Korea at a Regulatory Crossroads: Double Materiality and the Future of ESG Accountability

The European Union's adoption of double materiality through the Corporate Sustainability Reporting Directive (CSRD) has introduced a major divergence in global corporate accountability standards, contrasting stakeholder-inclusive reporting with the United States' investor-focused single materiality model. This regulatory split places Korea at a pivotal juncture, balancing export-oriented ties to the EU with structural integration into U.S. capital markets. Double materiality expands disclosure obligations to include not only financial risks but also the social and environmental impacts of corporate activity-fundamentally reframing corporate accountability and reinforcing the relevance of business and human rights due diligence. Despite this shift, Korea's Financial Services Commission has delayed ESG disclosure mandates and avoided adopting a clear materiality definition, reflecting institutional tensions between Korea's industrial policy legacy and growing demands for stakeholder accountability. Korean firms with substantial EU operations already face binding obligations under the CSRD's extraterritorial reach, creating regulatory fragmentation and governance incoherence. This study offers a comparative legal-policy analysis of Korea's strategic choices, evaluating materiality frameworks against four criteria: regulatory coherence, international alignment, stakeholder responsiveness, and implementation feasibility. It examines the EU's codification of double materiality, U.S. doctrinal resistance grounded in securities law, and Korea's fragmented regulatory posture. The paper concludes that Korea's optimal approach is phased implementation-starting with financial materiality aligned with ISSB standards, while preparing institutional capacity for future expansion to impact materiality. The choice of materiality framework is not merely technical, but a foundational decision on the future scope of corporate accountability in a globally integrated economy, with far-reaching implications for ESG governance and human rights.