Insights

“Cooperating with Government, National Assembly, and Civil Society to Build
an Environment for ESG to Take Deep Root Across Society” (Korea NGO News)

[Interview] 'The Pioneer of Socially Responsible Investment', Karl Chun Seung Yang,
Executive Director of the Korea Sustainability Investing Forum

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• Publishing the 'ESG Finance White Paper' and 'Fossil Fuel Finance White Paper' to guide financial institutions' ESG practices
• Participating as a joint secretariat for the National Assembly ESG Forum, executing an active role in enacting the Framework Act on ESG

The climate crisis is intensifying. Typhoons, torrential rains, wildfires, and droughts are all products of this crisis, destroying nature and claiming the lives of both humans and animals. Without resolving the climate crisis, we have no future.

This is precisely why corporate social responsibility is heavily demanded today. While a company's objective is to generate profits by producing and selling products and services, its future cannot remain optimistic if its activities destroy the environment and worsen the climate crisis. The future of Earth and humanity hangs in the balance.

Karl Chun Seung Yang, Executive Director of the Korea Sustainability Investing Forum (KoSIF), pointed out: "The climate issue has gone beyond mere temperature rises; it is threatening the health and lives of not only the current generation but also future generations. The slower we are to respond, the more exponentially the cost of damages will increase."

He emphasized that "long-term, consistent national strategies are required, and we must counter urgent climate challenges with speed." We sat down with Executive Director Yang to discuss the concept of Socially Responsible Investment, the founding objectives and primary activities of KoSIF, and his recommendations for resolving the climate crisis.

    Q. First, could you introduce the concept of Socially Responsible Investment and the founding purpose of the Korea Sustainability Investing Forum?

Socially Responsible Investing (SRI) is an investment approach that takes into account social and environmental values alongside economic returns. Instead of chasing high returns in isolation, it evaluates a company's environmental protection, social responsibility, and ethical management to allocate capital into businesses that meet these criteria. It is also referred to as sustainability investment or ESG investment. Recently, the recognition that a corporation's financial profits and sustainable development are mutually reinforcing has been spreading globally.

The Korea Sustainability Investing Forum (KoSIF) was established in 2007 to catalyze socially responsible investment and sustainable finance. Our goal is to help corporations fulfill their social and environmental duties beyond chasing economic profits, thereby contributing to building a better society.

Our core founding objectives are:

• Expanding socially responsible investment
• Reinforcing the social responsibility of investors and corporations
• Shaping a sustainable financial market
• Building a culture that reflects social responsibility and sustainability within the Korean financial market

Crucially, KoSIF is the first non-profit organization in South Korea to drive ESG by engaging primarily with financial institutions. To expand the understanding and participation of financial institutions and corporations in ESG, we conduct a diverse range of activities, including research, education, policy development, legislative support, international cooperation, and campaigns.

    Q. I understand you are the founder of KoSIF. What inspired you to establish the forum?

In 2004, when I turned 50, I entered graduate school to study energy policy, looking for a breakthrough for an environmental business I had been struggling to run. Because it was an energy policy department, my studies centered heavily on sustainability and climate change. Immersing myself in these topics led me to realize that our world is facing a massive sustainability crisis, epitomized by climate change, the extinction of biological species, and waste crises.

Furthermore, it felt as though society was moving backward. While democracy was advancing, human rights were still being brutally ignored in certain areas. For instance, South Korea historically did not have many homeless individuals, but ironically, as our living standards improved, the homeless population expanded. Seeing these environmental and social cracks widen during graduate school, I resolved to dedicate the second half of my life to breaking through this sustainability crisis.

My focal point was the corporation. I didn't think it was wrong for companies to make money. Rather, I thought it would be wonderful if companies could magnify their positive impacts and shrink their negative impacts on society and the environment while turning a profit.

At that time, the Corporate Social Responsibility (CSR) movement was in full swing, and the socially responsible investment movement was gaining strong global momentum. Coincidentally, the term "ESG" surfaced for the first time in 2004, and the UN-backed Principles for Responsible Investment (PRI) was launched in 2006.

The foundational concept of SRI is: "Let us move money to alter corporate behavior." Historically, financial institutions poured money into whatever generated the highest returns. To put it bluntly, the mindset was that as long as it made money, it didn't matter if it involved lethal weapons or illicit drugs. SRI upends this by integrating ESG into investment choices—evaluating the social and environmental footprints of capital. It is about reshaping the world by altering the behavior of finance and corporations. KoSIF was built precisely to do that work.

    Q. It seems that Socially Responsible Investment is equally critical from the perspective of financial institutions themselves.

Exactly. If corporations deteriorate and struggle due to unmanaged ESG risks, finance deteriorates with them. The 2008 global financial crisis is a prime example. The reckless distribution of subprime mortgages accumulated non-performing loans, which cascaded across the financial sector and triggered a systemic crisis.

Because humanity is experiencing a large-scale climate crisis for the very first time, no one has historical data on climate-induced financial risks. Who could have anticipated that summers would become this extreme? Over time, these climate risks can destabilize the entire global financial architecture. Protecting financial institutions, fostering healthy corporations, and making the world a livable place through capital allocation—this is the true essence of socially responsible investment.

    Q. While SRI, CSR, and ESG emerged at different times and hold distinct core meanings, they are often understood as interconnected and expanding concepts. How would you easily explain their concepts and boundaries to the general public?

CSR means that a corporation takes active responsibility to exert a positive impact on society and the environment while chasing economic gains. Moving beyond basic economic and legal obligations, it involves playing an ethical and responsible role for a diverse range of stakeholders, including local communities, the environment, workers, and consumers. The core of CSR lies in stakeholder management, pursuing sustainability across generations, transparent governance, and generating positive footprints. It represents a corporation's self-awareness as a vital member of society.

ESG represents the specific factors used to evaluate a company's sustainability—standing for Environmental, Social, and Governance. ESG steers corporations away from focusing solely on near-term financial metrics, pushing them toward a management style that values environmental preservation, social justice, and transparent administration for long-term growth. Investors utilize these criteria to assess a company's sustainability and make informed investment choices. It has also become a standard for consumers to demand greater accountability from businesses.

The common denominator among CSR, ESG, and SRI is the pursuit of sustainability and long-term success. Sustainability means satisfying macro-sustainability (the global ecosystem and socio-economic systems) and micro-sustainability (corporations and individuals) simultaneously.

The difference lies in their execution: CSR is a voluntary activity driven internally by the corporation itself; ESG provides the objective criteria and metrics to measure that responsibility and sustainability; and SRI is the actual investment practice that uses ESG data to allocate capital responsibly. While CSR focuses on internal corporate operations and its success is evaluated by the company itself, ESG and SRI provide the objective indicators that external investors and stakeholders use to evaluate and finance a business.

    Q. Why do we urgently need SRI, CSR, and ESG right now?

The common anchor across all three terms is sustainability. This is evaluated through "double materiality": the impact a corporation has on the environment and society (and the resulting social costs), combined with the impact that environmental and social shifts have on a corporation's bottom line. By minimizing the former and maximizing the latter, we can simultaneously secure ecosystem-level macro-sustainability and corporate-level micro-sustainability. We desperately need these frameworks because our current socio-economic model is accelerating the degradation of our planet and human society. Without solving these issues, the survival of both humans and corporations is endangered.

    Q. Since its inception, KoSIF has deployed various initiatives to embed and expand these frameworks. What are your primary operations?

Our main operations center on collaborating with global initiatives, researching and driving sustainable finance, and proposing ESG legislation and policies.

First, after introducing CDP to South Korea for the first time in 2008, KoSIF has served as the official Korean partner for RE100, EV100, and the Partnership for Carbon Accounting Financials (PCAF). We are also continuously expanding our cooperation with international initiatives like the Science Based Targets initiative (SBTi) and the Glasgow Financial Alliance for Net Zero (GFANZ). Through these partnerships, we help domestic financial institutions and corporations identify climate-related risks and opportunities to practice responsible management.

Researching and vitalizing sustainable finance is another core pillar. To guide financial institutions, we publish the ESG Finance White Paper and the Fossil Fuel Finance White Paper annually, disclosing critical data to steer proper financial practices. These two white papers are proprietary reports unique to KoSIF. They hold significant meaning because they map out the exact scale and trajectory of domestic ESG finance and fossil fuel funding based on a comprehensive census of both public and private financial institutions.

Finally, we place great emphasis on the role of laws and policies in engineering an ESG ecosystem. Legal frameworks are not mere regulations; they provide the baseline that empowers corporations and financial institutions to hit sustainability goals. For ESG to move beyond empty rhetoric, supporting laws must be designed to match reality. To this end, we collaborate with the government, the National Assembly, and civil society to build an infrastructure where ESG can take deep root.

    Q. Recently, KoSIF began serving as both the operating secretariat and the primary ESG think tank for the National Assembly ESG Forum. Could you share the background and upcoming plans for this forum?

To ensure that ESG policies are discussed consistently, KoSIF has consistently supported and operated ESG-related forums across multiple terms of the National Assembly, reinforcing ties with the legislature to provide timely policy alternatives.

Because ESG requires seamless collaboration across corporations, financial institutions, the government, and consumers, the National Assembly ESG Forum serves as a platform to orchestrate this cooperation. KoSIF will effectively bridge our networks across civil society, finance, and industry with the National Assembly to ensure professional, high-level policy debates.

The forum is backed by 45 bipartisan lawmakers, including representative members Min Byung-dug and Jeong Hee-yong, which will strengthen cross-party cooperation on ESG. We will support regular policy seminars to integrate field-level feedback into concrete legislation. In particular, since the representative lawmakers have expressed a powerful commitment to enacting a Framework Act on ESG, KoSIF—as the primary ESG think tank and joint secretariat alongside the UN Global Compact Network Korea—will execute a central role in ensuring this bill is successfully passed during the current legislative term.

    Q. During the forum's launch event, KoSIF presented 10 core ESG policy agendas for the 22nd National Assembly, followed by intense debates on the Framework Act on ESG. Could you expand on these 10 agendas and the Framework Act?

The 10 ESG policy agendas provide a comprehensive roadmap for the National Assembly. While responding to global ESG shifts is a mandate, domestic efforts have remained fragmented. We proposed these agendas to drive a more holistic strategy:

1. Enacting the Framework Act on ESG: Building a master legal architecture that harmonizes regulation and supportive incentives, encompassing ESG disclosure, investment, verification, and evaluation.
2. K-Sustainable Finance Action Plan: Mapping out a strategic plan to direct capital flows into a sustainable economy and mainstream long-term, transparent finance.
3. Mandating ESG Information Disclosure: Clarifying disclosure standards, channels, and exact timelines to eliminate ambiguity and elevate corporate transparency.
4. K-Sustainable Finance Disclosure: Mandating financial institutions to disclose sustainability data at both the product and corporate entity levels to inform consumers and investors.
5. Integrating Climate Risk into Asset Quality Assessments: Requiring financial institutions to factor climate risks into their asset quality evaluations to reduce financial market volatility.
6. Net-Zero Asset Portfolio Policies for Public Finance: Implementing explicit net-zero investment strategies across public financial institutions to curb portfolio emissions.
7. Expanding ESG Consideration and Stewardship Rights for Public Pension Funds: Ensuring public pensions evaluate ESG factors in investee companies and actively utilize stewardship rights beyond basic voting.
8. Enacting an ESG Supply Chain Due Diligence Law: Establishing a sustainable supply chain framework by providing due diligence and management support for human rights and labor issues within SME supply chains.
9. ESG Public Procurement: Applying ESG criteria to government public procurement to incentivize and accelerate ESG management among small and medium enterprises.
10. Reinforcing Preventative Measures Against ESG-Washing: Enacting strong policy measures to penalize "washing"—where companies merely maintain a superficial appearance of sustainability—to preserve market credibility.

The first agenda, the Framework Act on ESG, is designed to solve the fragmentation of current policies by addressing the ESG market from an ecosystem perspective. We are actively drafting its legislative support content.

The ESG market can only function properly when all core players—corporations, financial institutions, verification bodies, consumers, and the government—can reap their expected benefits. The Framework Act on ESG aims to consolidate scattered individual laws and policies into an overarching superior law to ensure consistency, while identifying and supplementing missing regulations and support mechanisms. Its ultimate focus is to provide more market opportunities to corporations genuinely practicing ESG, minimize unnecessary or overlapping regulatory burdens, and build an institutional foundation that drives the sustainable development of both businesses and society.

    Q. Alongside organizations like the Economic Reform Research Institute, Greenpeace, and the Korea Green Environment Institute, KoSIF is actively urging for mandatory climate disclosure in South Korea. What exactly is climate disclosure, and why do you advocate for its swift mandating?

Climate disclosure means measuring how climate change will impact a corporation's financial value from a rigorous financial standpoint, and disclosing that data transparently to investors and stakeholders. Sustainability disclosure, including climate data, has become an irreversible global baseline and serves as a critical compass for responsible capital allocation.

It serves as a core mechanism that steers corporations toward long-term value creation and provides investors with reliable data. If climate disclosure is not mandated early on, investors will struggle to obtain credible ESG information, which will amplify the risk of a "Korea Discount."

KoSIF has brought this issue to the forefront through joint press conferences with domestic NGOs and lawmakers. We are working diligently to execute mandatory sustainability disclosures swiftly, securing support from major international investment coalitions such as the UN-backed PRI.

    Q. Ultimately, the heart of the issue is the climate crisis. How do you diagnose our current situation, and what happens if we leave it neglected?

The climate issue has escalated past simple temperature graphs; it is a direct threat to the health and lives of people living today. The longer we delay our response, the more the financial and human costs will increase exponentially.

Today, climate risk can be quantified into concrete financial damage. Global GDP is projected to shrink by up to 18%—amounting to roughly $10 trillion annually—by the year 2100. While annual natural disaster recovery and relief costs are currently estimated at $300 billion to $400 billion, they are expected to more than double in the near future. Declining agricultural yields are projected to generate losses of approximately $170 billion annually by 2050, and health-related climate costs are estimated to hit $200 billion per year by 2030. Infrastructure and real estate losses in coastal zones due to rising sea levels are expected to reach $11 trillion annually. Furthermore, if financial asset valuations drop due to climate risks and investors fail to hedge against climate impacts, asset losses exceeding $4.2 trillion could be triggered every year.

    Q. As the climate crisis worsens, ESG is being emphasized globally, and domestic corporations are increasingly adopting it. However, it seems we still have a long way to go. What efforts are required from the government, the National Assembly, and corporations?

We need long-term, consistent national strategies, and we must execute urgent climate responses with immense speed. The government must quickly review the diverse policies proposed during the National Assembly ESG Forum launch, outline swift implementation roadmaps, and build a tight-knit collaborative matrix between the private sector and the political sphere.

We must enact institutional backstops and supportive policies for ESG finance, such as establishing an ESG Financial Corporation. Furthermore, we need to officially integrate ESG-related curricula into primary and secondary school education. Concurrently, powerful sanctions must be leveraged against ESG-washing.

Crucially, because the heart of a virtuous ESG ecosystem is verified data, ESG information disclosure must be mandated early on. The initial roadmap aimed to mandate ESG disclosures starting with large KOSPI-listed companies with assets over 2 trillion KRW. However, this was pushed back, and now business federations are arguing for a postponement to 2029.

But ask yourself: Will global investment capital gravitate toward a nation that provides transparent, reliable ESG information, or will it flow to a country where data remains completely obscured? To secure the strength of our financial markets, climate disclosure must be implemented without delay.

    Q. Civil society must also play a defining role. Do you have a final message for the public?

Voting wisely is the single most critical action. A government must make the hard policy decisions to curb greenhouse gas emissions. When casting your vote, examine candidates closely and reject politicians or political parties that remain lukewarm on climate change and structural sustainability issues.

Furthermore, I encourage citizens to support and participate in civic organizations that are entirely dedicated to ESG and sustainability. Public interest is our strongest fuel. Moving forward, KoSIF will expand its operations beyond climate finance to encompass broader environmental and social horizons, including biodiversity, human rights, and labor. We look forward to your continuous encouragement so that these shifts can bring a profoundly positive transformation to our society.