"ESG Management, Favorable for Financial Value Such as Stock Price Increase"

KCCI Holds 4th ESG Management Forum
"Need to Internalize ESG Management Strategy"

The Seoul Jung-gu Korea Chamber of Commerce and Industry hosted the Ceremony for Commerce and Industry Day on the 31st. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Hwang Yoon-joo] As ESG (Environmental, Social, and Governance) management has been shown to have a positive impact on a company's financial value, such as stock price increases, advice has emerged that ESG management should be viewed not as a regulation but as a new opportunity.

The Korea Chamber of Commerce and Industry (KCCI) announced that on the 30th, it held the "4th KCCI ESG Management Forum" jointly with the Ministry of Trade, Industry and Energy and the law firm Yulchon to discuss risk management and new business creation strategies in the ESG era.

The "KCCI ESG Management Forum" was organized to strengthen the domestic industry's response capabilities to ESG (Environmental, Social, and Governance), which has become a global issue across economic, managerial, and social sectors, and to discuss related risk management and policy support methods.

False or Exaggerated ESG Information Triggers Legal Risks Such as ESG Litigation... Companies Must Verify Their ESG Information

Lee Sang-yong, a lawyer at Yulchon Law Firm, who gave the first presentation on "ESG-related Law Enforcement and Litigation Trends," emphasized, "ESG litigation arising from issues such as environment, safety, labor, and governance has the ultimate goal of changing the company's business model or behavior patterns themselves," adding, "The resulting legal risks can test a company's business model and sustainability on a completely different level from existing partial and intermittent legal risks."

He continued, "Companies must verify the ESG information they provide based on three criteria: 'reliability,' 'comparability,' and 'verifiability,'" and advised, "Depending on the legal risk, companies can consider establishing a 'risk screening system' or operating a red team (a team that identifies vulnerabilities within the organization and simulates attacks) capable of conducting in-depth investigations (deep dives) into company information."

Stock Prices of ESG Companies Rise More Than General Companies... ESG as an Opportunity, Not a Regulation

Moon Cheol-woo, a professor at Sungkyunkwan University and the second presenter, stated, "During the COVID-19 pandemic, the stock prices of ESG companies rose more than those of general companies," and added, "According to Morningstar, a global fund rating agency, ESG funds that primarily invest in ESG companies reported higher returns than general funds that invest in similar index funds during the pandemic."

Professor Moon analyzed, "This shows that ESG has a positive effect on creating a company's financial value," and "This is an important result that presents new value creation possibilities, separate from ESG risk management strategies aimed at responding to existing regulations and public opinion."

He also said, "Since overseas investors are demanding ESG management and intervening in the election of board directors, domestic companies also need to actively establish ESG-related strategies."

Seo Hyun-jung, CEO of ERM Korea, who gave the final presentation on "Trends and Implications of ESG New Business Initiatives by Domestic and Foreign Companies," emphasized, "ESG should be accepted not as a regulation but as an opportunity to enhance corporate value."

CEO Seo advised, "Examples include consumer goods companies launching resource recycling products, developing games and apps for eco-friendly lifestyle education, and traditional companies with high carbon emissions transitioning to eco-friendly business models," adding, "Korean companies must fully integrate ESG into their corporate strategies to create new business opportunities and strengthen global competitiveness."

During the subsequent open discussion, participants agreed that ESG presents both 'crisis' and 'opportunity creation' aspects, and unanimously stated that companies should not view ESG management merely as a burden but should use it as a new opportunity for advancement. The presentations from this event can be viewed from July 9 on the Korea Chamber of Commerce and Industry website (www.korcham.net) under 'Online Seminar.'