[ What is ESG? ]

ESG is an abbreviation of E (Environmental), S (Social), and G (Governance), and is a factor that evaluates a company's non-financial performance. It contains the philosophy that sustainable development can be achieved only when transparent management such as eco-friendly, socially responsible management, and improved governance structure are considered when corporate activities.

Namely, not only short-term financial performance but also long-term corporate social responsibility is being emphasized, and ESG evaluation became an essential factor for companies as it spreads internationally and is settled by a new management paradigm.

E (Environmental) - The impact of a company on the environment in the management process.

: Resource used, Energy, Amount of Trash or Waste generated, Recycling, and Disposal methods

S (Social) - Whether a company conducts its social responsibility as a company

: Human rights, Treatment of workers, Impact on local communities, Gender, Client satisfaction, Data protection

G (Governance) - Transparency of Management

: Degree of corruption, Internal accusations, Corporate structure, Personnel and Whether management policies operate responsibly with democratically

The opportunity that ESG has magnified as a global issue be interpreted in various ways, but the prevailing interpretation is that changes in asset management strategies of world-class asset managers BlackRock and Vanguard have had a decisive impact on accelerating the spread of "ESG management."1)

Currently, there are no world-common judgment criteria such as evaluation indicators and laws about ESG, and more than 600 domestic and foreign institutions are currently evaluating ESG of companies on different standards. So, there is causing a lot of confusion because the ratings vary widely depending on which institution it is evaluated by. On this, ISO international standards can be a good guide for securing objectivity and reliability.

[ Introduction to ISO standards related to ESG ]

Environment

• •   ISO 14001:2015 (Environmental Management Systems)

  ISO 14001 is an international standard that helps reduce costs and improve environmental performance by reducing environmental risks such as waste and energy consumption through an environmental management system compatible with ISO 9001 and ISO 45001.

• •   ISO 50001:2018 (Energy Management Systems)

  ISO 50001 is an energy management system standard supports so that organizations improve energy performance through systematic energy management. Through ISO 50001, it can reduce greenhouse gas emissions, energy costs, and other environmental impacts to build a positive corporate image.

Social

• •   SA 8000 (Guideline about Social Accountability)

  SA 8000 is a standard related to voluntary compliance with Social Accountability. By acquiring certification, companies can identify the social impact due to business operations and prove that the relationship between employees, partners, and suppliers operates fairly and legally according to international norms.

• •   ISO 45001:2018 (Occupational Health and Safety Management Systems)

  ISO 45001 is an international standard that certifies that it provides safe and healthy workplaces and prevents work-related injuries and health disorders through an Occupational Health and Safety Management System compatible with ISO 9001.

• •   ISO/IEC 27001:2013 (Information Security Management Systems)

  ISO/IEC 27001 is an international standard that ensures that minimize the risk due to security issues by protecting the client information and internal records to be safety.

• •   ISO/IEC 27701:2019 (Privacy Information Management Systems)

  ISO/IEC 27701 is an international standard established to manage and continue to improve sustainably organizational privacy by expanding ISO/IEC 27001 to further.

Governance

• •   ISO 37001:2016 (Anti-bribery Management Systems)

  ISO 37001 can provide management, investors, employees, clients, and other stakeholders with the trust that the company is taking reasonable measures to prevent corruption and bribery. Reliability about organizational and business activities from clients is increased and can reduce risk costs associated with bribery.

• •   ISO 37301:2021 (Compliance Management Systems)

  ISO 37301 is a certification system that proves compliance management such as that organization's laws, regulations, norms, and codes of conduct (ethics) through third-party certification. Regulations related to compliance management are diversified, companies and executives and employees are increasingly responsible for violations of laws. Acquiring ISO 37301 certification is contemplated in many countries as the criterion of taking into account when regulatory authorities and courts sanction law violations of that organization.

Please refer to the link below for detailed information.

Introduction of System Certification > https://www.gicert.org/gicert_kor/theme/gicertorg/service/01_system.php

[ Reference ]

1) "Daily Impact", accessed Mar 4th. 2022
    https://www.dailyimpact.co.kr/news/articleView.html?idxno=66743