The ESG Happiness Economy Research Institute said Thursday that only half of the pharmaceutical and biotechnology companies among Korea's 250 largest enterprises have published sustainability reports as of the end of July.

With mandatory environment, social, and governance (ESG) information disclosure for listed companies set to take effect in 2030, only 183 companies, or 73.2 percent of the largest 250 companies surveyed by the institute, published sustainability reports this year, it said.

That represented an increase of 30 companies compared to last year. Still, the disclosure rate dropped from 76.5 percent to 73.2 percent, a disappointing figure considering the increase in respondents from 200 to 250 companies, the institute said.

It noted that the decline underscores the industry's sluggish response to increasing demands for transparency and accountability.

The situation is even more dire in the pharmaceutical and biotechnology sector where only 14 out of 28 companies disclosed sustainability reports, marking the lowest disclosure rate among 15 industries.

In contrast, some industries, including construction, shipbuilding, and finance, achieved a perfect 100 percent disclosure rate. Logistics and trading companies also demonstrated commendable compliance at 94 percent.

Only Samsung Biologics, which recently announced its inclusion in the Pharmaceutical Supply Chain Initiative (PSCI), a U.S. initiative promoting responsible business practices and supply chain management standards in the pharmaceutical industry, showed an example of leadership in the pharma sector regarding ESG.

The study also highlighted the inconsistent application of international ESG disclosure frameworks among biopharmaceutical companies.

Korean companies have applied various global ESG disclosure frameworks, including the UN SDGs (United Nations Sustainable Development Goals), GRI (Global Reporting Initiative), SASB (Sustainability Accounting Standards Board), and TCFD (Task Force on Climate-related Financial Disclosures) in reporting their ESG management activities and performance over the past year.

Some companies have proactively adopted global standards like ISSB (International Sustainability Standards Board)'s International Financial Reporting Standards (IFRS) S1⸱S2 and the EU's European. Sustainability Reporting Standards (ESRS) as well.

Since each standard has different disclosure objectives, most companies have adopted four key standards based on industry and company characteristics.

However, as there are no regulations in which frameworks the companies must use, the data showed that among the 14 pharmaceutical and biotech companies that issued reports this time, six adopted all four reporting standards, four used three standards, two utilized two standards, and two companies applied only one standard.

"Given the global push for simultaneous reporting of sustainability-related financial information as part of business reports, Korean companies need to internalize ESG disclosure functions to produce self-regulating outcomes," the institute said.

Pharmaceutical-biotechnology field lacks commitment to ESG

While the report focused on large companies, further analysis by Korea Biomedical Review revealed that the lack of interest in ESG management seemed more problematic in midsized pharmaceutical and biotechnology companies.

Midsized firms, including Jeil Pharmaceutical, Dongkook Pharmaceutical, and Daewon Pharmaceutical, have yet to publish sustainability reports, disregarding ESG principles.

Kwangdong Pharmaceutical, the only one among the top 10 pharmaceutical companies in terms of sales that failed to release a sustainability report, exhibited a notably poor ESG performance, earning a C rating and demonstrating a woeful lack of progress in key governance indicators, such as dividend policies and succession planning.

As a result, there is a growing consensus that Korean companies may fall behind in competitiveness and attractiveness to international investors when the global business landscape increasingly prioritizes ESG factors.

Industry watchers also warned that this shortsighted approach could have dire consequences.

"As international organizations finalize stringent ESG disclosure rules, Korean pharmaceutical companies risk being shut out of global supply chains and investment opportunities," a business executive told Korea Biomedical Review, asking to remain anonymous due to his company’s policy. "Their current practices, focused more on empty publicity than substantive action, fall short of international expectations.”

Another businessperson, also requesting anonymity, said, “It's as if these companies are living in a bubble, oblivious to the seismic shifts in global business practices. Their complacency is not just disappointing – it's dangerous."