviewed and adopted by listed companies in Korea’s capital markets. At the same time, the domestic applicability of the IFRS Sustainability Disclosure Standards should be scrutinized by the relevant parties to ensure local jurisdictional requirements are reflected in the standards.
IFRS Sustainability Disclosure Standards and their Implications / Dec. 07, 2021
The International Financial Reporting Standards (IFRS) Foundation plans to establish a global baseline for sustainability information disclosures through the International Sustainability Standards Board (ISSB) that was launched on November 3, 2021. What is noteworthy is that the global baseline serves as a sustainability-related financial disclosure, which would be differentiated from the current sustainability reporting framework centered on a wide range of stakeholders. Having adopted the prototype of the Task Force on Climate-Related Financial Disclosures (TCFD), the IFRS Sustainability Disclosure Standards require entities to disclose material information of sustainability-related risks and opportunities in terms of corporate governance, strategies, risk management, and targets. Related international discussions indicate that the IFRS Foundation is highly likely to develop the global baseline. Under the circumstances, Korea should prioritize systematically linking its sustainability disclosure framework with the international standards to be established, rather than setting up its standards for disclosure standardization.
Directions for Improvement in ESG Rating Schemes / Jun. 01, 2021
ESG ratings centering on non-financial data such as environmental, social, and governance factors are differentiated from credit ratings based on standardized corporate disclosure and accounting information under the global accounting standards. ESG ratings need improving in terms of transparency in methodology and consistency across raters because there is not a single set of standards on how to classify and measure corporate sustainability and report it to stakeholders. Under the rapid flow of investments pursuing ESG factors, the absence of standards could give rise to a distortion in asset allocation, and mis-selling issues. This is why financial authorities in developed nations have been seeking for improvement in this area. For example, global discussions mainly led by the EU include: establishing Sustainability disclosure standards in the ongoing non-financial disclosure directive revision; mandating financial institutions to disclose sustainability risks; and formulating a regulatory framework on ESG rating providers. It is worth referring to those discussions from the perspective of international compatibility when Korea seeks to improve its domestic ESG rating scheme.

Seminar Presentation

관련 세미나 이미지
2014 Jan 21
Capital Market Development and End-User Needs (Korean)
  • Presenter Senior Research Fellow Lee, Inhyung
관련 세미나 이미지
2010 Oct 25
Financial Safety Net Korean Experience and Implications
  • Presenter Senior Research Fellow Lee, Inhyung