[Reporter’s Notebook] Inflating 'ESG' in Public Institutions... Is Everything ESG Just by Touching It?

[Asia Economy Reporter Song Seung-seop] 1.3448 trillion KRW. This is the ESG (Environmental, Social, and Governance) management performance over two years announced by the Korea Inclusive Finance Agency. The Credit Recovery Committee, which shares the same head, also announced an ESG performance of 255 billion KRW.

However, a closer look reveals that many of the policies are far from ESG. Of the Korea Inclusive Finance Agency's ESG achievements, 664.4 billion KRW were related to 'customer-centered digital innovation.' The intention was to increase social (S) value by expanding non-face-to-face support. 'Consulting' and 'support for settling in the banking sector' were also included.

The Credit Recovery Committee is similar. They included the introduction of applications (apps), chatbots, and electronic documents as ESG achievements, citing customer service improvement and carbon emission reduction as reasons. They also considered their core task of credit counseling as ESG, announcing an overall management performance of 621.6 billion KRW.

Both institutions perform public roles. Their purpose is to pursue public interest, not private gain. However, they broadly interpreted their original task of 'increasing public interest' to include it in ESG. Regardless of carrying out good projects, this is inappropriate as it diminishes the original meaning of ESG.

ESG is a management approach that moves away from merely pursuing performance to considering and contributing to sustainable growth. Core elements include company-wide internal innovation, reflecting shareholder demands, and transparent disclosure of processes and results. Simply turning face-to-face inclusive finance into non-face-to-face or helping financially vulnerable people through counseling does not automatically qualify as ESG.

What should the 'real ESG' of public institutions be like? They must fully accept the mandate of the people, who are their shareholders. Key executives, including the heads of institutions, must actively implement the will of the people in management practices.

The voices of the people directed at public institutions so far have been rational, legitimate, and consistent. They never demanded ESG achievements measured in monetary terms. Instead, they have called for breaking the rubber-stamp boards that approve 99% of proposals, eradicating pro-government parachute appointments regardless of progressive or conservative leanings, appointing independent and stringent auditors, transparent information disclosure, and improving decision-making methods including the board of directors.

That is true governance (G) improvement and genuine ESG management.

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