42.2% of Listed Companies Use ESG Evaluation Results in Contracts and Transactions... Doubled in One Year

Proportion of Companies Applying ESG Incentives and Penalties Doubles in One Year
Support for Certification and Facility Investment Remains Insufficient
Korea Federation of SMEs Stresses Need for Enhanced Mutual Growth Efforts

The proportion of companies providing incentives or imposing penalties based on ESG (Environmental, Social, and Governance) evaluation results during contracts and transactions has doubled in the past year.

The Korea Federation of SMEs announced the results of the "Large and Medium-sized Enterprises Supply Chain Management Status Analysis," which includes this information, on the 5th. This analysis examined the sustainability management reports and partner company codes of conduct voluntarily disclosed last year by 199 listed large and medium-sized enterprises.

The analysis revealed that 97% of voluntarily disclosing companies conducted supply chain ESG management activities. This represents a 7.8 percentage point increase from the previous year (89.2%), indicating that supply chain ESG management is becoming a key sustainability management strategy for companies.

In particular, the proportion of companies utilizing ESG evaluation results during contracts and transactions increased by 19.9 percentage points, from 22.3% last year to 42.2%. Companies that disclose ESG-related policies in their purchasing systems and reflect them in procurement also rose from 52.0% to 78.9%.

Regarding support for partner companies, education (65.8%) and consulting (51.3%) for ESG internalization have increased significantly compared to the previous year. However, support for certification (16.6%) and hardware support such as facility investment (18.1%), which can promote substantial improvements in ESG levels, remain insufficient. Additionally, while the proportion of companies applying incentives (31.7%) to promote ESG among partner companies has increased considerably compared to the previous year, the proportion of companies imposing penalties (29.6%) has also increased to a similar level.

Yang Chan-hoe, Head of the Innovation Growth Division at the Korea Federation of SMEs, stated, “The influence of ESG in transactional relationships has grown significantly in just one year, but certification and hardware support that can effectively raise the ESG levels of partner companies are still lacking, and the proportion of companies imposing penalties is also high. Therefore, it seems necessary to expand large companies’ efforts for mutual growth.” He added, “We will continuously monitor changes in large companies’ ESG policies in response to domestic and international ESG regulatory environment changes, identify tasks for ESG mutual growth between large and medium-sized enterprises, and support SMEs to respond effectively by utilizing industry-specific customized ESG toolkits.”