Growing Momentum for Strengthening Greenwashing Regulations... Need for Systematic ESG Management Response

KCCI Hosts the 17th ESG Management Forum

Recently, in relation to the increasing global demand for ESG (Environmental, Social, and Governance) management, including regulations on greenwashing (corporate behavior that disguises itself as environmentally friendly when it is not), advice has been given that domestic companies should proactively identify and systematically respond to these issues. It was also suggested that companies should take this opportunity to enhance their competitiveness by solidifying their ESG management.

On the 5th, the Korea Chamber of Commerce and Industry (KCCI) held the 17th KCCI ESG Management Forum at the Seoul Chamber of Commerce building in collaboration with the law firm Hwawoo, discussing ESG issues and implications including greenwashing risks and countermeasures.

Seoul Jung-gu Korea Chamber of Commerce and Industry Building Exterior /
[Photo provided by=Korea Chamber of Commerce and Industry]

The meeting, broadcast online, was attended by Woo Tae-hee, Executive Vice President of KCCI; Lee Hyung-hee, Chairman of SK Communication Committee; Park Se-min, Director of Consumer Policy Bureau at the Fair Trade Commission; Kim Jeong-nam, Group Leader at Hwawoo Law Firm; Hwang Geun-sik, Head of the Korea Institute of Certified Public Accountants; Yang Jeong-bae, Manager at Korea SGS; Ahn Soo-hyun, Professor at Hankuk University of Foreign Studies; and Lee Jong-oh, Secretary General of the Korea Socially Responsible Investment Forum.

Kim, who presented on "Greenwashing Risks and Countermeasures," stated, "With the recent strengthening of global greenwashing regulations in ESG disclosures and investments, related risks are increasing. Once ESG disclosures become legally regulated, management will inevitably be held accountable for greenwashing. Therefore, companies must organize systems to communicate ESG management strategies and implementation results and seek advice from legal experts."

In his presentation on "ESG Disclosure Certification and Greenwashing," Hwang explained, "the International Sustainability Standards Board (ISSB) 5000, released last year, identifies greenwashing as a representative case of distorting sustainability information and urges caution against greenwashing throughout the certification process. As international standard-setting organizations aim to develop and incorporate effective certification methods to counter sophisticated greenwashing, companies should benchmark changes in certification standards and establish internal control systems to prevent greenwashing."

Yang, who presented on "Global ESG Certification Status and Implications," said, "Along with global ESG regulations such as those in the European Union (EU) and the United States, more companies are receiving ESG certifications or evaluations through global initiatives. It is necessary for our companies to proactively identify the initiatives to which their supply chains belong, such as the Responsible Business Alliance (RBA) focused on the electronics sector, and verify compliance with initiative requirements to respond effectively to global ESG certifications (evaluations)."

During the subsequent open discussion, there was a consensus that as ESG disclosure obligations become institutionalized mainly in developed countries, risks related to ESG washing, including greenwashing, are increasing. There was also an opinion that companies should view the solidification of ESG management as an opportunity to enhance corporate competitiveness.

Presiding over the meeting, Executive Vice President Woo said, "As ESG disclosures, previously left to corporate discretion, become institutionalized mainly in developed countries, the burden on companies regarding ESG washing is increasing. Companies need to leverage the acquisition of global ESG certifications and the solidification of ESG management as opportunities to differentiate themselves from competitors in responding to greenwashing risks."

The KCCI ESG Forum has been held regularly since its first session in April 2021, addressing the latest ESG issues. This was the 17th forum. This year, additional forums (18th to 20th) will be held on topics such as domestic ESG disclosure standards, biodiversity, and forecasts of major ESG issues for next year.