2020 ESG INCIDENT REPORT(English)

Who's Good 지음

지속가능발전소 2021년 03월 02일 출간

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This report is based on Who’s Good ESG Incident Analysis, powered by Artificial Intelligence (AI) algorithms and news data in Korea. This report provides an overview of the corporate ESG incidents in 2020, analyzed by industry groups, ESG issues and company groups.

목차

Contents

I. Preface
II. Methodology
III. 2020 ESG Incident at a Glance
IV. 2020 ESG Incident Analysis
1. Summary
2. 2020 ESG Incident Trends
3. ESG Issue Analysis
4. Company Type Analysis
○ Company Group
○ State-Owned Enterprise
5. Sector Analysis
○ ESG Risk Heatmap
○ Riskiest Company Analysis
■ Financial & Holdings: Hana Financial Group
■ Bio & HealthCare: Medytox
■ Industrials: Doosan Heavy Industries & Construction
■ Commercial & Professional Service: Samsung C&T
■ Materials: POSCO
■ Energy: Korea Electric Power Corporation
■ Transportation: Hanjin Transportation
■ Consumer Discretionary Service: Lotte Shopping
■ Consumer Discretionary Manufacture: KIA Motors
■ Information & Communication Technology: KT Corp
■ Consumer Staples Manufacture: KT&G
■ Hardware & Semiconductors: Samsung Electronics
V. 2020 ESG TOP 100

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2020 marked a critical year. Not only was it the first year that the stewardship code was implemented in South Korea, but it also signaled a new beginning as Korea’s National Pension Service (NPS) announced its plans to activate responsible investment. At a global level, ramifications of the COVID-19 pandemic accelerated recognition of the value of environmental, social and governance (ESG) issues. Taken together, we have witnessed a momentous shift from shareholder-centric capitalism to a more inclusive stakeholder capitalist paradigm. In this sense, the theme of 2020 can be summarized as “ESG mainstreaming.”
In Korea, 2020 was a turning point for both companies and investors. ESG considerations have become critical not only for impact investors, but conventional investors and firms have also been incorporating ESG frameworks to assess a company’s fundamentals and risk. Above all, the introduction of data analytics technology to ESG evaluation has made it possible to remove biases of existing evaluation methodologies. This has helped improve current market inefficiencies, which have underestimated the value of sustainable companies. As this may signal further activation of capital flows to sustainable companies, we can expect greater contributions to sustainable financing going forward.
Who's Good, which has been analyzing corporate ESG data with data analytics technology since 2014, provides ESG data and insights of Korean companies to investors around the world. ESG Incident Analysis, launched at the end of 2018, is the first product in Korea to automatically analyze a company's ESG-related news data using artificial intelligence technology. In 2020, we were able to advance its algorithms to expand our coverage from listed companies to private companies as well as state-owned enterprises. Moreover, more clients are utilizing our data to analyze a wide range of financial products, such as bonds and loans.
This is our third annual ESG Incident Analysis Report, based on the quality data generated by our improved algorithms. Based on news for various ESG-related incidents, we have summarized 2020 ESG incidents by sector, company, and ESG issue. We found that ESG incidents occurred in 474 companies (19.9%) out of a total of 2,373 listed companies analyzed. Among 17 ESG issues, “Business Ethics” issues such as embezzlement, bribery, stock price manipulation and fraudulent accounting were identified as the biggest threats to the sustainability of Korean companies since 2016. At the same time, our analysis confirmed that environmental and social issues are becoming increasingly important. While the number of companies with ESG incidents remained the same at about 400 each year, the proportion of news on corporate governance decreased from 64% to 49% over a five-year period, while social (56.6%) and environmental (2.0%) issues now account for a bigger combined portion of ESG incidents. In addition, due to the pandemic, social issues such as “Consumer Relations,” “Supply Chain Management,” and “Anti-competitive Practices” have become the most controversial issues after “Business Ethics.”
Last year, we presented findings from our White Paper, which ？ in-line with findings from other studies ？ found that ESG performance affects corporate value. Using our unique dataset, we analyzed the effect of ESG performance and risk data on stock price, corporate value, and financial performance. Even over a short period of time, companies with high ESG scores not only generated relatively higher returns, had higher dividend payouts and exhibited greater risk resilience, but they were also undervalued compared to firms with low ESG scores. (Please refer to the 2020 White Paper on our homepage).

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저자(글) Who's Good

Asia’s First AI-Driven ESG Insight ProviderAbout Who’s Good, PBCUsing public data, Who’s Good provides objective and up-to-date corporate ESG insights. Our products include ESG Performance Analysis, which evaluates non-financial (ESG) management performance based on public data; ESG Incident Analysis, which analyzes companies' ESG risks utilizing news data; and SCB (Sustainability Credit Bureau), which is a sustainability credit rating service, selected as ‘Innovative Financial Services’ by the Financial Services Commission of Korea.