As published on esgclarity.com, Monday 24 April, 2023.
Korea is taking the lead on the clampdown on greenwashing in Asia as the country is poised to become the first nation in Asia to hand out fines for the practice.
A new law is currently making its way through Korea’s National Assembly, which would see companies that are deemed by the country’s Ministry of Environment to have misled the public about their green credentials faced with a W3m ($2,286) fine.
According to market observers, the law is expected to pass later this year and would mean that Korea would be following in the footsteps of other jurisdictions globally to introduce legislation specifically targeted at greenwashing.
In March, for example, the European Commission proposed a new law that would force companies that make green claims to put forward scientific evidence to support them.
In November, Australia also issued its first ever fine for greenwashing, a A$53,280 ($35,666) penalty paid by ASX-listed Tlou Energy.
Korea already penalises greenwashing under the Development and Support for Environmental Technology Act and is able to issue fines, although in reality no fines have been issued under the law, only administrative notices, which are non-legally binding under Korean law.
“One of the reasons it’s so difficult to administer penalties is because the government has to prove how much revenue came from the greenwashing ad, which is obviously very difficult to do,” said Jihyeon Ha, head of the legal team at non-profit Solutions for Our Climate (SFOC).
“They can look at the companies’ profits but it’s very difficult to prove how much revenue comes from the ad so it’s not widely used.”
Regardless, the new law will cement Korea’s status as taking the lead in Asia on the clampdown on greenwashing.
Last year, Korea’s environment ministry warned energy giant SK E&S that it needed to change the wording on its website regarding the Barossa gas project in Australia having previously stated that the project would be CO2 free.
SFOC’s Ha was nonplussed about the fact that the fine was relatively small and said that the Korean government was acting as a leader in the fight against greenwashing.
“In the long term, it [the fine] should be larger but right now Korea is in the very early stages of regulating greenwashing. I think the government is showing its willingness and intention to take the lead on regulation, which is more important than the amount of the fine.”