This is the abstract of an article on environmental disclosure, which is contained in the Business Law Review, Vol.15, published in December 2003.

After decades of unparalleled economic growth, Korea is increasingly troubled with air, water and soil pollutions. For the nation to achieve sustainable development, not only the government but also enterprises and individuals should pay more attention to their environment than ever before.

The most effective way that goads businesses to preserve environment is somewhat different from country to country. Take an example of the United States. In the 1960s and 1970s, the U.S. government stepped up environmental regulation only to fail. It was because reinforced control meant swelling cost to businesses while loose control ushered in violations of environmental regulations.

On the contrary, the European countries were trying to enhance the public awareness of the environment, and encouraged companies to do environment-friendly operations. The member states of the European Union have ensured the public the right to know the surrounding environment, thereby to take to the environment-friendly companies.

In the United States, any violation of environmental regulations had only to lead to the judiciary remedy of appropriate damages. In 1969, the National Environmental Policy Act promoted the nationwide measures to protect the environment. But an increasing number of businesses were inclined to violate the mandatory pollution standards rather than to comply with the rules at a great cost. Accordingly the U.S. government has manipulated the financial markets to take market-based economic incentive approach. For example, banks were obliged to demand the borrowers to observe the relevant environment regulations. In the capital markets, the companies which make efforts to preserve the environment could be awarded economic incentives in the aftermath of the U.S. Supreme Court's decision on Chevron in 1984.

Though the American approach is efficient for the sustainable development, the Korean companies are not accustomed to the environmental disclosure. On the other hand, the European way of environmental protection, which includes environmental auditing and eco-label system among others, is necessary and appropriate to enhance the consumer awareness of the environment, but very slow owing to voluntary participation of business communities.

In conclusion, environmental disclosure will have constructive results when all the governmental agencies including financial supervisory bodies stick to the concerted environmental policy, while big enterprises declare the ethical management principles with considerable emphasis on the environmental protection. Against these backdrops, all the business circles are more and more willing to abide by environmental regulations than ever before.