Samil PwC "Sustainability Challenges... Still Beneficial to Business"

The election of Donald Trump as President of the United States has increased uncertainty surrounding U.S.-centered sustainability policies and regulations. However, efforts toward sustainability by the international community, led by the European Union (EU), continue, and the majority of companies believe that sustainability investments will still benefit their business even after President Trump's re-election.

On the 25th, Samil PwC announced on the 26th that it held a seminar titled "Beyond Climate Change: New Challenges and Response Directions for Companies" at Amore Hall on the 2nd floor of its headquarters in Yongsan-gu, Seoul, covering these topics.

The seminar, attended by sustainability experts from PwC Global and Samil PwC, was organized to review global trends related to sustainability, accurately understand new challenges such as biodiversity, circular economy, and supply chain management, and discuss ways to establish company-specific strategies. The seminar was conducted simultaneously on-site and via online live streaming, with about 300 corporate representatives attending.

Steven Kang, Leader of the Sustainability Platform at Samil PwC, said in his opening remarks, "Sustainability-related regulations are already in effect, and major companies are implementing them from a strategic perspective, so sustainability continues to have a significant impact on corporate management," adding, "We hope companies will use this seminar to identify directions for change toward sustainability and establish appropriate response measures."

Will Jackson-Moore, PwC Global Sustainability Leader and keynote speaker, explained the outcomes of the 29th United Nations Climate Change Conference of the Parties (COP29), the Convention on Biological Diversity (CBD), and other major global trends such as the UN Plastic Treaty. He also shared opinions on the impact of the recent U.S. presidential election results on future corporate activities during a dialogue with Leader Kang. Will stated, "Although changes in Biden's climate policies are expected, sustainable management will benefit corporate business," and forecasted, "Especially, energy management and the transition to renewable energy are economically advantageous, and considering climate risks and tariffs, building sustainable supply chains will be an important challenge."

The first session was led by Alexander Spek, EU CSRD Center Leader, and Jin-kyu Lee, Partner at Samil PwC, who reported on the legislative status of CSRD by EU member states and highlighted issues experienced by European and Korean companies in preparing for disclosure obligations. Partner Lee said, "European listed companies preparing for CSRD are proceeding with tasks sequentially to respond to disclosures and show some confidence, but they face difficulties regarding data availability, quality, and value chain information."

Meanwhile, difficulties discovered during a CSRD preliminary reporting project conducted by domestic companies together with their European subsidiaries included determining the level of double materiality assessment, insufficient sustainability governance systems in European subsidiaries, and low levels of data availability. Regarding this, Partner Spek emphasized, "It is important to establish a cooperative system between headquarters and local European subsidiaries to resolve difficulties encountered during the disclosure preparation process."

Partner Kyung-sang Park, who gave a lecture on "Natural Capital and Biodiversity," provided a detailed explanation of the concept of natural capital and biodiversity, the impact of natural capital loss on business, and directions for preparing natural capital disclosures.

According to the presentation, five industries?agriculture, forestry, aquaculture and fisheries, food and beverage and tobacco, and construction?which account for 12% of the world's gross domestic product (GDP), show a high dependence on natural capital at the direct operational stage. Partner Park stated, "Not only these five industries but all industries depend on nature, so managing the impact of natural capital across the entire value chain is necessary."

Partner Park recommended strategies for responding to natural capital disclosures, including ▲ understanding disclosure goals and requirements ▲ assessing the current disclosure status of the company ▲ establishing a disclosure strategy and roadmap that integrates existing disclosures with natural capital disclosures. He emphasized the need for companies to build an enterprise-wide reporting system through governance bodies, dedicated teams, or committees with focused attention.

In response to a question from an attendee about the relationship between nature-related financial disclosures and semiconductor manufacturers, Partner Park replied, "If the rate of species decline accelerates in the future, there will be more development restriction zones for biodiversity conservation, leading to reduced rare earth mining areas, which will eventually connect to semiconductor supply chain risks," adding, "It is necessary to disclose response strategies from the risk management perspective required by nature-related financial disclosures."

In the third session, Partner Bo-hwa Lee focused on the "Impact of the International Plastic Treaty." Lee addressed the key issues of the international treaty to end plastic pollution and its impact on companies.

Partner Lee reviewed the main issues of the 5th Intergovernmental Negotiating Committee meeting (INC-5) for the UN Plastic Treaty, held in Busan from the 25th to December 1st. The international plastic treaty is expected to become a legally binding regulation covering the entire lifecycle of plastics, which will have a significant impact on companies in the future.

Assuming the international plastic treaty proceeds similarly to the Paris Climate Agreement, Partner Lee predicted that its full impact will begin after 2028. Lee said, "When new regulations emerge, companies will incur new compliance costs and face increased market uncertainty, but from a mid- to long-term perspective, proactively responding to regulations, expanding eco-friendly products and cost reductions, and increasing research and development investments in eco-friendly materials will provide an opportunity to build fundamental market competitiveness."

Finally, Young-chang Yoon, Partner at PwC Consulting, introduced the main contents of the Corporate Sustainability Due Diligence Directive (CSDDD) confirmed by the EU in July and ways to secure corporate supply chain traceability. Partner Yoon explained, "Since 2021, human rights-centered supply chain due diligence regulations have been promoted by country, initially encouraging voluntary participation by companies, but recently due diligence regulations have become mandatory," describing the global situation.

Partner Yoon added, "Recently, violations related to supply chain regulations have been discovered, and sanctions such as customs clearance suspensions have been imposed, posing real risks to companies," advising, "To respond to global supply chain regulations, companies need to establish a complete traceability system at each stage of their supply chain to respond to and manage supply chain risks."

Steven Kang, Sustainability Platform Leader who planned this seminar, said, "Many global companies are already managing and investing in sustainability issues, including climate change, regardless of the U.S. election results," and added, "Domestic companies should not consider this a distant future task but should understand global trends and take the initiative." The seminar presentation materials are available on Samil PwC's ESG integrated information platform, 'SamilESG.com,' and the video can be viewed on the Samil PwC YouTube channel.