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<Economy21> No. 155
2003.07.01

Interview : Hewson Baltzell, CEO of Innovest

Environmental Management is Namely Competitiveness

Hewson Baltzell, the CEO of Innovest Strategic Value Advisors, reported the following after reviewing three giant Korean industries (semiconductor, automobile, and steel) in mid-June, “Korean corporations can be divided into two categories: the very good ones and the very bad ones.” In the current evaluation, Samsung Electronics received AAA, Posco received AA, and Hyundai Motors received A. These three corporations were assessed with the highest scores while the rest of Korea’s businesses came away with rock-bottom scores. Curiously enough, the companies with high overseas investment rates received better scores.

“Korean firms have a common flaw. They do not try to deal with the issue of sustainable development in advance, they do not attach great importance to reporting, nor do they create a performance index.” A progress index reveals a company’s past, and reports illuminate its present and future. International pressure has been growing lately, and a company’s swift action will come to decide its competitiveness. For example, a firm might find it profitable to develop an environmentally friendly product and occupy the market in a country with strong environmental protection regulations.

That is why overseas long-term investors consider it a crucial matter to have a look at a company’s reports. It is unwise to invest 5-10 years in a company without any indications of where the business is headed. The reason Innovest has agreed to collaborate with the Korean Eco-Frontier to evaluate environmental management in Korean companies is due to the high level of interest that international investors have shown.

The various organizations that have required information about Korean corporations include the California Pension Fund (CalPERS), Lehman Brothers, and ABN AMRO. They are known to be both short-term and long-term investors in the Korean markets. Switching them into long-term investors depends on enterprises and the market.