|Lee Hyung-hee, the president of SK SUPEX Council's Social Value Committee, speaks during an interview with The Korea Times at his office in Seoul, April 27. Korea Times photo by Choi Won-suk|
This article is the second in a series of interviews with ESG experts intended to give suggestions for Korea's financial, industrial and public sectors to come up with better ESG strategies for sustainable growth. ― ED.
SK's Social Value Committee head believes 'good profit' brings 'bigger profit'
There is no doubt among market insiders that SK Group is the pioneer of management prioritizing environmental, social and corporate governance (ESG) standards in Korea, given that the conglomerate began emphasizing "social value" many years before the global trend became popular here.
SK Chairman Chey Tae-won is now looking to get more local businesses to accept the values-based criteria, after becoming the leader of the Korea Chamber of Commerce and Industry (KCCI) this year.
Among the chairman's advisers on ESG strategies, the person drawing attention is Lee Hyung-hee, the president of SK SUPEX Council's Social Value (SV) Committee, who joined the KCCI as one of the vice chairmen of its Seoul office.
Known for getting SK affiliates to include the measurement of their social values in their key performance indicators (KPIs), he has helped the lobby group better cooperate with the government and its members to boost ESG management.
"All companies should be aware of the fact that ESG is indispensable for their continuous growth, but at the same time, they should strategically choose fields to focus on, considering their industrial environment," he told The Korea Times in a recent interview. "An ESG management team was organized at the KCCI recently to establish and share relevant strategies."
From that standpoint, he agreed with the opinion of other experts that ESG should be pursued from a long-term perspective, dismissing the skepticism that it will end as another passing fad.
He argued that global "rule-makers," such as the United States and the European Union, will continue to pressure governments and businesses worldwide to pursue the criteria to maintain their hegemonies against developing nations.
"Our group has pursued ESG for several years, but it is still too early to talk about achievements," Lee said. "The principle of ESG management is bringing larger profits in the long run by seeking good profits, rather than focusing on short-term profits."
According to the SK president, the company has asked its employees to develop an understanding of ESG management and has sought to change its corporate culture. He cited the conglomerate's hydrogen business, development of renewable energies and acquisition of a sewage management firm, EMC Holdings, as examples of innovating the company's business portfolio as it pursues improved ESG.
"We are also trying to minimize the impact on the environment by joining the Renewable Energy 100 (RE100) campaign and developing eco-friendly plastic," he said.
Last year, six SK affiliates became the first Korean companies to join the global initiative of businesses committed to making the move to 100 percent renewable electricity by 2050.
"Considering the global environmental policies, it seems that the government should deliberate in terms of strengthening long-term competitiveness of domestic industries, so there should be more communication between the government and businesses," Lee said.
He noted SK is also making efforts to improve its corporate governance, being aware of the criticism that domestic companies are emphasizing environmental issues to avoid demands for governance reform.
"Sizable conglomerates in Korea need trillions of won in investments from global capital markets, so they are required to be equipped with governance structures satisfying global standards," he said. "Our group's board of directors has pursued better management and accelerated efforts to reform our internal systems to stabilize a governance structure that meets global standards."
|Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, second from right, and Seoul Chamber of Commerce and Industry Vice Chairman Lee Hyung-hee, right, talk with Presidential Chief of Staff for Policy Lee Ho-seung, second from left, at the KCCI headquarters in Seoul, April 7. From left are Presidential Secretary for Industrial Policy Lee Ho-joon, Lee, Senior Presidential Secretary for Economic Affairs An Il-whan, KCCI Vice Chairman Woo Tae-hee, Chey and Lee. Courtesy of Cheong Wa Dae|
Helping SMEs enhance ESG management
Domestic conglomerates are also facing growing calls from global investors and ratings agencies to pay attention to ESG issues with their supply chains. In response, Lee introduced SK and KCCI efforts to improve small- and medium-sized enterprises (SMEs) ESG management.
"Our group provided assistance to enhance the ESG of subcontractors in their KPIs," he said. "For this, we are analyzing guidelines from global institutions and initiatives, including the RBA."
RBA, which stands for the responsible business alliance, is the international coalition of electronic firms, dedicated to corporate social responsibility in global supply chains. Its members can stop transactions with their subcontractors who have serious ESG issues.
"From the perspective of SMEs, they may feel huge difficulties, when they try to start ESG management, so support is needed for subcontractors of conglomerates," Lee said, adding the KCCI is also surveying SMEs to better understand their needs.