Are Korean startups embracing the ESG system?

The storm of the COVID-19 pandemic globally has fanned the flames for the continuing argument of shifting businesses towards a more sustainable and eco-friendly route. The concept of ESG –Environmental, Social, and Governance, which has been floating around for some time, has now accelerated broader interest. Worldwide industries, governments, and institutional investors are waking up to the need for ESG Management.

KOSPI Listed companies to comply with ESG factors

In South Korea, the major corporates across the manufacturing sector are transiting towards a greener, sustainable process. Investors are taking account of non-financial factors like governance structures, employees welfare, social responsibilities, clear partnerships, and environment. Korea’s financial authorities has announced a comprehensive policy framework earlier in 2021 that obligates listed companies to disclose information on investment activities related to ESG standards. Firms listed on the benchmark exchange KOSPI with total assets value over 2 trillion won ($1.81 billion) or more are requested to release their ESG data from 2025 until 2030, and then the compliance will be expanded to all listed businesses.

According to experts in the global business world, Korean startups and entrepreneurs, who want to create resilient businesses that can withstand the tough times of global public health crisis, climate crisis, and economic downturns, should prioritize the path to sustainability. Also, more and more international investors are using ESG factors as analytic tools to invest in startups. So, what seems like the future path for Korean startups is to adapt the sustainability methods as soon as possible.

Startups following the sustainability path

While the Korean government, investors, and corporates promote ESG management, more and more Korean startups are getting their sustainability system on board. The Seoul City authority has founded the Sustainable Development Commission to support actions of Korean startups that are working towards a sustainable environment and a greener, healthier society. Korea Investment Corporation announced that it would raise its ESG themed investments in startups in 2021.

Korean tech entrepreneurs are coming with unique concepts focussed on sustainability, zero waste, social development, and minimalism. A Seoul-based startup Zikooin is a fine example of making sustainable alternatives for meat. The startup has developed a technology that turns grains, oats, and nuts into an alternative to the famous Korean-style beef – Unlimeat. The company has attracted $ 4 billion of investments from US venture capital for its sustainable efforts.

Startups like Montsenu use discarded PET bottles to make clothes and fashion items. Forsys Engineering has developed high-tech services for cleaning debris from the ocean, agri-tech startup N.Thing has developed smart farm solutions. All these startups that have adapted eco-friendly technologies have got investors’ interest.

Also, startups are complying with the government directive to have ECG management on board. Korean Video game developer company NCSoft Corporation is the first gaming company in Korea to have established the ESG (Environmental, Social, and Governance) Management Committee with the aim to support sustainable business activities.

Korea Corporate Governance Service offers ESG evaluations for listed companies.
A startup like ‘Who’s Good’ helps investors and businesses through their platform that analysis ESG data for financial risk. Who’s Good’s platform collects environmental, social, and governance data and analyzes and provides performance ratios for businesses. The startup offers solutions for ESG management analytics, visualize data and build reports.

While the Korean government aims to reduce its emissions by 2030 through various sustainability measures, the Korean startups too are bringing in innovation to tackle the multiple threats that the climate crisis poses to humankind. However, the path to a better sustainable world is a long journey.

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