At some point, large’brother’ companies such as Samsung and SK Group, Naver and Kakao, are advocating ESG (environmental, social, governance) management.
In the meantime, there has been a strong perception that’large companies’ seeks to maximize corporate profits by exploiting the labor of ant-like employees or strangled by subcontractors, but now they are vying for a good company. There are unfamiliar landscapes that companies seeking to maximize profits think about the environment and society and create a transparent governance structure.
What is their instinct?
ESG management is a global trend…Global investment company “Do not invest in companies with bad ESG performance”
Interest and investment in ESG management is now a global trend. When ESG is a bit easier to understand, it means’eco-friendly’,’social responsibility’, and’appropriate governance’. In the meantime, the evaluation of a company has been about how much sales it makes and how much money it makes using how much money. Also, the degree of job creation was one of the major evaluation items of the company.
But now, making a lot of money doesn’t necessarily make you a good company for investment.
Global investment companies officially said, “We will not invest in companies with poor ESG performance”. How much does the company pay attention to and invest in environmental protection, exert a good influence on society, and have a transparent and stable governance structure? It has become very important. This is because people’s interest in the environment has increased due to climate change, and the standards of fair competition seen by the younger generation have also become more stringent.
ESG first became known when the UN Principles for Responsible Investment were enacted in 2006. In addition, social interest in companies with high ESG ratings increased significantly as the 2008 and 2012 global financial crisis went through. Corona 19, which has swept the world since last year, also raised the bar for companies. The public’s perception of unethical and environmentally responsible companies has worsened.
The Dutch Public Pension Fund recovers investment from KEPCO… “The reason for the connection to coal-fired power plants”
There were also cases in which companies felt the need for ESG management. In February of last year, the Dutch public pension fund sold 60 million euros and KRW 80.5 billion worth of KEPCO shares in Korean money and recovered the investment. The reason was that KEPCO was involved in coal-fired power plant projects in Indonesia and Vietnam. In connection with this, Samsung C&T decided to stop the new coal investment business in October last year.
As such, the global investment market is showing a movement to give low scores to companies that have neglected ESG, and to give various disadvantages in business. For this reason, ESG management of companies that have partnered with various companies in global regions is becoming a necessity, not an option. The increased consumer’s eye level and fierce monitoring also encouraged companies to adopt ESG management.
Naver and Kakao also establish ESG management systems such as eco-friendly and transparent management
The Korean government declared a vision for carbon neutrality in 2050, and in the case of Naver, the ‘2040 Carbon Negative’ goal was set with the establishment of the ESG Committee under the Chief Financial Officer. The 2040 Carbon Negative Plan means that by 2040 we will increase our reductions more than the amount of carbon released. Naver is operating a data center in Chuncheon, and plans to build a second data center in Sejong, so it is inevitable to put more effort into the low-carbon transition.
In addition, the company was the only company that received an A+ rating in the corporate governance category among the top 10 companies by market capitalization in the ‘2020 Corporate Governance Assessment’ of the Korea Corporate Governance Agency (KCGS). As Naver is the most active in the global market among domestic IT companies, Naver is putting more effort into ESG management.
Not long ago, Kakao, founded by Chairman Beomsoo Kim, who promised to donate more than half of his personal property, also declared ESG-oriented management.
The company held the board of directors last month and decided to establish an’ESG committee’ under the board of directors, and decided to check the direction of the sustainability management strategy and manage and supervise the performance and problems. The management also made it clear that it would carry out responsible management and establish and develop a sound governance structure.
Kakao is preparing an eco-friendly data center with the goal of completion in 2023 to contribute to the transition to a low-carbon economy, and plans to disclose ESG management status and performance through a future sustainability report.
The younger generation is the’pencil environment’ generation…
With Corona 19, orders for delivery food are soaring, and the social problem with plastic waste is growing. As a result, younger generations are becoming more resistant to overpacked delivery boxes and food packaging containers. In some cases, boycotts have also occurred. In addition, when someone is given preferential treatment or an unfair thing occurs in college or at work, the issue of this has also increased.
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Eventually, companies whose users lose their backs for the above reasons will inevitably be eliminated. Companies that commit fouls without considering the environment and seek only profits are bound to face a bigger crisis. Investors will also try to sever relationships with these companies in the long run.
With climate change that changed our daily lives and the pandemic of Corona 19, the demand for social responsibility for companies is growing more than ever. The importance of ESG management is expected to increase as the society becomes unacceptable for fouling and non-sense.