Korea Gas Giant Removes LNG Claim in Greenwashing Crackdown

(Bloomberg) -- South Korea’s largest private gas supplier SK E&S Co. removed claims it would produce carbon-free liquefied natural gas from its marketing materials after the government expanded a crackdown on misleading labels of fossil fuel projects.

SK E&S edited previous press releases and promotional videos in late September to remove its assertion that LNG from its planned Barossa project off the northern coast of Australia would be “CO2-free,” toning down its claim to “low-carbon” gas, a company representative said Tuesday. That came after the environment ministry urged the company to accurately advertise its product in March.

Seoul is getting tougher on green marketing as activist groups and lawmakers ramp up calls to counter the rise of dubious claims by firms over their climate actions. The ministry’s guidance came after a climate group in December alleged that SK E&S falsely advertised the green credentials of the Barossa project.

South Korea unveiled a target to be carbon neutral by mid-century in 2020, spurring public and private companies to accelerate de-carbonization plans. The claims by SK E&S highlight the difficulties that governments worldwide are facing as companies seek to burnish their green credentials to appeal to investors and satisfy regulators.

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“Even after the administrative guidance, SK E&S only just removed those claims after keeping the ads unchanged for six months,” Jin Sung-joon, a lawmaker in the opposition Democratic Party, said in parliament on Tuesday, criticizing the ministry for not following up on its recommendation sooner. 

The ministry’s guidance in March urged SK E&S to disclose the facts about its environmental claims in greater detail “in future advertisements,” the company said in a statement via text message. SK E&S revised its marketing materials recently to proactively respond to the environment ministry’s guidance following a discussion with lawmaker Jin’s office, it said in the statement.   

In its initial marketing materials, SK E&S had claimed it would capture and offset the greenhouse gases produced while making LNG. However, the project will only partially remove emissions from the process, without doing anything about carbon dioxide released when the gas is burned, which is where the vast majority of pollution comes from, according to Solutions for Our Climate, an activist group that filed a legal action against SK E&S.  

Shares of SK Inc., the parent company of SK E&S, closed down 0.7% in Seoul on Wednesday.

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“There has been a lack of follow-up monitoring,” Environment Minister Han Wha-jin conceded to lawmaker Jin in Tuesday’s audit session. For companies that made similar claims, “we’re currently requesting them to submit relevant materials, then we’ll issue administrative guidance to them too,” she said.

(Updates to add share prices in eighth paragraph. An earlier version was corrected to clarify project has not yet begun production.)

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