ESG at a Crossroads: The Evolving Role of Shareholders in Korea and Worldwide

In the age of Environmental, Social, and Governance (ESG) imperatives, the role of shareholders stands at a crossroads. Once perceived largely as passive beneficiaries of corporate profits, shareholders are now increasingly positioned as potential stewards of sustainable and responsible governance. This article examines the evolving role of shareholders in ESG engagement, with a particular focus on South Korea in comparative perspective. Global frameworks such as the UK Stewardship Code and the U.S. shareholder proposal system have institutionalized shareholder involvement in ESG matters, encouraging both institutional and retail investors to influence corporate behavior. Yet, in Korea, shareholder engagement remains limited and fragmented. Mechanisms such as the Korean Stewardship Code guide institutional investors toward a quasi-duty to consider ESG factors, but lack binding obligations and effective enforcement mechanisms, raising doubts about their impact. Moreover, shareholder activism in Korea continues to emphasize traditional corporate governance reforms (so called ‘Korea Discount’), conflicts between controlling shareholders and minority shareholders, and financial value maximization, while environmental and social agendas seldom make it onto shareholder meeting. Drawing on developments in the UK and U.S., this article undertakes a comparative legal and theoretical analysis of the shifting expectations placed on shareholders, the conceptual development of stewardship, and the institutional and structural barriers to meaningful ESG integration in Korea. It also considers how digital platforms, civil society pressures, and generational changes in investor behavior may reshape this landscape. Ultimately, the paper argues that although the normative vision of shareholder-led sustainability has gained global traction, its realization in Korea remains constrained by legal design and regulatory inertia. In the Korean context, while voluntary shareholder activism may play a role in governance(G) matters, regulatory mandates and top-down policy interventions, such as climate disclosure requirements, offer a more realistic and effective pathway for advancing environmental(E) and social(S) objectives within corporate governance frameworks.