Subscribe
E-Paper
 |
| Naver's headquarters in Seongnam, Gyeonggi Province / Korea Times file |
By Kim Hyun-bin
More than a dozen conglomerates, including Samsung Electronics, Naver and Hyundai Development Company (HDC), have been downgraded in their environmental, social and corporate governance (ESG) ratings by the Korea Corporate Governance Service (KCGS).
A privately owned ratings agency, the KCGS grades companies on their ESG efforts every quarter, rating them in seven levels: S, A+, A, B+, B, C and D.
In its survey released Tuesday, Samsung Electronics, Lotte Chemical, HDC, Korea Zinc, Central Insight, Asiana IDT, Air Busan and Asiana Airlines faced downgrades in the governance category.
Specifically, Samsung Electronics was downgraded from B+ to B, as its governance rating dropped from B to C. The downgrade comes as the Korea Fair Trade Commission (FTC) accused the conglomerate of a transfer-pricing scheme that shifted wealth to one of its affiliate companies, enriching the owner family's members.
Samsung Electronics, Samsung Display, Samsung Electro-Mechanics and Samsung SDI handed over their catering business contracts to Samsung Welstory, a Samsung C&T subsidiary offering above-market prices.
Samsung SDI and Samsung Electro-Mechanics fell from A to B+ in the governance section for the same reasons, but their overall ESG management ratings were left unchanged from A.
Hyundai Development Company's overall grade dropped from B to C due to the recent collapse of a building undergoing demolition at its redevelopment site in Gwangju. Several Kumho Asiana Group affiliates ― Asiana IDT, Air Busan and Asiana Airlines ― also suffered an overall downgrade from B to C as Chairman Park Sam-koo faces embezzlement charges.
Park is accused of taking more than 130 billion won ($116 million) in low-interest loans without collateral from nine group companies ― including Asiana Airlines ― to save Kumho Bus, a family-owned company, in violation of the Monopoly Regulation and Fair Trade Act.
The overall grades of Lotte Chemical and Korea Zinc also fell from A to B+ and from B+ to B, for discharging illegal emissions and continuous fatal industrial accidents, respectively.
Naver's social grade fell from A to B+ after an in-house bullying incident led to an employee suicide, as the KCGS believes the incident derives from problems in the company's culture.
"There was hazing in parts of the company and it was confirmed that the leaders did not properly make efforts to establish a healthy and sound organizational culture," the company said, partially acknowledging that the suicide of the employee was due to in-house bullying.
