Korea Federation of SMEs Holds '2024 1st SME Carbon Neutrality and ESG Committee' Meeting

Discussion on Responding to EU Carbon Neutrality Regulations

The Korea Federation of Small and Medium Business (Kbiz) held the ‘1st Small and Medium Enterprise Carbon Neutrality·ESG Committee of 2024’ at the Kbiz headquarters in Yeouido on the 30th.

The committee was established in June 2023 with the purpose of discussing strategies for small and medium enterprises (SMEs) and identifying support tasks in response to the global spread of carbon neutrality and ESG, as well as the ‘Supply Chain Due Diligence Directive’ passed by the EU Parliament. The committee members include representatives of SME cooperatives by industry and industry experts.

At the meeting, 19 representatives and experts from various industries attended, including Chairman Lee Sang-hoon (Chairman of the Korea Mining Cooperative), ▲ Lee O-seon, Chairman of Busan Clean Surface Treatment ▲ Shin Ik-cheol, Chairman of Regenerated Oil ▲ Chae Hyuk, Chairman of Industrial Road ▲ Kim Young-gyu, Chairman of Measurement and Control ▲ Jang Tae-soon, Chairman of Centrifugal Concrete ▲ Kim Jeong-hoon, President of the Korea Petroleum Distribution Association ▲ Park Pil-joo, Head of ESG Infrastructure Support at the Korea Environmental Industry & Technology Institute.

During the committee meeting, discussions were held to explore trends in ESG management of supply chains by large corporations, which are being strengthened in relation to the expansion of carbon-neutral trade regulations such as the EU Supply Chain Due Diligence Directive and the Carbon Border Adjustment Mechanism, and to seek response measures for SMEs.

In particular, there was significant concern in the industry about the increasing difficulties in responding to ESG evaluations by prime contractors and the possibility that prime contractors may shift the due diligence responsibility for second- and third-tier subcontractors to subcontracting companies.

Meanwhile, considering that the level and demands of ESG management differ by industry, the committee reached a consensus on the need for industry-tailored government support and the promotion of ESG-related win-win efforts by large and medium-sized prime contractors.

Chairman Lee Sang-hoon stated, “Seventy-five percent of listed large and medium-sized enterprises conduct supply chain ESG evaluations, and it is urgent for SMEs included as partners to prepare countermeasures,” adding, “Since the ESG competitiveness of subcontractors leads to the competitiveness of large and medium-sized prime contractors, practical support such as equipment provision and certification acquisition by large and medium enterprises, as well as active cooperation from government ministries, is necessary.”