[SK Rebalancing Midpoint Review] ESG Progress Stalls... Minority Shareholders Target Governance

ESG Rating Downgraded by One Notch
High Risk in Governance Category
Shareholders Criticize "Lack of Responsible Management"
Launching a "1% Share Acquisition" Campaign

Editor's NoteLast year, SK declared a transition toward future industries and began an intensive business restructuring and rebalancing process. Now, a year later, the domestic industry is facing major challenges such as global economic uncertainty and the strengthening of protectionism by major advanced economies. In this context, Asia Economy examines whether SK Group's strategy remains effective amid these risks and reviews the future direction needed to achieve sustainable growth.

There are growing calls for SK to restore market trust in its environmental, social, and governance (ESG) management through its rebalancing efforts. Facing a holding company discount due to sluggish stock performance and overlapping governance structures, some minority shareholders have recently begun to take direct action.

Choi Taewon, Chairman of the Korea Chamber of Commerce and Industry, is giving a lecture at the inauguration ceremony of the National Assembly Future Industry Forum held at Sarangjae, the National Assembly in Yeouido, Seoul on April 22, 2025. Photo by Kim Hyunmin

According to industry sources on April 25, minority shareholders of SK Inc. have launched a shareholder action campaign to collectively acquire '1% of shares.' This is the first time since the group's rebalancing initiative that shareholders, who have previously voiced dissatisfaction with sluggish stock prices and a lack of communication from management at regular general meetings, have taken concrete action.

Over the past 10 trading days, 0.75% of shares have been gathered, and a shareholder representative has been selected. Investors are demanding not only a restructuring of the business portfolio but also improvements in the governance structure and responsible management by executives to enhance shareholder value. If more than 1% of shares are jointly secured, shareholders gain legal rights that go beyond simply expressing opinions, such as the ability to file lawsuits against directors or auditors for improper or illegal conduct.

Following the reappointment of Choi Taewon as CEO of SK Inc. last month, calls within the market for restoring shareholder trust through responsible management have grown even louder. Previously, the Korea ESG Standards Institute downgraded SK's ESG rating for last year by one notch from A Plus (A+) to A. The company was rated as 'high risk' in the governance category, indicating a need for structural improvements in areas such as board independence, transparent decision-making processes, and protection of minority shareholder rights. The price-to-book ratio (PBR) of SK Inc., the main holding company, stands at about 0.3 times, meaning that SK Group's governance issues are directly linked to the market's undervaluation of the company's corporate value.

On the 26th of last month, Jang Yongho, CEO of SK Inc., spoke at the 34th General Shareholders' Meeting held at the SK Seorin Building in Jongno, Seoul. Photo by SK

Experts point out that unless SK strengthens its capital management, improves its decision-making structure, and enhances communication with the market during the rebalancing process, it will be difficult to restore trust in the long term. Last month, Moody's downgraded SK Innovation's credit rating due to a deterioration in its financial structure. Lee Namwoo, Chairman of the Korea Corporate Governance Forum, said, "The company has increased investments through excessive borrowing and is now burdened with debt," adding, "It is time to focus on managing debt levels."

Lee Junseo, a professor at Dongguk University's School of Business Administration, said, "A downgrade in the governance rating suggests that the board has made decisions favoring major shareholders over ordinary shareholders. If decisions made to resolve liquidity issues contributed to the group's growth, that would be acceptable, but concerns about private interests cannot be ruled out, so transparency is essential." Chairman Lee Namwoo also advised, "To establish responsible governance, it is necessary to review the decisions made by former executives and outside directors."

An SK official stated, "We are continuously making efforts to communicate with shareholders through initiatives such as the Shareholder Communication Committee and conference calls."