Events Recap

 The 1st Briefing Session for Enacting the ESG Framework Act

On March 8, 2023, the "1st Briefing Session for Enacting the ESG Framework Act" was held at the National Assembly Members' Office Building.

ESG (Environmental, Social, Governance) issues are shifting from a mere component of corporate competitiveness to a core factor that determines national competitiveness. However, South Korea still lacks a clear national direction, a state-level vision, and systematic strategies regarding ESG.

To advocate for the enactment of an ESG Framework Act aimed at promoting ESG and organizing its ecosystem, the Korea Sustainability Investing Forum (KoSIF) co-hosted this event alongside the Office of National Assembly Member Won-wook Lee and the Federation of Korean Industries (FKI).

National Assembly Member Won-wook Lee moderated and presided over the briefing session. Key presentations were delivered by Tae-han Kim, COO of KoSIF; Jong-yeong Lee, Professor Emeritus at Chung-Ang University; and Seong-hoo Moon, Advisor at Law Firm WON. Panelists included Hong-sun Song, Senior Research Fellow at the Korea Capital Market Institute (KCMI); Yeong-guk Yoo, Legislative Research Officer at the National Assembly Research Service (NARS); Yeong-jun Yeo, Associate Research Fellow at the National Assembly Futures Institute (NAFI); and Woo-hyeong Lee, Director at the Ministry of Economy and Finance (MOEF).

In his congratulatory remarks, Yang-choon Seung, CEO of KoSIF, emphasized, "ESG encompasses the environment, society, and governance—making it an absolute necessity for everyone." He added that now is the time to reflect on why we must pursue ESG and to what extent, highlighting that robust legal and institutional mechanisms are vital to ensure ESG does not fade as a temporary trend and that all stakeholders can actively practice it.

The first presentation, titled "Global Trends Surrounding ESG and the Necessity of Legislation," was delivered by COO Tae-han Kim. He noted that ESG originally emerged as a non-financial factor for investors to reflect the future value of corporations. He emphasized that ESG is central to transforming corporations and financial institutions—once seen as the primary drivers of environmental and social issues—into solutions-driven entities. He categorized the approach to ESG into infrastructure-level and issue-specific approaches, urging a stronger focus on infrastructure improvement leveraging market mechanisms. He stressed that a national strategy must be established to encompass corporations, financial institutions, and consumers, anchored by a framework act for long-term stability and a centralized control tower to oversee individual matters.

Secondly, Professor Jong-yeong Lee presented on "Why a Framework Act?" From a jurisprudential perspective, he explained that laws governing the ESG spectrum are currently scattered across roughly 60 individual acts, with oversight fragmented across numerous government ministries. He argued that adopting the structure of a framework act would be highly effective for setting clear policy directions, securing state budget support, and systemizing as well as integrating the regime. Furthermore, it would ensure policy consistency and continuity by virtue of statutory law.

Thirdly, Seong-hoo Moon, Advisor at Law Firm WON, presented on "Corporate Bottlenecks in Developing ESG Countermeasures." He pointed out that, in reality, enterprises still perceive ESG as a regulation or a risk. He emphasized the necessity of a framework act designed to practically improve the business environment and assist corporations in generating profits.

Following the presentations, the panelists engaged in a dynamic discussion offering diverse perspectives:

⦁ Yeong-guk Yoo (Legislative Research Officer, NARS): He noted that because the scope of ESG spans the entire social system, the ultimate benchmark for success will be whether a unified principle and policy independence can be secured through this legislation.

⦁ Yeong-jun Yeo (Associate Research Fellow, NAFI): He proposed forming an industry-friendly consultative body, emphasizing the importance of mid-level management and monitoring. He also outlined a legislative direction focused on promoting small and medium-sized enterprises (SMEs), which play a dominant role in public procurement.

⦁ Hong-sun Song (Senior Research Fellow, KCMI): He stated that regulating and aligning the interests of diverse stakeholders is the essence of ESG. He noted that this unprecedented attempt to enact a framework act would serve as an excellent global demonstration of South Korea’s commitment to ESG. He stressed that the framework act must incorporate a centralized control tower to arbitrate stakeholder interests and concrete incentives to facilitate the system.

⦁ Woo-hyeong Lee (Director, MOEF): He highlighted various government initiatives implemented to govern ESG, such as the announcement of the Measures to Advance ESG Infrastructure in December 2022 and the launch of a public-private policy consultative body in February 2023. While agreeing on the necessity of a framework act, he advocated for a cautious and measured approach.

In his closing remarks, co-host and National Assembly Member Won-wook Lee pointed out the stark reality where even promotional laws often morph into restrictive regulations. He pledged to dedicate efforts toward enacting a framework act that functions strictly as a promotional tool—securing tax benefits and human resources—and committed to continuously gathering feedback through the consultative body.

ESG involves an array of stakeholders, including corporations, financial institutions, financial consumers, investors, supply chain partners, and supervisory authorities. Consequently, evaluating most existing public policies and laws reveals that they fall within the ESG domain. However, if ESG judgments are made on an issue-by-issue basis to arbitrate individual interests, it is highly predictable that future policies and legislation will remain strictly regulatory, penalizing one side over another.

Therefore, the ESG Framework Act must not be a mere compilation of scattered, individual laws. Instead, it must transform the flow of capital and information to fundamentally reshape the business environment and address systemic social challenges. At a time when countless voices declare ESG an absolute necessity, an industrial ecosystem-transforming framework act is vital to pursue authentic ESG. KoSIF will take the lead in enacting the ESG Framework Act. We highly appreciate your continued interest and support.