"Full-scale Supply Chain Due Diligence Next Year... Need for Human Rights and Environmental Risk Management System"

KCCI, 16th ESG Management Forum
Review of Current ESG Issues and Outlook on Key Topics

Ahead of the full-scale implementation of ESG-related supply chain due diligence next year, recommendations have been made to establish a human rights and environmental risk management system.

The Korea Chamber of Commerce and Industry (KCCI), in collaboration with the law firm Kwangjang, announced that on the 11th, they held the "16th KCCI ESG Management Forum" at the Chamber of Commerce building in Jung-gu, Seoul, discussing recent ESG issues and prospects for major issues next year.

Attorney Kim Sang-min of Kwangjang Law Firm, in his presentation titled "2024 Major ESG Issue Outlook and Challenges," stated, "With the recent submission of related bills to the National Assembly in September, it is highly likely that discussions on supply chain due diligence will intensify next year," adding, "Companies need to proactively prepare by establishing human rights and environmental risk management and ESG management systems."

Until now, it has been difficult to clearly determine whether actions constitute greenwashing legally, making it challenging to punish violations even when enforcement occurs. Attorney Kim advised, "Since the government has established clear criteria such as the 'Guidelines for Eco-friendly Management Activities Display and Advertising' this year, greenwashing regulations are expected to be strengthened from next year onward," and emphasized, "Compliance checks on corporate advertising have also become important."

Lee Seon-kyung, Center Director at Daishin Economic Research Institute, in her presentation on "Measures to Ensure the Effectiveness of ESG Disclosure Systems," said, "Even if the global ESG disclosure standard ISSB is used as a standard when establishing domestic ESG disclosure criteria, specific scope, disclosure location, targets, and implementation timing must be determined according to each country's circumstances, and a cost-benefit analysis by country is essential."

Seoul Jung-gu Sangui Hall exterior view
[Photo by Korea Chamber of Commerce and Industry]

She added, "Regarding the disclosure location, if companies are required to disclose in business reports amid uncertainty about which items and at what pace will be added to the ISSB standards in the future, significant uncertainty may arise in the corporate disclosure system, and it could impose a heavy cost burden."

She continued, "With mandatory disclosure, all stakeholders?including companies bearing the burden, entities providing services using ESG disclosures, end-users of the results, verification bodies for key items such as climate disclosures, and civic groups?must participate in the decision-making process," emphasizing, "There should be sufficient time and public consultation."

During the free discussion following the presentations, participants agreed that while ESG institutionalization is a global trend, it should not be approached solely through regulation. They shared the view that the system should be introduced with a long-term focus on enhancing corporate competitiveness and sustainable growth.

Woo Tae-hee, Executive Vice President of KCCI who chaired the meeting, stated, "While ESG institutionalization is a global trend and necessary to enhance the competitiveness of domestic companies, excessive regulations introduced amid insufficient preparation could impose a significant burden on companies." He added, "Sufficient preparation time should be given to companies, and institutionalization should be carried out in a way that supports the improvement of companies' ESG management levels and sustainable growth rather than through regulation."