[New Release] Understanding ESG... 'The Structure of ESG: Good ESG and Risky ES+G'

The Essence of ESG Should Be Understood as ES+G
Korean-Style ESG Needed Led by Industry and Finance Together

[Asia Economy Reporter Sim Nayoung] Since the beginning of this year, the heads of large corporations have declared Environmental, Social, and Governance (ESG) management, ESG-themed stocks have appeared in the stock market, and even politicians are competitively introducing ESG-related policies. Despite the high interest in ESG, how many people truly understand the essence of ESG?

The newly released book on the 3rd, "The Structure of ESG: Good ESG and Dangerous ES+G," sounds an alarm about the current misunderstanding of ESG in South Korea and is an attempt to clarify its impact on the country's economy and industry.

This book argues that the essence of ESG should be understood as ES+G. In other words, the mechanism of ESG operates by investment capital controlling corporate governance (G) to solve environmental (E) and social (S) issues. It claims that this ESG structure is a superior solution compared to any other historical response humanity has devised to address environmental and social problems.

On the other hand, the book analyzes that due to the ES+G structure where investment capital controls industrial capital through G, ESG strengthens the dominance of investment capital over industrial capital. ESG results in industrial capital becoming subordinate to financial capital.

It also argues that between countries, Europe and the United States, which have strengths in the financial industry, may economically dominate East Asian countries centered on manufacturing, especially South Korea, China, and Japan, and that ESG may have been designed for such purposes from the outset.

Leading the withdrawal of investment in POSCO for failing to meet ESG standards, the Norwegian sovereign wealth fund, which attracted domestic media attention, along with major Wall Street asset management firms like BlackRock and global pension funds such as Japan's GPIF, form an international network of so-called universal owners. This financial cartel currently manages the global financial market, demonstrating that ESG has effectively developed under the leadership of Wall Street.

Therefore, for manufacturing countries like South Korea, Japan, and China, which have weak financial industries, ESG could negatively impact the autonomy of their national economies. The book warns that defensive barriers against the overseas outflow of domestic industrial capital, such as the Stewardship Code and Corporate Governance Code, are disappearing.

The author states, "If ESG, based on the dominance of financial capital, is accepted as is, manufacturing-centered countries risk becoming subordinate to Western economies where financial capital holds strong influence. Therefore, the Korean economic sector needs to prepare and respond accordingly," emphasizing that "an ideology of Korean-style ESG or K-ESG, where industry and finance lead together on an equal footing, must be established."