As the ESG business management trend continues to gain traction in South Korea, environmental factors have outweighed social and governance values in importance, the Federation of Korean Industries said on Thursday.
The major business advocacy group also added that SK Group, among business entities across the nation, has received the top recognition in the market as a pioneer of the ESG business culture.
In the federation’s survey polling research chiefs of major brokerages here, 60 percent of the respondents said that environmental factors are the most important in the growing the ESG business trend, which refers to a practice of factoring in environmental, social, and governance issues when doing business. Those who picked social and governance factors came to 26.7 percent and 13.3 percent, respectively.
Among the environmental factors, the findings showed that climate change and carbon emission agendas were deemed the most important.
“This reflects the fast-growing environment-friendly trend that is spreading across the globe since the outbreak of the COVID-19 pandemic,” the FKI said in its report.
In terms of individual businesses, petroleum goods, petrochemicals, and steel were chosen as the sectors that would suffer the most in terms of a fall in global investments and exports. Petroleum goods came out on top at 28.9 percent, while petrochemicals and steel followed at both 26.7 percent.
In contrast, the semiconductor and secondary battery sectors were predicted to be the top beneficiaries of the new business paradigm, at 28.9 percent and 26.7 percent, respectively.
Another sector that respondents said would see gains include the automobile industry, as the expanding electric vehicle business would partly offset the downsides of conventional internal combustion engine cars.
As for how well local businesses’ are adopting the ESG initiative, experts pointed out that small and medium-sized enterprises tend to fall behind conglomerates.
The top players across the globe were Microsoft, Tesla, Apple, and Patagonia, the survey showed. Among local companies, SK Group was ranked on top, followed by LG Chem, Samsung Electronics, and KB Financial Group.
South Korea was noted for its relatively high proportion of manufacturers in the ESG champion list, as opposed to the global list that heavily leans towards the IT sector.
“Due to the increased management uncertainties amid the COVID-19 outbreak, the market reaction for nonfinancial performances has been on the rise,” said Kim Bong-man who leads the FKI’s international cooperation division.
“Companies could take the burden from the heightened level of social and governance requirements.”
By Bae Hyun-jung (email@example.com