"66% of Top 500 CEOs Interested in ESG... Concept Ambiguity Makes Strategy Development Difficult"

[Asia Economy Reporter Jeong Hyunjin] A survey revealed that seven out of ten CEOs of the top 500 companies by sales show great interest in ESG (Environment, Social, Governance). However, the concept of ESG remains ambiguous, and the evaluation methods vary across institutions, causing difficulties in establishing related management strategies.

On the 5th, the Federation of Korean Industries (FKI) announced the results of the 'ESG Preparedness and Awareness Survey' conducted on the top 500 companies by sales. The survey showed a high level of interest in ESG among top executives at 66.3% (36.6% very high, 29.7% somewhat high). By industry, interest was particularly high in petrochemicals and products, steel, semiconductors, general machinery and shipbuilding, display and wireless communication devices, construction, and lodging and food services.

When asked why ESG is necessary, 43.2% of businesspeople responded that it is "to enhance corporate image." This was followed by "because it directly affects domestic and international profits" at 20.8%, "due to ESG regulatory burdens" at 18.0%, and "to manage investors (individual and institutional)" at 15.3%. Regarding whether ESG would increase sales, 33.7% of respondents answered "no difference," while 43.6% expected sales to increase by less than 10%. The FKI explained, "Since pursuing ESG management inevitably involves additional costs such as related investments, the effect on profits may differ from the sales increase outlook."

(Data = Federation of Korean Industries)

Although top executives show high interest in ESG, they face difficulties in establishing related management strategies. About 29.7% of top executives said that "the ambiguous scope and concept of ESG" make it difficult to formulate management strategies. Other challenges included low relevance to their own business (19.8%), differing ESG evaluation methods across institutions (17.8%), additional costs incurred (17.8%), and the excessively rapid introduction of ESG regulations (11.9%).

When asked about the establishment of specific annual goals for ESG management, 31.7% responded that they had "established" goals, and 39.6% said they "plan to establish" them, indicating that seven out of ten companies have set or plan to set concrete goals. Notably, all responding companies in the semiconductor and petrochemical industries reported that they have either completed or plan to complete goal setting.

About half of the top 500 companies have ESG committees or dedicated organizations. Among committee members, the composition was former businesspeople (24.1%), accounting experts (20.7%), professors (13.8%), and former government officials (6.9%). However, only 8.9% answered that they have plans to hire specialized personnel for ESG dedicated organizations. Interest in this was observed in some companies in construction, display and wireless communication devices, semiconductors, and retail industries.

Regarding the environmental sector of ESG, the main area of interest was "environmentally friendly production," accounting for 26.7% of responses, followed by "climate change response" (25.7%), "environmental risk management" (21.8%), and "environmentally friendly supply chain management" (16.8%).

Regarding the level of preparedness for the government's announced "2050 Carbon Neutrality Promotion Strategy," responses were "average" (37.6%), "relatively well prepared" (21.8%), "don't know well" (17.8%), "insufficient" (12.9%), "very insufficient" (6.9%), and "very well prepared" (3.0%). By industry, steel and display and wireless communication devices reported relatively good preparedness, while petrochemicals and products, lodging and food services, and general machinery and shipbuilding industries responded that their preparedness was insufficient. Carbon neutrality preparation projects included the development of air pollutant reduction facilities and management systems (31.7%), investment in renewable energy transition (15.8%), fuel switching to reduce carbon dioxide emissions (12.9%), and investment in electric battery materials (7.9%).

This survey was conducted by the FKI through a telephone interview method commissioned to the polling agency Mono Research. A total of 101 companies responded to the survey, with a response rate of 20.2%.

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