Domestic and International CEOs: "Top Priority Strategy for the Next 3 Years is 'Decarbonization and Achieving Net Zero'"

Global accounting and consulting firm EY Hanyoung (CEO Park Yong-geun) announced on the 26th that “although corporate chief executive officers (CEOs) have temporarily lowered the priority of sustainability due to internal and external circumstances, they still regard decarbonization and net zero as the most important long-term strategies.”

According to the latest ‘EY CEO Outlook Pulse’ survey of 1,200 CEOs from 21 countries worldwide, including South Korea, 40% of Korean company CEOs lowered the priority of sustainability compared to a year ago due to economic slowdown or financial difficulties. Six percent lowered the priority of sustainability to focus on board priorities. Nearly half of Korean CEOs, 46%, pushed sustainability down from their short-term priorities.

However, 26% of Korean CEOs said they prioritize sustainability more than a year ago, and 28% said they consider sustainability equally important. Among global CEO respondents, 54% valued sustainability more than a year ago, while 18% lowered its priority, showing that global company CEOs were more proactive about environmental, social, and governance (ESG) and sustainability than Korean company CEOs.

For the top strategy to prioritize over the next three years, both global and Korean CEO respondents chose ‘decarbonization and achieving net zero’ as number one. Nearly half of global CEOs, 43%, identified decarbonization and net zero achievement as the most important long-term strategy. However, only 28% of Korean CEOs responded similarly. Korean CEOs also cited securing sales and creating new revenue sources (28%), investing in technological innovation (28%), and improving data management and cybersecurity (22%) as important long-term strategies.

A separate survey of 300 global institutional investors found that 28% of global institutional investors prioritize sustainability more than a year ago when making corporate investments, and 36% consider it equally important as a year ago. However, 36% lowered its priority due to macroeconomic factors, increased regulatory scrutiny, and economic slowdown.

Global corporate CEOs identified the most helpful government policies to encourage the sustainability agenda as ‘support for green technology investment subsidies and tax reductions’ (55%) and ‘government investment in sustainable infrastructure such as renewable energy infrastructure’ (48%). Half of the respondents said that financial penalties for failure to reduce carbon emissions and disclose information would not help encourage sustainability.

Jaeheum Park, EY Hanyoung’s Climate Change and Sustainability Services (CCaSS) leader and ESG Impact Hub leader, said, “Although there is an analysis that ESG interest among domestic and international companies is decreasing due to the global economic recession, this may be an optical illusion caused by intensified fierce global competition,” adding, “In fact, many global companies are already strengthening ESG capabilities to respond to environmental and social trade regulations.”

He added, “Currently, it may not be easy to practice ESG management in terms of costs, but rather than simply responding to disclosures, it is important to establish a long-term sustainability strategy in line with newly enacted global ESG disclosure systems. This is because sustainability and non-financial matters affect corporate value.”