Granting Deliberation and Voting Rights Related to ESG Management
On the 15th, the new logo of Kia Motors was displayed on the exterior wall of the Kia Motors headquarters building in Seocho-gu, Seoul. The new logo removes the previous red oval border and presents the letters "KIA" in a simple and futuristic style. Photo by Hyunmin Kim kimhyun81@
[Asia Economy Reporter Yu Je-hoon] Hyundai Motor Company, Kia, and Hyundai Mobis are strengthening their ESG (Environmental, Social, and Governance) management systems. The three companies plan to establish a 'Sustainability Management Committee' within their boards of directors, granting it authority to deliberate and decide on ESG-related matters, thereby creating a definitive control tower for ESG management.
According to Hyundai Motor Group on the 19th, Hyundai Mobis proposed an amendment to its articles of incorporation at the previous day's shareholders' meeting notice to reorganize the existing Transparency Management Committee into the Sustainability Management Committee. Hyundai Motor Company and Kia also plan to present similar amendments through their boards of directors soon.
Since 2015, the three companies have established a 'Transparency Management Committee' composed of outside directors within their boards to enhance shareholder value and communication by ensuring transparency in internal transactions, protecting shareholder rights, and reviewing large-scale investments.
The expanded Sustainability Management Committee will broaden the scope of discussions to include ESG areas in addition to the existing roles of the Transparency Management Committee. It will have additional authority to deliberate and decide on the company's ESG policies, plans, and major activities. Essentially, it will serve as the control tower for ESG management.
Furthermore, the Sustainability Management Committees of the three companies will also have the authority to review the companies' safety and health plans as an extension of their ESG deliberation and decision-making functions. This is because, under the revised Industrial Safety and Health Act, companies above a certain size must establish annual safety and health plans, report them to the board, and obtain approval starting this year.
Accordingly, the Sustainability Management Committee will pre-review the established safety and health plans, objectively assess their effectiveness and appropriateness, and provide opinions on modifications and supplements. The companies explain that this will enable more precise decision-making on industrial safety during the board approval process.
The reason the three companies are strengthening their ESG management systems is that ESG has become an essential factor for corporate survival and a key criterion for consumers and investors to evaluate corporate value. Accordingly, the three companies have recently focused on developing eco-friendly vehicles such as electric and hydrogen electric vehicles, while actively engaging in win-win cooperation with partners and shareholder-friendly management.
Recently, Hyundai Motor Company issued ESG bonds worth 400 billion KRW, and Kia is also reviewing similar issuance. The funds raised through ESG bonds will be used for investment in the development of electric and hydrogen electric vehicle products, as well as the development and sales of new eco-friendly vehicles.
Positive evaluations of the three companies' ESG activities continue. In the ESG rating evaluation of major companies announced by the Korea Corporate Governance Service last October, Hyundai Motor Company and Kia were upgraded from a B+ rating the previous year to an A rating, while Hyundai Mobis maintained its A rating from the previous year.
A Hyundai Motor Group official stated, "Through establishing an ESG management system, we will contribute to humanity and create sustainable future value," adding, "We will strive to become a company loved by the market and society by having all executives and employees work together centered on the board of directors."
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