A recent controversy over the labor environment for workers building Samsung Biologics’ Plant 4 in Songdo, Incheon, is expected to negatively affect the rating of the company’s ESG (environment, social, governance) rating, industry sources said.

On Monday, Samsung Biologics released an ESG report summarizing the company’s major ESG management achievements and strategies.

Under the mission “Driven. For a Sustainable Life,” Samsung Biologics selected three core values – creating a sustainable environment (environment), building a healthy society (social), and implementing responsible business activities (governance), the company said. It added that the company established detailed strategies for the three values in nine essential areas.

John Rim, CEO of Samsung Biologics, said he hoped the company’s pre-emptive response to ESG could promote and accelerate the CDMO (contract development and manufacturing organization) industry’s ESG introduction.

“We will continue our innovation to protect human health, safety, and the environment and leap forward as a sustainable CDMO and ESG leader,” he said.

Last year, Samsung Biologics received Grade A in ESG rating by the Korea Corporate Governance Service (KCGS).

It was also included in the Dow Jones Sustainability Index (DJSI) World Index, where only the top 10 percent of the top 2,500 companies by market cap worldwide can join.

However, Samsung Biologics faces a problem in the “S” (social) part of ESG.

Construction workers building the company’s Plant 4 complained about poor working conditions at the construction site.

The Federation of Plant Construction Labor Union’s branch in Incheon and Gyeonggi Province held a press conference on June 16 to criticize Samsung Biologics for unfair labor conditions.

“We subcontractor workers building Plant 4 could not agree at all that Samsung Biologics received an A+ rating in social responsibility including human rights management,” the labor group said in a statement. “Construction workers at the Plant 4 site are enduring working conditions that are absurdly poor.”

An official at an accredited rating agency said when evaluating an ESG rating, the agency collects all the company’s year-long public filings, publicity materials, and website posts. The evaluation also includes conflicts with stakeholders, he said.

An official at a local pharmaceutical company said, “Although every rating agency has different criteria for ESG evaluation, they reflect a serious disaster or negative issues on management such as embezzlement in such evaluation.”