This photo taken Nov. 21, 2023, shows a port in South Korea’s southern city of Busan. (Image courtesy of Yonhap)
SEOUL, Mar. 27 (Korea Bizwire) – As the European Union expands its environmental, social, and governance (ESG) regulations on exports, South Korean companies appear to be lagging in their awareness and preparedness, according to a recent survey conducted by the Korea Chamber of Commerce and Industry (KCCI).
The survey, conducted with 205 domestic exporting firms, revealed concerning gaps in companies’ grasp of and compliance with the EU’s new ESG export rules. Scores were calculated on a 0 to 100 scale, with 0 indicating no knowledge or compliance, and 100 signifying comprehensive understanding and robust adherence.
Overall, respondents scored a mere 42 out of 100 in their awareness of major EU ESG export regulations, and an even lower 34 out of 100 in their level of compliance – underscoring the need for urgent action.
The divide was particularly stark between large corporations and smaller enterprises. While large companies scored 55 in regulation awareness, small and medium-sized businesses lagged far behind at 40. The compliance gap was similarly wide, with large firms at 43 and smaller counterparts at a troubling 31.
Among the ESG regulations cited as most burdensome, the EU’s Carbon Border Adjustment Mechanism topped the list at 48.3% of respondents. This was followed by supply chain due diligence requirements (23.9%), packaging regulations (12.2%), and corporate sustainability reporting directives (10.7%).
Regarding the Carbon Border Adjustment Mechanism, over half (52.7%) of companies cited difficulties in measuring carbon emissions as the primary hurdle. Insufficient funds for investing in carbon reduction facilities (41%) and a lack of specialized personnel (37.1%) were also highlighted as significant challenges.
Alarmingly, 81.4% of surveyed businesses admitted to not conducting any supply chain due diligence, underscoring the need for targeted policy support in this area.
When asked about policy priorities to bolster ESG export compliance, companies emphasized the need for educational resources and guidelines (52.7%), financial and tax incentives to offset costs (44.9%), and regular updates on emerging regulations (27.8%).
“For our exporters to maintain their global competitiveness, it is crucial that they receive more systematic, practical policies and concrete guidelines that can be realistically implemented on the ground,” stressed Cho Young-jun, head of the KCCI’s Sustainable Management Institution.
M. H. Lee (mhlee@koreabizwire.com)
