[ESG Evaluation] LG Household & Health Care, Shinhan Financial Group, SK Square 'AA'... LG Chem ESG Committee Ineffective

[Asia Economy Reporter Park Soyeon] LG Household & Health Care, Shinhan Financial Group, and SK Square received the highest ratings in ESG (Environmental, Social, and Governance) performance evaluations.

Sustinvest, an ESG evaluation and analysis agency, announced on the 16th the results of ESG evaluations and analyses of a total of 1,043 companies, including 749 companies listed on the KOSPI market and 294 companies listed on the KOSDAQ market for the first half of 2022.

Among companies with assets exceeding 2 trillion KRW, the top AA rating was awarded to Shinhan Financial Group, LG Household & Health Care, and SK Square. Shinhan Financial Group has been evaluated as an outstanding ESG company since 2019.

LG Household & Health Care has shown a continuous upward trend over the past three years and was recognized as an outstanding company in the first half of this year following the second half of last year.

In the case of SK Square, as a pure holding company without its own business operations, its environmental and social performance was evaluated based on the achievements of its affiliates such as SK Hynix.

Other companies that received an A rating include KB Financial Group, POSCO Chemical, NH Investment & Securities, SK Telecom, S-Oil, SK Hynix, and BGF Retail.

Ryu Youngjae, CEO of Sustinvest, stated, "SK Square received excellent evaluations in all areas of environment, society, and governance, but as a newly established company less than one year old, it is necessary to monitor its performance trends going forward."

The evaluation for this first half confirmed a clear increasing trend in the establishment of ESG committees.

The number of companies that have established ESG committees (including Ethics Management Committees, Governance Committees, Internal Transaction Committees, etc.) increased from 182 last year to 263 this year.

Among them, 65% (171 companies) held committee meetings fewer than four times a year, showing insufficient activity in committee operations.

In particular, LG Chem was criticized for having no activities after establishing an ESG committee in April 2021 and holding a committee meeting in October.

CEO Ryu said, "This first half evaluation highlighted the expansion of sustainable management by companies, such as the establishment of ESG committees," but added, "there were quite disappointing points in actual activities."

Meanwhile, Sustinvest annually publishes ESG management level evaluation results for about 1,000 listed companies. Considering the timing of business report disclosures and sustainability report publications, evaluations are conducted twice a year. The evaluation results are utilized in ESG investments by major domestic institutional investors such as pension funds and asset management companies.