How to Read 2019 ESG INCIDENT REPORT: ESG Incident Analysis of Korean listed companies in 2019 DOC
2019 was a remarkable year for responsible investment in the Korean financial market. Among three major policies required for responsible investment, which are ESG integration of pension funds, stewardship code, and the disclosure of corporate ESG information, Korea has made exceptional progress in implementing the stewardship code and integrating ESG.First, 2019 is the first year to implement the stewardship code in Korea which was introduced in 2018 by the National Pension Service (NPS), the world’s third-largest national pension fund. Until recently, the NPS voted against 10% of proposals in shareholders meetings, but in 2019 the number increased to 20% for the first time. One significant case was to vote against Chairman Cho Yang-ho’s re-election as a director of Korean Air. Cho Yang-ho, the chairman of Hanjin Group, which is the 13th biggest business group in Korea, stepped down after 20 years of management because of his family-risk over gapjil scandals. This indicates a noteworthy moment not only in the history of Korea's responsible investment, but also in the Korean capital market and the industry. The incident alarmed many Korean companies, and it led to the increased awareness of the importance of ESG. It also became an opportunity for overseas institutional investors to re-evaluate the Korean capital market.Second, the NPS released the policy to boost responsible investment on November 30, 2019. This includes a detailed plan to apply responsible investment to domestic and foreign stocks and bonds worth 600 trillion Korean won in the fund. It marks the first time for NPS to release this kind of comprehensive RI plan in more than a decade, since joining the UN PRI in 2009. Considering that its fund with responsible investment was only 7 trillion Korean won in 2016, this is a breakthrough for responsible investment in Korea.In the near future, ESG disclosure will be required not only by key stakeholders in the market but by the law, and the scope for disclosure will be increased. While governance has been emphasized the most among E, S and G so far, environmental and social performance also will be required to strengthen corporate sustainability and corporate value. The capital market has been moving towards sustainability, transparency, and stewardship responsibility in this decade, led by countries in Europe and the United States, since the 2008 global financial crisis.Since 2014, Who’s Good has analyzed the company’s ESG data based on public data and big data to respond quickly to this global movement towards corporate sustainability and provided Korean companies’ ESG data and insights to investors around the world. ESG Incident Analysis, launched in 2018, automatically analyzes ESG related news data. In 2019, we upgraded our analysis algorithms and provided raw data, platform, and reports to suit the needs of our customers.This is the second annual ESG Incident Report after its launch in 2018. We hope that this report can be a valuable resource for global investors to observe Korea’s movement towards responsible investment and for companies to observe their own ESG risks and strategize CSR policies. Furthermore, we sincerely hope to see even more active participation and dynamic discussion on corporate sustainability, social responsibility, and investors’ stewardship responsibility in 2020.
