| Financial Supervisory Service (FSS) Governor Jeong Eun-bo delivers a speech during the 2021 Korea Times Global ESG Forum, themed "Global Investors' ESG Proposals," at the Korea Chamber of Commerce and Industry (KCCI) building in Seoul, Friday. Korea Times photo by Shim Hyun-chul |
By Lee Kyung-min
The environmental, social and corporate governance (ESG) drive should be the governing principle for corporate management in the years to come, despite the immediate dent in corporate profit amid economic and financial uncertainties, the country's top financial regulator said, Friday.
As counterintuitive as risk-taking may seem with the dimming economic growth outlook brought on by the COVID-19 pandemic, the hard choice of prioritizing sustainability at the expense of near-term corporate profit will be more than worth the effort and rewarding, once the new growth approach becomes the new norm.
"We are stressing the importance of ESG goals here today, because we know it is the right way, however hard it may be. Also prompting us is a dire sense of urgency that it is now, or it would be too late," Financial Supervisory Service (FSS) Governor Jeong Eun-bo said in his speech during the 2021 Korea Times Global ESG Forum themed "Global Investors' ESG Proposals" at the KCCI building, Friday.
Uncertainties are elevated due to changes in monetary policy in major countries and insolvency risks in the real estate sector in China, compounded further by asset bubbles and soaring debt in the private sector.
Demand in the global economy is recovering, lifted by vaccinations and expectations for "Living with COVID-19," but concerns are lingering over prolonged inflation due to supply bottlenecks.
These risk factors notwithstanding, the ESG initiative in his view can prove a new opportunity for corporate management, underpinned by placing greater emphasis on values that best meet the needs and demands of consumers and the zeitgeist of the new age of sustainable growth.
Corporate value, he said, will be enhanced, as propped up by robust ESG performances translating into reduced stock price volatility and an increase in long-term returns. A greater number of foreign investors will be attracted, as a result, enhancing the country's financing capabilities. Further anchoring the spread of the positive influences are the changes in consumer behavior exhibited by the so-called "MZ generation," a considerable part of whom align their spending patterns with personal values and beliefs that are in line with environmental issues.
The role of the supervisory body will be strengthened to ensure the transparent and efficient disclosure of ESG information, in what he expects to be the basis for a fair evaluation of businesses.
"Mahatma Gandhi once said that the world has enough for everyone's needs, but not everyone's greed," he said. "Corporate greed seeking short-term profits has led to a variety of social costs. If we don't change it now, the Earth may not be a place where the basic needs of human beings are satisfied, a reason why the ESG discourse should continue."