South Korean companies are facing increasing carbon risks along their supply chains as global carbon regulations continue to strengthen. These directives include the International Financial Reporting Standards Sustainability Standards (IFRS S2), the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), as well as voluntary carbon management initiatives across the global tech industry. A growing number of Asian markets, such as Singapore and Hong Kong, have mandated IFRS S2, requiring companies to disclose climate-related risks and opportunities, including Scope 1 and 2 greenhouse gas (GHG) emissions from the 2024–2025 reporting cycle, and are in the process of adding Scope 3 from 2026.
Key findings of the report “Navigating supply chain carbon risks in South Korea” published by IEEFA are:
-Expanding global carbon regulations and stricter reporting requirements for indirect greenhouse gas (GHG) emissions (Scope 2 and 3) could significantly increase supply chain carbon risks for South Korean companies, including investment aversion, higher carbon cost exposure, and counterparty and reputational risks.
-Samsung Device Solutions emitted approximately 41 million tonnes of carbon dioxide equivalent (MtCO2e) in 2024, with a carbon intensity of 539 tCO2e/USD million — far higher than Apple (37 tCO2e/USD million) and Amazon Web Services (107 tCO2e/USD million), reflecting inadequate clean energy use and upstream supply chain GHG management.
-If the European Union’s Carbon Border Adjustment Mechanism (CBAM) expands to include semiconductors and full supply chain emissions, South Korean chip exporters could face USD588 million in CBAM certificate costs between 2026 and 2034, potentially prompting importers to switch from high-emission producers to low-carbon suppliers.
-Rising supply chain carbon costs in liquefied natural gas (LNG)-powered semiconductor clusters and Artificial Intelligence (AI) data centers could increase counterparty risks and production expenses, as South Korea’s renewable energy shortage limits global data center investment and heightens carbon cost exposure.
Access the report here
