□ (Overview) Korea Institute of Corporate Governance and Sustainability (KCGS) rated domestic companies*’ environmental (E), social (S), and governance (G) performance and published their ratings for 2023.
* This year, KCGS rated 987 listed firms for ESG and 62 non-listed financial companies for governance only.
ㅇ The ESG ratings (S, A+, A, B+, B, C, and D) provide incentives for companies to implement sustainable management and help capital market players perceive the quality of ESG practices at companies.
□ (2023 ESG Ratings) As an observed trend, companies that had been preemptive in improving ESG practices and disclosing relevant information received upgraded ratings relative to the previous year. The ratings of the firms with a relatively lower awareness of ESG management did not show big differences from previous years, resulting in a wider gap between the leaders and the laggards.
ㅇ Companies that had continued to implement ESG management were in a better position to respond to the assessments which were drastically revised in 2022, resulting in an increase of the firms rated ‘B+’ or higher by 10%p compared to the previous year (32%→42%).
ㅇ Meanwhile, most (around 85%) of the companies rated ‘B’ or lower in 2022 (679 firms) stayed in the same ‘B’ or lower grade bands this year as well, indicating that they had only minimal improvements in their ESG practices.
□ (2023 Ratings by Category) In all categories of E, S, G, and governance for financial institutions (FG), the percentages of the companies assigned higher ratings increased or remained more or less the same while the percentage of those rated ‘B’ (Average) decreased, indicating the need for those rated C and D to make continued improvements.
ㅇ In the categories of G for general issuers and S, the gap between the leaders’ group and those lagging widened.