ESG, which never gets left out when picking the hottest keywords. Both companies and consumers are changing. A primer that lets you understand exactly how and why ESG is rising like this; it introduces ESG's history, trends, future, and even its application to business.
A book that must be read once, a book I read while taking notes because I did not want to forget it. In 2005, ESG was called "corporate social responsibility" and left to the voluntary domain, but as it failed to meet the level needed for the earth and society to function properly, UNEP (United Nations Environment Programme) decided to leverage stakeholder interests. UNEP FI (a private partnership) stated that "considering ESG in financial investment is responsible investment."
In 2006, with the UN Principles for Responsible Investment 2006 (PRI), ESG became an international standard of finance. After a preparation period, they decided to put PRI into full operation from 2020. In 2010, the International Organization for Standardization (ISO) published ISO 26000. This stipulates the responsibility of all organizations in society to ensure that their decision-making and activities can benefit society. It contains content on governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and the community, and because it includes not only companies but also industry, government, consumers, labor, and NGOs, it can be said that we are all subject to ISO 26000.
In 2019, the BRT (Business Round Table) too announced that "value must be created for all stakeholders, including shareholders." Since this group was the very place that in 1997 said that "pursuing shareholders' interests" is what a company is for, you can see how much has changed.
ESG governs the flow of money. Previously, focusing on ESG was thought to lower profitability, but "impact investing is the most active form of ESG investing," and there is a growing trend of investors who view it as an investment that can yield large profits over the long term without generating risk.
From 2030, all KOSPI-listed companies are required to submit a "sustainability management report." Reasons ESG management is rising in Korea: 1) As PRI gets into full swing, investment money is increasing. 2) Credible indicators that can measure and evaluate non-financial performance have been developed.
-
KRX ESG portal esgprotal.kr
-
Korea Chamber of Commerce and Industry esg.korcham.net
- The climate crisis
- Pressure increases through global agreements.
- Consumers and society have changed.
-
For the MZ generation, it is not sustainability but survivability
-
e.g.) the bring-your-own-container challenge, plogging, zero waste, the change in donation culture "Jadoo, how much is it here"
As a weapon of thriving companies, ESG should be internalized, and marketing should emphasize a consistent brand philosophy and authenticity. Merely "pretending" to follow the trend can rather invite criticism as greenwashing. As a method of internalizing it, the supply chain must be managed. Google and Apple manage non-financial factors as well through the codes of conduct of their suppliers and partner companies. In our country, the emphasis tends to fall especially on E (environmental), but a company's organizational culture, the presence of ethical management, and diversity and inclusion are also important issues.
As long as the planet's problems remain unsolved, ESG will continue to go along with us. Capitalism, too, is gradually changing through this new paradigm. Consumers must be able to make smart choices. The world is changing so fast it is hard to keep up—AI, the metaverse, web 3.0, NFTs, the protocol economy, and so on—but ethics, law, institutions, regulations, human rights, and governance are chasing along behind. It should head in a direction where ESG is not management tailored only to ESG regulation or ESG for investment purposes, but where one ponders substantive problems and can arrive at wise answers.