Expanding corporate sustainability: an interivew with Jung Seung-eun

Corporate sustainability is a crucial yet one of the most challenging aspects of tackling the climate crisis. While international and domestic standards on companies develop over time, many still lack comprehensive strategies for long-term business model transitions to sustainability. In this interview, Jung Seung-eun at PwC Sustainability discussed how the department aims to strategize emission reductions across entire value chains and her personal insights on methods to address vague standards of ESG and sustainability compliance mechanisms.

How would you describe your department's responsibility at PwC?

Well, we start with corporate sustainability extra-legal activities, then sustainability reporting, and then there are various sustainability ratings that companies receive. For instance, when companies receive ratings from agencies like MBI or, in Korea, KCGS, we provide comprehensive consulting on how to effectively communicate their ESG or sustainability-related activities to these institutions to secure favorable ratings.

Do you recall any notable recent consulting projects you handled?

Yes, our team's primary work can be broadly categorized into the three areas I mentioned earlier. The first is sustainability strategy. For instance, when a company says, "We want to operate more sustainably with a long-term, eco-friendly strategy," we help them establish a roadmap detailing exactly how to achieve that sustainability quantitatively.

For instance, consider a common sustainability roadmap: to achieve net-zero greenhouse gas emissions by 2040 or 2050, we identify various decarbonization levers—the specific means a company possesses to reduce emissions. We measure these levers practically and collaborate to find the most effective ones. Second is reporting. Companies adhere to various sustainability standards.

They disclose their ESG or sustainability initiatives according to these criteria. Consulting projects exist to assist with drafting these reports or provide advisory services. Finally, there are various assessment organizations. For example, the most well-known is the Carbon Disclosure Project (CDP), which evaluates companies through questionnaires. When companies fill out these questionnaires, we can consult on how to best highlight their activities in an evaluative context. My most recent work this year involved reporting activities. 

It wasn't just about creating a report; it involved diagnosing how well the company currently manages the information required by these standards. We also helped establish future goals and plans for what information they should prepare going forward. It was a very meaningful project.

You mentioned that various companies are planning how to achieve Scope 3. So, among the methods these companies choose for planning, or the approaches they follow to achieve their goals, which one is the most common? What are the options?

First, greenhouse gases are now defined under the GHG Protocol into three scopes. Scope 1, Scope 2, and Scope 3. Scope 1 refers to the direct energy and electricity consumed by the company itself. Scope 1 and 2 primarily cover the energy, electricity, water, and other greenhouse gas emissions generated from the company's own operations or the production process. The most challenging part is Scope 3, which refers to the supply chain. 

This encompasses greenhouse gas emissions across the entire value chain, from the extraction of raw materials to the disposal stage. The standard further breaks down these emissions into 15 highly detailed categories, such as distribution during sales, employee business travel, and so on, requiring companies to measure emissions within these specific categories. Currently, very few companies can fully measure their entire scope tree. Therefore, the most important first step when establishing a roadmap is for a company to accurately measure its greenhouse gas emissions under Scope 1, 2, and 3. Then, based on its current emissions, it can set detailed targets aligned with its strategic goals for future years.

The most accessible area for companies to start is, for example, in factories, they can replace equipment to maximize power reduction or cut consumption. For instance, if machinery used to stay powered on even when inactive, they can now install equipment that automatically shuts off when not in use, preventing unnecessary power consumption. Another approach involves replacing equipment with highly efficient alternatives that maximize energy output while minimizing electricity consumption. Some companies also choose to switch entirely to renewable or more eco-friendly energy sources.

Therefore, if a company previously operated production or other processes based on fossil fuels, the most common approach now seems to be reducing energy consumption by switching to solar power, hydrogen, nuclear power, or wind power generation.

Do you think that for companies to realistically adopt Scope 1, there needs to be progress from the government or in policy? How could that become a more realistic goal?

That's an excellent question. This has actually been a major concern for corporate practitioners. So, late last year, The National Institute of Environmental Research released guidelines for companies on how exactly to measure Scope 1 emissions. They published a 300-page guideline essentially saying, "Here's how you measure it." Then, this January, they reached out to corporate practitioners asking for feedback.

They asked whether the guidelines were appropriate, whether they were actually applicable and implementable within companies, and if not, what adjustments might be needed. It seems research institutes and national agencies are continuously gathering feedback on these points, reflecting it, and exploring ways to help companies.

It seems like there's a lot of focus on ESG reporting. What do you think is most needed for ESG to move beyond mere reporting and truly influence companies to consider it a crucial part of their management, rather than just focusing on competition or profit?

That's another excellent question. Well, if I explain one of the various ESG standards I mentioned earlier, it might serve as my thought or answer to this question. Until now, there have been numerous voluntary ESG reporting standards available for companies. The most representative example is the Global Reporting Initiative (GRI), which is an international organization covering ESG topics. Companies report on the information they deem important based on their own priorities, and various stakeholders review this non-financial information. Companies, especially publicly listed ones, are generally required to publish an annual report. 

Financial statements are essentially a company's report card, showing its annual revenue, losses, and other financial performance metrics. These financial statements must be disclosed annually. So, who views this information? Other companies can see it, as well as potential investors like shareholders or other businesses. Shareholders, as holders of shares in this company, make judgments based on this information.

They decide whether to invest more in this company or not. Until now, this financial information has always been extremely important, and companies were required by law to disclose such information. This is how it was managed. However, companies' ESG-related information was highly voluntary.

So, even if companies only disclosed what they considered important, it was optional – they could do it or not. It felt like companies were completely under the radar, just defending themselves. However, now there are movements and standards emerging. The International Accounting Standards Board (IASB) has established the standards for preparing these financial statements. They want companies to prepare them according to these international accounting standards. Then, each country incorporates these into their own national laws.

But within those same international accounting standards, sustainability-related standards have been created. When countries adopt these, the relevant companies must disclose information annually, like submitting a financial report card, based on these ESG-related standards. The most significant part of these standards is that first, the impact of climate on the company must be expressed in monetary terms.

Europe's sustainability standards are more compliance-focused. For instance, if a company prioritizes its employees' working conditions, education, or similar aspects, there are highly detailed standards for those areas. So, practically speaking, companies must then calculate the financial implications of meeting these standards. For instance, we must financially calculate how much we'll invest in employee training and the positive impact this investment will yield. These standards guide companies to apply this to their actual business strategy. So, rather than companies feeling they simply have to do something, these disclosure standards now seem to play a role in enabling them to assess this tangible impact, reintegrate it into their business strategy, and continuously improve.

So you mentioned that Europe has become more detailed now. In that case, to meet these more stringent standards, does PwC's sustainability team have any specific goals or changes you'd like to see happen in the near future?

That's also an excellent question. Well, first, what I find a bit regrettable is that Europe's highly compliance-focused sustainability standards, which were commissioned in February this year, are now seen as being too compliance-heavy and excessive. And because these standards demand too much information from companies, legislation is currently being discussed to reduce these data points by about 50%. And this has already been passed for companies – in fact, large corporations listed in the US and Europe have already disclosed information according to these standards starting this year, 2025. The implementation has been phased based on company size, with smaller SMEs following in subsequent years. However, this phased rollout has now paused temporarily.

This truly requires the entire company to align its strategic business trip and everything else, with all departments preparing this data thoroughly. It's still demanding a bit too much at this stage, so it's not necessarily ideal. However, as a consultant and consulting firm, what we can do is help companies move beyond just complying because they have to. Instead, we can help them gain real insights from these standards and the various international regulations that will be required of them going forward. When there are requirements like these, we help companies gain insights here and figure out how we can truly internalize this. And while the gap is huge, we play a role in minimizing it as much as possible. 

Standards and guidelines are often very vague. For example, take this question: "Have you taken measures to mitigate negative impacts on topics the company considers important?" That's incredibly ambiguous, right? So, from a practical standpoint, we help companies identify what they can do. First, we use materiality assessments to pinpoint the company's key topics. From there, we assist with human rights due diligence. When we say human rights due diligence, it could involve their own workforce, or workers within their value chain like temporary workers, non-regular employees, or even staff from other partner companies. We help identify any groups that might be underrepresented or silenced, like those who struggle to voice their concerns. We help identify whether any vulnerable groups exist within the human rights index—for instance, groups unable to effectively voice their concerns. We also explore how to assist these individuals, such as by establishing hotlines or helplines for them.

Therefore, we can propose approaches like establishing policies and incorporating these elements into company-wide KPIs. We work together to find practical ways to implement these guidelines and customize them to fit the specific situation of each company. This hands-on approach seems to be the most practical way to provide real help to businesses.