Environmental, Social, and Governance (ESG) is becoming a trend not only among workers in business fields but also among university students. ESG refers to non-financial factors that investors use to measure and evaluate a company’s advancement in sustainability. The term “sustainability” and how various firms have made an effort to apply it to their business may be familiar enough. However, the main problem of sustainability is its vagueness, which makes it difficult to tell if a firm’s business or working environment is sustainable or not. In this sense, ESG reflects an advanced form of sustainability as it can be measured in three dimensions: environmental, social, and governance. ESG covers all three of these factors. Firms may produce business projects that could prevent climate change to satisfy the environmental aspect. Social concepts could include issues regarding the treatment of labor, employees, and impacts on local communities. Moreover, governance refers to the mechanisms and ways in which corporations are run, for example, executive compensation or corporate board structures.
ESG, now a financial trend among university students
More universities are implementing ESG-related majors or courses starting from this year’s spring semester. Hanyang University was the first to implement an ESG curriculum track, HUBS ESG, for their MBA in Business School. The school also designed the course Practicum on Social Innovation for senior undergraduate students, which mainly deals with the concepts of social innovation and ESG. Inha University also executed a master’s degree in Green Finance, which deals with the environmental business management sector of ESG, under the Ministry of Environment’s support project that aims to implement Korea’s Green New Deal.
Ewha Voice interviewed Professor Hannah Jun, who teaches international business at Ewha Graduate School of International Studies, to delve into the current phenomenon.
Although the environment factor of ESG is familiar to many students, the social and governance aspects of ESG are relatively less well-known. Professor Jun suggests that this is because the environmental aspect is more tangible than the other two. Whereas effects of climate change and environmental impacts can even be analyzed by individual consumers, social and governance issues tend to be less apparent due to the difficulty of measuring and monitoring them.
As there is no perfect concept, ESG is still in debate regarding its standard of measurement. When considering a more diverse environment, one may intuitively measure diversity based on gender or ethnicity. However, in terms of having diverse perspectives, it is much more difficult to define what it means to be diverse and how to measure it.
Despite some limitations of ESG, the term’s stickiness makes it attractive, while other terms used in the past have been fleeting.
“There is also a great meme that reads, ‘What is the fastest thing on earth? A cheetah? An airplane? The speed of light? No, it’s people becoming specialists in ESG!’,” Jun said. “Although Korea is now the 12th largest economy of the world, it made a huge rapid development in a relatively short period of time. Economic growth took priority over many other things, such as labor welfare or environmental conservation.”
Regarding the boom of ESG-related majors and courses among Korean universities and graduate schools, Jun elaborated on both positive and negative sides.
“On the positive side, I think that it is a reflection of the importance and a sense of urgency of addressing ESG issues,” she said. “However, the flip side is that the term is relatively new and those who impacted the market the most are from investment adjuncts, research institutions, and corporations, which makes them the experts. Thus, when it comes to raising the importance of these issues and perhaps how ESG trends have played out from historical and geographic perspectives, we can raise those questions in universities. However, I think I would be careful to position curricula or programs.”
As the concept is being applied by multiple companies in diverse fields, the number of university students who plan to study the field of ESG is increasing.
“Because it is such a hot issue, I think it is becoming more relevant especially when it comes to employment opportunities,” Jun said. “It does open some opportunities for you even in the types of careers you can enter. Try to locate experts in the field both locally and globally.”
Firms practicing ESG: Who’s Good and Melixir
With increasing interest and demand for ESG movements from investors and consumers, many companies are taking the lead to adopt ESG. Sustainable corporate practices have been implemented in diverse industrial sectors. Ewha Voice interviewed two Ewha alumni currently working in the field of ESG: Kim Soo-young, an ESG analyst at Who’s Good, Asia’s first AI-based ESG research institute, and Lee Hana, the CEO of Melixir, Korea’s first vegan skincare brand.
Who’s Good: Asia’s first AI-based ESG research institute
Kim Soo-young works as an ESG analyst at Who’s Good, which employs big data to analyze corporate ESG data and evaluate a firm’s collective consciousness of social and environmental factors. The collected data is then provided to financial institutions, investors, and financial platforms such as Naver Finance and Factset.
Who’s Good analyzes ESG in two ways. The first is through the ESG Performance Analysis(PA) which mainly utilizes public data provided by government agencies. The ESG scores are calculated out of 100 using more than 200 indicators. Factors such as carbon emissions are compared to other companies in the same industry and the percentage of female executives are analyzed.
Another way to analyze ESG is by using ESG Incident Analysis(IA), which Kim is currently in charge of. IA uses artificial intelligence to analyze text data from 15,000 news articles daily to automatically classify and score the types and severity of ESG incidents in companies.
While studying at the Graduate School of International Studies at Ewha, Kim worked as a research assistant for Professor Kim Eun-mee and for the Institute for Development and Human Security(IDHS). Additionally, by taking classes from Professor Jun and Jasper S.Kim, she was able to better understand the responsibilities of private sectors.
“ESG investment, which is investing in consideration of the environment, the well-being of humans, and economy, began in the stock market,” Kim said. “Currently, it has recently expanded to private and public sector companies, public institutions that issue bonds, and various financial instruments such as bonds and real estate. Although the introduction of ESG-related standards in Korea has been slightly slower than that of other countries, efforts are being made to start ESG integration. The Korea Exchange has set up an ESG Advisory Committee to encourage domestic corporations to take the lead in the global ESG phenomenon.”
Looking back at the difficulties she came across when trying to deepen her knowledge on corporate sustainability, Kim gave some advice to Ewhastudents interested in this field.
“You don’t have to learn the field professionally and take this position right after graduation,” Kim said. “It might be more advantageous to pick a specific field you are interested in like investment, human rights, or international politics and think about whether you can introduce ESG into the area.”
Melixir: Korea’s first vegan cosmetic brand
Lee Hana, an Ewha alumna who graduated from the College of Art & Design, is the CEO of Melixir, Korea’s first vegan cosmetic brand. Lee reflects that she was interested in nature for a long time and has enjoyed traveling to places where she could appreciate nature.
Before establishing Melixir, Lee worked at a cosmetic company that entered the U.S. market at the time. During her time at Silicon Valley, the two questions she received the most were “Does your company do animal testing?” and “Are your products based on animal ingredients?”.
Plant-based culture was spreading not only to food products but also to lifestyles such as beauty and fashion. Lee was able to predict that the concept of veganism would become more important in the future.
Melixir’s “me:cycle,” an empty bottle recycling campaign program, is being run with the global recycling company Terracycle. Through the campaign, Melixir’s empty bottles would go through several steps such as grinding and washing. They would be donated as new resources to small enterprises, instigating a virtuous cycle of sustainable resources. About 200kg of carbon emission is being reduced yearly through this campaign, contributing to a sustainable future.
“I hope there will be more entrepreneurs who are interested in the positive social influences of companies in the future,” Lee said. “Starting a business might seem challenging, but I encourage students at Ewha to believe in their potential and take a chance.”