Business circles embrace 'ESG Management' trend... Construction industry evolving into 'Green Developers'

Aerial view of Hanwha Construction's Daejeon Sewage Treatment Plant

As 'ESG (Environmental, Social, and Governance)' establishes itself as the new standard in the global business environment, a strong wave of 'ESG management' is sweeping through the domestic construction industry. The trend is moving away from the traditional image of construction companies toward rapidly transforming into 'Green Developers' in the era of eco-friendliness and the Fourth Industrial Revolution.

According to industry sources on the 28th, Hanwha Construction recently conducted a demand forecast for its 109th public corporate bond issuance, totaling 80 billion KRW, including 50 billion KRW in green bonds and 30 billion KRW in corporate bonds. The total funds attracted amounted to 544 billion KRW, which is 6.8 times the target amount. Green bonds are a type of ESG bond issued for socially responsible investments aimed at improving environmental, social, and governance factors, with usage restricted to eco-friendly projects. Hanwha Construction plans to use the funds raised through green bonds for constructing eco-friendly buildings, investing in sewage treatment plant construction, and railway construction projects as eco-friendly transportation means to reduce greenhouse gas emissions.

Earlier, SK Construction, which acquired the environmental platform company EMC Holdings, attracted 1.21 trillion KRW?more than eight times the target amount of 150 billion KRW?in a green bond demand forecast conducted earlier this year.

The number of construction companies preparing for ESG management environments by establishing dedicated departments is also increasing. GS Construction approved the establishment of an 'ESG Committee' at its board meeting on the 15th. The ESG Committee will serve as the core control tower for sustainable management and will set strategies and directions to advance as an ESG company.

Bando Construction also established a dedicated ESG organization this year to actively pursue ESG management. Through this dedicated department, experts from various sectors review elements necessary for ESG management across multiple fields and are currently formulating and implementing detailed plans such as promoting eco-friendly and smart construction and social contribution activities.

The accelerating pace of ESG management in the construction industry is also driven by changes in the investment environment. Major global pension funds and large asset managers already use ESG indicators as key criteria in selecting investment targets. However, for domestic construction companies, there are calls for improvement particularly in the governance (G) aspect of ESG. According to the ESG ratings by the Korea Corporate Governance Service, among large listed construction companies, only three?GS Construction, Hyundai Construction, and Samsung Engineering?received an A grade in governance.

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