Issue Focus

This study defines governance (G), the core of ESG management, and establishes the current status and direction of construction industry governance. - With the recent expansion of ESG discussions around the world, our government is also working to advance ESG by preparing ESG-related policies, but ESG in the construction industry remains at a lower level than its importance. Governance can be defined as "the right decision-making system for all stakeholders" and is a key area of ESG closely linked to the environmental (E) and social (S) sectors. - Good governance includes values such as sustainability, participation, responsibility, transparency, fairness, inclusion, and trust, and is a broader concept than 'corporate governance', which means the ownership and control structure of a company. It is very difficult to quantify the level of governance of a company. Therefore, governance-related systems are limited to 'corporate governance' rather than 'governance', and are applied to some companies as an early stage of system preparation, but they are expected to spread gradually. - The corporate governance report disclosure system was introduced in the form of self-disclosure in 2017 and was converted to mandatory disclosure for companies with assets of 2 trillion won or more from 2019. It plans to gradually expand the target companies to the entire KOSPI listed companies from 2026. In the construction industry, despite the importance of governance than other industries due to the characteristics of the industry, ESG responses centered on large companies are being made, and responses from small and medium-sized companies are insufficient. - Governance is very important not only for successful business performance, such as winning orders and financing, but also for promoting sound and sustainable growth by protecting the rights of numerous stakeholders who interact with the construction industry. - About 20 construction companies have published sustainability management reports and corporate governance reports. Considering that the total number of construction companies is 87,239 (as of 2022), only a few large companies are implementing ESG management, and the ESG activities of mid-sized and small-sized companies are insufficient. The direction of response according to the importance of construction industry governance is as follows. - ① ESG management promotion and performance sharing: Leaders' will to promote ESG management and establish a management promotion system are needed. - ② Improving corporate governance: Protecting shareholders' rights, transparency and soundness of the board of directors and audit organizations should be established. - ③ Compliance and Ethics Management: It is necessary to establish a system for promoting compliance and ethics management within a company to build trust with stakeholders. - ④ Risk management: A stable operation of a company should be promoted and sustainability should be increased by preparing a system for prevention and response to various risks. Establishing an efficient system for companies is of course important, but fundamentally, both companies and individuals in the construction industry must share the value of consideration and respect pursued in governance. - Just as an individual cannot live alone in a community, no single company can survive alone. There is a need for a change to a mature legal personality that considers and respects stakeholders and considers the future. - ESG management will be able to play an important role in restoring trust and increasing sustainability in the construction industry.