KOTRA Shares Successful ESG Cases of 31 Companies from 6 Leading Countries

KOTRA Publishes Report on 'Successful ESG Response Cases of Overseas Companies'
"Find ESG Elements Suitable for Each Company's Environment, Integrate into Business Models, and Utilize ESG Finance"

[Asia Economy Reporter Kim Hyewon] The formula for corporate success is changing. As ESG (Environmental, Social, and Governance) performance, a non-financial factor, gains attention over traditional financial metrics, companies that respond agilely to ESG trends have emerged as the mainstream.

On the 29th, KOTRA announced this in a report titled 'Successful Cases of Overseas Companies' ESG Responses,' analyzing ESG response success cases of 31 companies located in six countries including the United States, Canada, the United Kingdom, Germany, France, and Japan, and presenting them as benchmarking models for Korean companies.

Seventh Generation in the United States: ESG Management Responding to Global Corporate Demands

Seventh Generation, a U.S. manufacturer of eco-friendly household products such as detergents and toilet paper, has been selling its products through the Amazon platform. When Amazon launched the 'Climate Pledge' campaign for carbon neutrality by 2040 in 2019 and encouraged its vendors to participate, Seventh Generation also joined. As part of the campaign, Amazon created a dedicated section for sustainability-certified products on its platform, and Seventh Generation actively pursued certifications, registering and selling over 55 products to date. Although Amazon requested participation, Seventh Generation saw this as a golden opportunity to promote its eco-friendly product line. In fact, Seventh Generation products registered in this section showed a click-through rate over 60% higher than unregistered products.

Willstage in Japan: New Business Promoting Regional Economic Revitalization

Willstage, a Japanese water purification service company, received preferential interest rate loans from Shiga Bank on the condition that funds be used for projects solving social issues. While considering ways to revitalize the local economy using its proprietary water purification technology, it initiated an aquaculture business in Shiga Prefecture, an inland area without a sea, where such a business had never been attempted. Eventually, it applied existing technology to develop a 'fully enclosed recirculating land-based aquaculture system' that allows aquaculture for one year without water replacement in tanks, and established a subsidiary, Aquastage, in 2017 to commercialize this new business.

This technology activates bacteria that remove feed residue and fish excrement in the tanks, circulating clean water. As a result, water costs are only about one-third of those for conventional land-based aquaculture. Furthermore, since aquaculture occurs in clean water, the survival rate of farmed fish is high, and growth speed is twice that of sea aquaculture, making it highly viable. Currently, about 2,000 pufferfish are being trial-cultured. If successful in removing substances known to induce pufferfish toxin using bacteria in the water, 'toxin-free pufferfish' is expected to become a new specialty product of Shiga Prefecture.

Vital Farms in the United States: Utilizing ESG Investment Funds as Growth Capital for Startups

Vital Farms, which sells animal welfare eggs and dairy products in the U.S., started in 2007 with 20 free-range hens on a Texas farm. To realize its mission of delivering 'ethical food' to the table, it has maintained long-term cooperative relationships with small family farms sharing similar philosophies rather than pursuing profit maximization through indiscriminate farm expansion. To promote mutual growth with partner farms, it set delivery prices higher than industry averages. Based on this 'good' business model, it secured necessary funds from impact investment institutions such as SJF Ventures and Sunrise Strategic Partners every 1-2 years as needed, strengthening its business foundation. As consumers responded positively to ethical food, Vital Farms' sales grew rapidly. It has now become the largest free-range egg brand produced in the U.S. Early last year, it successfully raised $200 million through a Nasdaq IPO.

Financial institutions are offering various incentive programs such as preferential interest rates for companies with excellent ESG performance, including sustainability-linked loan programs. For example, HSBC USA sets sustainability performance targets such as greenhouse gas reduction and employee diversity for each company and provides preferential interest rates based on achievement.

At BNP Paribas in France, ESG evaluation results are used to categorize loan encouragement and exclusion sectors, providing incentives like preferential interest rate loans in encouraged sectors. Businesses related to arms production, coal-fired power generation, and mining are subject to strict screening criteria or classified as exclusion sectors, prohibiting loans.

Kim Taeho, Director of KOTRA's Economic and Trade Cooperation Headquarters, stated, "ESG is emerging as a new core axis of corporate management," and added, "KOTRA will also assist our small and medium-sized enterprises in internalizing ESG factors into their management methods."