Corporate Governance Service Evaluation Results: Hanssem and Hyundai Livart Only Receive A Grade
Chairs, Zinus, and Coas Among Those Rated C Grade or Below
[Asia Economy Reporter Kim Jong-hwa] It has been revealed that the ESG management report cards of furniture companies, including Zinus, famous for its "Amazon Mattress," are at a failing level, indicating an urgent need for improvement.
According to the Korea Corporate Governance Service (KCGS) on the 2nd, among major furniture companies, only Hanssem and Hyundai Livart received an overall A grade, while most received B and C grades. In particular, in the "E (Environment)" category, four companies?Enex, Fursys, Coas, and Sidiz?received a C grade, and Zinus was rated D, indicating concerns about "shareholder value impairment."
In the "S (Social)" category, Coas, Zinus, and Sidiz received C grades, and in the "G (Governance)" category, Sidiz received a C grade.
A C grade is given to companies that absolutely need to make efforts to establish a sustainable management system as suggested by governance, environment, and social best practices, and that have a high risk of shareholder value impairment due to non-financial risks. A D grade indicates a stage where the company has almost failed to establish a sustainable management system as suggested by governance and environmental best practices, raising concerns about shareholder value impairment due to non-financial risks.
These ESG evaluation results in the furniture industry were somewhat predictable. It is analyzed that the polarization that became clear after the COVID-19 pandemic also affected ESG investments. Companies that received C and D grades are those that recently experienced poor performance and noise during governance restructuring.
Fursys recently underwent a National Tax Service investigation during its governance restructuring process, and it is reported that the impact extended to Sidiz, a subsidiary of the Fursys Group. Enex and Coas, which mainly focused on B2B (business-to-business) transactions, faced difficulties due to deteriorating performance after COVID-19, and Zinus struggled earlier this year due to anti-dumping lawsuits from U.S. companies but has recently returned to a growth trend.
However, a representative from a furniture company said there is an "unfair aspect" to the ESG management report card. He said, "Although recent performance was not good and there were difficulties such as gifts and stock sales, we have continuously invested in eco-friendly areas," adding, "Performance is also rebounding, but it seems that these aspects have not been reflected."
Industry insiders stated, "It is not an exaggeration to say that the evaluation depends on whether the furniture industry, which uses a lot of petrochemical materials that can cause carbon emissions, has the capacity to invest in eco-friendly areas," adding, "However, since the entire industry is mandating the use of top-grade 'E0' materials and rushing to introduce ESG management, such evaluations could cause consumers to distrust eco-friendly furniture, which is regrettable."
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