The Ministry of SMEs and Startups is promoting a support project to strengthen the response capabilities of small and medium-sized enterprises (SMEs) in environmental, social, and governance (ESG) areas in preparation for the implementation of the European Union (EU) supply chain due diligence guidelines. The ministry announced that it would recruit companies to participate in the ‘Supply Chain ESG Innovation Project’ from February 25 to March 25.
The EU supply chain due diligence guideline is a system that requires companies of a certain size or larger to inspect and disclose the environmental and social impacts within their supply chains. It will be enforced from 2027. It is anticipated that EU export companies and partner SMEs in Korea with annual sales of approximately 2.1 trillion won (15 billion euros) or more will be directly affected. If this guideline is violated, the list of companies may be disclosed, or a fine of up to 5% of sales revenue may be imposed, making it urgent for Korean companies to prepare.
This project has been prepared to enhance the ESG response capabilities of SMEs within the domestic supply chain in preparation for the introduction of the supply chain due diligence guidelines. It will integrate the ‘Climate Disclosure and Supply Chain Due Diligence Response Infrastructure Building’ project and the ‘Public-Private Joint Strategic ESG Support’ project. A total budget of 5 billion won will be invested this year, and more than 600 SMEs will be able to receive support, targeting 15 supply chains.
The ‘Climate Disclosure and Supply Chain Due Diligence Response Infrastructure Building’ project is a program designed to help SMEs receive ESG evaluations and improve weaknesses. A budget of 3 billion won has been allocated this year, and companies can perform self-diagnosis and receive expert consulting using an integrated ESG platform. Partner SMEs of selected primary contractors can use the ESG platform to inspect the ESG levels within the supply chain and seek ways to improve. Additionally, experts will visit to provide ESG education, consulting, and certification acquisition support.
The ‘Public-Private Joint Strategic ESG Support’ project is a program that supports tasks where conglomerates and partner SMEs jointly conduct ESG-related activities. A budget of 2 billion won has been allocated this year, consisting of 1 billion won in government subsidies and the remaining 1 billion won as contributions to the win-win cooperation fund by conglomerates. Conglomerates can recruit partner SMEs to apply for ESG projects, with major support areas including response to supply chain due diligence, greenhouse gas verification, ESG information disclosure, and eco-friendly process consulting.
The government plans to support SMEs in implementing ESG management and proactively responding to the supply chain due diligence guidelines through this project. Additionally, the aim is to strengthen ESG cooperation between conglomerates and SMEs to enhance sustainability within the supply chain.
Detailed information on the project and application methods can be found on the websites of the Ministry of SMEs and Startups (www.mss.go.kr), ESG Integrated Platform (www.kdoctor.kosmes.or.kr/esgplatform), and the Win-Win Growth Committee (www.esg.winwingrowth.or.kr). It remains to be seen whether domestic SMEs can prepare for the EU supply chain due diligence guidelines and strengthen their ability to respond to global ESG regulations through this project.