"Domestic Companies' ESG Export Regulation Response Score 34 Points"

KCCI Surveys 205 Export Companies
"Burden from Carbon Border Adjustment and Supply Chain Due Diligence"

Although the European Union (EU) is expanding ESG (Environmental, Social, and Governance) export regulations, it has been found that the awareness and response levels of domestic companies are insufficient.

The Korea Chamber of Commerce and Industry (KCCI) announced the results of a survey on the current status of ESG regulation response and policy tasks conducted on June 26, targeting 205 domestic export companies (15 large companies, 69 mid-sized companies, and 121 small and medium-sized enterprises).

The scores were calculated by converting 0 points for companies that were completely unaware or unable to respond to the regulations, and 100 points for those that were very knowledgeable or responded well. The survey results showed that the awareness level of major EU ESG export regulations was 42 out of 100 points, and the response level was 34 points.

By company size, the awareness levels were 55 points for large companies, 42 points for mid-sized companies, and 40 points for small and medium-sized enterprises. The response levels were 43 points for large companies, 36 points for mid-sized companies, and 31 points for small and medium-sized enterprises.

Companies most frequently cited the Carbon Border Adjustment Mechanism (48.3%) as the most burdensome ESG export regulation. This was followed by supply chain sustainability due diligence (23.9%), packaging material laws (12.2%), corporate sustainability reporting guidelines and disclosure standards (10.7%), battery regulations (2.9%), and eco-design regulations (2.0%).

The Carbon Border Adjustment Mechanism is a system that imposes a carbon price similar to the EU Emissions Trading System (EU-ETS) on products imported into the EU from outside regions. Since October of last year, it has been piloted on six items: cement, steel, aluminum, fertilizer, electricity, and hydrogen. Items such as petroleum, chemicals, and plastics are expected to be added in the future. It will be fully implemented from January 2026.

Among the difficulties related to responding to the Carbon Border Adjustment Mechanism (multiple responses allowed), the most common was the difficulty in measuring carbon emissions (52.7%). This was followed by a lack of investment funds for carbon reduction facilities (41%) and a shortage of experts (37.1%).

The pace of implementing supply chain due diligence was also found to be slow. 81.4% of the responding companies answered that they are not conducting supply chain due diligence.

Companies identified policy tasks for responding to ESG export regulations (multiple responses allowed) as providing education and guidelines (52.7%), financial and tax benefits and other cost support (44.9%), and delivering information on regulatory and legislative trends (27.8%).

Jo Young-jun, Director of the Sustainability Management Institute at KCCI, said, "To maintain export competitiveness, it is important to provide more systematic and practical policies and concrete guidelines that can be actually applied in the field by our companies."

This content was produced with the assistance of AI translation services.