Sustainability and Competition Global Practice Guide |
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Korea |
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(Asia Pacific)
Firm
Lee & Ko
Contributors
Hwan Jeong |
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| Are ESG measures/sustainability agreements included in your jurisdictional competition regime? | No. |
| If ESG measures/sustainability agreements are not included in your jurisdictional competition regime, do you foresee any new regulations coming into place in 2022? | Recently, there have been active discussions on ESG-related regulations, and ESG regulations have been implemented by a number of government ministries, including the Ministry of Environment and the Ministry of Employment and Labor. Given this trend, there still remains some possibility of ESG-related regulations being adopted by the Korea Fair Trade Commission (“KFTC”) in 2022. However, there is also the possibility that the KFTC may rely on existing regulations to regulate ESG-related matters. For example, if the KFTC targets improving ESG concerns in the area of supply chain, the KFTC may be able to rely on existing regulations that already allow for requesting data, setting targets or goals, and compelling certain actions by vendors. In addition, the KFTC is expected to continue monitoring matters involving undue support of affiliates and to promote improvement in the corporate governance of large conglomerates in line with the recent trend of emphasizing ESG management. |
| Has your Authority issued any guidance on the role, if any, of ESG in the competition law analysis applied to mergers or other conduct? | No. |
| Has your jurisdiction issued guidance regarding competitor collaborations or participating in industry working groups, and if so, do they specifically address ESG? | Yes, there are extensive regulations on collusion enforced by the KFTC. However, these regulations do not specifically address ESG. It seems likely that issues relating to collaborative conduct and joint participation will continue to be addressed under the existing antitrust regulatory framework. |
| Can parties seek specific guidance from authorities on proposed ESG initiatives? | Yes. In December 2021, under the oversight of the Ministry of Trade, Industry and Energy, the K-ESG Guidelines were released by the Ministry of Trade, Industry and Energy to various government ministries. (See here (In Korean)). The K-ESG Guidelines provide general guidance to companies on conducting internal self-inspections and do not set forth detailed guidance on specific issues. |
| How, if at all, does your jurisdiction quantify or calculate the ESG effects? | The K-ESG Guidelines contain 27 categories (energy, waste, labor, industrial safety, etc.) based on social values. Each category has item specifications containing an explanation, evaluation for performance and standards for evaluation. In total, there are 61 item specifications provided, with a point system enabling companies to conduct internal self-inspections to calculate their own level of ESG management. The point system contains five levels, with “Level 1” being the lowest rating (0 points) and “Level 5” being the highest rating (100 points). |
| What does your legal authority currently permit even if your agency is not yet active on this topic? | At this time, as the KFTC is not active on this topic, it is difficult to provide a meaningful response. |
| Are there precedents that involved ESG/sustainability matters in your country? If so please provide a short description. | In Korea, the Serious Disaster Penalty Act (“SAPA”) was recently enacted. Since the implementation of the SAPA, many companies have established a safety division with compliance officers assigned thereto to ensure compliance. Thus, the SAPA has had a significant impact on companies. |
| Is there specific antitrust regulation in your jurisdiction to be aware of which might give rise to private or class action ESG litigation? | No. However, conduct such as greenwashing may fall under the KFTC’s regulation on unfair or false or deceptive labeling and advertising, which may then trigger potential private actions. As for class actions, although there have been active discussions on expanding the scope of class action lawsuits in Korea, currently, they are available only for securities-related claims. However, there have been more and more derivative actions relating to collusion pursued by the National Pension Fund as a minority shareholder in Korea in line with the recent trend of emphasizing ESG management. |
Sustainability and Competition Global Practice Guide
No.
Recently, there have been active discussions on ESG-related regulations, and ESG regulations have been implemented by a number of government ministries, including the Ministry of Environment and the Ministry of Employment and Labor. Given this trend, there still remains some possibility of ESG-related regulations being adopted by the Korea Fair Trade Commission (“KFTC”) in 2022. However, there is also the possibility that the KFTC may rely on existing regulations to regulate ESG-related matters. For example, if the KFTC targets improving ESG concerns in the area of supply chain, the KFTC may be able to rely on existing regulations that already allow for requesting data, setting targets or goals, and compelling certain actions by vendors. In addition, the KFTC is expected to continue monitoring matters involving undue support of affiliates and to promote improvement in the corporate governance of large conglomerates in line with the recent trend of emphasizing ESG management.
No.
Yes, there are extensive regulations on collusion enforced by the KFTC. However, these regulations do not specifically address ESG. It seems likely that issues relating to collaborative conduct and joint participation will continue to be addressed under the existing antitrust regulatory framework.
Yes. In December 2021, under the oversight of the Ministry of Trade, Industry and Energy, the K-ESG Guidelines were released by the Ministry of Trade, Industry and Energy to various government ministries. (See here (In Korean)). The K-ESG Guidelines provide general guidance to companies on conducting internal self-inspections and do not set forth detailed guidance on specific issues.
The K-ESG Guidelines contain 27 categories (energy, waste, labor, industrial safety, etc.) based on social values. Each category has item specifications containing an explanation, evaluation for performance and standards for evaluation. In total, there are 61 item specifications provided, with a point system enabling companies to conduct internal self-inspections to calculate their own level of ESG management. The point system contains five levels, with “Level 1” being the lowest rating (0 points) and “Level 5” being the highest rating (100 points).
At this time, as the KFTC is not active on this topic, it is difficult to provide a meaningful response.
In Korea, the Serious Disaster Penalty Act (“SAPA”) was recently enacted. Since the implementation of the SAPA, many companies have established a safety division with compliance officers assigned thereto to ensure compliance. Thus, the SAPA has had a significant impact on companies.
No. However, conduct such as greenwashing may fall under the KFTC’s regulation on unfair or false or deceptive labeling and advertising, which may then trigger potential private actions.
As for class actions, although there have been active discussions on expanding the scope of class action lawsuits in Korea, currently, they are available only for securities-related claims.
However, there have been more and more derivative actions relating to collusion pursued by the National Pension Fund as a minority shareholder in Korea in line with the recent trend of emphasizing ESG management.