Press Releases

How Far Have Korean Companies Come in Responding to
Climate Change? CDP Korea Committee: "Governance, Supply Chains,
 and Carbon Pricing Are the Key Challenges"

- Key data previewed ahead of the release of the 2024 CDP Report; Conference to be held on Wednesday, April 30

- Board-level climate expertise remains at only half of companies despite growing climate risk awareness; supply chain emissions reduction also a pressing challenge

- Internal carbon prices significantly lower than global benchmarks; urgent need for institutional reform to quantify climate risks

CDP Korea Committee (Chair: Ji-in Jang) has released key data previewing the level of climate action among domestic companies, ahead of the official publication of the "2024 CDP Korea Report" on April 30. The report evaluates major indicators related to climate change, including governance expertise, greenhouse gas emission structures, and climate transition strategies, as well as overall environmental performance in areas such as renewable energy, water resources, biodiversity, and plastics.

CDP is a global environmental disclosure platform in which more than 24,000 companies worldwide participate, and it has recently come to serve as a practical tool for implementing international disclosure standards such as IFRS S2 and TNFD. Based on the principle that "you can only manage what you measure," CDP has systematically collected and disclosed information on corporate greenhouse gas emissions, climate strategies, and risk management. In Korea, a total of 865 companies participate in CDP, including those across supply chains, and the

CDP Korea Committee Secretariat is operated by the Korea Sustainability Investing Forum (KoSIF).

For this report, the CDP Korea Committee analyzed 239 domestic companies that responded to all sections of the integrated questionnaire and made their disclosures public.

l 87% of Korean Companies Identify Climate Risks; Awareness Rises by 10 Percentage Points

Climate risks refer to potential risk factors arising from climate change that may affect companies and financial institutions. Identifying these risks is the first step in formulating corporate strategy and a core requirement under international disclosure standards. Standards such as IFRS S2 require companies to disclose strategies and financial impacts based on identified risks.

According to the report, 87% of Korean companies have identified significant climate risks, a 10-percentage-point increase from the previous year. The most commonly recognized risk types were: policy risks (carbon pricing, emissions regulations, etc.), short-term physical risks (typhoons, heat waves, etc.), market risks, and long-term physical risks (temperature change), in that order.

A comparison between domestic and global companies shows that both groups ranked "policy risks" and "short-term physical risks" as the highest priorities. However, while global companies ranked "long-term physical risks" above "market risks," Korean companies identified "market risks" as their third-highest concern — a notable difference.

l Board-Level Climate Expertise at Only Half of Companies; Decision-Making Capacity Must Be Strengthened

For climate risks to be meaningfully integrated into corporate strategy and financial planning, the role of boards in assessing and overseeing these risks is critical. According to the report, 92% of Korean companies indicated that they manage environmental factors at the board or management level. However, only 52% actually possess climate-related expertise — a figure that calls for significant improvement and stands 35 percentage points below the global average of 87%.

CDP considers a board or executive to possess expertise if they meet at least one of the following criteria: relevant professional experience in environmental matters, a related academic degree, completion of climate-related training, or participation in an environmental committee. Commenting on the findings, Seung-yeon Seo, Senior Research Fellow at KoSIF, stated: "The time has come to examine not merely whether the institutional framework is in place, but whether climate issues are actually being reflected in real decision-making processes." She added: "Moving beyond formal management structures to strengthen substantive expertise and execution capacity is the core challenge."

l Scope 3 Emissions Eight Times Higher Than Scope 1 and 2 Combined; Urgent Need for Supply Chain Reduction Strategies

The combined Scope 1 and Scope 2 greenhouse gas emissions of the 234 domestic companies analyzed totaled 275 million tCO₂e, of which 87% originated from domestic operations. Meanwhile, Scope 3 emissions — encompassing other indirect emissions including supply chains — amounted to approximately 2.179 billion tCO₂e, roughly eight times the combined Scope 1 and 2 emissions, and accounting for 89% of total greenhouse gas output.

The number of companies reporting Scope 3 emissions increased from 127 in 2023 to 158 in 2024, a 24% rise. However, the reporting rate relative to all respondents remains at only 68%, indicating a stagnation. This reflects the fact that many companies continue to struggle with supply chain emissions management due to difficulties in data collection, the complexity of calculation methodologies, and limited access to supplier information.

Dayeon Lee, Research Fellow at KoSIF, noted: "Scope 3 accounts for the vast majority of total emissions, yet many companies continue to report it only selectively." She emphasized: "Nevertheless, as global clients and investors increasingly demand supply chain transparency and supplier emissions management systems, companies must strengthen reduction strategies across the entire value chain." Indeed, global frameworks such as SBTi do not recognize "net-zero" targets without Scope 3 management, and this is regarded as a core requirement under international disclosure standards and ESG assessments.

The CDP Korea Committee also highlighted renewable energy as a key tool for reducing Scope 2 emissions linked to electricity use. According to 2024 CDP data, the overall renewable energy usage rate among Korean respondent companies stands at just 11%, up 1.3 percentage points from the previous year, while the rate for domestic operations alone is only 5%. Among the 36 Korean RE100 member companies, the average renewable energy usage rate was 24%, higher than the overall average. However, the domestic operations rate was 12%, while the overseas operations rate reached 59%, confirming that renewable energy procurement remains largely concentrated in overseas facilities. This is attributable to constraints on domestic procurement options and an underdeveloped domestic market infrastructure. Senior Research Fellow Seungyeon Seo noted: "In order for corporate Scope 2 reduction strategies to have genuine execution capacity, institutional support — including expansion of renewable energy infrastructure — and improvements to supply conditions are essential."

l Wide Gap Between Korean and Global Internal Carbon Prices; Alignment with International Standards Urgently Needed

Companies use internal carbon pricing to assess the financial impacts of changes in investment, production and consumption patterns, potential technological developments, and the future costs of emissions reduction. The rate of internal carbon price adoption among Korean companies stands at 48%, meaning nearly half of companies are using this mechanism. However, the benchmarks applied are far removed from global standards, highlighting a need for improvement. Analysis of internal carbon prices shows that Korean companies most commonly set prices in the range of USD 1–10 per tCO₂e, while global companies most commonly set prices in the range of USD 60–90 per tCO₂e — a significant disparity. The International Monetary Fund (IMF) has recommended that an appropriate carbon price for 2030 should be around USD 75 per tCO₂e.

The CDP Korea Committee attributed the gap between domestic and international levels largely to the relatively low market price of Korea's Emissions Trading Scheme (average of approximately USD 6 in 2024). It pointed out that excessively low carbon prices have undermined the policy's intended function of incentivizing low-carbon investment and improving energy efficiency.

Under IFRS S2, internal carbon pricing is recognized as "a means of financially quantifying climate risk" and is explicitly listed as a disclosure item. This makes it an important benchmark for assessing the extent to which companies are able to quantify climate risks and integrate them into their overall management strategies. In this context, Jungseok Kim, Research Fellow at KoSIF, stated: "Korean companies have yet to sufficiently translate climate risks into costs and incorporate them into their management strategies." He added: "Refining carbon price methodologies, broadening their scope of application, and integrating them with financial strategy must be urgently discussed."

The full 2024 CDP Report is scheduled to be released on Wednesday, April 30. On the same day, the CDP Korea Committee will hold a conference on climate change response and sustainability issues, alongside an awards ceremony for outstanding companies. The event has been organized to share the environmental disclosure achievements of Korean companies and to facilitate discussion on understanding and responding to international disclosure standards. (End)

View the report

Inquiries: cdp@kosif.org