Since its inception in 2002, the Korea Corporate Governance Service(KCGS) has engaged in various activities. The agency created and updated the code of best practices of corporate governance. It has also provided regular governance ratings of listed firms in a bid to present and establish a best practice corporate governance for Korean companies. The KCGS rates the state of play of governance at Korean firms and helps them turn the improvements in corporate governance into an enhanced corporate value and sustainable management.
Recently, the world has raised their awareness of corporate social responsibilities. More and more investors like to see firms take into account their employees, suppliers, local community, and other stakeholders when they make business decisions. In a drive to support sustainable management at Korean listed firms, the KCGS published the codes of best practice of socially and environmentally responsible management. The agency’s rating of governance expanded its scope to the ESG (Environmental, Social, and Governance) rating in 2011. The integrated evaluation helps listed companies and financial institutions in Korea understand their standing of sustainable management and make improvements when necessary.
Responsible investors take into account the corporate social responsibility performance of the firms in the investment decision-making process. As at the beginning of 2019, the practice of responsible investing exceeds USD31 trillion in AUM globally. As of 2019, 2,300 firms around the world have signed the UN-supported Principles of Responsible Investment that was published in 2006. Korean asset owners, notably pension funds, also conduct responsible investing. Still, the size and the scope of the investment activity are in their infancy. So is the awareness of the market participants.
The core values of responsible investing lie in an active exercise of shareholder rights and the reflection of ESG factors in an investment decision, including long-term investment. To support responsible investing, the KCGS offers a variety of services to institutional investors, including the proxy advisory service that started in 2012. After all, voting rights constitute the very heart of the fundamental shareholder rights as well as corporate governance and responsible investing. The agency’s voting advice helps institutional investors faithfully exercise their voting rights, which drives rational business decisions at firms. Then, investment returns will grow, and investors will be better protected.
In 2016, in a joint effort with the Financial Services Commission, the KCGS established the Korean version of stewardship code stressing institutional investors’ fiduciary duties. The Korea Stewardship Code, “Principles on the Stewardship Responsibilities of Institutional Investors,” offers the standards on the fiduciary role of the institutional investors. As of 2019, more than 100 institutional investors joined the stewardship code. The growing signatory base will help the Korean capital markets develop further. It will, in turn, nurture more sustainable management at companies and more productive investments in the market.
The KCGS is also a research institute. It conducts research on corporate governance, responsible investing, and sustainable management in-house, providing valuable feeds for academia at the same time. The research results are made public in periodicals, reports, and lectures, among others. The research activities will help Korean companies improve corporate governance and sustainable management practice, and institutional investors engage in responsible investing effectively. The KCGS will continue to strive for excellence in what we do today and spare no effort to help the capital markets and the companies grow to the next level.
We look forward to your continued encouragement and support. Thank you.
COPYRIGHT © 2018 KOREA CORPORATE GOVERNANCE SERVICE
ALL RIGHTS RESERVED