Asia and Australia target greenwashing as companies risk penalties

Asia-Pacific nations from Singapore to South Korea are getting tougher on false or misleading climate claims as ESG rules ramp up.

Having pressured South Korean oil giant SK E&S into retracting claims it would produce carbon-free gas, ex-fossil fuel lawyer turned climate advocate Jihyeon Ha now wants tougher action against corporates in a greenwashing crackdown in Asia-Pacific.

South Korea in January became the first nation in East Asia to draft a law that would fine firms for false or exaggerated green claims, as companies in the region face more scrutiny over their environmental credentials and net-zero emissions pledges.

This followed a landmark lawsuit in 2021 by advocacy group Solutions for Our Climate (SFOC) – where Ha is head of legal operations – accusing SK E&S of greenwashing after the oil major said it would produce “CO2-free” liquefied natural gas (LNG).

In March 2022, South Korea’s environment ministry warned SK E&S that it needed to base its claims on facts, and the company ultimately changed the wording on its website to say the Barossa gas project off Australia’s northern coast was “low-carbon”.

“Massive gas projects will have serious, irreversible impacts on the climate, contrary to their ‘CO2-free’ claims,” 35-year-old Ha said in an interview.

“Green fossil fuels are a myth and an oxymoron,” added Ha, who was previously legal counsel for S-Oil, a major refiner.

SK E&S did not respond to requests for comment.

South Korea’s draft greenwashing law – which includes fines of up to US$2,300 – is expected to be passed in the first half of 2023, a spokeswoman for the environment ministry told Context.

Ha said that while the fines are small, the bill signalled a major shift in approach from the government, with regulators having only previously tackled greenwashing by giving “administrative guidance” to oil refiners and steel giants.

“Just as regulating tobacco adverts stopped misleading consumers, the same kind of regulation with the right sanctions will prevent greenwashing,” she said. “To achieve net zero by 2050, business practices cannot remain the same.”

Globally, greenwashing is in the spotlight, with UN experts issuing a warning at last year’s COP27 climate summit about its prevalence, and new standards on environmental, social and governance (ESG) credentials currently under consideration by an international body.

In Asia-Pacific, where research shows growing ESG investment and public appetite for environmentally-friendly products, an Australian regulator has launched its first greenwashing case against a pension fund, while Hong Kong and Singapore are vying to be the region’s green finance hubs with stricter ESG rules.

“Efforts to tackle greenwashing are not just happening in the US and Europe – some Asian countries may actually be moving faster than the US,” said Kathlyn Collins, vice president and head of ESG at investment firm Matthews Asia.

Learn more: Eco-Business