CONTENTS
- 1. Greenwashing | The Background of Its Spread and the Structure of Corporate Risk
- - Characteristics of Greenwashing
- - Key Legal Risks Companies Face
- 2. Greenwashing | Measures Companies Can Implement on Their Own
- 3. Greenwashing | Main Regulatory Laws and Penalty Structure
- - Regulation Under the Act on Fair Labeling and Advertising
- - Regulation Under the Environmental Technology and Industry Support Act
- 4. Greenwashing | The Actual Flow of Investigation and Sanction Procedures
- - Stage-by-Stage Response to Investigation, Administrative Sanctions, and Disputes
- 5. Greenwashing | Domestic Ripple Effects of Foreign Regulation
- - When the Involvement of an Environmental Law Attorney Is Needed
- - The Strategic Assistance of an Environmental Law Attorney
1. Greenwashing | The Background of Its Spread and the Structure of Corporate Risk
For greenwashing risk, Daeryun's environmental law attorneys provide comprehensive legal response services ranging from preliminary diagnosis to regulatory response and dispute and litigation matters.
As ESG management and eco-friendly policies have recently become core standards in corporate management, the legal responsibility surrounding greenwashing has also been expanding rapidly.
Greenwashing goes beyond a marketing issue and connects to consumer deception, false or exaggerated advertising, distortion of environmental information, and damage to the credibility of ESG disclosures, thereby creating multilayered legal risks.
In particular, as eco-friendly standards become more detailed and quantified both domestically and internationally, eco-friendly claims that lack objective grounds are increasingly becoming subject to regulation in themselves.
Characteristics of Greenwashing
Greenwashing refers broadly to conduct in which a company, despite having no or only a negligible positive environmental impact, presents itself as if it is engaged in eco-friendly activities and thereby misleads consumers and stakeholders with false or exaggerated information. It typically has the following characteristics.
- Emphasizing an eco-friendly image without objective figures or supporting grounds
- Promoting only a specific process or partial result as if it were the company's overall management performance
- A lack of verifiability for carbon offset or carbon neutrality claims
- Inconsistencies among ESG reports, advertisements, and press releases
- Domestically focused promotion that does not account for overseas regulatory standards
Key Legal Risks Companies Face
When greenwashing becomes an issue, a company may bear the following combined forms of liability.
- Administrative investigation by the Fair Trade Commission and the Ministry of Environment
- Imposition of corrective orders, penalty surcharges, and administrative fines
- Possibility of criminal punishment (imprisonment or a fine)
- Claims for damages and collective disputes by consumers and environmental groups
- A decline in ESG ratings and reduced investment
2. Greenwashing | Measures Companies Can Implement on Their Own
Greenwashing risk is an area where preventive blocking matters far more than after-the-fact response.
The response measures that a company can proactively carry out internally can be summarized as follows.
· A consistency review across ESG reports, the website, and IR materials
· Confirmation of whether objective figures and data supporting eco-friendly claims are held
· Improvement of internal compliance and review processes
· Training and guidelines for external communications staff
Before using eco-friendly expressions, a company should check in advance whether the expression corresponds to the facts, whether there is any possibility of misleading consumers, and whether the supporting evidence is sufficient.
The Act on Fair Labeling and Advertising uses the very possibility of misleading consumers as a regulatory standard, regardless of the intent behind the expression.
Therefore, expressions such as "carbon neutral," "eco-friendly," "environmentally conscious," and "sustainable" carry a high risk of being judged as greenwashing if they are not accompanied by objective indicators, verification data, and a clear explanation of their scope and limitations.
3. Greenwashing | Main Regulatory Laws and Penalty Structure
The main regulatory laws and penalty structures relating to greenwashing are as follows.
Regulation Under the Act on Fair Labeling and Advertising
The Act on Fair Labeling and Advertising regulates false, exaggerated, and deceptive advertising of goods and services in general, and greenwashing is also a major target of sanctions.
The main types of violations are as follows.
▶ Labeling eco-friendly performance or effects that differ from the facts
▶ Promoting an eco-friendly aspect of only part of a process as if it were a characteristic of the entire product
▶ Using comparative, "best," or "only" expressions without grounds
▶ Using expressions likely to mislead consumers
A violation may result in imprisonment of up to two years or a fine of up to 150 million won, and a corrective order and penalty surcharge may be imposed concurrently.
Regulation Under the Environmental Technology and Industry Support Act
The Environmental Technology and Industry Support Act regulates conduct that distorts environmental information considered across a product's entire life cycle (manufacturing, use, and disposal).
The main types of violations are as follows.
▶ Exaggerated, understated, or distorted labeling of environmental attributes
▶ Misuse of eco-labels or eco-friendly certifications
▶ Exaggerated promotion of carbon offset or environmental improvement effects
▶ Unverified claims of environmental technology
A violation is subject to imprisonment of up to two years or a fine of up to 20 million won.
In many cases, administrative investigation, corrective measures, and public disclosure measures precede criminal punishment, but repeated violations carry a strong possibility of expanding into criminal liability.
4. Greenwashing | The Actual Flow of Investigation and Sanction Procedures
In greenwashing cases, the scale of the risk is determined by the manner of the initial response.
The general flow proceeds in the following order: ① administrative guidance or the filing of a public (administrative) complaint, ② a request for the submission of materials and verification of the facts by the Fair Trade Commission or the Ministry of Environment, ③ a corrective recommendation or corrective order, ④ a penalty surcharge or public disclosure measure, and ⑤ expansion into a civil dispute or criminal liability.
In particular, even where a matter appears relatively minor at the administrative stage, if the content of the submitted materials and the manner of explanation are inappropriate, there is a high possibility that it will shift into a formal sanction procedure.
The statements and submitted materials at this stage serve as important grounds for judgment in the subsequent level of sanctions and in litigation.
An environmental law attorney performs the role of managing the matter at a controllable level in this process by adjusting the scope of expression revisions, organizing the facts, and refining the legal issues.
Stage-by-Stage Response to Investigation, Administrative Sanctions, and Disputes
Greenwashing-related cases begin with investigations by the Fair Trade Commission, the Ministry of Environment, and local governments, and in many cases requests for the submission of materials, orders to halt advertising, and corrective recommendations proceed in parallel.
During the initial response, the level of sanctions and the likelihood of subsequent disputes vary greatly depending on the scope of expression revisions, the manner of organizing the facts, and the strategy for submitting materials.
The key is to design a response strategy that addresses criminal, administrative, and civil risks in an integrated way rather than separating them.
| Category | Responses a Company Can Take Immediately |
|---|---|
| Response to Material Submission | After confirming the scope of the request, submit only materials supported by facts, figures, and grounds, selected accordingly |
| Advertising and PR Management | Temporarily halt or narrow the scope of eco-friendly and carbon neutrality expressions |
| Organizing the Facts | Check whether the content of advertisements, the website, and ESG reports is consistent |
| Internal Communication | Establish a joint response system among the relevant departments (PR, ESG, and legal) |
| External Response | Establish a unified standard of explanation for inquiries from the media and outside parties |
| Records Management | Retain the supporting materials and decision-making process related to eco-friendly claims |
5. Greenwashing | Domestic Ripple Effects of Foreign Regulation
The greenwashing case law and regulatory standards accumulating in major countries such as France, Germany, and the United Kingdom are highly likely to have a direct impact on domestic companies as well.
Domestic environmental and advertising regulation has so far operated mainly through administrative guidance, but abroad, substantive sanctions have already become a reality, including orders to remove carbon-neutral claims, large coercive enforcement fines, and the recognition of damages awarded to environmental organizations.
From the perspective of an environmental law attorney, Korea is also entering a transitional period in which it is moving beyond administrative guidance toward the stage of judicial determination, and greenwashing is likely to soon establish itself as a full-fledged area of legal dispute.
When the Involvement of an Environmental Law Attorney Is Needed
There are clearly points in time when greenwashing risk becomes difficult to control through internal corporate review alone.
In the following situations, a response with the assistance of an environmental law attorney may be needed.
The response at this stage requires a comprehensive judgment that encompasses the company's overall management strategy, communications, and risk management.
An environmental law attorney not only handles disputes after the fact but also designs an efficient timing and scope of response by comprehensively considering the legal, financial, and reputational risks the company must bear.
The Strategic Assistance of an Environmental Law Attorney
Greenwashing risk is an area in which environmental law, the Act on Fair Labeling and Advertising, the Monopoly Regulation and Fair Trade Act, ESG disclosure, and foreign regulation are intertwined in complex ways.
Daeryun Law Firm, Korea's 9th largest law firm (based on 2025 National Tax Service value-added tax filings), provides the following one-stop legal services through a collaborative TF made up of environmental law attorneys with experience in environmental crime investigations and administrative sanction responses, specialists well versed in ESG and environmental regulation, and accounting, tax, and labor experts.
· Assessment of the provability of carbon-neutral and environmental claims
· Risk analysis reflecting domestic and foreign greenwashing regulations and case law
· Response to investigations by the Fair Trade Commission and the Ministry of Environment, and litigation representation
· Response to disputes with consumer and environmental organizations
Greenwashing has already become an area of legal liability made real through actual sanctions and judgments abroad, so what companies now need is not a declaration but a provable ESG strategy.
If you need assistance, please receive the strategy of an environmental law attorney through 🔗scheduling an Environmental and ESG attorney legal consultation.
