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[Maekyung Economy] ESG ratings play too great a role as a determinant
Professor Youngju Nielsen (Faculty Chair of AI MBA, Associate Professor of Finance) has written a column about the stock market on MK News (Maekyung Economy). One thing that suddenly started to look like a loser after doing well is ESG: Environment, Social, and Governance. Skepticism over ESG ratings loomed large, starting with the greenwashing scandal of the German asset management company DWS. This was followed by the removal of Tesla in May this year by ESG evaluators S&P, to which Elon Musk tweeted, “ESG is a scam. It is weaponized by phony social justice warriors.” This sparked a series of tweets against ESG. In addition, the low rate of return on ESG funds which underperform compared with benchmarks has not mitigated this situation. So is ESG a scam, as Musk rants? First, let's consider the essence of ESG before judging whether investing in companies that are working hard on ESG increases returns. No one would disagree that the implementation of ESG by companies is very desirable, and that the world should accept it without question in the future. The recent controversy is over how to evaluate it, that is, how to ascribe points. In the end, too much depends on ratings and ranking. ESG ratings are derived from ESG rating companies' evaluation criteria, as with credit rating agencies. ESG ratings are first used by investment companies that sell ESG funds based on the ratings, and the second use could be promotional. Let's study an example of what affects scores. Most evaluation companies include an item on the Board of Directors to assess governance scores. The female director ratio is often considered here. Then, can it be said that the higher this ratio, the better the governance structure? Is a company with two females out of four directors better than one with three out of eight? This may affect total scores. As another example. Business Week referenced McDonald's ESG scores in a December 2021 article. McDonald's greenhouse gas emissions in 2019 were higher than Portugal’s or Hungary’s, and increased by 7% compared with the past four years. Still, McDonald’s ESG ranking rose because the evaluation company removed carbon emissions from the criteria as they did not consider carbon emissions a risk or a critical factor for appraisal. Many poorly explained instances stem from ESG evaluation methods. Accordingly, U.S. and European regulators are taking action to solve this problem. This year, the European Securities and Market Administration (ESMA) began investigating how ESG is evaluated and ranked, and the Financial Times (FT) reported feedback in July. Noteworthy feedback reports possible problems with transparency, error correction, and timing of feedback on the evaluation method and data, and the ESMA says it will continue to monitor whether regulations should be created. Many evaluation institutions explain that ESG ratings, by definition, are a standard for institutions and experts who understand the evaluation items they used, and who pay fees knowing how the scores were calculated. In a sense, the ESG ratings are a business source, and the idea of precisely regulating them may be unreasonable. In the end, it seems that monitoring will take place as much as in credit rating evaluation. The biggest current problem is that companies communicate with the public through the media as if they were absolute standards, so it is necessary to protect ordinary consumers understand neither ESG ratings accurately nor the bases for rankings. Original article in Korean: https://www.mk.co.kr/opinion/contributors/view/2022/07/655174/
Professional MBA: Cohort 11 tries to make the most out of 2022
Enjoy a brief summer breeze on the Han river! Professional MBA Student Union for the 11th Cohort organized a yacht party in June. Professionals work smart but enjoy smarter, against the difficulties in the spreading virus era. The Professional MBA program at SKK GSB is the best choice for those wishing to advance in their careers whilst working. The program curriculum is taught in English in a multicultural environment and provides dual degree opportunities in partnership with Indiana University Kelley School of Business.
SKK GSB completed mini-MBA session at 13th Asian Leadership Conference
The 13th Asian Leadership Conference (ALC) hosted by Chosun Media was held at the Shilla Hotel in Seoul on July 13 and 14. SKK GSB successfully conducted two mini-MBA sessions: "New Economic Response Investment Pattern", and "Beyond Hybrid Workplaces: Post-Pandemic Business Operation Measures." The first session, "New Economic Response Investment Patterns," introduced global investment trends focusing on the national level and on climate change. Professor Youngju Nielsen introduced various cases in the technology, food, and energy sectors of the country's trend towards growth through investment. Prof. Nielsen asserted that securing source technology through strategic overseas investment is crucial, acknowledging the importance of fostering each area simultaneously. Prof. Nielsen was followed by Ben Meng, Chairman at Franklin Templeton, who introduced changes in global investment trends due to climate change. He spoke about the problem of the current situation of two missing I’s: Information, and Incentive. He suggested the possible solutions of disclosing crisis information, and establishing carbon emission prices based on incentives. The second session, “Beyond Hybrid Workplaces: Post-Pandemic Business Operations Measures,” introduced new challenges that corporations face and countermeasures specified in human resource operational strategies. Anirudh Suri, the founder of the Indian Internet Fund, explained the disruptions caused by geopolitical power shifts in diverse relations such as inter-governmental cooperation, conglomerates and start-ups, and inter-industries. He advised paving the way for the changes based on a deep understanding of the geopolitical power game changes. Next, Prof. Annelise Riles of Northwestern University, also a director at the Roberta Buffet Institute, proposed how to sustain innovation and progress in the post-pandemic era. She proposed fostering skills to advance beyond limits, to become ‘cooperative geniuses.’ Eric Shih, Dean of SKK GSB, said, "Participating in the Asian Leadership Conference for two consecutive years, it was possible to share analysis and insights with experts in each field and academia on global issues. We will continue the in-depth and lively discussion next year." The replay of Mini MBA sessions at 2022 Asian Leadership Conference at the official website: https://alc.chosun.com/2022/en/.
Career Development Center (CDC) holds a regular Friday Chat with Alumni: Here is the recap of Spring 2022
SKK GSB’s Career Development Center (CDC) is dedicated to connecting students and alumni for networking and opportunities. Therefore, the CDC organizes regular events called "Friday Chat with Alumni". In these sessions, alumni share their experiences at SKK GSB and the paths they followed afterward. In this spring’s first session, Friday Chat invited students to hear Symean Chao (FMBA, 2020) on how to grasp internship opportunities in Korea's finance sector. A proud SKK GSB alumna, Symean is currently working as an underwriter at AmWest Funding Korea. In this session, Symean shared her insights on understanding the Korean job market and answered all questions heartfully. The following Friday Chat was with Asyl Uraimova (FMBA, 2020). Asyl related her career-changing experience: she initially worked in data analytics and changed to the entertainment industry, particularly mobile games. She shared her exciting career change stories and how she is now successfully working as a global recruiter in 4:33 Creative Lab. Next, our Full-Time MBA students were pleased to have Gabi Yoon as the Friday Chat with Alumni guest. Gabi currently works as a consultant in digital consumer intelligence and marketing strategy at S-Core (Samsung Group Consulting). She shared her insights on how students can broaden their network successfully, especially in the marketing sector. Last but not least, CDC prepared a coffee chat with our alumnus and the president of his cohort, Tyron Sabatta (FMBA, 2021). Tyron is currently the CMO of eMoldino, an loT and Al solutions company. Our students could learn a lot from this chat: Tyron's experiences as CMO, and how he forged his own path to where he is now. Follow SKK GSB LinkedIn group for upcoming Friday Chat with Alumni sessions: https://www.linkedin.com/groups/2586461/
‘Kelley – SKK GSB Women in Leadership Club’ Launch Ceremony
2019 Homecoming Day
Professional MBA Welcome Dinner
Executive MBA Immersion
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