SK hynix employed the expert of relevant field as an executive to speed up ESG management.
Bangsil Lee, who has been working on the creation of knowledge content as a journalist specializing in business management at Dong-A Business Review (DBR), is an expert in the fields of creating shared value (CSV), social impact, and sustainable management. Through the 2017 book “Big Profit”, Bangsil Lee, as a co-author, introduced a new growth model for companies that can generate profits while solving social problems at the same time. Lee holds an MBA from the Fuqua School of Business at Duke University and a Ph.D. in engineering from the Technology Management, Economics, and Policy Program (TEMEP) of the Seoul National University.
The recent paradigm of corporate valuation is expanding to include non-financial factors, such as environment, social, and governance (ESG), beyond the financial performance of a company. In other words, ESG – the impact of the company on the environment, whether the company fulfills its social responsibilities, and the transparency in the company’s governance – are the keys to the future of the company.
To proactively respond to changes in the business environment as well as the needs of stakeholders, SK hynix is accelerating ESG management by continuing its Double Bottom Line (DBL), a management philosophy to pursue economic value and social value at the same time.
In September 2020, as part of the efforts to achieve ESG management, SK hynix launched an ESG task force (TF) under the immediate control of the CEO, which then was promoted to a regular organization at the end of the year. In 2021, in particular, SK hynix plans to establish the “ESG Management Committee”, a monthly meeting body directly supervised by the CEO, to formulate mid- to long-term ESG management policies and reinforce execution capabilities, and to eventually internalize related management systems.
Meanwhile, through his New Year’s message, Seok-Hee Lee, CEO of SK hynix talked about the company’s future plan for ESG management by saying, “Although it requires a lot of effort for a long time, SK hynix will reinforce ESG management to create more economic and social values, contribute to humanity and society, and step up on a virtuous cycle to develop into a more sustainable company.
The SK hynix’s global newsroom team heard from Bangsil Lee about her philosophy and future plans for ESG management.
1. What do you think is ESG management?
Basically, ESG is a concept starting from the perspective of “investors” among various stakeholders of a company. This is to figure out how a company is contributing to the environment and society under what type of governance, in order to ensure a more sophisticated corporate valuation than before. Specifically, investors are mainly asking for the three things: understanding risks arising from environmental issues in companies; understanding financial risks that can arise from the relationship with various stakeholders within the value chain ecosystem; and disclosure of information on the decision-making system of the corporate (governance) that manages these environmental and social risks.
What is important is how companies like SK hynix will respond to these changes in investors’ demands. Companies need to take a more proactive approach, not a passive approach such as responding reluctantly. I think it is necessary to expand the scope of thinking, rather than just staying in the realm of managing business risks and increasing operational efficiency. I believe that the core of ESG management that SK hynix should pursue is to use ESG as a growth momentum that can create new value by objectively diagnosing the company’s sustainability to reflect in the company’s long-term strategy.
2. Why did you choose SK hynix and what do you think is SK hynix’s ESG level, from the perspective outside the company?
SK hynix, which overcame all kinds of hardships and has established itself as a global semiconductor company, has continued to grow by constantly challenging itself without fear of crisis. I feel very happy and grateful for the opportunity to be part of this great company.
To the question related to SK hynix’s ESG level from the outside, I’d like to introduce the comments of Yoo-kyung Park, Head of APAC Responsible Investment & Governance at All Pensions Group (APG) Asset Management, the largest pension provider in the Netherlands. Park pointed out, “It is commendable that the SK Group has taken lead to emphasize social values sincerely; however, there is a concern that the social value is emphasized too much so that some affiliates are mistaken that the overall evaluation of ESG will improve, even if they do well in the social sector only.”1 Of course, APG Asset Management does not represent the entire global asset management companies and it is an evaluation of the entire SK Group, not individual affiliates, such as SK hynix, but I think it has some significance.
3. What do you think are the core ESG topics that SK hynix should deal with?
Currently, the part where many investors put great importance is the corporate strategy to manage risks and discover opportunities in terms of environmental aspects, such as climate change response and water resource management. In particular, investors want companies to deal with ESG topics at the board of directors, the top decision-making body of a company, based on leadership. This is because they view ESG as a topic that should be reflected in long-term management strategy, not an operational topic to be handled at a specific department level within the organization.
4. Please tell us about your future plans and the vision you want to pursue at SK hynix.
It would be great if I can contribute to SK hynix to evolve and develop into a company that contributes to the happiness and prosperity of mankind and a company that is loved and respected by people more than now. By carefully listening to various voices inside and outside the organization, I will do my best to realize ESG management where all internal members can share their heart, while being recognized by external stakeholders.
1 Source: https://dbr.donga.com/article/view/1205/article_no/9819/ac/magazine
