ESGG, instead of ESG
Ethical Sustainable Global Good
1. Proposal background of ESGG
ESG management has become an undeniable trend recently, not only for corporations but for all organizations. ESG stands for Environmental, Social, and Governance, and it emphasizes the pursuit of sustainable management and fulfillment of social responsibilities. International societies and governments worldwide are developing specific guidelines and directions for ESG. Consequently, it is now necessary to consider not only financial performance, but also non-financial factors. Efforts to address the climate crisis highlight a focus on the environment (E), as well as social responsibilities (S) to address polarization. There is also a growing demand for transparent governance (G) to support these goals. However, there are several obstacles in the execution phase, including a lack of information and the reliance on subjective judgment. Nevertheless, ESG reflects the realization that corporations cannot solely pursue profit maximization and must prioritize sustainability. Therefore, social responsibility, transparency, and efforts to address the climate crisis will inevitably continue to be essential.
Enhancing carbon reduction activities within ESG can be a win-win opportunity. Climate technology and services are bound to become the most critical industries soon. As the climate crisis worsens, the international community's efforts to address it will accelerate, leading to an explosive growth in investments and markets for climate technology and services. Therefore, excellent climate technologies and services not only hold the potential for significant financial returns, but also contribute to creating a sustainable global ecosystem. Such activities can serve as advantageous factors for the E and S aspects of ESG, and objective evaluation criteria can be established.
However, there is still debate about whether social responsibility (S) and governance improvements (G) significantly contribute to a company's growth or performance. For instance, the criteria for distinguishing genuine ESG efforts from ESG washing, where companies engage in philanthropic activities with profits generated through any means, remain ambiguous. In the case of governance, although board composition, roles, and shareholder right protection are used as indicators, the increasing demands for governance (G) seem to prioritize the prevention of investor damage caused by major accounting scandals like Enron. While transparent governance is undoubtedly important for sustainable management, there is a concern that entrepreneurial spirit, such as the decisive decision-making and daring challenges of entrepreneurs for creating social value, may be overlooked. In fact, our society is currently at a point where various challenges for a new global order need to be undertaken in all fields, and entrepreneurial spirit is highly demanded. It is questionable how much these aspects will be reflected in ESG management indicators. If such entrepreneurial spirit can make the world a better place, I believe it should be crucially reflected in ESG management indicators.
While transparent business practices are crucial for protecting investors' rights, it is necessary to examine more closely whether a company's vision is oriented towards contributing to society and whether there are concrete methodologies to implement it. A comprehensive evaluation methodology is needed to meticulously assess such plans and their execution results. It is important to reiterate that it is impossible for any company or organization in the world, as long as they pursue narrow social values like profit maximization or national interests to solve the climate crisis and to build a leap-forward human civilization that seeks prosperous coexistence as a global community. Therefore, it is crucial to remember that we are currently in a situation where we must not destroy the common sense that humanity possesses and establish a new order.
Although it may be a topic that no one dares to contemplate, we have limited time remaining, and if we fail to address these issues, we will face a dystopia. If there is a shared understanding of this, we should all come together to solve these challenges, considering the urgency of the situation. Taking these factors into account, I propose a new form of ESG management that aligns all organizations towards a vision of contributing to global values, rather than being solely focused on profit maximization.
2. ESGG (Ethical Sustainable Global Good)
As mentioned earlier, if we respect the opinions of scientists that we have approximately a decade left to address the climate crisis. It is clear that extreme measures are required. This means avoiding the current economic development model and expediting the digital transformation (DX) to optimize the real world. We need to activate the sharing economy and reconstruct resource circulation in an extreme yet natural manner. Furthermore, concepts that may be unfamiliar in our current mindset, such as the activation of the digital economy and self-realization education, must be urgently applied in a direction that overcomes the climate crisis and contributes to global values.
Above all, if we realize that the human community is a community of shared destiny and that we must collectively strive to maximize global values for prosperous coexistence, it is of utmost importance. The recent proposition by representatives of artificial intelligence development companies to temporarily halt AI development is highly significant. It reflects concerns about the direction of AI as it becomes smarter. It is dangerous to use superior intelligence for crime. Whether individuals, artificial intelligence, corporations, or nations, all must pursue the global good that contributes to prosperous coexistence, regardless of personal interests.
If ESG was proposed as a solution to the climate crisis, a universally relevant issue, then it should explicitly state that the organization's vision and direction align with creating global values. Declaring that our organization will respond to the climate crisis and contribute to society through fair and transparent methods is insufficient. A true ESG organization should be able to declare, like Patagonia, a frequently cited model of an ESG company, that "the only shareholder of Patagonia is the Earth." Many companies in Korea and around the world have made efforts to contribute to global values. We should evaluate these companies as genuine ESG companies. In other words, unless the direction of all organizations, companies, and individuals is fully realigned towards maximizing global values, there is no hope for the future of humanity.
Therefore, focusing solely on profit maximization falls short, as the climate crisis is a global issue that transcends wealth, geography, and national boundaries. If we recognize that, for the first time in human history, humanity must come together to address this challenge, then any vision of an organization practicing ESG must explicitly include a declaration to pursue global values. To pursue such global values, rational and ethical judgment must always be present, and all business activities should be directed towards benefiting all species and ecosystems. Even small actions should be considered to align with this direction and to set a vision, declaring a commitment to true ESG management.
These global values naturally prioritize environmental tasks for overcoming the climate crisis and inevitably address polarization and social conflicts. However, even within this prioritization of global values, it is necessary to generate profits to sustain an organization. Therefore, for companies and organizations to pursue global values, specific business plans must be presented on how members and stakeholders can lead sustainable lives, and the feasibility of these plans must be evaluated.
In summary, ESGG (Ethical Sustainable Global Good) goes beyond profit maximization and requires organizations to align their visions with pursuing social values that contribute to the planet. This includes an explicit declaration of pursuing global values, setting specific business plans to enable sustainable lives for members and stakeholders, and evaluating the feasibility of these plans.
ESG emphasizes the pursuit of both economic and social value creation by companies, while "Global Good" carries a deeper meaning than "Global Value." Global Good encompasses a broader scope, aiming to achieve the overall benefit and well-being of humanity. It aligns with the traditional Korean philosophy of ‘Hongik Ingan’ (弘益人間, benefiting all of humanity) and signifies the pursuit of greater philosophical and social values. By practicing Global Good, companies contribute to society, promote social responsibility, and contribute to the welfare and sustainable development of humanity. Becoming a company that practices Global Good and works together with customers, members, and the global community can be seen as the true success model of ESG management. Therefore, it is important to have a clear vision for Global Good, establish specific implementation plans, and ensure that the results of these efforts are well-reflected in corporate reports. If these conditions are met, the company is likely to be loved by customers and shareholders as an ESG enterprise.
Considering this, it is suggested to emphasize global values rather than ESG by using the concept of "ESGG" (Ethical Sustainable Global Good). As mentioned earlier, the core of ESG lies in the organization's vision of pursuing global values and the presence of specific methodologies to achieve them, as well as evaluating the proper implementation of these values. If ethical, moral, and intellectual judgments are closely examined in the decision-making process, more meaningful evaluations can be made than just focusing on transparent governance structures.
Therefore, replacing ESG with "Ethical Sustainable Global Good" emphasizes the direction of contributing to global values in the business operations of companies and organizations, defining it as "ESGG management." It is proposed to establish systematic guidelines and evaluations for this approach.
ESGG represents a management approach where companies and organizations strive for sustainable development while considering intellectual and ethical values, pursuing the overall benefit of humanity and global values.
"Ethical" represents the ethical aspect, judging whether companies or organizations adhere to moral principles such as fairness, responsibility, and truthfulness. This can encompass certain indicators related to social (S) or governance (G) aspects used in traditional ESG, but it would be beneficial to include more fundamental indicators for making comprehensive judgments.
"Sustainable" denotes sustainable growth, where companies or organizations aim for economic growth while considering environmental and social factors. This can include indicators related to environmental (E) or social (S) aspects used in traditional ESG.
"Global Good" signifies the pursuit of global values, considering the benefit of all humanity and the preservation of the Earth's ecosystem. It emphasizes that companies or organizations should contribute to protecting the Earth's ecosystem and enhancing human welfare. Evaluating the vision and practical implementation of companies or organizations from a global perspective would require the utilization of new indicators.
By evaluating the extent to which companies or organizations contribute to global values through ESGG, and if there is an increase in highly evaluated entities, it could serve as a measure of progress in overcoming the climate crisis and advancing toward a new civilization.
3. Evaluation of ESGG
The problem with traditional ESG lies in its attempt to apply universal indicators to all companies, making it challenging to accommodate exceptions and establish baselines for qualitative results. Companies operate in different industries, scales, and regions, each with unique business models and operational environments. Standardized indicators applied uniformly to all companies may fail to reflect the distinctive situations and challenges they face. Additionally, ESG evaluations heavily rely on qualitative assessments, making it difficult to compare results or establish baselines. Subjective judgments can introduce inconsistency and compromise the reliability of the outcomes.
Therefore, ESGG aims to utilize individual baselines and performance evaluations to assess the validity of each organization's ESGG Statement, the excellence of its execution plans, and the results achieved. This approach allows for individualized assessments of organizations based on their contributions to global values. It enables the evaluation of their direction, values, determination, and execution in pursuing global values, regardless of the magnitude of their activities.
In the evaluation of ESGG, the primary focus should be on environmental issues, especially in the field of carbon reduction. Resource circulation can also be seen as part of carbon reduction in a comprehensive sense. Short-term emphasis should be placed on these areas. Additionally, the business activities aligned with pursuing Global Good naturally encompass social (S) and governance (G) aspects, even without specifically considering them. Therefore, careful examination of the ESGG Statement is crucial. The content and feasibility of voluntary climate performance systems proposed by the SDX Foundation, such as the Voluntary Climate Performance System (VCPS), can also serve as a reference.
ESGG allows for the evaluation of each organization's contributions to global values by establishing a vision for Global Good, implementing specific execution plans, and evaluating the results. Simply by developing an ESGG Statement, organizations should receive evaluations. The concrete execution plans can provide various methodologies for maximizing the global values of all organizations. Sharing these methodologies can play a crucial role in creating a virtuous cycle that maximizes global values. Finally, evaluating the results achieved through their own capabilities and efforts in contributing to global values can make ESGG a guidebook for all organizations, and even individuals, becoming a new evaluation method that surpasses profit-centered evaluations.
