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ESG keywords to ponder during a short lunch break.
A "social enterprise" is a business that pursues a business model oriented toward solving social problems. Possessing characteristics of both for-profit and nonprofit organizations, social enterprises differ from for-profit companies—which serve the goal of generating profits for shareholders and owners—in that they are operated as organizations that prioritize public benefit, such as providing social services and supporting vulnerable populations. As the representative form of enterprise in the social economy, a social enterprise is defined by South Korea's "Social Enterprise Promotion Act" as "a business entity certified by the Minister of Employment and Labor that engages in commercial activities such as the production and sale of goods and services while pursuing social objectives, such as enhancing the quality of life for local residents by providing social services or jobs to the disadvantaged."Considering the significance and context of social enterprises, their origins can be traced as far back as the 1800s, but the approach to social enterprises in the form we know today dates to the 1970s and 1980s. Research by scholars such as Bill Drayton, who founded the Ashoka Foundation in the United States in 1980 to support innovators in civil society areas such as education and human rights, drew attention to the concept of social enterprise. In South Korea, as the 2000s brought the structuralization of jobless growth and rising demand for social services, concrete discussions on social enterprises as a model for job creation and the provision of quality social services through nonprofit corporations and organizations gained momentum, resulting in the establishment of the Social Enterprise Promotion Act in 2007. To operate a business as a social enterprise, certification must be obtained from the Ministry of Employment and Labor in accordance with the Social Enterprise Promotion Act, and the following requirements must be met. 1. The organization must take a form prescribed by Presidential Decree, such as a corporation or association under the Civil Act, a company or limited partnership under the Commercial Act, a corporation established under a special act, or a nonprofit private organization.2. It must employ paid workers and engage in commercial activities such as the production and sale of goods and services.3. The realization of social objectives—such as enhancing the quality of life for local residents by providing social services or jobs to the disadvantaged or by contributing to the local community—must be the organization's primary purpose. The specific criteria for this shall be prescribed by Presidential Decree.4. It must have a decision-making structure in which stakeholders, such as service beneficiaries and workers, participate.5. Revenue generated through commercial activities must exceed the threshold prescribed by Presidential Decree.6. It must have articles of incorporation, bylaws, or equivalent documents as required by the Promotion Act.7. If distributable profits are generated in a given fiscal year, at least two-thirds of such profits must be used for social purposes (applicable only to companies and limited partnerships under the Commercial Act).8. It must satisfy other operational standards prescribed by Presidential Decree.According to the Korea Social Enterprise Promotion Agency, social enterprises in South Korea are classified into five types: job creation type, which supports employment for the disadvantaged; social service provision type, which supports social services for the disadvantaged; community contribution type, which contributes to improving the quality of life for local residents; mixed type, which simultaneously provides both jobs and social services to the disadvantaged; and other (creative/innovative) type, which requires separate deliberation as it is difficult to determine its primary purpose solely by the standard criteria.by Editor O[Reference Article] [Brand & ESG] Triple Bottom Brewing: A Brewery for Beer, People, and Planet
02/07/2024
In response to the climate crisis, "RE100" is an initiative aimed at expanding demand for renewable energy, signifying the goal of using electricity generated from 100% Renewable Energy. The campaign was created and is operated by the UK-based non-profit The Climate Group in partnership with the Carbon Disclosure Project (CDP), and was launched at Climate Week NYC in 2014. Targeting companies that consume 100 GWh or more of electricity annually, companies that agree to participate in RE100 commit to sourcing their electricity from renewable sources recognized by RE100—such as solar, sustainable biomass, wind, hydro, tidal, and geothermal—rather than from electricity generated from fossil fuels. RE100's target deadline is 2050. While member companies are free to set their own annual milestones, The Climate Group, which oversees the campaign, recommends targeting 60% achievement by 2030 and 90% by 2040. RE100, which encourages voluntary participation, launched with 13 member companies including IKEA and has since grown into a campaign with 426 participating companies, including Apple and 3M. In South Korea, six SK Group affiliates—SK Inc., SK Materials, SK Siltron, SK Telecom, SK Hynix, and SKC—were the first to join RE100, and the number of participating Korean companies had grown to 36 as of 2023. However, achieving RE100 targets in South Korea is not easy, and there is criticism that among the participating companies, some have no renewable energy usage or have not obtained usage certification, suggesting that the interest in and membership in RE100 may be little more than a superficial gesture.by Editor O[Reference Article] [Brands & ESG] Mastercard: Priceless, the Invaluable Value of ESG
01/31/2024
A ‘Green Bond’ literally refers to a green bond. Green bonds are one of the bonds referred to as ESG bonds, and as interest in the environment and investment opportunities grows, opportunities to see and hear related news are increasing. Recently, LG Energy Solution, Korea Water Resources Corporation, and POSCO announced green bond issuances. Green bonds are issued to raise funds for large-scale eco-friendly projects. While they are issued in the same manner as general bonds, the funds raised must be used exclusively for eco-friendly initiatives. They are limited-purpose special bonds that can only be invested in eco-friendly processes and climate change response projects, including transportation, creating sustainable resource-use environments, energy efficiency, renewable energy facilities, and environmental pollution prevention. *The International Capital Market Association (ICMA) classifies eligible green projects as renewable energy, energy efficiency, pollution prevention and control, sustainable management of resources and land, ecosystem and biodiversity conservation, clean transportation, sustainable water and wastewater management, climate change adaptation, circular economy, and green buildings. Issuing bonds entails mandatory disclosure requirements. First, a Green Bond Framework (GBF) must be established. The framework includes the purpose of the green bond issuance, use of funds, and project selection and evaluation procedures, with the issuance results disclosed in a post-issuance report. South Korea codified these requirements through its ‘Green Bond Guidelines’ in 2020.Since the European Investment Bank first issued green bonds in 2007, international organizations, public and private enterprises, and financial institutions have continued to issue them. In South Korea, the Export-Import Bank of Korea was the first to issue green bonds in 2013, and according to the Korea Institute for International Economic Policy, the cumulative amount is estimated to have reached approximately ₩52 trillion as of 2021. by Editor O[Reference Article] [Reading Sustainability Reports] Creating Energy That Elevates the Value of the Earth ‘Doosan Enerbility’
01/26/2024
Stranded Assets refer to assets that lose their economic value or turn into liabilities due to unforeseen circumstances, such as shifts in the market environment. While they were once recognized for their economic utility, recent changes in the social landscape—including the growing emphasis on ESG and the impacts of climate change—have led to industries based on fossil fuels such as coal, petrochemicals, and oil refining, as well as high-carbon-emitting sectors like shipbuilding and steel, being classified as stranded assets. South Korea has set a basic goal of achieving carbon neutrality by 2050. In line with this, discussions are underway regarding the phase-out and compensation of coal-fired power facilities classified as stranded assets, as well as countermeasures for energy-related infrastructure at risk of becoming stranded.by Editor O[Reference Article] [Reading Sustainability Reports] Creating Energy that Raises the Earth's Value: Doosan Enerbility
01/17/2024
The term ‘Carbon Footprint’ refers to the total amount of greenhouse gas emissions generated by an individual or organization. It is a comprehensive concept that encompasses direct and indirect emissions from manufacturing processes, heating, use of transportation, and the supply of electricity needed to provide goods or services, as well as other greenhouse gas categories such as methane and nitrous oxide. The carbon footprint was derived from the concept of the ‘Ecological Footprint,’ which was primarily used in environmental and ecological circles. Similar to how human impact on nature over a lifetime was converted into land area, the amount of greenhouse gases we emit is calculated and expressed as the weight of carbon dioxide. It is sometimes also expressed in terms of the number of trees we need to plant. By displaying a carbon footprint, we can see how much greenhouse gas is emitted when we use a product or service. For this reason, countries such as the UK and France require carbon footprint labeling on some or all products. This is called the ‘Carbon Labelling’ system, which encourages eco-friendly consumption by helping consumers choose products with lower carbon emissions. There is also a 2022 study from Germany’s Julius Maximilian University of Würzburg showing that when carbon footprints were displayed on restaurant menus, customers were influenced to choose foods with lower carbon emissions.South Korea has been implementing a carbon labeling system since 2009. The Korea Environmental Industry and Technology Institute under the Ministry of Environment has overseen certification, and in 2016, it was integrated into the Environmental Product Declaration system, which evaluates a broader range of environmental impacts beyond just the carbon footprint, including ozone layer impact and water footprint.by Editor O[Reference Article] [Global Trends] Remote Work vs. Office Commuting: Which Is Better for ESG Strategy?
01/12/2024
The 'B' in B Corp certification stands for Benefit. Previously, when evaluating corporate value, we focused primarily on direct Profit. However, perspectives have shifted. A company's sustainability cannot be evaluated by Profit alone. Founded in 2006, the U.S. non-profit organization 'B Lab' introduced comprehensive Benefit—including indirect social impact—as a corporate evaluation standard and grants 'B Corp Certification' based on this assessment. [B Corp Certified Logo ⓒB-Lab]A company's social and environmental performance—the baseline for B Corp certification—is evaluated using B Lab's corporate evaluation framework, the 'B Impact Assessment (BIA)'. Companies scoring 80 points or higher (out of 200) on social and environmental performance, alongside assessments of corporate transparency and legal accountability, are certified and listed as B Corps, renewing their certification every three years. Since the first certification in 2007, the number of B Corp certified companies has grown to over 7,700 across 92 countries as of late 2023. In South Korea, around 30 companies—including Tree Planet, Continew, and Melixir—are B Corp certified. In Korea, guidance and verification for B Corp certification are managed by 'B Lab Korea', and any for-profit company operating for over a year can apply for the B Impact Assessment.by Editor O[Related Article] [Brand & ESG] 'Triple Bottom Brewery' — A Brewery for Beer, People, and Planet
12/27/2023
[E;Environment ⓒESG.ONL/ESG Today]ESG is an acronym created from the first letters of Environmental, Social, and Governance. Until now, key standards for evaluating business value were quantitative metrics and financial performance, such as financial statements. However, ESG is an index designed to examine what enables long-term, sustainable corporate operations. Driven by a global recognition that metrics determining enterprise perception and investment direction can no longer be limited to financial performance, it demands attention to the actual environment surrounding companies. In fact, renowned international credit rating agencies such as Moody’s, Fitch, and Standard & Poor’s have included ESG criteria when assessing corporate credit since 2019. As highlighted by the widely used phrase 'ESG Management', ESG serves as three core non-financial indicators to stably enhance the value of companies and their businesses over the mid-to-long term. The 'E' in ESG stands for Environment. The indicators recommended by the Korea Exchange to evaluate the environmental aspect of a company's ESG activities consist of five key areas: greenhouse gas emissions, energy usage, water usage, waste discharge, and legal compliance/accidents. [ⓒ Korea Exchange, ESG Information Disclosure Guidance]Among these, the most critical issue is carbon and greenhouse gas emissions. Concern regarding carbon emissions generated by corporate business activities has existed for a long time. Recently, as opportunities to experience the real impact of climate change have increased, the awareness that we are threatening human survival ourselves has grown significantly, driving intense interest in this issue. Consequently, companies are continuing activities aimed at carbon reduction and net-zero goals, such as improving energy efficiency, consuming fewer resources, managing waste, and supporting organizations working for the environment.by Editor O
12/21/2023
[S;Social ⓒESG.ONL/ESG Today]ESG is an acronym created from the first letters of Environmental, Social, and Governance. Until now, key standards for evaluating business value were quantitative metrics and financial performance, such as financial statements. However, ESG is an index designed to examine what enables long-term, sustainable corporate operations. Driven by a global recognition that metrics determining enterprise perception and investment direction can no longer be limited to financial performance, it demands attention to the actual environment surrounding companies. In fact, renowned international credit rating agencies such as Moody’s, Fitch, and Standard & Poor’s have included ESG criteria when assessing corporate credit since 2019. As highlighted by the widely used phrase 'ESG Management', ESG serves as three core non-financial indicators—Environment, Social, and Governance—that will act as important benchmarks for stably enhancing the financial value of companies and their businesses over the mid-to-long term. The 'S' in ESG stands for Social. This refers to the efforts that companies, which are not isolated entities but members of society, must make toward mutual growth. It measures whether a company respects social members—such as employees, suppliers, local communities, government, and customers—and aims to build long-term, sustainable relationships. [ⓒ Korea Exchange, ESG Information Disclosure Guidance]by Editor O
12/21/2023