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Morning features and interviews. A morning story over a cup.
Each year, the market value of unsold inventory that the domestic fashion industry sends to incinerators is estimated at approximately ₩1 trillion. Under the pretext of preserving brand exclusivity, the choice to burn rather than dump at bargain prices had become entrenched as a standard practice. However, such logic is becoming difficult to sustain. Under the EU’s Ecodesign for Sustainable Products Regulation (ESPR), the disposal of unsold clothing, clothing accessories, and footwear by large enterprises within the EU is, in principle, prohibited. The EU is signaling that overproduction and inventory destruction can no longer be treated as merely an internal cost issue for companies. The ESPR itself is a regulation that took effect in July 2024, and beginning July 19 of this year, the regulation will start applying to products from large enterprises. While the regulation’s direct scope is the EU market, Korean companies that sell products in Europe or are connected to the supply chains of European brands are not exempt from its influence.The Fashion Industry Will Feel the Regulatory Shift Through ESPRESPR is the EU’s core product regulation established for the transition to a circular economy. Its fundamental direction is to impose sustainability requirements across the entire life cycle of products — from the design stage before a product enters the market, through use, repair, reuse, recycling, to disposal. Before ESPR took effect, there was the Ecodesign Directive enacted in 2009. While that directive primarily dealt with energy efficiency standards for energy-related products, ESPR significantly broadens the scope of application. With the exception of certain categories such as food, feed, and pharmaceuticals, nearly all physical products placed on the EU market may become subject to product-specific delegated regulations in the future. [Key contents of the Ecodesign Regulation © Korea Energy Agency]While ESPR sets a comprehensive regulatory framework that applies across industries, the specific prohibition on the disposal of unsold textile and footwear products by fashion large enterprises has begun to take effect, making the fashion industry the first to directly experience the regulatory signal.Three Changes Beginning July 19The first change that will apply most directly to large fashion enterprises within the EU starting July 19 is the ‘prohibition on the disposal of unsold inventory.’ Of course, there are limited exceptions. Exceptions may be recognized in cases such as safety reasons, products that are severely damaged and unusable, or counterfeit goods that should not be circulated in the market. To apply an exception, companies must retain documentation proving the grounds for the exception for five years. It would be difficult to effectively maintain existing incineration practices through the exception clause.Second, the disclosure burden regarding the treatment of unsold products is increasing. ESPR requires companies to disclose the quantity, weight, reason for disposal, and treatment method of unsold consumer goods that are discarded. Large enterprises are already within the scope of this disclosure obligation, and from 2027, reporting must be conducted in a more standardized format.Third, preparations surrounding the Digital Product Passport (DPP) are gaining momentum. DPP is a system that digitally exposes sustainability-related information such as raw materials, composition, repairability, and recycling information of products. Its purpose is to enable consumers, repair shops, recyclers, and regulatory authorities to more easily access product information. Companies are now at the stage where they must begin organizing their supply chain data collection systems to prepare for the phased implementation of DPP requirements. [ESPR Implementation Timeline and Key Phases © TÜV Rheinland Official Website]Challenges for Korean Fashion Companies in EuropeESPR targets products sold within the EU. Domestic companies that directly export clothing or footwear to the EU, as well as suppliers that provide fabrics, subsidiary materials, or finished products to European brands, may fall under its direct or indirect influence. The key is not ‘whether you are a Korean company’ but ‘whether your product is placed on the EU market.’According to Ministry of Climate, Energy and Environment statistics, domestic clothing waste generation exceeds 110,000 tons annually. Clothing incineration or disposal occurring within Korea is not directly subject to ESPR regulation. However, for companies supplying products to the EU market, domestic production, distribution, and inventory handling practices are highly likely to become subject to gradual scrutiny. This is because once DPP is fully implemented, product data will connect the entire life cycle — from raw material sourcing, manufacturing, and distribution to use, repair, and recycling. [Poster for LF HAZZYS’s first upcycling project, the ‘Rework Collection’ © LF]In response, the government and industry are also beginning to prepare. The Ministry of Trade, Industry and Energy and related agencies are operating pilot projects and consultative bodies for DPP preparedness, while discussions on inventory management, recycling, and data standardization continue within the textile and fashion industries. Examples linking inventory and circularity are emerging — such as the Rework Collection, an upcycling project launched by LF HAZZYS in 2023, and Kolon FnC’s expansion of its secondhand fashion platform. However, responding to the unsold clothing disposal regulation may be an even more challenging task than DPP preparedness. While DPP is a matter of organizing data, the prohibition on inventory destruction requires transforming production volumes, sales strategies, discount policies, resale channels, and recycling infrastructure — this is closer to an adjustment of the fashion business model itself.ESPR: An Export Industry Issue Beyond FashionThe scope of ESPR does not stop at fashion. The European Commission is progressively presenting a timeline for adopting product-specific delegated acts through the ‘2025–2030 Working Plan.’ The adoption of the delegated act for steel is scheduled for 2026, followed by textiles and clothing, aluminum, and tires in 2027, furniture in 2028, and mattresses in 2029. This is why the ESPR response is not merely about whether unsold clothing can be burned. As delegated acts accumulate, how transparently Korean export companies manage their product data and how they collect and verify environmental information across their supply chains will become a prerequisite for accessing the EU market. The regulatory clock is already ticking. by Editor L
The Korea Exchange (KRX) confirmed the regular rebalancing of the Korea Value-Up Index constituent stocks through the Index Operation Committee on May 21, and the results began to be fully reflected in the market starting June 12. With 20 stocks added and 19 removed in this rebalancing, all 100 constituents have now been filled with companies that have disclosed corporate value enhancement plans roughly two years after the index’s launch. The core of this regular rebalancing lies not in the numerical reshuffling itself, but in the shift in the index’s operational direction. The Korea Value-Up Index had only 7 disclosing companies among its constituents when first announced in September 2024. The disclosure ratio steadily expanded thereafter — reaching 25% in December 2024 and 61% in June 2025 — and with this adjustment, it has reached 100%.[Korea Value-Up Index additions and removals © Korea Exchange]Disclosure Compliance Determines the Fate of StocksThis regular rebalancing is the ‘Phase 3’ measure — the final stage of the phased operational plan outlined by the KRX. In Phase 1, which began in 2024, companies that made early disclosures of their corporate value enhancement plans were granted special inclusion, allowing them to remain in the index for two years, thereby encouraging voluntary participation. Starting with Phase 2 the following year, special inclusion was applied to companies recognized as Value-Up Excellence Companies, and incentives such as relaxed evaluation criteria were provided to disclosing companies. Conversely, penalties were imposed on previously included companies that failed to disclose, such as tightened criteria for market valuation and market capitalization. Phase 3, applied this month, constitutes the index centered on disclosing companies, while non-disclosing companies may be preferentially removed.Under this direction, industry-specific performance trends and disclosure compliance determined the fortunes of individual stocks in this rebalancing. In the industrial goods sector, major shipbuilding and power infrastructure companies such as HD Hyundai Heavy Industries, HD Korea Shipbuilding & Offshore Engineering, and HD Hyundai Marine Solution were added in significant numbers. In the IT sector, SK Square and Tes were included; in consumer staples, APR; in healthcare, Caregen; and in finance, NH Investment & Securities — a total of 20 stocks newly entered the index. Conversely, major industrial and IT companies such as Hyundai Rotem, Hyosung Heavy Industries, POSCO DX, and Poongsan, which had recently seen rising stock prices, were removed. A clear signal has been sent to the market that even companies with solid performance metrics can hardly remain in the index without disclosure.Constituent Count from 99 to 100, Market Cap Share Expands to 54.6%The Korea Value-Up Index constituent count had decreased to 99 last December due to the merger of HD Hyundai Infracore, but was readjusted to 100 through this regular rebalancing. After the rebalancing, the market capitalization share of the index constituents relative to the total KOSPI and KOSDAQ market capitalization reached approximately 54.6%. With the large-scale inclusion of key companies from market-leading sectors such as shipbuilding, defense, and IT, the index’s market representativeness can be assessed as having broadened further. The changes will also be automatically reflected in the asset composition of exchange-traded funds (ETFs) that track the Korea Value-Up Index as their underlying asset. As of the end of March 2026, the total net assets of 13 Value-Up ETFs stood at ₩2.6 trillion, a 439.4% increase from their initial launch. With this reorganization expected to increase the weight of shipbuilding and infrastructure stocks while reducing that of some consumer goods and healthcare stocks, ETF investors’ portfolio shifts also warrant attention. Since its base date of September 30, 2024, the Korea Value-Up Index has recorded returns exceeding the KOSPI’s increase by 31.8 percentage points, driving capital inflows. [Korea Value-Up Corporate Disclosure Status © Korea Exchange KIND]Tax Incentives as a Catalyst for Accelerated Disclosure ParticipationBeyond the phased operational plan, another backdrop to this reorganization is the explosive increase in the number of companies participating in disclosure. With the December 2025 revision of the Special Tax Treatment Control Act, separate taxation was introduced for dividend income from stocks of high-dividend companies meeting certain requirements, excluding it from aggregation with other financial income. Following the revision, disclosure became mandatory for high-dividend companies seeking dividend income tax benefits. Individual shareholders with financial income of ₩20 million or less had their dividend income withholding tax rate lowered from 14% to 9%, and companies could deduct 5% of the excess from corporate tax if their total shareholder return increased by 5% or more compared to the average of the preceding three years.These tax incentives became a decisive driver of corporate participation in disclosure. In March 2026 alone, a total of 409 companies newly disclosed corporate value enhancement plans, of which 405 were high-dividend companies. The cumulative number of listed companies that have disclosed totaled 590, comprising 307 on KOSPI and 283 on KOSDAQ, a sharp increase from 181 at the end of February to 590 in a single month. As the tax benefit requirements for high-dividend companies are linked to the disclosure obligation, value-up disclosure is rapidly establishing itself as essential capital market infrastructure.[Cumulative Trend in Number of Companies Filing Main Disclosures © Korea Exchange ‘Monthly Corporate Value Enhancement Status’]The KRX stated, “We plan to manage the index according to the phased operational plan, aiming to support the spread of a corporate value enhancement culture by constructing the index centered on companies that have disclosed value enhancement plans.” However, while the formal goal of a 100% disclosure system has been achieved, the completion of disclosure does not guarantee the improvement of corporate value. Demands for qualitative criteria such as the substantive depth of disclosure content, the traceability of plan implementation, and whether they are linked to shareholder return performance are emerging as the next challenge. Whether this reorganization prompts additional listed companies to participate in disclosure and how well existing disclosing companies fulfill their promises will be the yardstick for measuring the substantive performance of the Value-Up Program. by Editor L
As the June 3 local elections concluded, thousands of tons of waste were left in their wake. According to the National Election Commission, approximately 1,500 tons of banners were collected nationwide during the 2022 local elections, and a similar volume of banner waste is estimated to have been generated in this June 3 local election. When paper campaign materials are added to the banners, the scale of election-generated waste is far larger than one might imagine. The banners used in elections are not mere pieces of fabric. They are made from polyester fiber derived from naphtha extracted during petroleum refining, coated with synthetic resins such as polyvinyl chloride. Moreover, the mixed structure of ink and coating makes them difficult to recycle.Plastic That Occupied the Streets During the Election PeriodDuring the 2022 local elections, 75% of banners collected nationwide could not be recycled and were incinerated or landfilled. The incineration process also releases hazardous substances. In particular, polyvinyl chloride components produce harmful substances such as dioxins when burned. Carbon emissions from the incineration process are also substantial. Climate Change Action Research Institute Fellow Lee Yoon-hee estimated the carbon footprint of a single banner at 9.38 kg. The analysis found that the raw material usage stage accounts for approximately 70% of total carbon emissions, with the disposal stage accounting for about 30%. In other words, the process of producing and disposing of a single banner emits greenhouse gases equivalent to the amount of carbon a single pine tree absorbs in a year. The cost and administrative burden of banner disposal is also a recurring issue. Under the Public Official Election Act, candidates are required to remove banners after the election, yet in practice, removal is frequently delayed or neglected, leading to a recurring pattern where district and city offices end up carrying out collection and disposal work. Incineration costs reach approximately ₩290,000 per ton. [Waste Banner Collection Point Guide ©Seoul Metropolitan Government Climate and Environment Bureau Instagram ]The Seoul Metropolitan Government established a dedicated waste banner collection point in Seongdong-gu, building a system that collects waste banners from 25 autonomous districts into one location for processing. This raised the recycling rate from the previous 42% to 94%. However, this remains an effort at the Seoul city level and has not led to nationwide adoption. Paper Campaign Materials Discarded Without Being ReadA problem even larger in scale than banners is paper campaign materials. For the 2022 local elections, 580 million copies of campaign materials were mailed, and the paper used for printing materials, ballots, and posters alone amounted to 12,853 tons. Considering that producing one ton of paper requires 17 thirty-year-old trees, this equates to the consumption of over 210,000 trees. Figures for campaign materials used in this June 3 local election have not yet been officially released, but given the more granular candidate and constituency breakdown, the figures are estimated to be similar or larger. The problem is that these materials are discarded without being properly read. In some apartment complex mailboxes across Gyeonggi Province, unopened campaign materials had piled up even after early voting had ended. They were papers that had become waste without ever being read. With smartphone penetration nearing 99%, producing and distributing massive quantities of paper campaign materials is increasingly criticized as inefficient. [June 3 Local Election Paper Campaign Materials © ESG.ONL]The paper used for campaign materials is also difficult to process. Campaign materials often use coated paper that is hard to recycle, and are therefore mostly treated as general waste. This pattern — in which campaign materials produced at enormous expense are incinerated as general waste without ever being properly read — repeats with every election.Discussions on transitioning to electronic campaign materials have been raised multiple times in the National Assembly. In the 22nd National Assembly, three amendments to the Public Official Election Act were proposed, including introducing electronic campaign materials or producing them on recycled paper, but all remain pending in committee. While counterarguments regarding accessibility for the elderly exist, voices calling for a reexamination of the current structure — which insists on full-scale paper distribution in an era of high smartphone penetration — are growing louder.Environmental Responsibility Exempt from ElectionsIn corporate ESG management assessments, waste reduction and resource circulation are key environmental indicators. Companies are required to disclose the recycling rates and treatment methods for their waste and to set reduction targets. Yet the election system itself — which repeatedly produces thousands of tons of plastic banners and hundreds of millions of paper sheets — has no corresponding environmental responsibility standards.[Wonmi-gu Mayor Kim Won-kyung collecting banners after the June 3 local election © Bucheon City Official Integrated Public Relations Portal ‘Saengsaeng Bucheon’]The terms of the 17 metropolitan government heads and 226 local government heads elected in this June 3 local election extend to 2030 — a period that also marks a critical checkpoint for evaluating national greenhouse gas reduction target performance. The paradox of elected leaders who campaigned on climate action pledges having to deal with thousands of tons of waste from day one of their terms was repeated in this election as well. Environmental groups point out that institutional reform is needed so that the National Election Commission, as the authority overseeing elections, also takes responsibility for waste disposal. Amendments to curb the proliferation of banners have failed to pass the National Assembly and remain pending. Unless the system governing election waste changes, the same scene will repeat itself in the election four years from now. by Editor L
If I had a time machine, I would not go to the far future of 2050 but back to 1968. Returning to 1968, I would stand in front of a newsstand somewhere that year and read the articles debating the construction of the Gyeongbu Expressway. During holidays, we worry about traffic jams on the expressway, talk about rest stop food, and check the arrival time shown on our navigation apps. For us today, the Gyeongbu Expressway connecting Seoul and Busan is not the future — it is everyday life.Future Value That Cannot Be Explained by Numbers AloneBut for the people of 1968, the Gyeongbu Expressway was not routine — it was an adventure. Before its construction, questions arose: why build an expressway in a country with so few cars? The national budget was tight, and road pavement rates were low. Opponents of the construction at the time argued that considering Korea’s economic situation and automobile penetration rate, building the Gyeongbu Expressway was neither urgent nor a financially wise decision. With approximately 60,000 vehicles in Korea in 1967 and a road pavement rate of just 8% by 1969, theirs was a reasonable argument. In the January 1968 issue of the monthly magazine Sedae (Generation), then-National Assembly member Park Young-rok of the New Democratic Party expressed the view that “while it is a matter to be resolved in the future, it should not be pursued too hastily.” His argument was that, considering the burden on the people, more urgent problems should be addressed first. Kim Dae-hwan, a sociology professor at Kookmin University at the time, also pointed out that pushing forward a new expressway project not included in the Second Five-Year Economic Development Plan would increase the burden on the national economy and could disrupt the development plan. [Gyeongbu Expressway construction site, 1968 © National Archives of Korea ]It is hard to scoff at the opinions opposing the road construction. Indeed, building a highway costing hundreds of billions of won in a poor country was not an easy decision. It would therefore be unfair to say that all opponents of the Gyeongbu Expressway were short-sighted people who failed to see the future. However, their concerns did not account for a reality that had yet to arrive. The value of the Gyeongbu Expressway cannot be explained at the time of groundbreaking solely by the number of cars traveling on it. It was a road built because there were cars, but it was also a road that summoned the era of automobiles and logistics. No one can refute the fact that the Gyeongbu Expressway, while avoiding overlap with existing railways and national roads, served as the arterial route connecting the capital region, the Yeongnam industrial belt, and the ports of Incheon and Busan, functioning as the backbone of economic development.The Questions Left by a Reckless ChallengeLet us move the time machine a little further, to Pohang in 1970. Similar words were exchanged there. A country lacking iron ore, capital, and technology had declared it would build a large-scale steel mill. Today, we regard POSCO as the foundational strength of Korean manufacturing. But at the time, POSCO’s success was anything but a given. The criticism directed at the steel mill construction back then was even more explicit.Looking back at past debates, prominent economists denounced the steel mill as “uneconomical, a waste of resources, and merely for wartime purposes.” The press argued that it would be better to simply import steel. In the National Assembly, lawmakers questioned why a steel mill with neither raw materials nor a use case should be built, and even criticisms along the lines of “let’s solve the food shortage from the lack of rice first” emerged. [Pohang Steelworks No. 3 Blast Furnace Main Construction © Pohang Museum of History] By the calculations of the time, both the Gyeongbu Expressway and the Pohang Steelworks looked uncertain. The costs were clear, but the benefits were hazy. Everyone could see that investment was needed now, but no one could precisely calculate what industrial landscape that money would create in the future. Perhaps this is the shared fate of ‘things we now take for granted.’ Almost nothing was obvious from the beginning. The Gyeongbu Expressway at first looked like waste, and the Pohang Steelworks at first looked like a reckless gamble. But as time passed, the question itself changed. No longer “Why was it built?” but “What would things have been like without it?”The Cost of Transition vs. the Cost of Delay: Which Is More Expensive?Of course, we must not view this story merely as a tale of success from a bygone developing country. The history of the Gyeongbu Expressway and the Pohang Steelworks also carries shadows: regional inequality, insufficient democratic debate, and the sacrifice of labor. Therefore, when addressing the topic of ‘energy transition’ that Korean society faces today, we need not follow that era’s methods wholesale. Nevertheless, the past cases still pose questions toward the present. Can the infrastructure of the future be sufficiently explained by today’s economic viability alone? Should we expand renewable energy further? How fast must we build transmission grids? How should we reform the electricity market and rate system? The questions are many, and the answers are far from simple. Familiar opposition arguments also emerge: “It is uneconomical,” “It only increases the burden on the public,” “Electricity prices will rise,” “Industrial competitiveness will weaken.” But one cannot say these counterarguments are entirely wrong. [Nicholas Stern’s report ‘The Economics of Climate Change’ © Cambridge University]Energy transition genuinely entails costs. It is not something that ends with merely expanding solar and wind power. Transmission grid construction, electricity market reform, local acceptance, and industrial structural transformation must all move in tandem. Someone must bear the costs, and someone must accept changes to the existing order.If we consider the future, several more questions arise. How much does energy transition cost, and what do we lose by delaying it? This very point was the crux of the argument made by British economist Nicholas Stern in the 2006 Stern Report, ‘The Economics of Climate Change.’ In the report, Nicholas Stern argued that the benefits of strong, early action on climate change far outweigh the economic costs of inaction.Let us imagine someone living in 2050 unfolding today’s newspaper. That person would read the debates surrounding the expansion of renewable energy, the conflicts over power infrastructure, and the various disputes over electricity rates and industrial competitiveness centered on carbon emissions. And perhaps, like us today reading about the 1968 Gyeongbu Expressway debate, they might tilt their head and wonder: “Why was that so controversial?” Of course, we cannot be certain. Energy transition is more complex, and far more stakeholders are entangled in these issues. Still, there is a scene I hope for. When the people of 2050 look back at the past, they will accept the energy transition not as a once-unnecessary fad, but as the ‘obvious choice.’ Just as we now look at the Gyeongbu Expressway and the Pohang Steelworks and think, “Why were they so doubted back then?” — that future generations, looking at today’s debates, might say, “If only they had started sooner.” by Kim Won-sang (Climate Solutions, Media Communications)
2026 marks the first year in which the carbon cost structure for Korean companies fundamentally changes. The 4th Planning Period (2026–2030) National Emission Allowance Allocation Plan, finalized by the government at a Cabinet meeting on November 11, 2025, includes provisions to phase up the paid allocation ratio for the power generation sector from the current 10.0% to 15.0% in 2026, 20.0% in 2027, 30.0% in 2028, 40.0% in 2029, and 50.0% in 2030. The EU’s Carbon Border Adjustment Mechanism (CBAM) also entered full-scale implementation this year. During the term of the 9th popularly elected local governments, when the dual pressures of escalating paid emission allowance phases and mandatory CBAM certificate purchases will operate simultaneously, the level of regional renewable energy infrastructure will directly determine the carbon costs of businesses in that region. Companies in regions with high renewable energy accessibility can lower their emission coefficients and reduce the cost burden under both regulations, while companies in regions with insufficient infrastructure may face higher carbon costs even when producing the same products. This is why the ESG competitiveness landscape of businesses in a given region shifts depending on which local government head is elected in the June 3 local election.[Nationally Determined Contribution Confirmation © Minister of Climate, Energy and Environment Kim Sung-hwan Instagram]CBAM Full-Scale Implementation: Challenges for Steel-Concentrated RegionsCBAM is a carbon tariff system formally enacted by the EU in May 2023. Following a transition period through December 2025, it entered full-scale implementation on January 1, 2026. Importers must report the total volume and carbon emissions of products imported in the previous year once annually by May 31 and purchase CBAM certificates equivalent to those emissions. Certificate prices are linked to EU Emissions Trading System (ETS) allowance prices, and failure to submit certificates incurs fines of up to €140 per ton of carbon emissions.South Korea’s cost burden for CBAM compliance is concentrated in steel. According to 2022 Korea International Trade Association statistics, steel accounts for approximately 90% of South Korea’s exports of CBAM-covered items to the EU. For regions such as Jeonnam, Gyeongbuk, and Chungnam, where major steelmakers including POSCO and Hyundai Steel and related parts and materials companies are densely located, CBAM is a regional economic issue directly tied to export competitiveness. To reduce the CBAM certificate costs applied to companies exporting to the EU, carbon emissions in the production process must be reduced, making renewable energy accessibility in the region a decisive variable.The Lee Jae-myung administration has designated the creation of RE100 industrial complexes as a national agenda item. The ‘2026 Economic Growth Strategy’ announced by the Ministry of Economy and Finance on January 9, 2026, includes tax support such as 100% income and corporate tax exemption for 10 years for startups in RE100 industrial complexes followed by an additional 50% reduction for 5 years, along with raised local investment promotion subsidy limits and national treasury subsidy ratios, streamlined permitting, and measures to lower renewable energy procurement costs. Emission Allowance Costs Rising One Step at a Time Throughout the TermThe core of the 4th Emission Allowance Allocation Plan is not a simple ratio adjustment. The partial amendment to the Emissions Trading Act promulgated on October 28, 2025, maintains free allocation for sectors at risk of carbon leakage and special-use sectors such as local governments, public transportation, schools, and medical institutions, but strengthens the Benchmark (BM) coefficient — the baseline value for allowable greenhouse gas emissions per unit of product — to the top 20.0% level by 2030. This means that the baseline for the emission efficiency-based allocation method itself rises each year, creating a structure in which companies bear higher costs even when emitting the same amount of carbon.[‘Shinan-Ui Offshore Wind Project,’ the first project of the National Growth Fund and related to RE100 Industrial Complex development © Jeollanam-do Provincial Government]There are two practical ways for companies to reduce carbon costs: reduce emissions themselves, or switch to renewable energy to lower their emission coefficient. Both methods are difficult to accelerate without infrastructure support from local governments. This is the context for the Ministry of Trade, Industry and Energy’s allocation of ₩1.2703 trillion for renewable energy-related budgets in 2026 — a 42.0% increase from the previous year — including a record ₩648 billion for financial support projects for RE100 industrial complexes, agrivoltaics, and offshore wind expansion. The execution of this budget takes place in the regions, and the speed of execution depends on the administrative capacity of local governments.The Renewable Energy Infrastructure Gap Determines Regional Corporate CompetitivenessIn the competition for RE100 industrial complex site selection, Jeonnam currently leads the pack. It boasts abundant renewable energy potential and relatively advanced solar and offshore wind infrastructure. An October 2025 issue report by the Jeonnam Research Institute, ‘Chronicling the Asset Report of the Energy Transition: Proposals for Building Jeonnam-Style RE100 Industrial Complexes,’ presented a full-cycle support framework encompassing energy supply–grid stabilization–corporate implementation–institutional/incentive support–performance management as the core conditions for RE100 industrial complexes, arguing that “Jeonnam’s renewable energy production capacity must be linked to job creation, improved living conditions, and the attraction of high-tech enterprises to build a virtuous economic cycle.” This is the context in which Democratic Party candidate Kim Young-rok’s core pledge for the integrated Jeonnam-Gwangju Special City includes the designation and creation of 2 million pyeong of RE100 industrial complexes in the Yeongam Samho and Sampo districts.In contrast, companies in regions with insufficient renewable energy infrastructure have limited means of achieving RE100. As of 2024, South Korea’s renewable energy generation share stands at approximately 9.0%, just one-third of the OECD average (31.0%). While the government is targeting 100 GW of installed capacity by 2030, the actual pace of expansion varies significantly by region. The solar potential of industrial complexes managed by the Korea Industrial Complex Corporation reaches 4.7 GW, but actual installed capacity stands at only 0.8 GW (17.0%). Companies in regions with low renewable energy accessibility face a structure in which they bear higher CBAM costs when exporting to the EU and also pay higher costs in the domestic emission allowance market.[Sample June 3 Local Election Ballot © National Election Commission]Issues and Limitations: Legal Gaps and By-Election VariablesThe challenge lies in the gap between pledge intent and actual execution. With the RE100 Industrial Complex Special Act yet to pass the National Assembly, it is difficult for local government heads to independently finalize RE100 industrial complex locations and establish power supply systems. Democratic Party lawmaker Kim Jung-ho pointed out during a National Assembly audit that “if the institutional and technological foundations are not in place before 2026, when RE100 industrial complexes are slated to begin full-scale development, achieving the targets will be difficult.”The results of the 14 National Assembly by-elections held on the same day are also important in this context. With all five RE100 Industrial Complex Special Act bills having been introduced solely by Democratic Party lawmakers, the by-election results directly affect the legislative timeline and momentum for these bills. The establishment of a Measurement, Reporting, and Verification (MRV) system for CBAM certification also falls on companies to handle independently, but the response speed of SMEs and mid-sized enterprises varies depending on how much intermediary support local governments provide. This is the significance of June 3, when the selection of local government heads and the composition of the National Assembly are simultaneously decided.The four-year term of the 9th popularly elected local governments is a period in which the paid allocation ratio in the power generation sector rises from 10.0% to 50.0%, CBAM certificate obligations become fully operational, and the statutory transition for ESG disclosure converges. Over these four years, during which all three systems are simultaneously strengthened, the ESG competitiveness of regional businesses becomes even more directly linked to the renewable energy infrastructure of the region and the carbon neutrality administrative capacity of the local government head. Companies in regions capable of sufficiently supplying renewable energy can remain in global supply chains by implementing RE100, while companies in regions that cannot will fall behind in competition as carbon costs accumulate. The local government head we choose on June 3 determines not only four years of regional carbon policy but also the ESG cost structure of businesses operating in that region. The direction of the transition is clear, but the pace and center of gravity are still pointing elsewhere. by Editor L
‘Critical Minerals’ are minerals so important to the economy that if their supply were cut off, entire related industries would be shaken. Smartphone batteries, electric vehicle motors, and semiconductor chips all require specific critical minerals in their manufacturing processes. The problem is that the distribution of these critical minerals is concentrated in only a few countries. The International Energy Agency (IEA)’s ‘Global Critical Minerals Outlook 2025’ report projects that by 2035, China will supply over 60% of the world’s refined lithium and cobalt, and over 80% of battery-grade graphite and rare earth elements. The fact that the critical mineral supply chain is concentrated in a single country means that if that country regulates supply, other nations’ industries could grind to a halt. [Critical Minerals and Diplomacy © ESG.ONL]From Raw Material to Diplomatic WeaponWhen the United States blocked China’s exports of advanced semiconductor equipment, China responded by progressively expanding export controls on critical minerals to the U.S. Starting with gallium and germanium in 2023, China introduced an export licensing system for seven rare earth elements in 2025. In January 2026, citing the Japanese Prime Minister’s remarks ‘hinting at intervention in the event of a Taiwan contingency,’ it abruptly banned exports of dual-use items — goods usable for both civilian and military purposes — to Japan. Critical minerals have become not merely raw materials but diplomatic bargaining chips. To reduce dependence on China, the United States chose a strategy of increasing domestic production of critical minerals while simultaneously joining hands with allies. In February 2026, it launched the Forum on Resource Geostrategic Engagement (FORGE), a trade consultative body ensuring stable mineral supply, with 56 participating countries including South Korea, Japan, and Australia. [View of the Malaysian refining and processing plant of Australian mining company Lynas © Lynas]Japan has the most advanced experience in stabilizing the critical mineral supply chain. It all started during the 2010 China-Japan territorial dispute, when China blocked rare earth exports to Japan. Since then, Japan has quietly spent 15 years building a critical mineral supply chain that bypasses China, joining hands with Australian mining company Lynas to create a route in which rare earths mined in Australia are refined in Malaysia. A Japanese Ministry of Economy, Trade and Industry official once noted, “The United States and Europe are only now realizing the urgency of the rare earth issue. Japan learned its lesson from the relevant problem 15 years ago.”Challenges for Domestic Critical Mineral Supply Chain Independence[Critical Mineral Re-Resource Recovery Activation Vision and Promotion Strategy © Government of the Republic of Korea]Compared to the countries mentioned above, South Korea’s critical mineral supply chain structure is somewhat more complex. For a long time, the model has been to import raw materials from China, import processed materials from Japan, and then manufacture finished products such as semiconductors, batteries, and displays in South Korea. It is a structure where if China imposes export controls on Japan, the ripple effects could be transmitted like a domino to South Korea as well. In response, in 2023, the South Korean government set a target of reducing the import dependence on specific countries for critical minerals from the current level of around 80% to the 50% range by 2030. In January 2026, it officially recognized ‘re-resource recovery’ — recovering metals from waste batteries and other sources to reuse as industrial raw materials — as a critical mineral manufacturing industry and began fostering it. A 250 billion won Critical Mineral Supply Chain Stabilization Fund is also being established. South Korea holds the FORGE chairmanship until June 2026, positioning it to lead international cooperation on critical minerals.That said, compared to Japan’s 15 years of preparation for stabilizing its critical mineral supply chain, South Korea still has a long way to go. It simultaneously needs to secure supply sources for various critical minerals, establish domestic facilities capable of directly refining and processing critical minerals, and systematically foster re-resource recovery companies, which are predominantly SMEs. Even a single smartphone we use every day contains dozens of types of critical minerals. We are living in an era where where those minerals come from and who controls them determines national competitiveness. by Editor L
On May 1, 2026, South Korea marks its first Labor Day on which all workers take the same day off. The two changes — the restoration of the name and its designation as a statutory holiday — are not mere institutional fine-tuning but a societal answer to the age-old question of ‘who is a worker.’[Labor Day-related post © Ministry of Employment and Labor Instagram]In 1963, the word ‘labor’ was erased from the law. After seizing power through the May 16 military coup, the government restructured labor-related legislation in a direction that suppressed the autonomy of the labor movement, and in that process, the ‘Act on the Designation of Workers’ Day’ was created. The choice was ‘geullo’ (diligent work) instead of ‘nodong’ (labor). According to the National Institute of Korean Language, ‘geullo’ means working diligently, while ‘nodong’ means working by moving the body. One demands an attitude; the other describes a fact. It was a choice aligned with the spirit of the times, which emphasized the faithful provision of labor services over workers’ rights. After being maintained for 63 years, on October 26, 2025, the National Assembly passed a full revision of the ‘Act on the Designation of Workers’ Day’ into the ‘Act on the Designation of Labor Day.’ A single word changed, but considering the weight of the era contained in that word, this is not merely a name swap. And the change did not stop at the name.What Has Changed and What Has NotAlongside the statutory holiday designation, new criteria also emerged. The Ministry of Employment and Labor issued an official interpretation that substitute holidays are not permitted for Labor Day. This is because, unlike other public holidays, the special act directly fixes the date of May 1. If work is unavoidable on Labor Day, employers must choose between paying premium wages or granting compensatory leave under a written agreement. The elimination of size thresholds also heightens the sense of change, as Labor Day is guaranteed as a paid holiday regardless of workplace size. Until now, workplaces with fewer than five employees had effectively fallen into a legal blind spot, but the principle of Labor Day, at least, applies uniformly regardless of size.[Public servants also included in this year’s Labor Day holiday © Korean Government Employees’ Union]However, there are places this standard does not reach. Workers in special types of employment are often not recognized as workers under the Labor Standards Act, so time off is not legally mandated for them. The government is aware of this gap. The Ministry of Employment and Labor is promoting a labor-respecting legislative package for 1.44 million workers in special employment types who are not protected by labor laws as AI advances. It is also working on introducing a ‘worker presumption system,’ under which a person is presumed to be a worker and protected by labor law unless the employer proves otherwise. From the Conditions of a Worker to the Definition of a WorkerWhen Chicago workers took to Haymarket Square in 1886 demanding the eight-hour workday, the core issue was ‘how long do we work.’ Now, 140 years later, the issue has shifted to ‘who is recognized as a worker.’ And this question does not remain confined to the workplace.[The Haymarket affair, the origin of Labor Day © Wikipedia Commons]Amid the trend of strengthening global supply chain due diligence standards, the working conditions and rest rights of workers employed by partner companies are being elevated to quantitative indicators in sustainability reports reviewed by investors. Yet, workers who are not legally ‘workers’ go uncaptured even in these reports. They are labor actually utilized by companies, yet they exist outside disclosure indicators. Just because a risk is not yet visible does not mean it does not exist. Global buyers and institutional investors have begun looking directly into supply chains. If the reality of labor forces not captured in reports is revealed during due diligence, it leads to questions of disclosure reliability and the very business relationship can be shaken. The definitional vacuum around ‘whom to consider a worker’ accumulates unmanaged, eventually bursting as a risk all at once. This institutional change has partly raised that baseline. The statutory holiday designation has broadened the language of ‘worker’ somewhat, but for Labor Day to truly become a day for everyone, a broader structural change is needed beyond a single line of law. This May 1 marks the starting point of that journey. by Editor L
The Green Transformation International Week (GX Week) and UNFCCC Climate Week, which kicked off on April 20 at the Yeosu Expo Convention Center, is nearing its close. Beginning with an opening ceremony that brought together approximately 800 participants including ministerial-level climate officials from major countries and senior figures from international organizations, a total of 67 sessions ran nonstop throughout the event period. At the negotiating table, the current state of Paris Agreement implementation — covering mitigation, adaptation, finance, and implementation — was officially reviewed, while outside the venue, Earth Day lights-out events and eco-friendly experience programs served as a bridge connecting citizens’ daily lives with the climate agenda. ESG Today examines the significance that this GX Week and UNFCCC Climate Week has left for South Korean climate diplomacy through the flow of the week.Climate Negotiations and Energy Transition in One VenueThe UNFCCC Climate Week — held for the first time in South Korea — was jointly convened in conjunction with GX Week. Climate Week is a forum in which the 198 Parties to the UN Framework Convention on Climate Change gather in one place to officially review the current state of Paris Agreement implementation. To this end, a total of 67 sessions were operated throughout the event period: 25 thematic events related to climate and energy, 11 citizen participation events, and 31 UNFCCC sessions. The government and industry jointly created a venue for cooperation on diverse themes, including a discussion forum on the electrification of transport modes for carbon neutrality in the transport sector, a forum on promoting local government carbon neutrality, and a forum on climate-tech innovation and transition finance. One citizen who visited Yeosu during Climate Week expressed that it was meaningful to glimpse the efforts being made by the nation and institutions amid the climate and energy crisis through the variety of programs. [GX Week Opening Ceremony at the Yeosu Expo Convention Center © ESG.ONL]UNFCCC Climate Week Opens, Entering the Substance of NegotiationsAt 9:00 AM today, the official plenary opening ceremony of the UNFCCC Climate Week was held at the Expo Hall of the Yeosu World Expo site. At the event, attended by key figures from the international community including UNFCCC Deputy Executive Secretary Noura Hamladji, representatives of the COP Presidencies from Brazil and Türkiye, and delegations from the Parties, Vice Minister of Climate, Energy and Environment Lee Ho-hyun announced plans to accelerate carbon neutrality, including building an ‘energy expressway’ and expanding renewable energy installed capacity, stating that “the Republic of Korea, as a leading actor in climate action, will make renewable energy the central pillar of the future energy system.” [UNFCCC Climate Week Opening Ceremony held this morning © Jeollanam-do]While GX International Week was a forum dealing with the Korea-led green transformation agenda, the UNFCCC Climate Week is a separate international negotiating stage at which the 198 Parties officially review the progress of Paris Agreement implementation. At this gathering attended by officials from international organizations and non-governmental organizations, pending issues are reviewed ahead of the 31st Conference of the Parties (COP31) to the UNFCCC, to be held in Türkiye this November. In addition, a global forum on Green Taxonomy and transition finance, as well as a Korea Exchange roundtable for upgrading the carbon emissions trading market (K-ETS), still remain on the agenda through the event’s close.Climate Action Practiced at the VenueDuring Climate Week, various scenes encouraging citizen practice unfolded both inside and outside the venue. The use of disposable products was restricted and reusable containers were encouraged throughout all areas of the venue, and eco-friendly hydrogen electric buses operated in circulation between major hotels and the event site. Yeosu City reduced paper printouts and introduced a digital information system to promote administrative efficiency and carbon neutrality. [Eco-friendly hydrogen electric buses operated near the event venue © ESG.ONL]On Earth Day, April 22, during the event period, major cities and landmarks across the country — including Yeosu City, the government complexes in Gwacheon and Sejong, Suwon Hwaseong Haenggung, and Busan’s Gwangan Bridge — participated in a simultaneous lights-out event for ten minutes starting at 8:00 PM. If approximately 10,000 households participate in the lights-out event, two tons of greenhouse gases can be reduced, an effect equivalent to planting about 200 thirty-year-old trees. For that moment, the carbon neutrality being discussed in the conference halls was connected through a single switch across the nation.[Yeosu Expo Convention Center, where GX Week and UNFCCC Climate Week were jointly held © ESG.ONL]The Ministry of Climate, Energy and Environment stated that through this event it plans to build international consensus on the ‘Republic of Korea Green Transformation Promotion Strategy,’ scheduled to be announced in June, and further solidify South Korea’s role in the climate and energy field. What the soon-to-conclude Climate Week has left in Yeosu is not a consensus document but possibility. Let us look forward to the fruit that the agendas exchanged at the negotiating table will bear at the COP31 plenary this November, and to South Korea’s climate diplomacy as it leaps toward becoming a global standard-setting nation for green transformation. by Editor L