SK Hynix receives mixed ESG ratings from agencies KCGS downgrades the company's E rating while MSCI and S&P Global upgrade ratings

Translated by Kim So-in 공개 2022-01-17 07:43:36

이 기사는 2022년 01월 17일 07:41 더벨 유료페이지에 표출된 기사입니다.

A chemical leak at SK Hynix has led Korea Corporate Governance Service (KCGS) to downgrade the company’s environmental (E) rating among ESG (environmental, social, governance) ratings while foreign agencies upgrade the company’s ESG ratings.

KCGS held an ESG rating committee meeting on Wednesday and downgraded the ESG ratings of 11 companies, reflecting ESG risks identified from October 1, 2021 to January 3, 2022. Additional adjustments are expected to be made in April.

SK Hynix’s E rating has been downgraded from A to B+ due to the chemical leak accident. The adjustment has been made in response to a chemical leak occurred at SK Hynix’s Cheongju plant in October 2021 after one worker was injured due to a hydrofluoric acid leak at the Icheon plant in Gyeonggi Province in April 2021.

KCGS’ evaluation on SK Hynix is different from that of a foreign agency. Morgan Stanley Capital International (MSCI) upgraded SK Hynix’s ESG score from BBB to A in December 2021. S&P Global also raised the company’s ESG score from 76 to 79.

For the environmental dimension, SK Hynix received 79 points from S&P Global, far exceeding the industry mean of 30 points. The company received nearly 100 points for the environmental policy and management systems, although the score is unlikely to have included ESG issues occurred after November 2021.

KCGS downgraded SK Hynix’s E rating, but its overall rating stayed the same. This means either the latest adjustment did not have strong impact on the overall rating, or that the agency will monitor the company’s follow-up measures for improvement.

The reason why the evaluations by foreign and domestic agencies differ is that each agency has their own criteria, with ESG issue risks reflected at a different timing.

“Domestic agencies, such as KCGS, reflect issues (into scores) faster than foreign agencies as they could take a closer look at issues here,” said a corporate governance expert.

“They can better reflect aspects that are difficult for global agencies to properly take into account, such as the nation’s unique chaebol structure and local environmental issues.” (Reporting by Choong-hee Won)
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