Based on our ESG evaluation, KCGS has helped Korea’s listed companies and financial institutions to properly diagnose their current state and make further improvements where necessary. Furthermore, on top of our support to institutional investors with regard to responsible investment, KCGS helped establish Korea Stewardship Code in 2016 with a strong emphasis on institutional investors’ fiduciary duties, aiming for self-regulation for better corporate governance.
As corporate social responsibility has recently attracted growing attention, companies are required to consider various stakeholders such as employees, customers, partners, and local communities when making management decisions. Against the backdrop, major companies in developed countries have increasingly reflected human rights, labor, and climate change issues in corporate management.
Aiming to help listed companies achieve sustainable business management, KCGS unveiled the Code of Best Practices to promote CSR and environmentally-friendly management, while carrying out ESG evaluations since 2011.
In the US, European, and other advanced capital markets, SRI taking CSR performance into account for investment decisions have exceeded $22 trillion as of the end of 2015, representing 26% of AUM by global institutional investors. As of 2017, the number of signatories to the Principles for Responsible Investment of 2006 stood at approximately 1,700.
Although pension funds have taken initiatives, Korea’s market for SRI still lags behind in terms of investment size and public awareness among market participants. With the aim for making fundamental improvements, KCGS has provided institutional investors with a wide array of SRI-related services.
Responsible investment regards ESG considerations, long-term investment, and the active exercise of shareholder rights as core values. However, institutional investors in Korea have relatively been passive in exercising their shareholder rights.
Although the exercise of voting rights is a passive form of shareholder rights, their exercise of voting rights thus far has been no more than a mere formality. In order to improve such practices, KCGS has provided the proxy advisory service since 2012 with the aim to help domestic institutional investors to exercise their voting rights in good faith.
In 2016, KCGS participated in the Financial Services Commission’s move to establish Korea Stewardship Code that provides the standards for which institutional investors should carry out as fiduciaries. Going forward, Korea Stewardship Code is expected to contribute significantly to invigorating Korea’s capital markets via active participation of institutional investors, and sustainable growth of listed companies.
KCGS will continue to strive for improving corporate governance of listed companies and support their CSR activities in order for the capital markets to make a leap forward and sustain sound development.
We look forward to your continued encouragement and support.