We have expanded the list of climate policies we assess company engagement with to incorporate land-use related policy, referring to legislative or regulatory measures to enhance and protect ecosystems and land where carbon is being stored. Assessments under this category are currently underweighted in terms of their contribution to the overall company metrics. This weighting will be progressively increased over the next 6 months.
We adjusted the terminology used to describe the queries running down the left-hand side of our scoring matrix and added additional explanatory text to the info-boxes. This has no impact on the scores and methodology. It has been done following user feedback to improve clarity.
Climate Policy Engagement Overview: Despite generally supporting an energy transition away from fossil fuels since 2020, Korea Chamber of Commerce & Industry (KCCI) appears to be opposed to greater regulatory stringency on climate in South Korea. The KCCI mainly engages on policy issues related to carbon taxation, including around the introduction of a carbon tax in Korea and the European Union’s Carbon Border Adjustment Mechanism (EU CBAM), as well as opposing increased ambition for South Korea’s 2030 emissions reduction target and the Korea emissions trading scheme (K-ETS).
Top-line Messaging on Climate Policy: KCCI has made some positive top-line statements in support of climate action, but has not supported a strengthened role for climate change regulation. At the inaugural meeting of the Carbon Neutral Industrial Transformation Promotion Committee in April 2021, Chey Tae-won, Chairman of SK Group and the KCCI, recognized the need to “actively participate” in global climate action. However, at a meeting of the same committee in November 2021, Chairman Chey appeared to not support “regulatory-focused” climate policies, noting that Korea’s raised 2030 emissions reduction target “greatly increased the burden on industry” and calling for “incentives” over regulations. In May 2022 at the Ministry of Environment’s ‘Business Environment Policy Council’ meeting, KCCI Vice Chairman Woo Tae-hee acknowledged the “importance of carbon neutrality”, and requested “active government support centered on benefits (incentives)”, but did not add whether KCCI would support more regulation-based policies.
Engagement with Climate-Related Regulations: KCCI has taken broadly negative positions on climate policy in South Korea. It opposed the upward revision of South Korea’s 2030 Nationally Determined Contribution (NDC) emissions reduction target. In August 2021, when the draft target was first announced, Yonhap News reported that five Korean industry groups including the KCCI had published an opinion statement expressing “concern” that the newly revised 35% emissions reduction target would have a “direct impact on industrial competitiveness and exports” for Korean companies. In the same month, Chosun Ilbo reported that the same five industry groups attended a meeting with the Ministry of Trade, Industry and Energy, submitting the opinion that the upward revision of the 2030 target had “insufficient rational basis” and expressing concern that it would lead to a rise in raw material prices and electricity rates. In October 2021, KCCI Chairman Chey did not entirely support the upwardly revised target, with the Seoul Economic Daily reporting on his comments about “considerable concerns about the realistic possibility” of achieving the target and the “burden” on companies.
KCCI has expressed support for the Korea Emissions Trading Scheme (K-ETS) but has also engaged in advocacy that would weaken the climate ambition of the policy. In October 2020, two months ahead of the introduction of the K-ETS 3rd allocation phase (2021-2025), KCCI published a press release that criticized reductions in free allocations for companies. In a report published on its website in September 2021, the KCCI suggested banking and carrying over surplus emission permits from previous K-ETS planning periods, contrary to the ambition to remove these surpluses in order to increase the carbon price and effectiveness of the scheme. In a May 2022 press release, KCCI advocated for the K-ETS to increase existing limits on the use of offset allowances and overseas greenhouse gas emission permits by companies to count towards their reduction quotas. Meanwhile, in December 2021 press conference, Chairman Chey appeared to not support carbon tax policies in Korea, stating that "we cannot achieve our goal just with policies where you get fined or pay more taxes for emitting more carbon."
Positioning on Energy Transition: KCCI broadly supports the transition of the energy mix. In May 2021, Chairman Chey Taewon spoke at the P4G Summit and supported reductions in government fossil fuel subsidies that had proved “inefficient”. Chairman Chey also appeared to support the electrification of transportation at an ESG Conference in August 2021, appealing for government subsidies and infrastructure support to expand the production of electric vehicles and hydrogen cars. In an October 2021 Position Paper delivered to major political parties ahead of the March 2022 presidential election, KCCI supported government incentives and infrastructure investments for the low-carbon transition of the building and transportation sector. A March 2022 KCCI press release about a survey of member companies called for “bold government support” to implement carbon neutral transition, identifying research and development for carbon reduction technology and improved renewable energy provision as “top priority policy tasks” for the government.