Expansion and Establishment of ESG Indicators in Investment and Contribution Institution Management Evaluations... Green Product Purchase Ratio Increased to 70%
[Asia Economy Reporter Lim Cheol-young] The Seoul Metropolitan Government is gearing up to expand ESG throughout society.
According to Seoul City on the 5th, the city will actively introduce ESG as a priority in its administration. The ‘Climate Budgeting System,’ which was piloted last year in three headquarters and bureaus, will be fully implemented across all administrative sectors starting this year and reflected in next year’s budget. In the public sector, the city will establish an ESG administrative operation foundation through the full implementation of the ‘Climate Budgeting System,’ strengthening the reflection of ESG indicators in the management evaluations of city-invested and affiliated institutions, and expanding the mandatory purchase of green products by public institutions.
The ‘Climate Budgeting System’ will be fully implemented starting with the 2023 fiscal year budget prepared this year. This system analyzes the greenhouse gas emission impact of each budget project, expanding projects expected to reduce greenhouse gases and scaling down or preparing offset measures for projects expected to emit greenhouse gases. For example, the distribution of electric vehicles and expansion of green spaces are considered ‘reduction projects’ that reduce greenhouse gases and are prioritized in budget allocation, while ‘emission projects’ that increase fuel consumption are included in budget plans with reduction measures to enable emission cuts.
ESG-related indicators will be incorporated into the annual management evaluations of 26 Seoul city-invested and affiliated institutions. Evaluation indicators such as energy consumption, waste generation, green product purchase performance, and zero-waste promotion performance will be set to strengthen ESG management in these institutions.
The mandatory purchase of green products by public institutions will also be expanded. The city will strengthen its green product purchase review criteria from the current threshold of 700,000 KRW to 500,000 KRW. The construction and civil engineering sectors, which account for 71% of the city’s green product purchases, will be closely managed to increase the mandatory purchase ratio from 32.6% (55.8 billion KRW in purchases) in 2021 to 70% by 2026.
To expand participation in the private sector, the city will pursue various measures including ▲preferential treatment for ESG excellent companies in contracts and private consignment ▲building and operating cooperative networks with economic organizations ▲expanding ESG management transition consulting for small and medium enterprises ▲and fostering and supporting green industries.
The city is actively promoting measures to give preferential treatment to ESG excellent companies in contracts worth about 2.5 trillion KRW annually (including construction, goods, and services). It is reviewing a plan to award points to eco-friendly companies with EMS (Environmental Management System) certification, EnMS (Energy Management System) certification, and GMS (Green Management System) certification during the general service bid winner selection process and negotiation contract bonus points.
The city is also pushing to revise private consignment management guidelines to award extra points to eco-friendly companies when selecting private consignment contractors. After selection, the city plans to improve comprehensive performance evaluation indicators and guidance/inspection items to ensure that consigned institutions continue ESG initiatives.
Considerable effort is also being made to nurture and support ESG companies. The city has formed an ‘Economic Organization Cooperation Network,’ a consultative body with economic organizations such as the Korea Chamber of Commerce and Industry, the Federation of Korean Industries, the Korea Federation of SMEs, and the Korea Employers Federation. Since the first meeting on April 19, the network holds bi-monthly meetings. Through this consultative body, the city collects corporate difficulties and strengthens cooperation with companies in major city projects responding to climate change, such as building energy efficiency projects, electric vehicle charger distribution, and zero waste initiatives.
ESG and eco-friendly consulting for small and medium enterprises will also be expanded. This is in response to many SMEs expressing difficulties in understanding and self-assessing ESG after the city gathered voices from the field. Currently, the city supports 5 million KRW per company in cooperation with the Korea Federation of SMEs and plans to expand support companies after identifying related demand.
The city will also strengthen energy welfare projects for vulnerable groups in cooperation with companies. It plans to establish and operate a cooperation model linking corporate social contribution projects with carbon emission rights.
Meanwhile, support through four facilities (centers) operated by Seoul City to foster green industries will continue. The total support scale this year is 3.42 billion KRW. These facilities provide support for eco-friendly and green company startups, network building and marketing support for smooth sales of eco-friendly products, and technical development support for greenhouse gas reduction and waste reduction.
Yoo Yeon-sik, Head of the Climate Environment Headquarters, said, “Seoul has been striving to respond to climate change, including being the first in East Asia to receive certification from C40 for its climate action plan to achieve carbon neutrality by 2050,” and added, “We will do our best to create an ESG ecosystem in cooperation with companies and citizens on the path toward carbon neutrality.”
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