[Environmental Law] Implications of the KFTC's First 'Greenwashing' Sanction Against a Large Corporation

As ESG management establishes itself as an essential corporate value, "eco-friendly" marketing is surging. However, unfounded claims or exaggerated expressions can lead to "greenwashing" that undermines consumer trust and turns into a liability. Recent cases in which major steel and fashion companies were sanctioned by the Fair Trade Commission for greenwashing bear this out. The EU and the U.S. already prohibit eco-friendly claims that lack scientific basis, and Korea is also strengthening its regulations. Companies can now secure sustainability only by establishing fact-based verification systems for all eco-friendly communications and preemptively blocking risk through legal counsel.

Citing the burden on businesses, the government has postponed the mandatory ESG disclosure that was scheduled to take effect in 2025. However, the direction and necessity of ESG disclosure remain valid. The draft Korean ESG disclosure standards announced in 2024 seek consistency with international standards and have laid out key disclosure elements such as governance, strategy, risk management, and metrics. Even amid the deferral atmosphere within the global trend, companies should seize this as an opportunity to preemptively prepare for ESG assessments, the building of internal governance, and reviews of environmental-law compliance.