KCGS Downgrades ESG Ratings for 10 Companies Including LG Chem and SillaJen

[Asia Economy Reporter Minji Lee] The Korea Corporate Governance Service (KCGS) announced on the 10th that it held an ESG rating committee on the 8th and downgraded the ESG ratings of 10 companies, including LG Chem, SillaJen, and Samsung Heavy Industries. This reflects the ESG risks identified during the second quarter of this year since the second ESG rating adjustment in April 2020.

ESG ratings are classified into seven grades: S, A+, A, B+, B, C, and D. As a result of the third rating adjustment, companies downgraded due to risks in Environmental Management (E), Social Responsibility Management (S), and Governance (G) were one, four, and six companies, respectively.

In the environmental management sector, LG Chem's rating was adjusted from C to D, reflecting the impact of a gas leak accident at its plant in India.

In the social responsibility management sector, the ratings of LG Chem, Samsung Heavy Industries, Han Express, and Sinsung Tongsang were downgraded. Samsung Heavy Industries was downgraded from A to B+ due to findings of habitual unfair subcontracting practices. Han Express's rating fell from B to C, reflecting the impact of a fire at its logistics warehouse in Icheon.

In the governance sector, the ratings of six companies?Kukje Pharm, SillaJen, SL, Yooyang D&U, Initech, and Isu Chemical?were adjusted. SillaJen was downgraded from B+ to B after former CEO Moon Eun-sang was indicted on embezzlement charges.

A KCGS official stated, "As a result of individual rating adjustments, the integrated ratings of six companies dropped by one level," adding, "The frequency of ESG rating adjustments will be expanded from once every six months to once every quarter, with the next rating adjustment scheduled for October."