Despite Advocating ESG Management... Only 29% of Large Companies Establish Internal Committees

'2021 Asia Future Business Forum'/Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Heung-soon] While countries around the world are accelerating ESG (Environmental, Social, and Governance) management and domestic companies are presenting measures to join this trend, an analysis revealed that less than 30% of large corporations have actually established ESG committees within their organizations. It was also pointed out that the expertise of related personnel has not been verified, necessitating improvements to enhance effectiveness.

On the 26th, Leaders Index, a corporate analysis research institute, analyzed 334 companies out of the top 500 domestic companies by sales that submit quarterly reports. It found that 97 companies, or 29% of the total, had established ESG committees. Among them, 69 companies had appointed an ESG committee chairperson, accounting for 20.6% of the total companies surveyed.

By industry, the proportion of companies with ESG committees was highest in telecommunications (100%), trading companies (83.3%), steel (75%), and banking (70%). Due to the impact of carbon taxes imposed in Europe, steel companies such as POSCO and Hyundai Steel had ESG committees in 9 out of 12 companies. In contrast, the automotive, parts, energy, and shipbuilding machinery equipment industries had ESG committee establishment rates below 30%.

Additionally, most ESG committee members and chairpersons concurrently serve as outside directors, raising some concerns about expertise. Among the chairpersons, those from academia accounted for the largest share at 32%, followed by former government officials and business executives at 26% each. Among the former government officials, 10 were from the prosecution and the National Tax Service, the largest group.

The proportion of female chairpersons was 12% (8 individuals), more than double the average proportion of female executive directors (5%). Among corporate owners, Kim Beom-su, Chairman of Kakao, and Yoon Song-i, Chief Strategy Officer (CSO) of NCSoft, each serve as ESG committee chairpersons.

Park Joo-geun, CEO of Leaders Index, stated, "Based on the profiles of ESG committee chairpersons so far, there is suspicion that ESG committees are organizations that extend the role of outside directors rather than being specialized bodies." He added, "The committees also lack expertise and need improvement."