KCGS Downgrades ESG Ratings of 7 Companies Including POSCO and Hyosung

[Asia Economy Reporter Minji Lee] The Korea Corporate Governance Service (KCGS) announced on the 12th that it held an ESG rating committee on the 7th and downgraded the ESG ratings of seven companies, including CJ Logistics, POSCO, Hyosung, and Aekyung Industrial. This reflects the ESG risks identified up to January 1st of this year since the regular ESG ratings were assigned in October last year.

ESG ratings are classified into seven grades: S, A+, A, B+, B, C, and D. In the first round of rating adjustments, no companies experienced environmental management (E) risks, while three companies faced social responsibility management (S) risks and four companies faced governance (G) risks, resulting in downgrades.

In the social responsibility management category, the ratings of CJ Logistics, POSCO, and Hanon Systems were downgraded. CJ Logistics was lowered from B+ to B due to the deaths of six delivery workers. POSCO was downgraded from B+ to B due to repeated worker fatality accidents, and Hanon Systems was lowered from B+ to B due to sanctions for habitual unfair subcontracting practices.

In the governance category, Hanwha Solutions, Hyosung, and Aekyung Industrial were adjusted from B+ to B. Hankook Express was downgraded from C to D. Hanwha Solutions was highlighted for receiving a corrective order and a fine of approximately 15.7 billion KRW from the Fair Trade Commission for unfair support practices. Hyosung was noted for the Supreme Court’s guilty verdict on embezzlement charges against Chairman Cho Hyun-joon of the group, and Hankook Express was downgraded based on the Fair Trade Commission’s corrective order and a fine of 7.3 billion KRW for unfair support practices.

A KCGS official stated, "Following this individual rating adjustment, the integrated ratings of Hanon Systems, Hanwha Solutions, and Hyosung each dropped one level to B, B+, and B+, respectively."