In the past, corporate financial statements were closer to a report card for shareholders and investors. Evaluating profitability and stability through revenue and profit, assets and liabilities, was all that mattered.
But in the ESG era, financial statements are no longer a mere set of numbers. They have begun to be read as a "map of stakeholder relations" that shows whom a company engages with, what kind of relationships it forms, and what social value and risks it generates in the process.
The concept symbolizing this shift is "Double Materiality."
Recently established as a core principle of the global ESG disclosure framework, this concept means that companies must simultaneously consider the impact of corporate activities on society and the environment (Inside-out) and, conversely, the impact of social and environmental changes on corporate finances (Outside-in). Companies have now entered an era in which they must explain not only "how much they earned," but also "with whom and how they share value."
From this perspective, financial statements can be seen not as a simple set of numbers, but as a structure closely connected to various stakeholders.
Revenue is the result of consumer trust and choice, and operating profit is the added value a company creates across the entire value chain based on capital supplied by investors. Pre-tax profit is linked to the government's tax base, and net profit leads to the issue of value distribution between shareholders and employees.
Ultimately, corporate profits are not the achievement of any single group, but rather a joint outcome co-created by consumers, employees, partners, the government, local communities and shareholders.
The Social (S) dimension of ESG emphasizes precisely this balance of relationships. Social value is not simply about donations or social contributions, but is formed in the process of building sustainable relationships with stakeholders.
If Environment (E) is about reducing a company's external effects, Social (S) is about how harmoniously a company manages internal and external stakeholder interests. Governance (G) requires that this balance be maintained not by the power of any particular group, but within a transparent and independent decision-making system.
In this context, Samsung Electronics' recent labor-management decision on performance bonuses, which has stirred controversy, carries significant implications from the perspectives of ESG and stakeholder capitalism. Of course, in high-tech industries, securing top talent and rewarding employees are essential conditions for maintaining corporate competitiveness.
However, in industries such as semiconductors that require large-scale upfront investment and long-term R&D, a structure that directly links a fixed proportion of operating profit to performance bonuses risks intensifying short-term, results-oriented management pressure.
This calls for a cautious approach, as it could collide with the capacity for future investment, the continuity of R&D, supply chain stability and even long-term shareholder value.
Particularly from the perspective of double materiality, a company's value distribution is not simply a matter of labor-management agreement. Expanding employee compensation may appear to create social value in the short term, but if it leads to reduced long-term investment or weakened future competitiveness, it ultimately returns as a financial risk in the form of damaged corporate value.
In other words, social impact and financial impact are not separate concepts but mutually connected structures. This is why decisions skewed toward specific stakeholders can clash with the original intent of ESG.
Stakeholder capitalism is often misunderstood as the empowerment of a particular group, but its essence lies in the balance and optimization of diverse interests. It is a concept that emerged to complement the limitations of shareholder capitalism, not a philosophy intended to justify the dominance of any specific stakeholder.
The key lies not in maximizing the interests of any one group, but in a balanced distribution of value for the company's sustainability.
The directors' duty of loyalty to shareholders, which has come to the fore alongside recent discussions on the revision of the Commercial Act, also needs to be read in this context. While directors' duty of loyalty does not mean only short-term stock price management, the principle that management decisions must be made within a scope that does not undermine the sustainable preservation of corporate value and shareholder value remains important.
If the current performance bonus structure is highly likely to lead to reduced long-term investment or weakened future cash flows, it could create tension not only with the principles of stakeholder capitalism but also with directors' duty of loyalty to shareholders.
Ultimately, financial statements in the ESG era are not merely accounting numbers. Within them lies the question of whose interests a company reflects and to what degree, and what kind of balance it seeks among diverse stakeholders, including future generations.
The essence of ESG does not lie in fixing predetermined shares for any particular group. The key is how to design corporate sustainability in a balanced way among diverse stakeholders.
The real question raised by the Samsung Electronics bonus controversy ultimately comes down to this point. Corporate profits cannot be the exclusive privilege of any one side.
