FKI Announces Results of 'Group ESG Management Case Study'
Summary of Institution Establishment, Measurement, Alliances, Consumers, and Technology Development
[Asia Economy Reporter Kim Heung-soon] The Federation of Korean Industries announced on the 13th that it summarized the ESG (Environmental, Social, Governance) management keywords of the top 10 conglomerates (by total assets) among the mutual investment restriction business groups as 'S.M.A.R.T.' based on its survey of 'Group ESG Management Cases.' The acronym represents the first letters of English words such as Structuring, Measure, Alliance, Relations, and Technology Development.
Structuring
Accelerating the Structuring of Organizational Setup
Among the top 10 groups, seven companies have established ESG committees or expanded and reorganized existing committees. LG and Hyundai Heavy Industries are scheduled to establish such committees in the first half of this year.
Measure
Focusing on Securing Measurable Means such as International Certifications and Joining Global Initiatives
Attempts to quantify values in the environmental and social sectors continue. Since 2016, Samsung Electronics has been quantifying and publishing social and environmental indicators. SK Group is also active in this area. SK established the Center for Social Value Enhancement (CSES) to promote the monetization of social value and serves as the vice-chair company of 'VBA,' which includes BASF, SAP, and Novartis. The top 10 groups have also been proactive in obtaining domestic and international certifications in environmental and social fields such as anti-corruption. This can be used as an objective measure to demonstrate active engagement in ESG activities.
Recently, attention has shifted not only to existing international certifications like ISO for environment, safety, and anti-corruption but also to participation in global initiatives related to carbon neutrality. Joining 'RE100' is a representative example. It declares 100% use of renewable energy, with eight SK Group companies and LG Chem among the members. Additionally, many companies participate in the Carbon Disclosure Project (CDP). Samsung has seven companies including Samsung Electronics, Hyundai Motor Group has six, LG has eight, SK has three, and Lotte has two companies reporting annual greenhouse gas emissions and other data.
Alliance
Active Formation of Alliances, Including Cross-Industry Partnerships
Alliances between competitors and across industries related to ESG are also ongoing. GS Construction and LG Uplus are collaborating to develop smart construction technologies for industrial accident prevention. SK Telecom and Kakao are establishing a joint ESG fund. Through this fund, they plan to support ESG activities for sustainable development of innovative ICT SMEs and startups.
Lotte Central Research Institute and Hansol Paper are jointly developing eco-friendly paper packaging called Kakao board, which contains cacao fruit components. Cases involving multiple companies are also emerging. Recently, aiming to develop carbon-neutral innovative technologies, about ten companies including Hyundai Motor, GS Energy, Hanwha Energy, and Hyosung Heavy Industries have formed an energy alliance.
Relations
Projects Centered on Consumer and Partner Relationships
They are also actively managing supply chains. Samsung Electronics already operates various IT systems such as G-SRM, an integrated risk management system for partner companies. Hyundai Steel conducts annual ESG evaluations of its supply chain to check potential risks in labor and human rights, environment and management, ethics and compliance, and safety and health.
Meanwhile, ESG activities targeting consumers are active, especially in the distribution industry. Lotte Chemical is running 'Project Loop,' a PET bottle recycling campaign aimed at consumers. Emart has installed eco refill stations to enable consumers to participate in environmental protection activities in daily life. Consumers who bring their own containers to Emart stores can refill laundry detergent and fabric softener at a 35-39% discount compared to the original product price. Other representative consumer-targeted ESG management cases include GS Retail’s launch of label-free bottled water, Seven Eleven’s 'La(bel)tte(gi)neun mal-iya' campaign, and LG Household & Health Care’s operation of the Green Product Review Council.
Tech
Engaging in Technology Development and Large-Scale Investment in Eco-Friendly Areas
Hyundai Mobis is accelerating the development of hydrogen fuel cell systems for hydrogen vehicles. It is known to be reviewing additional sites and scale for hydrogen fuel cell factories. LG and SK are jointly developing 'biodegradable plastics.' Lotte is expanding strategic investments worth about 5.2 trillion KRW focused on four core tasks including eco-friendly product production and climate change response, centered on major chemical affiliates such as Lotte Chemical.
Meanwhile, POSCO Energy’s zero atmospheric emissions technology using plasma gasifiers is gaining attention. Hanwha Solutions is promoting the establishment of a circular economy system through investments in solar power and green hydrogen technologies. The Federation of Korean Industries stated, "We will continue to actively discover ESG management cases of domestic and foreign companies, share them with businesses, and actively promote exemplary cases."
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