Strengthening Consulting in the Accounting Industry Amid the ESG Boom

Expansion of Big 4 Business Areas Including Anjin and Han Young
Expansion Through Provision of One-Stop Services

[Asia Economy Reporter Ji-hwan Park] The accounting industry is busy securing opportunities in the environmental, social, and governance (ESG) market. This is because the related market is expected to grow rapidly, as companies are increasingly required to meet ESG criteria when borrowing money from financial institutions or securing overseas export contracts.

According to the accounting industry on the 24th, recently, the domestic Big 4 accounting firms?Samil, Samjong, Han Young, and Anjin?are actively strengthening their ESG-related organizations. Anjin has officially launched its ESG business this year, and Han Young and others are attempting to expand their business areas by adding personnel to existing teams. Unlike in the past when only financial performance indicators such as sales and operating profit were evaluated, ESG refers to incorporating non-financial factors that affect a company's sustainability, such as environmental, social, and governance aspects, into performance evaluations.

Overseas, including Europe, ESG has long been integrated into corporate management, financing, and contracting processes. This contrasts with the recent surge of interest in ESG in Korea. Earlier this year, the Dutch pension fund manager APG withdrew 79 billion KRW worth of shares invested in Korea Electric Power Corporation (KEPCO) due to KEPCO's investment in overseas coal power projects. This was because it conflicted with APG’s investment philosophy emphasizing environmental indicators. Global investment institutions like BlackRock have also declared that they will not invest in companies that inadequately respond to ESG, reflecting the same trend. In Europe, contracts sometimes include conditions requiring measurement of the carbon emissions produced to manufacture a product and annual reduction targets.

Lee Dong-seok, leader of the ESG dedicated team at Samjong KPMG, stated, "If companies proactively respond to anticipated risks such as climate change, it can become an opportunity, but if not, a time has come when they may lose business opportunities." Park Jae-heum, leader of EY Han Young’s CCaSS, said, "ESG will not end as a temporary trend; it should be viewed from a regulatory perspective, such as the 'carbon border tax' that the European Union (EU) is preparing to impose on carbon-emitting products."

Currently, the ESG-related business areas in the accounting industry are focused on the early stages of ESG certification services (certification of ESG bonds and ESG reports). ESG bonds refer to special-purpose bonds emphasizing public interest. In Korea, a total of 46.6 trillion KRW worth of ESG bonds were issued by August this year, a more than 30-fold increase compared to 1.3 trillion KRW in 2018. Lee Ok-su, director of Deloitte Anjin’s Risk Advisory Division, said, "Next year, aligned with the National Pension Service’s strengthened ESG investment policy, the issuance of ESG bonds by companies is expected to expand significantly," adding, "The demand for certification verifying that the funds raised through bond issuance are used appropriately is also expected to increase substantially."

The accounting industry is envisioning a bigger picture going forward. Beyond fragmented services, they are attempting to provide specialized knowledge related to various industries and countries, as well as one-stop ESG services related to corporate operations, including investment advisory, data verification and disclosure, and tax response. Yoon Kyu-seop, a partner in charge of ESG services at Samil Accounting Corporation, emphasized, "In the future, to provide products or services to overseas multinational companies, companies must establish practical carbon reduction and eco-friendly operation strategies," adding, "Collaboration with experts well-versed in global regulations and market environments has become crucial for companies."

This content was produced with the assistance of AI translation services.