Public-Private Cooperation to Promote ESG Management Adoption in SMEs

The 3rd Public-Private Working Council Meeting for SME ESG Preparation Held

ESG Management (Image=Getty Images Bank)

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Lee Young, hereinafter referred to as the Ministry) announced on the 1st that it held the '3rd Public-Private Working Council for Preparing ESG in SMEs' (hereinafter referred to as the Council) at the Korea Federation of SMEs.

Since its launch in November last year, the Council has been held quarterly to promote the adoption of ESG (Environmental, Social, and Governance) management in small and medium-sized enterprises and to raise awareness. By facilitating direct communication between the private sector and the government, the Council reflects field opinions in policies and shares diverse views, contributing to the government’s formulation of specialized and effective support policies for ESG management in SMEs. This meeting was the first to expand participating organizations from 13 to 29 and to operate by dividing them into four subcommittees considering the characteristics of each organization, focusing on future operational directions.

The Ministry operates the 'SME ESG Self-Diagnosis System,' which allows companies to self-assess their ESG level using an 'ESG Checklist' and automatically receive a report including areas needing improvement. Approximately 2,000 companies participate monthly. Analysis of self-diagnosis data up to the second quarter shows that ratings are mainly distributed as Environment (E) grades 3 to 5, Social (S) grades 1 to 2, and Governance (G) grades 3 to 5, indicating that SMEs find it most challenging to respond to environmental aspects of ESG. The Ministry reflects these analysis results and survey contents in policies to expand support related to carbon neutrality and provides policy funds and consulting to help companies especially address environmental issues.

Among all companies participating in the self-diagnosis, 28.6% are exporters, with ESG demands highest from the United States, China, and Japan, in that order. This is believed to be due to the government policies of those countries. To support SMEs struggling with increasing ESG demands from export markets, the Ministry plans to publish the 'SME ESG Management Guide (Export Edition and Industry Edition)' in the second half of this year, summarizing ESG demand characteristics by country.

Regarding regional participation rates, companies located in Gyeonggi, Seoul, and Incheon accounted for nearly half (46.6%) of the total self-diagnosis volume, showing generally high participation from metropolitan area companies. To support regions outside the metropolitan area where ESG education and promotion are relatively insufficient, the Ministry plans to promote ESG self-diagnosis through regional SME support organizations and ESG-related associations’ branches, and to expand interest in regional SMEs by holding regional briefings, meetings, and ESG education sessions.

Oh Ji-young, head of the Future Industry Strategy Team at the Ministry, stated, "It is crucial to share opinions through communication between the private sector and government so that rapidly spreading ESG does not become a burden for SMEs." She added, "We will do our best to ensure that SMEs do not see ESG merely as a regulation but embrace it as a new opportunity."

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