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Evening ESG news and briefings to wrap up your day.
The pandemic that swept across the world. During the pandemic, office workers grew accustomed to the work-from-home format of working somewhere other than the office. But as companies such as Amazon, Meta, and IBM—which brought all their employees back to the office the moment the pandemic ended—have increased, so too has the lively discussion over whether working from home helps a company's long-term ESG strategy.According to Forbes, in 2023, 12.7% of full-time employees worked from home and 28.2% worked in a hybrid form using both the office and home. There is also an analysis by the video-conferencing technology company "Owl Labs" that, worldwide, 16% of companies operate remotely without a physical office. The freelance brokerage company "Upwork" predicted that, if the current trend of actively encouraging work-from-home continues, by 2025 about 32.6 million people—22% of the entire U.S. labor force—will choose to work from home.[2020 Future Workforce Report. ©Upwork]Cutting Commutes Cut the Carbon Footprint TooDuring the pandemic, when working from home was actively encouraged, positive assessments continued that working from home helps a company's ESG strategy.On the environmental side, working from home is a way to reduce a company's carbon footprint by cutting the time spent riding cars or public transportation to commute and by shrinking the office space used on a fixed basis. According to the "Spanish Institute of Environmental Technology," working from home can reduce by about 10% the amount of nitrogen dioxide, a major air pollutant emitted by means of transportation. Between 2020 and 2022, numerous San Francisco–based IT companies are known to have switched their work format to work-from-home or to have relocated offices while downsizing. As a result, in the third quarter of last year the San Francisco office vacancy rate rose to as high as 34%.[San Francisco office vacancy rate graph. ©CBRE Research]There are advantages on the social and governance sides as well. 35% of work-from-home employees answered that their productivity improved, and 71% said it helps in maintaining work-life balance. Moreover, because people can work without physically gathering in one place, the breadth of hiring diversity widens, and an organization's inclusiveness and flexibility can grow. In addition, because employees can be hired across various regions, the talent pool widens and the possibility of providing more jobs increases.Tom Wilson, the CEO of the U.S. insurance company "Allstate," said that after Allstate adopted work-from-home, the company's hiring diversity increased by as much as 30%. The U.S. Department of Labor has stated that, because the need to commute disappeared, the number of workers with disabilities employed across the United States also increased by about 28% compared with February 2020, when the pandemic began, reaching about 1.8 million.Carbon Emissions That Occur Out of SightOn the other hand, there is also criticism that many ESG values have been lost with the adoption of work-from-home. This is because a company cannot manage its level of environmental pollution in an integrated way, since individual employees cannot account for their own impact on the environmental side. The "Harvard Business Review" raised the possibility that, whereas commuting to a set office allows the carbon emissions from a fixed travel distance to be measured and managed, when working from home it is difficult to manage the extent to which an individual moves to change their work location or generates waste, so the degree of environmental pollution may become higher than when working in a fixed office.There are also opinions pointing out the risks that work-from-home carries on the social and governance sides. Because people communicate remotely, cases have increased of isolated employees feeling no sense of belonging and complaining of loneliness. The point that people easily experience burnout by carrying out work only through video conferencing and messengers was also cited as a drawback of working from home. In addition, along with an analysis that the cyberattacks that increased by 238% during the pandemic are related to work-from-home, management has been shown to be worried about the security risks that arise when information is exchanged without using an internal network.Companies Setting Out to Cut Direct and Indirect Carbon Emissions Through Hybrid WorkIn its "2023 State of Hybrid Work Global Report," "Owl Labs" analyzed that companies working fully in the office reach 54%. As companies adopting hybrid work or mandating office attendance increase, discussion of how closely the work format a company adopts and its ESG strategy interact is also expected to become more active.The "Sustainable Finance Disclosure Regulation (SFDR)," whose mandatory scope the EU recently expanded, includes both a company's direct and indirect emission sources in the calculation of its carbon footprint. Going forward, EU-based companies and companies active in the EU market will calculate their direct and indirect carbon emissions according to work format and concentrate their goals on reducing total carbon emissions.The CEO and CTO of the British office-management software company "Kadence," together with a vice president of the real-estate company "CBRE," announced a "Hybrid Manifesto for Sustainability." Through this manifesto, they expressed the aspiration to find a way to achieve an ESG strategy without gathering to work in one fixed office, while combining working from home and commuting.As with the goals of the companies that joined the Hybrid Manifesto, companies going forward are expected to give more thought to the need to build work environments that can simultaneously improve work efficiency and pursue ESG values, rather than maintaining traditional work systems. by Editor N
On the 13th, the U.S. House of Representatives passed a bill banning "TikTok"—the Chinese short-form platform—citing national-security concerns based on personal-data leakage. It contained the requirement that TikTok's parent company, ByteDance, sell TikTok's U.S. business rights within 165 days, and that if the sale fails, the app must be pushed out so it cannot be downloaded from app stores. As this bill passed by agreement of the Democratic and Republican parties just 8 days after its introduction, along with the assessment that the U.S.-China conflict has spread online, it brought the personal-information-protection obligation from an ESG standpoint to the surface.The TikTok ban bill contained content that, citing national-security concerns, makes illegal the distribution, maintenance, and updating of the Chinese TikTok parent company ByteDance, as well as TikTok and its subsidiary apps. The U.S. government has continuously raised concerns that the data of U.S. TikTok users could be handed over to the Chinese government, and this past May, in the U.S. state of Montana, a bill that actually fully banned TikTok downloads and uploads passed. Former President Trump had announced an executive order banning TikTok use within the U.S., and President Biden banned TikTok downloads on official communication devices.[A TikTok banner celebrating reaching 150 million TikTok users in the U.S. ©TikTok]According to The Wall Street Journal (WSJ), the number of TikTok users in the U.S.—which was 150 million last year—recorded 170 million this year, so the scale of TikTok users in the U.S. has grown so large that more than half of the U.S. population can be seen as using it. The reason the U.S. government is trying to intervene so much in TikTok's method of handling personal information does not consist only of the U.S.-China conflict structure. Recently, as the personal-information-protection obligation among corporate social responsibilities has drawn attention, the fact that users' personal information must be managed safely and used only for its original purpose is being emphasized.Corporate personal-information protection—also called "data privacy"—is closely related to the ESG framework, and this TikTok bill issue is connected to the S (Society) sector among these—that is, to the content that a company, in obtaining personal information from users, must (1) seek explicit consent, (2) use it only for the specific purpose the user permitted, and (3) restrict who can access the information. The U.S. government is questioning TikTok's social responsibility, raising the suspicion that TikTok could share personal information with a third party, the Chinese government.Korea, too, is on a trend of emphasizing personal-information protection from an ESG standpoint. The Ministry of Science and ICT required the disclosure of information-protection status (hereafter the information-disclosure system) to be made mandatory for 603 companies in 2022. The information-disclosure system refers to a disclosure system that discloses companies' information-protection status for the purpose of service users' safe internet use and the activation of information-protection investment. Last year, the government also raised the fines it imposes on companies with poor disclosure. Foreign companies such as Google and Meta also have precedents of being fined for violating information-protection statutes in the past, so they are known to have actively taken part in the information-disclosure system, which was reorganized last year.With opinions that it violates the First Amendment, which stipulates freedom of expression, it is uncertain whether the TikTok ban bill will pass the Senate, but this measure by the U.S. House can be interpreted as a signal that TikTok is not sufficiently fulfilling corporate social responsibility. The TikTok ban bill is an opportunity to think once again about the corporate social responsibility of data privacy. by Editor N
On the 6th (local time), the U.S. Securities and Exchange Commission (SEC) voted to adopt a rule mandating corporate climate disclosure. A total of five commissioners took part in the vote, with three Democratic-leaning commissioners—including SEC Chair Gary Gensler—voting in favor, and two Republican-leaning commissioners voting against. The crux of the decision was determining the scope of corporate greenhouse gas emission disclosures, which are divided into Scope 1 through 3. The result landed in a middle ground that satisfied neither camp: companies will only be required to disclose Scope 1 and Scope 2 emissions, while Scope 3 emissions will not need to be disclosed. Scope 1 refers to greenhouse gases emitted directly by companies through the use of fuel to manufacture and sell products, while Scope 2 refers to greenhouse gases indirectly emitted through the use of electricity or thermal energy. Scope 3 refers to greenhouse gases emitted directly and indirectly across a company's supply chain. The mandate applies to large listed companies (market capitalization of $700 million or more) and medium-sized companies (market capitalization of $250 million or more), with disclosure required starting in 2026.[SEC Chair Gary Gensler explaining the climate disclosure proposal at a 2022 hearing ©Reuters]Environmental Groups Say "It's Not Enough"As soon as it was announced that Scope 3 would be excluded from the climate disclosure rule, U.S. environmental groups immediately launched criticism. They argue that the regulation has been excessively watered down and lacks any real effectiveness. In fact, Scope 3 accounts for approximately 70% of total greenhouse gas emissions for the majority of companies. However, the SEC accepted companies' arguments that identifying greenhouse gas emissions across their supply chains is too difficult. Companies appear to have made strong and persistent demands of the SEC. The SEC disclosed that since first announcing the climate disclosure regulation in March 2022, it received over 24,000 comment letters, which it took into consideration before finalizing the rule.Republicans Say "It's Overreach"Republicans argue that the climate disclosure rule itself is unjustified and that the SEC is overstepping its mandate and authority to engage in environmental activism. According to Reuters, ten states where Republicans hold the advantage—including Georgia, Alabama, and Alaska—have already filed lawsuits against the SEC. The U.S. Chamber of Commerce has also mentioned the possibility of pursuing legal action on the grounds that the rule imposes an excessive burden on companies. The Chamber of Commerce has previously filed a lawsuit challenging California's climate disclosure law, arguing that it exceeds the state government's authority.The SEC Says "Remember Roosevelt"In announcing the adoption of the climate disclosure rule, the SEC invoked the 32nd U.S. President, Franklin Roosevelt. The SEC was established under the Roosevelt administration. It was a measure to protect investors in response to the 1929 Wall Street crash, which triggered the Great Depression. The Wall Street crash was an event in which a bubble of indiscriminate investment—built on blind faith in the market—burst. During the process of establishing the SEC, President Roosevelt emphasized the "complete and truthful disclosure" of corporate information. By invoking Roosevelt's words as the climate disclosure rule was adopted, the SEC Chair was reminding everyone of the agency's founding principles.What Was the SEC's Role?The SEC's core intent in adopting this rule was not to protect the environment or corporations, but to protect investors. The SEC stated that the background for discussing the rule was investor demand for companies to disclose more transparent and reliable information regarding climate risks. Indeed, under this rule, companies must disclose not only their greenhouse gas emissions but also the costs they incur to mitigate climate risks and the financial impacts. The SEC is not an environmental authority. It determined purely from a market perspective that climate risks are already affecting corporate operations and finances, and that investors therefore need to know about them. The decision that satisfied neither camp may, in the end, have been a decision made for the majority—or in the majority's interest.by Editor N
Microsoft has claimed the top spot on the "2023 ESG 100 Best Public Companies" list* compiled by IBD, a U.S. media outlet providing stock market information. With growing interest in ESG investment portfolios over the past four years, the perception has also expanded that companies adept at managing ESG risks are stable, well-managed enterprises with high investment value. As ESG regulations have become increasingly stringent, the preference for companies prepared to respond flexibly to ESG demands has also risen.Keeping pace with this trend, IBD has been selecting its own list of the 100 Best ESG Companies for ESG investors over the past five years. And Microsoft, by applying ESG standards across multiple domains within a rapidly changing business environment, is regarded as one of the companies most actively practicing ESG management in the United States.*If you are curious about IBD's selection process for the 100 Best Companies, click here to read this article.[Microsoft IR Webpage ©MICROSOFT]Why Microsoft Took the Top SpotIBD selects its ESG 100 Best Companies from among companies that have received outstanding scores across five categories: Business Model and Innovation, Environment, Human Capital, Leadership and Governance, and Social Capital. Among these five, Human Capital and Social Capital correspond to the Social (S) dimension, while Leadership falls under the Governance (G) dimension. IBD noted that it follows the five-category classification established by the Sustainability Accounting Standards Board (SASB), a nonprofit organization founded in 2011. Microsoft achieved the top overall ranking across SASB's five criteria while also claiming first place within the computer industry, establishing itself as a company consistently practicing ESG management. IBD highlighted the following representative activities as the reasons behind Microsoft's number-one ranking:1. Leading the corporate carbon emission reduction trend2. Developing technology (e.g., Microsoft Cloud) that enables thousands of customers to set and achieve their own sustainability goals3. Supporting the White House's AI Bill of Rights and safeguarding labor rights4. CEO Satya Nadella's two promises: to deliver returns to shareholders, and to build a path toward a sustainable future for both the company and the planet together5. Setting corporate targets for carbon neutrality, water reduction, and zero waste by 2030The Light and Shadow of ESG LeadershipBeyond the environmental sphere—for which Microsoft is best known as a leading ESG responder—the company has made strides in the social dimension as well. In 2022, Microsoft formally announced that it had adopted the principle of respecting the right to form labor unions. Last year, the company partnered with the Communications Workers of America (CWA) to complete its acquisition of major gaming company Activision Blizzard*, and jointly announced a "labor neutrality principle," under which it would take a neutral stance when employees wish to join a union.*Activision Blizzard: The company behind well-known games such as Overwatch, Candy Crush, and StarCraft.[Components of the Human Capital Category ©MSCI]MSCI*, another issuer of major global investment indices, states that the human capital category consists of four elements: labor management, human capital development, health and safety, and supply chain labor standards. FTSE (Financial Times Stock Exchange) of the UK is another representative global investment indicator alongside MSCI. Unfortunately, however, Microsoft—which has been aggressively expanding its AI business this year—was reported to have notified approximately 1,900 employees, representing roughly 9% of the gaming division workforce centered on Activision Blizzard, of layoffs just three months after the acquisition.*MSCI, along with FTSE of the UK, is cited as a representative global investment index provider.ESG Management That Is Hard to Sustain ConsistentlyAccording to MSCI, ESG investing originated in the "socially responsible investing" of the 1960s. At that time, investors avoided putting money into companies associated with tobacco production or the South African apartheid* government, and as the scope expanded, it evolved into today's form of ESG investing. More recently, an investment trend has taken hold in which investment value is judged by applying both traditional financial criteria and ESG criteria.*Apartheid: The policy of racial segregation and discrimination that the South African government formalized into law during the Cold War era.However, investors differ in the investment criteria they favor, and companies find it difficult to satisfy every investor's preferences. The same holds true for ESG: among the multitude of ESG criteria, it is virtually impossible to concentrate on and satisfy only the ESG areas that investors care about. Moreover, practicing ESG management well does not mean there are no negative issues for investors to consider, and there are also voices of concern that a company might experience deterioration in its actual business performance while focusing on achieving its ESG goals. For these reasons, practicing well-balanced ESG management seems likely to remain no easy task for companies in the years ahead.by Editor N
Regulatory pressure on companies regarding ESG is increasing by the day. In this environment, ESG has become a critical factor determining the future direction of business. Which American companies truly understand this reality and have prepared themselves to flexibly respond to future low-carbon policies?Since 2019, IBD (Investor's Business Daily, a media outlet providing US stock market information) has been publishing its annual list of the 100 Best ESG Companies. The IBD 100 Best ESG Companies list is known to be created by combining the Dow Jones* Sustainability scores with IBD's sophisticated technical and fundamental stock evaluation. Companies included in this list can be regarded as having achieved outstanding scores in ESG-related investment criteria and as being worthy of investment consideration.*Dow Jones: A company that provides the Dow Jones indices (industrial average) for tracking US stock market trends How IBD Selects the 100 Best ESG CompaniesLet us follow the process IBD used to select its top 100 companies. First, IBD collected ESG information on over 6,000 global companies by measuring the "ESG Sustainability Scores" compiled by its affiliate, Dow Jones Newswires*. Both officially available corporate information and media coverage analysis for each company were utilized. IBD also leveraged scores derived from thousands of English-language data sources collected through Factiva, Dow Jones's comprehensive media data and business intelligence platform.*Dow Jones Newswires: A news agency operated by Dow Jones that primarily distributes breaking news and press release-style articles./ Five-Step Selection Process for the 2023 ESG 1001. Narrow down an initial pool of 2,067 companies.2. Exclude privately held companies and those with stock prices below $10. Also exclude companies lacking sufficient information for IBD's comprehensive evaluation. This process leaves 1,559 companies as the second-round candidates.3. Remove companies that have not been included in the S&P 500, the benchmark for blue-chip companies, over the past five years.4. Among companies scoring 81 or above on the IBD Composite Rating, designate those scoring 100 as the top 20% of companies. For companies with tied scores, apply the Relative Strength Rating to rank them, and use the Earnings Per Share Rating if necessary.5. Finally, rank the 100 Best Companies according to their Dow Jones ESG scores. Companies with tied scores are ranked using the IBD Composite Rating.Microsoft Takes the Top Spot Among ESG StocksAs of August 25 last year, the company claiming the number one spot on the ESG 100 list based on these criteria was Microsoft. Second place went to Applied Materials (semiconductor and display equipment), third to Woodward (design and manufacturing of industrial engines and control systems for aircraft and other applications), fourth to Verisk Analytics (data analytics), and fifth to Mastercard.The metrics used to rank the companies are shown in the table below. To view the full list of the 100 Best ESG Companies, visit the IBD page. [2023 ESG Top 5 Companies Scorecard ©IBD]by Editor N
A directive guiding companies to take responsibility for the environmental and human rights impacts of their entire supply chain is expected to take effect in Europe soon. The Council of the European Union* and the European Parliament** have reached a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD). Discussions on this directive began when the European Commission*** first proposed it to the Council and Parliament in March 2022. After nearly two years of extensive negotiations, an agreement was reached on December 14. The Council stated that this directive aims to protect the environment and human rights not only within the EU but around the world.* The Council of the European Union is the upper legislative body of the European Union (EU), representing the governments of each Member State. ** The European Parliament is also a legislative body of the European Union (EU), representing the citizens of each Member State and elected through direct elections.*** The European Commission is the executive body of the European Union, representing the general interests of Europe and initiating relevant legislation. Content and Scope of the DirectiveOnce this due diligence directive takes effect, large companies of a certain size and their subsidiaries and partners will have legal obligations to protect the environment and human rights in their business operations. Notably, the directive includes provisions requiring that corporate business models and strategies align with the Paris Agreement. Companies will also bear responsibility for preventing ecosystem and biodiversity degradation. Regarding human rights, companies will be held accountable for unfair labor practices such as forced labor, child labor, and wage exploitation, as well as worker health protection issues including employee health and occupational safety.The agreement also clarified the implementation timeline and the scope of companies covered. For EU-based companies, it applies to large enterprises with 500 or more employees and a global net turnover of at least €150 million. For non-EU companies, they will be subject to the directive if their net turnover exceeds €150 million after a three-year grace period from the effective date. Of course, South Korean companies that are subsidiaries or partners of EU-based companies would be included without a grace period.Legal Binding Force of the DirectiveThe directive also includes provisions on penalties and civil liability for companies that violate their obligations. Through this agreement, the Council and Parliament announced that they have finalized the scope of the directive, corporate duties, penalty levels, and the rights and prohibitions that companies must respect.In particular, the Council emphasized that if a company is found to be adversely affecting the environment or human rights through its business partners, and cannot prevent or stop such activities, it must sever business relationships with those partners. If companies violate these guidelines and fail to pay the imposed fines, additional penalties proportional to company turnover (e.g., 5% of revenue) will be levied.Impact on South Korean CompaniesOnce the directive is announced, South Korean companies exporting to the EU will need to shoulder not only the workforce and costs required for due diligence but also the costs and personnel needed for potential litigation. According to research by the Industrial Bank of Korea (IBK), export sectors such as textiles, agriculture and fisheries, raw materials, and steel are relatively vulnerable to environmental and human rights issues, falling under ‘high-impact sectors,’ making thorough preparation all the more critical.Of course, the CSDDD has not yet come into effect. Technical meetings to examine whether there are any loopholes or issues in the agreement, as well as the final adoption process by the Council and Parliament through voting, remain. However, given the provisional agreement between the two institutions, it is highly likely to take effect in the near future. The European Coalition for Corporate Justice (ECCJ), a civil society organization, expects the relevant vote to take place in March of this year.by Editor N
Major countries are successively postponing the mandatory implementation dates for ESG disclosures. First, South Korea delayed the mandatory disclosure deadline for listed large corporations, originally set for 2025, by one year. The EU will proceed with cross-industry common ESG disclosures as scheduled starting this January, but industry-specific ESG disclosure implementation has been postponed by two years from the originally planned June of this year to 2026. The U.S. Securities and Exchange Commission (SEC) has also delayed the release of its final climate disclosure rule multiple times, now scheduling it for April of this year. Of course, even this may be further delayed.Why ESG Disclosure Keeps Getting PostponedWhile there are various reasons, the biggest is widely considered to be the burden felt by companies. Unlike conventional disclosures that contain financial information such as income statements and financial statements, ESG disclosures must include fragmented non-financial information. It is not an easy task to quickly identify and organize information that previously had no legal disclosure obligation — such as greenhouse gas emissions and reduction plans.According to a survey by the Korea Chamber of Commerce and Industry, over 90% of companies conducting voluntary ESG disclosures rely on external professional agencies. Only 14.0% of companies had their own in-house ESG IT systems. Due to these difficulties, the Korea Employers Federation requested relevant government bodies, including the Financial Services Commission, to postpone the mandatory ESG disclosure deadline by one year, and the government accepted. The EU's disclosure delay was also aimed at reducing the burden on businesses.The Emergence of Disclosure Support SolutionsIn the meantime, solutions to reduce the burden of ESG disclosure for companies have emerged. Accounting firms, which already serve as financial disclosure advisors to companies, and SI (System Integrator) firms with strengths in data management have taken the lead in launching platforms that support ESG disclosure. These platforms assist obligated companies with tasks such as identifying the data they need to collect, efficiently managing that data, and processing it in accordance with international reporting frameworks like the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI).Accounting firms, in particular, emphasize their consulting expertise, going beyond ESG disclosure support to assist with overall ESG management. PwC Samil Accounting Corporation highlights that through its 'ESG Platform' service, it can help with 'redefining Vision for transitioning to an ESG management system,' 'establishing business strategies that integrate ESG value,' and 'building a monitoring system for strategy execution and performance.'In the SI sector, IBM, a leading company, acquired the Australian sustainability data analytics company 'Envisi' and integrated it with its own AI software to complete the IBM Envizi ESG Suite (hereafter 'Envizi Suite'). The Envizi Suite automates the collection of ESG and greenhouse gas emission data and structures and standardizes the data to create the foundation for reports. IBM emphasizes that the Envizi Suite can reduce the time companies spend on ESG disclosure by 50% and highlights a case where it saved a company 20 million dollars in energy and water usage costs.[Envizi Suite Carbon Emission Management Dashboard Demo ©IBM]Will Platforms Solve the Disclosure Burden?Of course, introducing a platform alone cannot eliminate the ESG disclosure burden in one stroke, because the absence of systems is not the only problem. According to a 2023 survey by the Federation of Korean Industries, 61.1% of domestic companies cited 'ambiguous disclosure concepts and lack of clear standards' as the biggest challenge in ESG disclosure. Export companies, moreover, struggle because disclosure standards differ from country to country. The disclosure standards of the International Sustainability Standards Board (ISSB), which will serve as the basis for South Korea's ESG disclosure, were also unveiled six months later than planned in June of last year after repeated coordination. The official Korean translation was only released just two weeks ago, in December.Nevertheless, some argue that there is no real benefit in continuing to postpone ESG disclosure. Even if South Korea delays its disclosure timeline, export companies will still have to disclose anyway, and beginning disclosure will allow businesses to adapt to the system sooner and enhance their global competitiveness. Since some companies are already voluntarily making disclosures, it is not an impossible task. Professional disclosure support solutions from specialized firms are also beginning full-scale service operations. What matters most is the will of the obligated companies. Where there is a will, there is a way.by Editor N
The term 'greenwashing' has been used since the 1980s with the same meaning it holds today. Now, with the expansion of ESG, greenwashing is once again drawing attention. Greenwashing refers to the practice of making a product or service appear environmentally friendly through advertising, promotion, or packaging when it has little to no actual environmental benefit. It also includes communicating corporate strategies or activities as purely environmental initiatives when their true purpose is closer to profit generation.Why Companies GreenwashIt is not difficult to imagine why companies engage in greenwashing. They seek to gain favor from customers and society, increase investment from shareholders and institutions, and reduce government sanctions. Of course, there may also be genuine corporate concern for the environment and future generations. However, when communicating these "intentions" and "outcomes" to consumers, careful attention is essential.Regulatory Crackdown on Greenwashing BeginsAs corporate sustainability communications, particularly those centered on the environment, have increased, regulations against greenwashing have also strengthened worldwide. In the UK, the Advertising Standards Authority (ASA) has identified and banned over 20 cases of greenwashing advertisements since 2022. The issue lay in specific words or expressions used in advertising and promotional copy.For example, in June 2022, German airline Lufthansa released a digital poster featuring the slogan "Connecting the World. Protecting its Future." as part of its #MakeChangeFly campaign promoting environmental efforts. This slogan—meaning to connect the world and protect its future—is the type of expression one might have encountered somewhere before, even outside of Lufthansa's advertising. Nevertheless, the ASA raised concerns that the slogan could "give consumers a misleading impression of Lufthansa's environmental impact." In particular, the phrase "Protecting its Future" was seen as an "absolute promise" regarding the environment. Lufthansa countered that the poster was clearly linked to website content detailing the airline's efforts in carbon emission mitigation and waste reduction. They also added that if the first part of the phrase—"Connecting the World"—was not viewed as an absolute promise, then treating only the second part—"Protecting its Future"—as an absolute promise represented an inconsistent standard.However, the UK's CAP Code requires a high level of substantiation for environmental claims such as "protecting the environment." Ultimately, the ASA ruled that the advertisement could not be displayed in the UK because Lufthansa's environmental targets would take years or even decades to verify, and considering the aviation industry as a whole—which has a significant impact on climate change—there existed no plan or commercially viable technology sufficient to say they are protecting the environment.[Lufthansa #MakeChangeFly Campaign Poster ⓒ lufthansagroup]South Korea Also Establishes Advertising Guidelines to Combat GreenwashingThe South Korean government has also created greenwashing prevention guidelines for domestic companies. On October 31, the Ministry of Environment, together with the Korea Environmental Industry & Technology Institute (KEITI), published the "Guidelines for Labeling and Advertising of Eco-Friendly Management Activities." Based on the principles of truthfulness in labeling and advertising, clarity of expression, specificity of subject, and completeness of information, the guidelines categorize corporate environmental activities into eight types and provide case studies and self-assessment checklists for each.Sanctions against greenwashing ask companies to reflect on whether they have repeated exaggerations and falsehoods, not only to consumers but to themselves. As social concern over the climate crisis grows, companies have faced pressure to act immediately. However, messages that deceive consumers and society cannot be allowed to continue indefinitely. While it may be difficult to change the inertia shaped by circumstances overnight, the time has come to communicate objectively and based on substance.by Editor N