South Korea clamps down on greenwashing with new financial penalties

22 Feb 2023 --- The South Korean ministry of environment plans to introduce a fine of up to ₩3 million (US$ 2,300) for companies that mislead the public about their environmental impacts. While the ministry can fine companies that commit greenwashing, it needs to follow a complex process to determine the penalty amount. The new regulation is expected to simplify the process and allow the ministry to take a stronger stance on greenwashing. 

However, environmental organizations such as Solutions for Our Climate (SFOC) say there also needs to be regulation around greenwashing branding companies, which are not advertisements to sell specific products but to promote a company’s general brand image. 

“On a similar note, regulators need to closely monitor greenwashing companies’ business plans and be ready to challenge companies even at the planning stage if the plans contradict what the companies are advertising,” Jihyeon Ha, head of legal operations at SFOC tells PackagingInsights. 

“Also, as more companies begin to use offsets to promote their products as ‘green’ or ‘carbon neutral,’ they should be obligated to display disclaimers around the limitations of offsets. Lastly, there should be specific guidelines or regulations around the need for companies to disclose specific amounts of emissions to back up any green claims in advertising.”

The recent move  shows that climate litigation plays a key role in strengthening regulation.“A step in the right direction”
The ministry of environment will release a set of guidelines against greenwashing later this year.

The move follows a string of warnings issued by the environment ministry to major energy and steel companies in the country, recommending “evidence-based, factual” advertising, according to documents provided by National Assembly member, Sungjoon Jin.

SK Enmove, was an accused company hit with legal action last year by Seoul-based SFOC for using questionable offsets to promote oil products as “carbon neutral.” The regulator also gave SK Energy, POSCO and GS Caltex administrative guidance for greenwashing advertisements.

“Companies should be on alert. The recent move from the South Korean environment ministry shows that climate litigation plays a key role in strengthening regulation. Three million won may not be a lot, but it’s a step in the right direction,” says Ha.

The fine comes as more countries have begun battling greenwashing. Last August, France announced it would ban fossil fuel advertisements, including fossil gas, later this year. The EU is also expected to publish an “anti-greenwashing law” that will ban ecological claims unless backed by evidence, says SFOC. 

Further steps needed
Earlier this year, major news outlets claimed a leaked draft from the European Commission revealed the EU’s likely plans for revising its Green Claims code, which takes action against companies greenwashing their products with false or exaggerated environmental sustainability claims. 

Part of the revisions of the EU Green Deal – which have been in the works since last year – could mean packagers will face court if their product marketing is deemed misleading or omits important environmental information.

However, experts say that the government needs to take further steps to monitor and regulate greenwashing proactively. “There is a risk that corporations simply pay the fine while reaping the monetary and reputational benefits of greenwashing,” adds Ha. 

“The ministry of environment must now demonstrate it is serious about curbing greenwashing by enforcing the fine and further strengthening regulation against greenwashing,” she concludes.

By Natalie Schwertheim

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