On April 13, 2021, the amended Environmental Technology and Industry Support Act (the “Amended Act”) took effect.  The Amended Act is of particular importance, considering that it is closely related to ESG (Environment, Social and Governance) which has recently became a buzzword for businesses, and it is also designed to contribute to the Korean government’s goal of achieving carbon neutrality by 2050.  Please see below for major highlights of the Amended Act: 
 

• Establishment of “Green Grade System” and a standardized evaluation system to support “environment-conscious investment” (i.e., investment decisions that take into account environmental-friendliness of the impact of the investment) (to become effective on October 14, 2021)

To support and promote environment-conscious investment, the Amended Act provides the legal basis for the following:

• Establishment of the “Green Grade System” which evaluates whether a certain business activity is sustainable and environmentally friendly

• Establishment of a standardized evaluation system to assess companies’ performance and outcomes in the area of environment protection

• Designation of institutions such as Korea Environmental Industry & Technology Institute as a dedicated agency to support promotion of policies regarding environment-conscious investment, conduct assessment of environment-friendliness based on the standardized evaluation system, and collect and manage the information necessary for such assessment.

Currently, the Ministry of Environment (the “MOE”) is in the process of conducting research to establish the “Green Grade System,” which is customized to the Korean economy and environment, and plans to complete the establishment by the first half of this year in consideration of practices in other jurisdictions such as the European Union.  The MOE is also planning to put together by end of the first half of 2021 a guideline on the standardized evaluation on the “Environment” aspect of the ESG performance based on analysis of private institutions’ performance indicators and methodologies.  During the second half of the year, the MOE will launch pilot projects with relevant institutions.  
 

• Broadened the scope of companies which are subject to the disclosure requirement of certain environment-related information (to become effective on October 14, 2021)

The Amended Act extends the scope of entities that are required to disclose environment-related information (27 items, including water use, energy consumption, chemicals and wastes generation).  Prior to the Amended Act, only the public institutions and certain companies/organizations who have a large environmental impact were subject to this requirement.^*  However, under the Amended Act, all companies having assets of a certain size will be subject to the disclosure requirement.  While the specific threshold amount of the asset is yet to be decided, it will be determined based on comments from the relevant industries, and those companies who will be newly subject to the disclosure requirement under the Amended Act will be obligated to disclose the relevant environment-related information starting from 2022. 

(^*) As of 2021, 1,686 institutions and companies were subject to the disclosure requirement under the pre-amendment Act (including central government agencies, local government offices, public universities, companies subject to emissions permit, and “Green Businesses” (i.e., certain companies designated by the government as operating businesses that are deemed environmentally friendly)). 
 

• Added “Upcycling Industry” to the definition of “Environmental Industry” under the Act 

The Amended Act added upcycling industry to the definition of the term “Environmental Industry”^** under the Act.  The upcycling (i.e., upgrade + recycling) industry as provided in the Amended Act refers to activities that create new values by adding new ideas or designs to wastes that were already discarded but later picked up or recollected, or used products that are about to be discarded.  Promoting and supporting upcycling activities is one of the important goals of the Amended Act. 

(^**) “Environmental Industry”​​​​​​​ refers to certain industries providing facilities, materials or services to protect the environment. 

[Korean version]