ESG Management Broadly Spreading in SME Worksites

Jungjingong, Analysis of ESG Performance Indicators for Policy Fund Supported Companies

Chairman Kim Hak-do is announcing support measures for eco-friendly green innovation at a press conference marking the first anniversary of his inauguration held in Mokdong, Seoul, on May 20.

[Asia Economy Reporter Kim Cheol-hyun] It has been confirmed that ESG (Environmental, Social, and Governance) management is generally spreading in the field of small and medium-sized venture enterprises. The Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced on the 24th the results of an analysis of ESG performance indicators of companies supported by policy funds.

As a result of analyzing ESG performance indicators for 6,022 companies that received policy funds from SBC in 2019 and 2020, the overall ESG score increased by 6.7 points (14.8%) from 45.3 points in 2019 to 52.0 points in 2020. As of 2020, the scores by category were Governance (G) 68.8 points, Social (S) 47.6 points, and Environment (E) 39.7 points. Although the environmental category scored relatively low, the growth rate compared to the previous year was 21.6% (7.1 points), higher than Social at 13.1% (5.5 points) and Governance at 12.5% (7.6 points).

In detailed indicators, high scores were observed in ethical management (96.4 points), ownership structure stability (88.0 points), and labor rights and human rights protection (81.9 points). Indicators such as community contribution (17.9 points), supplier cooperation (36.5 points), environmental management activities (39.7 points), job creation (40.5 points), and financial disclosure (49.1 points) were below the overall average (52.0 points). Additionally, the largest increases were seen in equal employment opportunities and ethical management (representative reliability), while scores for industrial health and safety and ownership structure stability declined. This suggests the need to expand policy support for improving working conditions such as industrial health and safety.

Based on this analysis, SBC proposed policy support measures for small and medium-sized venture enterprises to respond to ESG. These include ▲ strengthening response capabilities through ESG management introduction diagnosis and customized policy linkage support ▲ expanding the base of ESG management through ESG win-win cooperation between local governments and large and small-medium enterprises and the establishment and operation of an integrated ESG support platform for SMEs ▲ raising ESG awareness through the production of an ESG management manual for small and medium-sized venture enterprises and the introduction of a self-diagnosis system.

Chairman Kim Hak-do stated, "Since 2019, SBC has been operating by introducing policy purpose items such as environment, society, and governance in the evaluation of companies supported by policy funds," adding, "Through this performance indicator analysis, companies were able to identify vulnerable ESG areas, and SBC will do its best to provide policy support to enhance ESG awareness and response capabilities of small and medium-sized venture enterprises in the future."