Outside Directors of 30s Group Concentrated in Specific Fields... Only 3.5% in ESG

Leaders Index Analyzes Proportion of Outside Directors' Competencies
Survey of 827 Outside Directors from 237 Companies
Law, Policy, Finance, and Accounting Account for 51%

Major companies in South Korea are introducing the Board Skills Matrix (BSM) to secure diversity in their boards of directors, but contrary to intentions, the expertise of outside directors is concentrated in specific fields.

BSM is an indicator that evaluates the abilities, qualifications, and diversity of a board of directors. Following recommendations from entities such as the New York City pension fund in the United States, global companies listed in the S&P 500 have begun disclosures, and countries like Australia have made such disclosures mandatory.

On the 20th, Leaders Index, a corporate analysis research institute, analyzed the competency proportions across seven common fields for 827 outside directors from 237 companies that submitted quarterly reports among affiliates of the top 30 domestic groups. The results showed that the legal and policy field (225 people, 27.2%) and finance and accounting field (197 people, 24.8%) accounted for more than half, totaling 51%.

They were followed by financial investment (124 people, 15.0%), technology (114 people, 13.8%), corporate management (105 people, 12.7%), and marketing (33 people, 4.0%). The environment, employment, and labor fields related to Environmental, Social, and Governance (ESG), a recent major topic in corporate management, accounted for only 29 people (3.5%). Groups with a high proportion of outside directors in the ESG field included POSCO (14.3%), Youngpoong (13.3%), and Kakao (12.9%).

Leaders Index conducted the survey based on the appointment backgrounds of outside directors disclosed by each company according to seven common fields: management, financial investment, finance and accounting, legal and policy, technology, marketing, and ESG. Among the companies, 192 disclosed appointment backgrounds, while for the 45 companies that did not disclose, the individual career histories of outside directors were used as the basis.

Meanwhile, among the 827 outside directors surveyed, 18.5% (153 people) were women. In terms of competency distribution, the legal and policy field accounted for 32.7% (50 people), higher than that of male outside directors (26%). The proportions in the ESG and marketing fields were 7.8% and 9.8%, respectively, significantly exceeding the male averages (2.5% and 2.7%). Conversely, the proportions in finance and accounting (18.3%) and financial investment (5.2%) were relatively low.

The average age of outside directors in the top 30 groups was 60.7 years. By age group, those aged 70 and above accounted for 9.3% (77 people), those in their 60s 49.8% (412 people), those in their 50s 34.2% (283 people), those in their 40s 6.4% (53 people), and those in their 30s 0.2% (2 people), indicating that over half were aged 60 or older, showing a lack of age diversity.