China recruits South Korean conglomerate to advise on ESG

Bloomberg

South Korean conglomerate SK Group is accelerating efforts to help China develop ESG standards after a years-long push by Beijing to improve social governance disclosures at its companies stalled.
SK said it will team up with China’s State-owned Assets
Supervision and Administration Commission (SASAC) to jointly establish a lab in Beijing to study and develop rating methods for environmental, social and governance practices at companies like China Mobile Ltd and China Petroleum & Chemical Corp. The conglomerate, South Korea’s third largest, has been working with SASAC, which oversees the country’s government-run companies, on social value efforts since 2019.
The Covid-19 pandemic saw a surge in inflows into ESG-related assets, driving companies to step up social value disclosures in order to access a share of the trillions of dollars invested in this area. Even before the outbreak, China had pledged to make its nearly 4,000 listed corporates publish ESG metrics by the end of this year, though those efforts have yet to come to fruition. The world’s second-largest economy has also been seeking to burnish its environmental and social credentials, with President Xi Jinping targeting to make the country carbon neutral by 2060.
“There are misconceptions that Asian companies are climate villains and they neglect ESG practices,” said Lee Hyung Hee, President of the Social Value Committee at SK Supex Council, the conglomerate’s main decision-making committee. “It’s disdainful of the entire Asia and we’d like to fix and show that Asian companies are interested in ESG.”
BASF SE, the world’s largest chemical maker, is leading a growing number of global firms including BMW AG, Novartis AG and SK in a collaboration to create an international accounting standard of evaluating social value by 2022.
SK, which is actively advising South Korean government organisations and companies on evaluating social values, aims to have its affiliates from SK Hynix to SK Innovation adopt an integrated accounting method including ESG practices within the next five to 10 years, Lee said.