When it comes to the banking sector's environmental, social, and governance (ESG) efforts, an industry veteran says the success depends on the chief executive officer’s sense of balance.
In an interview with The Korea Economic Daily, Non-Executive Director at Standard Chartered Korea Choi Hee-nam said, “If the CEO pays attention only to the growth of the financial metrics, the ESG management will not improve,” adding that patience is the key.
On Saturday, Standard Chartered Korea received an A+ grade for four consecutive years from the Korea Institute of Corporate Governance and Sustainability.
It was also named the model corporate governance company on Dec. 2, a first for a financial institution.
The honorary title is given to companies that have received a governance award at least twice in the last four years and an A+ grade in evaluations. Before Standard and Chartered this year, there were no award recipients in the last 14 years.
Choi said the corporate culture of the board of directors leading the decision-making is the reason behind the company’s success.
The board of directors at Standard Chartered Korea decides on the bank’s immediate following year and the next five-year's strategy at its annual end-of-year board meeting.
On top of that, it also hosts semi-annual meetings on a select topic of the year such as cryptocurrency, online banking, and more.
“The fact that the board of directors is leading the major decision-making and operating in-house CEO training program has been helpful,” Choi said. “Recently we have been collaborating with the management to strengthen control within the company.”
Logo of Standard Chartered Korea
In South Korea, a bank’s president usually serves two to three years, shorter than his or her counterparts in the United States and Western Europe. Due to the shorter term, the top management is inclined to focus on the financial metrics rather than non-financial metrics that take longer to show results.
“Most of the ESG tasks such as improved governance are not easy to achieve in a short period of time,” Choi said. “The chief executive should show the determination to think long-term for the company regardless of his own term as the president.”
Choi also cautioned against companies shutting down their ESG projects during an economic slowdown.
