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Research on Management Measures to Respond to Small and Medium-Sized Enterprises’ ESG and Enhance Social Value

  • Legal Theory & Practice Review
  • Abbr : LTPR
  • 2024, 12(1), pp.11-52
  • Publisher : The Korea Society for Legal Theory and Practice Inc.
  • Research Area : Social Science > Law
  • Received : January 26, 2024
  • Accepted : February 24, 2024
  • Published : February 29, 2024

Kim, Young-Kook 1

1단국대학교 경영대학원

Accredited

ABSTRACT

ESG is an abbreviation for ‘Environment’, ‘Social’, and ‘Governance’. As various environmental and social problems become more visible, it is considered an essential element for companies to achieve sustainable growth, and the concept of ‘ESG management’ has recently been spreading. In addition, ESG investment, which selects investment destinations from the perspective of environment, society, and governance, is also attracting attention around the world. In 2006, the UN announced the ‘Principles for Responsible Investment’ (PRI), which contains policies for institutional investors, and as of 2019, the number of signatory countries exceeded 2,000. Global ESG investment has been increasing since around 2014, expanding to $928.1 billion by the end of 2021. Based on its size ($66.2 billion) as of the end of 2015, ESG investment is expected to attract the attention of general investors. It is not easy for small and medium-sized businesses to approach ESG management. However, the basis of ESG management is for management to thoroughly acquire ESG knowledge and make efforts to recognize SDGs. Additionally, thorough information disclosure is important to encourage ESG investment. One way to do this is to prepare an integrated report summarizing financial and non-financial information for investors. In addition, an increasing number of companies are introducing ESG-related evaluations, such as whether work is performed in consideration of the environment, safety, and human rights, rather than simply evaluating employee performance. Integrating ESG into corporate philosophy and strategy will also become essential in the future. In order to respond to the expansion of ESG investment, ESG management for small and medium-sized enterprises is key. ESG investment, which is currently expanding among investors, is expected to continue to grow in the future as corporate initiatives lead to improvements in the social environment, such as environmental and human rights. Not only the government and large corporations, but also small and medium-sized enterprises must respond to ESG management in order to raise funds from investors. In addition, participating in ESG management can create benefits essential for future scale expansion, such as sound corporate management and securing excellent talent. Things small and medium-sized businesses should pay attention to when pursuing ESG are as follows: You should be aware in advance that the effect will not appear immediately. ESG is an initiative that must be continued over the medium to long term. It is difficult to feel the effect from a short-term perspective. When embarking on ESG, it is necessary to perceive it as an initiative that can bear fruit in the future rather than expecting immediate results. Additionally, because it is difficult to judge the results, the standards for judging effectiveness must be appropriately reviewed. There are difficulties in comparing and verifying policies. Currently, ESG indicators are scattered. This makes it difficult to accurately evaluate efforts. Investors considering investing in our company should carefully consider what information may be useful to them. Examples from other companies may not apply directly to you. Currently, companies promoting ESG are mainly large corporations. Large companies are utilizing their abundant financial resources to pursue ESG initiatives. Therefore, these examples may not be helpful to small and medium-sized businesses. We need examples of ESG models that even small and medium-sized businesses can implement.

Citation status

* References for papers published after 2022 are currently being built.