ESG POLICY & STRATEGY

Are Korean Companies' ESG Management Strategies Properly Aligned with Global Standards?

An analysis suggests that what Korean companies must pay attention to is the shift in the due diligence method required by the CSDDD, as formal due diligence such as 'sending the same questionnaire to all tier-1 suppliers' is no longer justified, and the principle of risk-based due diligence has become much clearer. Korean companies generating a certain level of revenue or more within the EU are subject to both the CSRD and the CSDDD, and subsidiaries of Korean companies within the EU are also subject to the CSRD if they meet the size requirements. Under the CBAM, carbon emissions translate into financial costs, and the combined effect of production and carbon costs determines competitiveness. In particular, the EU may apply conservative default values to companies lacking an MRV (Measurement, Reporting, and Verification) system, imposing additional costs that could severely undermine their competitiveness.