"It's Not Like That Anymore"... The ESG Trend Sweeping the Sangjo Industry

From Regional Coexistence to Eco-Friendly Funeral Culture
Accelerating Trust Recovery in the Industry Through ESG Management

The funeral service industry is focusing on ESG (Environmental, Social, Governance) management, which emphasizes social responsibility and environmental protection. The industry, which had a negative image due to sudden closures and consumer distrust, is making efforts to restore trust through coexistence with local communities, fostering an eco-friendly funeral culture, and securing financial soundness.

According to the industry on the 26th, major funeral service companies are actively engaging in various activities to practice ESG management. ESG stands for Environment, Social, and Governance, non-financial factors of a company, and is evaluated as a key criterion to gauge corporate sustainability and trustworthiness. Through this, the funeral service industry aims to enhance its industrial image and regain trust.

Fried Life employees are creating a 'Spring Gift Kit' using artworks by artists with developmental disabilities. Photo by Fried Life

Among these, the most noticeable recently is the Social (S) sector. Freedelife launched an employee-participation social contribution project called 'Companionship of Rest Paradise' earlier this year, and on the 20th, carried out its second activity by distributing 'Spring Gift Kits.' The kits, made using works by artists with developmental disabilities, were delivered to 50 households of elderly people living alone in Incheon and Daejeon.

Kyowon Life supports the local economy by purchasing necessary food ingredients for its directly operated funeral hall 'Kyowon Yeoum' from local farms. Since 2017, it has continuously provided living and medical expenses support for vulnerable groups in Pyeongtaek City. Boram Funeral Service has been promoting community sports activities by interacting with local clubs through the 'Boram Hallelujah Amateur Table Tennis Team,' established in 2016.

Changes are also detected in the Environmental (E) sector. Freedelife reduces the use of disposable products by providing biodegradable corn starch plates certified as eco-friendly at funeral halls. Additionally, eco-friendly materials are applied to the burial clothes worn by the deceased. Kyowon Life is promoting the introduction of reusable containers at its nationwide directly operated funeral halls. A Kyowon Life official explained, "By introducing reusable containers at funeral halls in Gangwon, Gimhae, and Pohang, we have reduced 1.11 million disposable items annually."

Reusable tableware setup at Gyowon Yeoum Funeral Hall. Provided by Gyowon Life

In terms of Governance (G), securing financial soundness has emerged as a key task. Given the nature of the funeral service industry, where consumers regularly pay a certain amount in advance to funeral companies through prepaid installment transactions, the ability to protect consumers, such as the solvency ratio that shows the capacity to respond in case of closure, is an important evaluation criterion. As of the end of 2023, major funeral companies such as The K Yedaham (113%), Freedelife (112%), and Kyowon Life (103%) show solvency ratios exceeding the industry average (98%), demonstrating relative stability.

The main reason the funeral service industry is focusing on ESG management is the essential task of 'restoring trust.' Last October, With Life Group closed due to financial difficulties while holding about 25,000 members and approximately 50 billion KRW in advance payments, causing consumer damage to become a reality. ESG management is not only an image improvement for the entire industry but also a strategic choice for sustainable growth.

An industry official said, "The funeral service industry still has some shortcomings compared to other industries in terms of ESG," adding, "Along with restoring the industry's trustworthiness, it is expected that the industry will strengthen ESG management in line with the recent trend toward total life care."

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