The Role of NGOs for Strengthening ESG in Korean Business Enterprises: With Special Reference to Stakeholder Capitalism

Abstract

This paper examines the role NGOs play for strenthening ESG in Korean business enterprises. In a global polycrisis, ESG is imperative for companies to adhere to carbon neutrality for future survival. I compare shareholder capitalism and stakeholder capitalism within the analytic framework of political representation system and interest intermediation system. Shareholder capitalism is grounded on free market economy where the state incorporates different group interests based on social pluralism. It is, by and large, characterized by local constituencies within the presidential system. In contrast, stakeholder capitalism runs on coordinated market economy where the relationship between the state and society can be seen as social corporatism. It is usually marked by proportional representation under the parliamentary system. This is one of the reasons why Anglo-Saxon shareholder capitalism needs ESG unlike the European stakeholder capitalism with ESG already embedded. There is a limit to ESG propelled by Korean companies. The most important reason is the fact that business enterprises are not ready to adopt stakeholder capitalism. Although Korean NGOs fall behind business enterprises in many capacities including resources and organization, the latters need to be monitored by the former that enlightens civil society for the understanding of the advantages of stakeholder capitalism. In conclusion, I propose a “critical cooperation” between NGOs and business enterprises for consolidating ESG.