Introducing EGS Regulations...
to Take It as New Opportunity not Entry Barrier”
- It is forecast that EU supply chains will be
restructured centering on the companies that comply with ESG regulations...
Need to seize the opportunity by building data that
can verify compliance with ESG regulations -
the European Union (EU) is introducing ESG-related regulations one after
another, some argue that Korean companies needs to take this as an opportunity
to make inroads into the EU.
to a report titled, “Trends and Implication in ESG-related Regulations in EU”
issued on April 27th by the Brussels branch of the Korea
International Trade Association (Chairman: Christopher Koo), the EU is
establishing policies and accelerating legislation to strengthen corporate
obligations on ESG (environmental protection, social responsibility, and
governance improvement) based on the principles of sustainability.
policies include △'Sustainable Financial Disclosure Regulation (SFDR)', which
imposes mandatory disclosure obligation for financial institutions on
sustainability of investment products, △Non-Financial Reporting Directive
(NFRD), which discloses the social and environmental impact of companies'
activities in non-financial statements', △'Taxonomy', which defines
environmentally sustainable economic activities and presents criteria for
judgment, and △'Supply Chain Due Diligence system, which requires companies to
monitor the status of environmental and
human rights protection practices across the supply chain'.
to the report, global companies in the EU are already preparing for ESG
legislation by establishing their own regulations on non-financial disclosures,
environmental and human rights protection supervision of supply chains, and
developing an ESG information tracking system for supply chain companies
utilizing blockchain technology. At the same time, it appears that ESG compliance
is being used as a differentiating strategy from competitors.
report forecast that if the supply chain due diligence system is implemented,
it will enable monitoring of the environmental and human right protection
situations and the value chain will be restructured, centering on companies
that can comply with EU standards. In addition, the report analyzed that ESG
legislation might act as a barrier when entring into the EU market, but if
Korean companies establish management activities that comply with ESG
regulations and a system to verify them, there will be higher possibility to
participate in the supply chain of the EU, which currently is dominated by
China, and it can serve as a new opportunity.
Bit-na, head of Brussels Branch of the Korea International Trade Association,
said, “Korean companies looking to make inroads into the EU needs to take ESG
issues as business opportunity, not regulations,” and added, “The EU is the
first in the world to pay attention to 'sustainability' and make it a reality
through concrete legislation. Korean companies need to keep an eye on these
movemens of the EU and figure out whether they meet the EU's standards of the
environment, hazardous substances, labor, etc. and be thoroughly prepared by building data.”