Digital ESG, a Critical Success Factor for ESG

Digital ESG, a Critical Success Factor for ESG

Sustainable management and ESG were considered corporate philanthropy two to three years ago. However, the meaning of ESG has recently been revisited and ESG is considered a requirement for sustainable management. Therefore, big companies quickly create a dedicated ESG team and establish an internal ESG committee. The Korean government helps small- and medium-sized companies to promote ESG measures to remove ESG blind spots by setting a K-ESG guideline. Still, companies performing ESG measures are often confused and complained about. It is only natural for a transitional stage that ESG is adopted across companies. But you should bear this in mind:

ESG data, the data companies introducing ESG should look and prepare for. ESG data is defined as “all integrated and reprocessed internal and external data required for companies to do their business according to the global ESG information disclosure standard, such as GRI or SASB.”

GRI: 3 sections, 92 topics
  • Section: Business performance/Topic: Business performance, ethical management, governance, etc.- > 25
  • Section: Society/Topic: Executives and employees, contractors, local community, etc. -> 28
  • Section: Environment/Topic: Raw materials, climate change, water, energy, etc. -> 39
SASB: 11 large categories and 77 small categories for industries
  • Large category: Tech./Industry: Semiconductor, parts, S/W, etc. -> 6
  • Large category: Infrastructure/Industry: Construction, engineering, real estate, etc. -> 8
  • Large category: Financial/Industry: Bank, insurance, securities, asset management, etc. -> 7
>(The content of GRI and SASB) Business activity data have been reprocessed according to the global ESG standards
  • Raw materials, renewable resources, dividends, greenhouse gas, revenue, salary, conflict minerals, education, the ratio of female to male employees, work accident, water supply and drainage, hazardous substances, win-win cooperation, donation
[Figure] ESG data concept map (Source: S-Core)

Please remember: When preparing ESG data, you should manage the ESG data flow to see simple the result data and cause data at a glance. For example, one of the global ESG disclosure criteria is to disclose the usage of raw materials produced in the disputed territories, including the Democratic Republic of the Congo, Uganda, etc., to reduce the usage of raw materials from there. The reason for such criteria is that if companies buy raw materials from a disputed territory, the country spends money that will buy and maintain weapons of war. Therefore, managing data on raw material usage is required. When companies can access data on the form and source of resources, the type of mineral, the supplier, and the refinery, then they can figure out what raw materials from what disputed territories go through what partners and what mineral is supplied, that is increasing the ratio of usage of raw materials from disputed territories.

It’s never too late. What data must be managed by our company for ESG management? How is the data for ESG management collected, stored, and managed? How can we secure the accuracy and reliability of ESG data? Ask these three questions to your company. How active your company is in finding the answer for digital-based ESG will define the success and failure of the ESG strategy in the next two to three years.

This article is extracted from DT Quarterly, Issue 2, 2022, the Korea Industrial Technology Association.

[Visit the source text]: http://dtquarterly.koita.or.kr/202203-trend

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Jeongyeoul Seo
Jeongyeoul Seo