BNK Economic Research Institute "Focus on ESG as New Management Standard... An Inevitable Future"

[Asia Economy Reporter Kim Hyo-jin] BNK Economic Research Institute, affiliated with BNK Financial Group, released an analysis on the 9th in its research report titled ‘ESG Transition and Challenges for the Southeastern Region,’ stating that ESG (Environment, Social, Governance) is gaining significant attention as a new standard for corporate management.

It explained that ‘Environment (E)’ focuses on eliminating negative environmental impacts from corporate activities to sustainably maintain the Earth's ecosystem; ‘Social (S)’ covers human rights, safety and health, social responsibility in supply chains, and consumer protection; and ‘Governance (G)’ emphasizes sound and transparent board operations while actively communicating with stakeholders through ESG information disclosure.

The institute pointed out that the environmental sector is receiving particularly high attention. As countries worldwide are raising greenhouse gas reduction targets, expanding renewable energy investments, and promoting green finance, companies are responding to climate change through initiatives such as RE100 (100% renewable energy use), reducing carbon emissions, and minimizing waste generation. It noted that active responses are crucial for the Southeastern region as it has a high proportion of industries with large greenhouse gas emissions.

Greenhouse gas emissions in manufacturing are highest in the following order: steel (38.3%), chemicals (17.4%), petroleum refining (10.8%), electronic components (7.5%), metal processing (2.4%), and automobiles (2.4%). These industries are core key sectors in the Southeastern region, the report explained.

It also mentioned the need to actively monitor the strengthening global environmental regulations such as carbon border tax, carbon tax, plastic tax, and supply chain due diligence systems.

Regarding the carbon border tax, the EU plans to gradually impose it on imported products starting in 2023, and carbon taxes are currently implemented in 25 countries, with related bills proposed in Korea as well.

The plastic tax was introduced by the EU this year, with a charge of 0.8 euros per kilogram on non-recyclable waste. The report also pointed out the importance of paying attention to environmental regulatory policy changes such as the ban on internal combustion engine vehicle sales and supply chain due diligence systems.

From 2025 onwards, many countries worldwide will halt the sale and registration of internal combustion engine vehicles, and the supply chain due diligence system, which penalizes companies refusing to provide non-financial information by disadvantaging them in supply chain selection, is set to be introduced from 2024.

The institute emphasized that Southeastern region companies urgently need to recognize the ESG transition not as a threat but as an opportunity, improving corporate structure and expanding investments. To this end, it pointed out the necessity of improving the environmental sector through developing eco-friendly new products and innovating environmentally friendly processes.

It also stressed the need to strengthen social responsibility management by supporting partner companies, protecting employee human rights and health, and improving working conditions, as well as efforts to secure governance transparency through establishing ESG committees and ensuring gender diversity.

Jung Young-doo, head of BNK Economic Research Institute, said, “The ESG transition is an unavoidable future,” adding, “It is important to actively provide evaluation information, mid- to long-term strategic consulting, and financial support to help regional companies with their ESG transition.”

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