Go to Contents Go to Navigation

(Yonhap Feature) S. Korean firms embrace ESG principles

All News 09:00 June 11, 2021

By Kim Deok-hyun

SEOUL, June 11 (Yonhap) -- At first glance, the semiconductor industry and environmentalism seem to be awkward bedfellows.

Water and energy are essential for semiconductor manufacturers, which use large amounts of hazardous chemicals that cause environmental pollution and produce toxic waste.

But SK hynix Inc., the world's second-largest maker of memory chips, is increasingly working to run its plants with more renewable energy and better water management.

SK hynix is one of a growing band of South Korean firms that embrace environmental, social and governance (ESG) principles for their decision-making procedures.

"We will do our best to integrate ESG factors into our long-term business strategy in order to ensure value creation and sustainability," Lee Bang-sil, head of SK hynix's ESG Strategy, said in a video that was uploaded on the company's website.

CEOs pose for the camera before holding a meeting on ESG management in Seoul on April 26, 2021. (Yonhap)

ESG principles and investment, which aim to make companies more sustainable by encouraging them to act on a range of environmental, social and governance issues, have been a watchword for financial firms for years in South Korea.

This year, non-financial firms across the board were warming to the corporate doctrine as they prepare for a post-pandemic world.

According to a recent survey by the Federation of Korean Industries, the nation's largest business lobby, 66.3 percent of 500 CEOs at big firms paid "higher attention" to ESG principles.

Another survey by the Korea Chamber of Commerce and Industry showed that 63 percent of 300 respondents said their purchases were affected by a company's ESG performance.

With investors also putting pressure on companies to improve their ESG performance, big companies have already sharpened their focus on the environment and society.

This file photo shows a coal-fire power plant in Incheon, a port city 40 kilometers west of Seoul. (Yonhap)

Samsung Group, the nation's largest business conglomerate, has announced that its affiliates would phase out coal-related investments.

Eight affiliates of SK Group, which has SK hynix under its wing, and LG Chem Ltd. joined a global RE100 initiative that brings together companies committed to 100 percent renewable electricity.

Seven affiliates of Samsung Group, including Samsung Electronics Co., six affiliates of Hyundai Motor Co., eight affiliates of LG Group and three affiliates of SK Group, participated in a global disclosure system to manage their environmental impacts.

Hyundai Motor, GS Energy Corp. and Hanwha Energy Corp. formed an alliance to develop technologies on carbon neutrality, which requires companies to achieve "net-zero" emissions.

POSCO Co., the nation's biggest steelmaker, pledged to double "eco-friendly purchases" to US$2 billion by 2025.

Such purchases require POSCO to increase the recycling of waste resources and buy energy-efficient and eco-friendly certified products.

"The upcoming era of a great transformation is an era of rapid change where crises and opportunities coexist, and the importance of ESG will stand out even more," POSCO CEO Choi Jeong-woo said in a statement.

Late last month, the nation's pension fund said it will stop funding new coal power projects at home and abroad in line with the global transition from fossil fuels.

The National Pension Service (NPS), the world's third-largest pension fund, approved the plan to limit investment in companies with their mainstay focus on businesses tied to coal power.

"The NPS declares the coal-free investment policy to prepare for the toughening global environmental regulations and to combat climate change, and proactively establish the investment strategy to hedge risks," the NPS' fund management committee said in a statement.

NPS Chairman Kim Yong-jin speaks at a forum on ESG on May 21, 2021, in this photo provided by the NPS. (PHOTO NOT FOR SALE) (Yonhap)

Starting in 2025, KOSPI-listed companies with assets worth 2 trillion won or more will be required to disclose their ESG reports. By 2030, the rule will be applied to all KOSPI-listed firms.

Although companies are increasingly leaning toward ESG principles, there are lingering concerns that some firms don't provide details on how they work for the environment and society.

Lee Si-yeon, a researcher at the Korea Institute of Finance, warned against potential "ESG-washing," or a deceptive practice by a company to exploit an ESG as a marketing tool, rather than appropriately disclosing its ESG data.

"The scale of ESG-related investment is rapidly growing, but it also faces a rise in risks," Lee said in a recent report. "In particular, concerns over so-called 'ESG-washing' grow due to uncertainties in ESG ratings."

kdh@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!