FRAMEWORK GUIDE
KCGS: a Tier-2/3 supplier response guide
The Korea Institute of Corporate Governance and Sustainability (KCGS) is a leading domestic ESG rating body that publishes annual environmental, social, and governance ratings for listed Korean companies. Its ratings feed into responsible-investment decisions by institutional investors, including the National Pension Service, and its governance ratings represent one of the longest-running datasets of this kind in Korea. Ratings apply, in principle, to listed companies — unlisted suppliers are not directly rated.
Who asks for it — and why
KCGS's direct rating targets are large listed companies (mainly OEMs and Tier-1s), and Tier-2/3 suppliers are rarely rated directly. However, as listed customers strengthen their supplier-management systems (supply-chain ESG risk management, shared-growth indicators) to improve their own KCGS rating, that push can flow down as requests to suppliers for ESG data submissions or policy documentation.
Key requirement areas
- Governance assessment
Board composition and operation, and shareholder-rights protection, form Korea's longest-running rating dimension.
- Environmental and social assessment
Covers environmental-management systems, worker safety, and supply-chain management policies and performance.
- Stakeholder engagement and supply-chain linkage
How well a company manages relationships with stakeholders like suppliers and local communities feeds into the rating.
What Tier-2/3 suppliers should do
For Tier-2/3 suppliers, the practical points are: (1) there's no need to prepare for a KCGS rating directly, but understanding that a customer is trying to improve its supply-chain-management or shared-growth indicators helps you understand the context behind their requests, (2) being able to show documented evidence of a supply-chain ESG risk-management policy helps when responding to a customer, and (3) running a similar self-assessment yourself lets you respond proactively before the principal contractor asks.
78 questions in our free self-assessment cover topics this rating scheme also assesses. Our questions are authored independently from public standards — none is derived from this scheme's methodology.
Example questions
- Does your company have an environmental policy, and to what extent is it embedded in a management system?
- Has your company set environmental objectives and key performance indicators (KPIs), and how are they managed?
- Over the past three years, has your company had a significant environmental enforcement outcome — a fine or administrative surcharge, an improvement or corrective order, a suspension of operations, a permit revocation, or a criminal referral — and what did the company do about it?
- Is your company's environmental management system certified or externally verified?
- How mature is your company's greenhouse gas (GHG) emissions management?
FAQ
- Can our unlisted supplier get a KCGS rating?
- KCGS's regular ratings apply, in principle, to listed companies. Unlisted suppliers are not directly rated, but can be indirectly affected as listed customers strengthen their supply-chain management.
- How should we respond if a customer cites KCGS as the reason for a data request?
- There's no need to reproduce specific KCGS questionnaire items or scoring exactly. The basic principle is to present your own ESG policy and management status as they actually stand, and a report from this assessment can serve as supporting material.
Public sources
Informational only — this does not replace an official ESG evaluation. Independent content; not affiliated with or endorsed by any framework organization.