What Is the Secret of the World's No.1 Company in 'ESG Risk Management'? "ESG FIRST"

[Asia Economy Reporter Suyeon Woo] An analysis has revealed that the secret to being the world’s number one company in ESG (Environmental, Social, and Governance) risk management lies in how systematically the company manages its strategy, risks, and key issues.

On the 24th, the Federation of Korean Industries (FKI) announced this through a report titled "Case Analysis of No.1 Companies in ESG Risk Management by Industry." The FKI summarized the characteristics of companies excelling in ESG risk management into core keywords presented as 'F·I·R·S·T.' Specifically, these stand for Risk Definition (Framework), Issue Management, Ratings and Initiatives Utilization, Structuring (Organizational Design), and Targeting (Goal Specification).

Case Study of the World's No.1 Company in ESG Risk Management Keywords/Data Provided by: Federation of Korean Industries

First, Thule, the world’s largest manufacturer specializing in vehicle carriers, was selected as an outstanding company in 'Risk Definition (Framework),' which involves concretely and systematically organizing risk areas. Thule applies a management framework that categorizes ESG risks into four categories: ▲Industry & Market ▲Sustainability ▲Operations ▲Financial Risks. The company identifies risk factors in each area and analyzes and prepares in advance by classifying the likelihood of occurrence and impact level into high, medium, and low.

Secondly, RELX, a UK-based scientific, technical, and legal information services company, was recognized for its strength in 'Issue Management.' The company systematically formalizes policies and establishes and manages annual goals in core ESG areas. Particularly in the critical industry issue of 'personal data protection,' RELX manages specific annual goals such as continuous preparation for security incident responses and enhancing resilience against phishing and ransomware attacks, and operates a dedicated department for this purpose.

Meanwhile, global top companies commonly participate actively in global initiatives such as MSCI and Sustainalytics evaluations, RE100, UN Global Compact, RBA, and international certification systems (Ratings) like ISO. It was found that there are more than 50 global initiatives and ESG evaluations and indices in which these companies participate.

Notably, the number one companies actively implement supply chain management policies that comply with international standards. Herm?s, the leading company in the textile and apparel sector, states that it applies the highest standards in supply chain policies, including environmental and social issues as well as quality aspects. In using specific raw materials for leather products and perfumes, Herm?s complies with the Washington Convention (CITES) for the global protection of endangered animal and plant species, and strictly adheres to regulations on animal welfare and health requirements for livestock used for food.

Another strength of these companies is that they have organically 'structured' their risk management organizations. Barclays operates eight related committees, including the Risk Management Committee, Stakeholder Committee, ESG Committee, and Greenhouse Gas Reduction Strategy Committee. The company also conducts regular risk assessments on human resources to manage potential risks among its members. Semiconductor company ASML also defines roles for its Board of Directors, Audit Committee, Risk Committee, Disclosure Committee, and Internal Control Committee at the governance level and manages ESG risks in an integrated manner.

Lastly, companies strong in ESG also quantify and specify their sustainable strategy implementation 'Targeting.' Herm?s sets and manages concrete mid- to long-term sustainability strategy commitments. These include ▲Reducing greenhouse gas emissions by 50% by 2030 (base year 2018) ▲Using 100% renewable energy by 2025 ▲Reducing industrial water usage intensity by 5% annually ▲Conducting biodiversity impact assessments ▲Implementing innovations such as eco-friendly solutions for resources and waste ▲Prohibiting new investments in fossil fuel usage. The company establishes these specific goals and annually reviews the progress of their implementation.

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