Samjeong KPMG "Companies Must Enhance Corporate Value Through ESG Management"

[Asia Economy Reporter Ji-hwan Park] As the global paradigm shift toward ESG (Environmental, Social, and Governance) management accelerates, an analysis has emerged that domestic companies need to establish step-by-step plans including ESG management strategies and information disclosure.

According to a report published by Samjong KPMG on the 25th, with the worldwide strengthening of ESG regulations and increasing ESG demands from investors and customers, the impact of ESG on corporate value is expected to grow further.

Currently, about 20 countries have mandated ESG disclosures. Europe is expanding disclosure obligations starting in March from pension funds to banks, insurance companies, and asset management firms. The United Kingdom plans to mandate ESG information disclosure for all listed companies by 2025.

Since 2019, Korea has revised regulations to require KOSPI-listed companies with total assets exceeding 2 trillion won to mandatorily disclose a 'Corporate Governance Report' to investors. In January, financial authorities announced a plan to gradually expand voluntary disclosure of 'Sustainability Reports' to activate ESG responsible investment, aiming to make it mandatory for all KOSPI-listed companies by 2030.

The report explained that institutional investors’ ESG demands are diversifying into shareholder engagement, voting rights, and investment exclusion. For example, the Norwegian Government Pension Fund Global (GPFG) announced in 2017 that it would completely exclude investments in companies deriving 30% or more of their revenue or power production from coal related to environmental pollution.

Global asset manager BlackRock plans to sell stocks and bonds of some companies generating 25% of their revenue from coal power and increase sustainable funds from the current 14 to over 150. The National Pension Service of Korea also declared it would invest 50% of its managed funds based on ESG by 2022.

Global credit rating agencies such as Moody’s and Standard & Poor’s (S&P) have begun to actively incorporate ESG capabilities into corporate credit rating evaluations. Lee Dong-seok, Executive Director and ESG Team Leader at Samjong KPMG, said, "Demand for products and services from companies with excellent ESG performance is increasing, investments in such companies are expanding, and corporate capital costs are decreasing while corporate image improves, thereby increasing corporate value."

The report emphasized that for successful ESG management activities, companies must establish an ESG management system and develop step-by-step plans from setting an ESG vision to stakeholder communication strategies. It explained that companies should first diagnose their ESG evaluation level in the market by utilizing ESG information from credible rating agencies. MSCI, the most widely used globally, evaluates corporate performance based on about 30 detailed ESG criteria.

The necessity of establishing ESG governance led by top management and the board of directors was also raised. Since corporate ESG information is an issue attracting attention not only from investors but also from supply chains, government regulatory agencies, employees, and customers both inside and outside the company, agile and consistent decision-making is important, and ESG issues must be managed under the leadership of top management and the board.

Executive Director Lee Dong-seok emphasized, "Global leading companies are already actively utilizing ESG as an opportunity for new growth engines, so our companies should recognize ESG management not just as a risk response but as a new opportunity to innovatively transform existing businesses and establish ESG business models and management strategies."

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