Samil Accounting Corporation: "Role Allocation Between Board and Subcommittees Crucial in ESG Oversight"

[Asia Economy Reporter Park Jihwan] The ESG (Environmental, Social, Governance) oversight by a company's board of directors starts with identifying stakeholders, and it is important to allocate roles between the board and its committees, according to recommendations.

On the 6th, Samil Accounting Corporation's Audit Committee Center introduced a guide that can be used when the board oversees the company's strategy and execution regarding ESG (Environmental, Social, Governance) through the recently published Audit Committee and Governance Issue No. 14.

First, it is recommended that management establish strategic plans to leverage market opportunities and manage significant risks to enhance the company's long-term value.

In particular, responding to opportunities and risks from the ESG perspective is becoming increasingly important and is establishing itself as an essential management factor. Investors are actively evaluating companies' ESG strategies and execution and reflecting these in their investment decisions.

The guide emphasizes that a company's approach to ESG should be systematic and phased, and the board must play a substantive role. For effective oversight, it advises that the board first decide whether to establish a specific committee for ESG under the board, assign the responsibility to an existing committee, or have the entire board take responsibility.

If an existing committee is assigned, it is recommended to detail the oversight activities to ensure smooth implementation of the ESG strategy and reflect this in the board or committee regulations. Additionally, linking executive compensation with ESG strategies can help achieve related goals and externally communicate the company's interest and importance in ESG.

Samil Accounting Corporation's Audit Committee Center suggested, "Since investors' and rating agencies' ESG evaluations are mainly based on the information the company discloses about ESG," the board should review the disclosed information from a comprehensive perspective.