Sustainable companies on the Korean stock exchange have outperformed the index by more than 110 per cent since 2007, and by 220 per cent since 2002, reports SolAbility in its second yearly assessment.
The number of companies now reporting on sustainability issues indicates that Korean companies are realizing their importance in business, says SolAbility, a Swiss-Korean joint venture offering advice to corporates.
However, there are reservations. SolAbility says many companies have implemented formal governance following a new regulation requiring large companies to have a majority of independent directors, but they often fall short of best global practice and independent management control is not guaranteed. The report says absolute management control through minority owners in some conglomerates worries investors, as short-term volatility through mismanagement can occur.
A high percentage of Korean companies have implemented ethical behaviour codes, employee training and monitoring systems, yet irregularities, particularly illegal price agreements between companies, are common.
Because of high energy costs, smaller companies in particular now lack performance measuring and data management, says the report. It calls for more spending on energy efficiency management and technology.
Safety standards are observed in industry, say the researchers, but there is too little awareness of health issues such as overwork, stress from multiple tasking, burnouts and work-life balance.
Korean companies are given credit for their corporate giving and involvement in charity activities, which are common because business people have always felt responsible for their communities. SolAbility’s only criticism is that there is little strategic management or co-ordination of these activities.