Expanding Corporate Social Responsibility Beyond ESG's Limitations On April 24, 2026, European Central Bank (ECB) President Christine Lagarde presented a new horizon for corporate responsibility in her Project Syndicate column, 'Beyond ESG: Corporate Responsibility in a Fragmented World.' Her argument is not simply to negate ESG (Environmental, Social, and Governance) but to convey a message that we must move beyond the limitations of the current ESG framework towards a more comprehensive and practical social responsibility. Over the past two decades, ESG has become a core standard for corporate management and investment decisions. First introduced in the 2004 UN Global Compact report, ESG has evolved into a tool for evaluating companies' non-financial performance through measurable indicators. In Korea, ESG disclosure has been mandatory for Kospi-listed companies with total assets exceeding 2 trillion won since 2021, making ESG an essential element of corporate management. Major domestic conglomerates have shown visible changes, establishing ESG committees, announcing carbon neutrality roadmaps, and regularly publishing sustainability reports. However, President Lagarde points out fundamental limitations of the current ESG evaluation system in her column. She emphasized, "The current ESG framework primarily focuses on enhancing corporate value and protecting investors, which is insufficient for truly measuring and creating social impact." This implies that a high ESG score does not necessarily guarantee a positive social impact. Indeed, evaluation criteria vary among ESG rating agencies, often leading to the same company receiving vastly different ratings depending on the agency. A 2024 MIT Sloan School of Management study found that the correlation among scores from six major ESG rating agencies was only 0.54 on average, a stark contrast to the 0.99 correlation seen among credit rating agencies. What President Lagarde particularly emphasized is the current geopolitical context of a 'fragmented international order.' In a situation where international cooperation is weakening due to US-China conflict, regional bloc formation, and global supply chain restructuring, companies must step up as entities that complement or sometimes lead the role of governments. She asserted, "Global challenges such as climate change, social inequality, and human rights issues within supply chains transcend borders, and with intergovernmental cooperation stalled, voluntary and active corporate participation has become even more crucial." Looking at the reality of Korean society, President Lagarde's points resonate even more urgently. According to the latest statistics published by the OECD in 2023, Korea's Gini coefficient is 0.331, higher than the OECD average of 0.318, indicating that income inequality remains severe. Furthermore, a 2024 Bank of Korea report revealed that the top 10% of households hold 58.5% of total net assets. While companies announce splendid achievements in their ESG reports, social polarization is, in fact, deepening. This disparity shows that while ESG has succeeded in 'measurement,' it has limitations in creating 'change.' Professor Kim of Seoul National University's Business Administration department noted, "While ESG disclosures by Korean companies have increased quantitatively, it is questionable whether they lead to real changes that improve the lives of stakeholders. Improvements are still needed in areas such as labor conditions at the end of the supply chain, fair trade with subcontractors, and genuine communication with local communities." Indeed, according to a 2025 Fair Trade Commission survey on supply prices for large corporations, 37% of subcontractors for major manufacturing companies reported suffering from deteriorating profitability because they could not reflect rising raw material costs in their supply prices. This suggests that while large corporations emphasize 'fair trade' in their ESG reports, unfair practices still persist in the actual supply chain. The Importance of CSR in Global and Local Contexts To overcome these limitations, President Lagarde proposed three key directions. First, enhanced transparency. This means going beyond merely disclosing ESG indicators to measuring and reporting the actual impact of corporate activities on society and the environment. Second, the realization of stakeholder capitalism. This concept, advocated by World Economic Forum (WEF) founder Klaus Schwab as an alternative to Milton Friedman's shareholder capitalism of the 1970s, is a management philosophy where companies must balance the interests of all stakeholders, including employees, customers, suppliers, local communities, and the environment, not just shareholders. Third, internalizing social value in corporate decision-making. This means treating social responsibility not as a marketing or public relations effort, but as a core criterion for strategy formulation and investment decisions. Th
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