Korea Federation of SMEs 'Supply Chain Management Status Analysis Report'
75% of Target Companies Implement Supply Chain ESG Management
Practical Support Such as Hardware and Certification Acquisition Remains Low
It was found that 75% of large and medium-sized enterprises manage supply chain ESG (environmental, social, and governance), but practical support such as equipment and certification was relatively low.
The Korea Federation of SMEs published the "2024 Large Enterprise ESG Supply Chain Management Status Analysis Report" on the 6th containing this information. The analysis was conducted on 148 listed large and medium-sized enterprises that voluntarily disclosed reports on the Korea Exchange ESG portal by September 30 of last year, and was carried out by the ESG evaluation agency Sustainvest.
The report categorizes the supply chain ESG management activities of large and medium-sized enterprises into 14 detailed activities based on the sustainability management reports and partner company codes of conduct of the target companies, and includes analysis results on whether these activities were implemented and their contents.
According to the analysis results, 75% of the target companies manage supply chain ESG through their own codes of conduct, evaluation criteria, and partner company support.
Looking at the detailed activities, the implementation rates were highest in the order of ▲partner company evaluation conducted (75.0%) ▲possession of partner company code of conduct (67.6%) ▲possession of partner company evaluation items (57.4%) ▲reflected in purchasing system (52.0%). This suggests that most listed companies are focusing on establishing basic infrastructure for supply chain ESG management, such as building partner company ESG evaluation systems.
By industry, supply chain ESG management was most active in the order of ▲automobile (74.4%) ▲electronic components (66.7%) ▲electrical and telecommunications equipment manufacturing (63.1%) ▲construction (60.0%) ▲telecommunications (59.0%).
The proportion of companies applying disadvantages based on partner company evaluation results was relatively low at 18.9%. However, the proportion of companies that have a "penalty clause based on ESG evaluation results" in their code of conduct reached 43.2%, indicating that the impact of ESG evaluation results on business relationships is likely to expand in the future.
On the other hand, partner company ESG support activities were mostly focused on ▲education (41.2%) ▲evaluation consulting (31.1%) ▲hardware support such as equipment provision (21.6%) ▲certification acquisition support (14.2%), showing that practical support such as equipment and certification is relatively low compared to education and evaluation consulting.
Meanwhile, in the automobile and equipment/parts manufacturing industries, which have advanced countries as major sales markets, activities to measure and manage partner companies' carbon emissions were partially observed. This is expected to increasingly demand partner companies' efforts to reduce greenhouse gas emissions due to the strengthening of global carbon emission regulations, including the Carbon Border Adjustment Mechanism (CBAM), which entered its transition period in October.
Yang Chan-hoe, Head of the Innovation Growth Division at the Korea Federation of SMEs, said, "While the independent efforts of partner companies to strengthen SME ESG capabilities are important, mentoring and practical support expansion from large and medium-sized primary contractors who know supply chain ESG best are necessary," adding, "Since the importance of supply chain ESG management varies by industry, tailored government support by industry is expected to be more effective."
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