"Mandatory ESG Disclosure... Internal Controls Needed to Ensure Information Reliability"

Sangui's 'ESG Innovation Growth Symposium'

The European Union (EU) is pushing for mandatory ESG (Environmental, Social, and Governance) disclosures for companies, prompting calls for domestic companies to establish internal controls to ensure the reliability of their disclosures.

Jaeheum Park, Executive Director at EY Hanyoung, stated on the 13th at the 'ESG Innovation Growth Symposium' held by the Korea Chamber of Commerce and Industry to commemorate the 50th anniversary of Commerce Day, "Even domestic companies must disclose sustainability information under the EU Corporate Sustainability Reporting Directive (CSRD) if they meet certain conditions, such as having corporate sales exceeding 40 million euros within the EU."

In his presentation on the final version of the Corporate Sustainability Reporting Directive and reporting standards and response measures, Executive Director Park emphasized, "It is important to disclose not only the impact of environmental and social changes such as the climate crisis on companies but also how companies affect the environment and society (double materiality assessment)."

He added, "To manage ESG risks, improving the quality of disclosures is key, and it is necessary to establish an internal control system to ensure the reliability of a company's sustainability information."

On the same day, Hoon Jung, Research Fellow at the National Assembly Futures Institute, explained in a presentation on the trends and challenges of the Carbon Border Adjustment Mechanism (CBAM), "The CBAM announced by the EU will begin its pilot operation period from October this year, applying to six major items: steel, cement, aluminum, fertilizer, electricity, and hydrogen."

He continued, "Although the scope and range of application are limited during the pilot period, expanding the target items to plastics, organic chemicals, etc., and including indirect emissions in the future could increase the burden on our companies, so strategic responses are necessary." He also added that considering the expansion of CBAM's application scope and its direct and indirect impacts, companies should manage emissions across the entire supply chain and establish phased reduction strategies to prepare proactively.

Woo Taehee, Executive Vice Chairman, said, "With ESG disclosure mandates and the Carbon Border Adjustment Mechanism institutionalized mainly in major countries, these could act as trade barriers in the future, and this trend is expected to accelerate further. ESG systems can be an opportunity to surpass competing companies and expand markets if utilized properly, so it is a time when companies need active mindset shifts and ESG implementation."