40% of Domestic KOSPI 200 Companies Establish ESG Committees

[Asia Economy Reporter Park Jihwan] A survey revealed that 4 out of 10 companies listed on the KOSPI200 have introduced ESG (Environmental, Social, and Governance) committees. This is interpreted as a response to the recent significant strengthening of ESG information disclosure obligations.

According to the "Audit Committee Journal No. 18" published by Samjong KPMG on the 23rd, a total of 76 KOSPI200 companies had established ESG committees as of July. This accounts for 38% of the total. Among them, one company was found to have two committees equivalent to ESG committees, resulting in a total of 77 ESG-related committees under the board of directors.

Among the 77 ESG committees, 61 (79.2%) were newly established or expanded this year. The report predicted, "As companies planning to introduce such committees in the second half of the year are included, the number of domestic companies establishing ESG committees or similar bodies under their boards of directors will increase further by the end of this year."

The average number of meetings was 1.4. Major agenda items included △ ESG disclosure and evaluation response △ carbon neutrality declarations △ operation of safety and health management systems △ compliance with key indicators in corporate governance reports. Samjong KPMG evaluated that 23.5% of the agenda items proposed by the committees this year were related to overall and macro ESG issues. Among Environment (E), Social (S), and Governance (G), agenda items related to ‘Social’ accounted for a relatively high proportion.

The average number of members in ESG committees of KOSPI200 companies was 4.4. 83.1% of the committees were composed of five or fewer members. The majority of members were outside directors. The average proportion of outside directors in ESG committees was 75.6%, and 62 committees (80.5%) had an outside director as the chairperson.

CEOs participated in 43 ESG committees (55.8%) overall. Kim Yukyung, leader of the Audit Committee Support Center (ACI) at Samjong KPMG, emphasized, "For audit committees, outside director candidate nomination committees, and compensation committees, securing independence is important, so it is desirable for outside directors to serve as chairpersons excluding the CEO. However, ESG committees should function as bodies that declare and implement management’s commitment, so it is important for the CEO to be included in the committee."

Kim added, "Considering that accounting-related matters are included in ESG performance evaluations and that committee activities are subject to audit, a pre-coordination system should be established where some audit committee members participate in the ESG committee to carry out their tasks."

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