ESG performance and financial performance

ESG, as sustainability issue, is stressed in both processes of government policy making and corporate strategy development. The purpose of this paper is examining the ESG situations related to both the government and private companies in Korea. The first part investigates the diverse policies and initiatives related to ESG in Korea. In the first part, ESG infrastructure advancement plan, ESG information disclosure, ESG rating and ESG finance status are described. In the second part, statistical analysis is performed to show the impact of corporate ESG performance on firm performance in Korea. Positive relationship is significantly found between ESG performance and profitability measured by ROA (return on asset) but the relationship between ESG performance and stock price return did not provide significant result. Based on our analysis in the first and second part, some implications for ESG policies and corporate strategy are discussed.