U.S. President Donald Trump has withdrawn the previous administration's green policies, leading to a rapid decline in interest in environmental, social, and governance (ESG) policies. Amid growing concerns about the domestic and international economic situation, interest in ESG is waning, causing corporations to engage in greenhushing activities to conceal their ESG efforts.
Financial authorities are now in a difficult position. Initially, they planned to establish ESG disclosure standards and a roadmap for the first half of this year, but the atmosphere surrounding ESG has changed significantly both domestically and internationally.
According to government and business officials on the 15th, since the inauguration of Trump's second administration this year, the number of ESG-related events has sharply declined, and requests for official attendance at events to financial authorities have come to a halt. Up until last year, corporations were requesting financial authority officials to attend ESG disclosure-related seminars and briefings about 10 times each month. A Financial Services Commission official noted, "Interest in ESG policies has decreased significantly."
This is not unrelated to the shift toward protectionism among various countries following the launch of Trump’s second administration. Many corporations are delaying or easing the timing of their ESG activities while monitoring the political situation. A senior industry official stated, "Everyone knows the need for carbon neutrality and is making efforts, but it doesn't seem to be a topic worth discussing in such a chaotic time."
The industry describes such corporate movements as "greenhushing." An ESG officer at a corporation said, "Originally, the term greenhushing referred to corporations hiding their activities due to the burden of criticism for not meeting carbon reduction targets,” adding, “Although its usage has slightly changed recently, it carries a similar context in that it reflects a hesitance to disclose externally."
Earlier this year, BlackRock, the world's largest asset management company, withdrew from the Net Zero Asset Managers Initiative (NZAMI). Global bond manager PIMCO also exited Climate Action 100+. JP Morgan and State Street Global Advisors, among others, have also formalized their departures. Banks such as Goldman Sachs, Wells Fargo, Citigroup, Bank of America, and Morgan Stanley have left the Net Zero Banking Alliance (NZBA).
The European Union (EU), which has been leading ESG policies, has also begun to adjust its pace. A notable example is the European Commission's substantial easing of the application scope of the Corporate Sustainability Due Diligence Directive (CSDDD). CSDDD is a regulation that came into effect last July to monitor ESG violations within corporate supply chains.
Our government is also facing a complex calculation. There is growing policy uncertainty in both the U.S. and the EU, which have played a guiding role in ESG-related matters. In particular, the Financial Services Commission announced in its January business report that it would establish ESG disclosure standards and a roadmap during the first half of the year.
Financial authorities stated that, as nearby countries such as Japan and China are preparing ESG disclosure standards and a roadmap, South Korea will also proceed as planned. Japan officially announced its ESG disclosure standards that comply with the International Sustainability Standards Board (ISSB) guidelines on the 5th. China published its first ESG disclosure standards last December. The United Kingdom is expected to release its ESG disclosure standards this month.
A Financial Services Commission official stated, "Referring to the announcements from Japan and the United Kingdom, we aim to complete South Korea's ESG disclosure standards and roadmap in the first half of the year," adding, "While it may be challenging for South Korea to take the lead due to various circumstances, we will strive to keep pace with other countries and not fall behind."