8 out of 10 Mid-sized Companies Say "ESG Management is Necessary"... The Obstacle is 'Cost Burden'

Logo of the Korea Federation of Medium-sized Enterprises.
[Photo by Korea Federation of Medium-sized Enterprises]

[Asia Economy Reporter Junhyung Lee] Eight out of ten mid-sized companies (78.2%) surveyed felt the need for ESG (Environmental, Social, and Governance) management.

The Korea Federation of Mid-sized Enterprises announced on the 14th that it conducted a survey titled 'Opinions of Mid-sized Enterprises on ESG Management' targeting 101 mid-sized companies from the 4th to the 14th of last month, revealing these results. While the awareness of the necessity of ESG management among mid-sized companies is very high, the Federation explained that policy support such as institutional incentives is needed.

The main motivations for pursuing ESG management were identified as 'demands from client companies and consumers' (42.6%) and 'response to ESG regulations' (34.7%), ranking first and second respectively. This was followed by 'enhancement of corporate image' (12.9%) and 'fundraising demands such as from investors' (4.9%).

The majority of mid-sized companies reported their level of ESG management preparedness as above average. 16.8% responded that their ESG management preparedness was high, and 43.6% answered average. Those who responded 'low' accounted for 39.6%.

Nearly half (47.5%) of mid-sized companies cited 'increased workload and costs' as the biggest obstacle to pursuing ESG management. This was followed by 'ambiguous ESG concepts and scope' (19.8%), 'different evaluation methods by institutions' (17.8%), and 'strengthening of ESG-related regulations' (12.9%).

Accordingly, the need for policy support was also raised. Seven out of ten mid-sized companies (70.3%) responded that a policy support system should be established, including institutional incentives, credible evaluations, and the establishment of disclosure standards. A representative from the Federation stated, "The high awareness of ESG management among mid-sized companies reflects the practical demand in the field," adding, "Since this is an issue requiring changes across the entire industry, policy support to back up companies' autonomous efforts must be provided."

Meanwhile, only 23.8% of mid-sized companies had established ESG response organizations, about one-quarter. Among them, 91.7% had set up response organizations by 'appointing responsible personnel and assigning tasks within existing organizations.'

Won-ik Ban, Executive Vice Chairman of the Federation, said, "While the awareness and willingness to adopt ESG management among mid-sized companies are very high, there are considerable concerns due to uncertain future prospects," and added, "To spread ESG management, policy incentives that significantly support companies' proactive investments based on a clear understanding of ESG must be greatly expanded."

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