Does adopting a gender positive ESG policy improve corporate financial performance? Evidence from a depopulating South Korea

Peter Matanle, University of Sheffield
Yang Li, University of Sheffield
Zhamayne Fakharuzi, The University of Sheffield
Yejin Shin, University of Edinburgh

Demographic pressures arising from low fertility, ageing, and depopulation mean that the most successful economies of the future will likely be those which can mobilise people from currently under-represented groups into sustainable high productivity employment and advance the best of these into management roles. South Korea and Japan are in the vanguard among East Asian countries most at risk of experiencing long-term slower growth from the changing population dynamics sweeping across the world’s developed economies. Using quantitative regression analysis, we research the employment practices of the largest listed South Korean corporations and make comparative reference to the Japanese demographic and development experience. We take an ESG (Environment, Social, & Governance) investment perspective, focusing on companies’ implementation of DEI (Diversity, Equity & Inclusion) policies. We do this because, under the financial logic of ESG, among labour force adaptation measures available to corporations, a strong DEI policy is potentially a comparative advantage where competition to hire the best workers is intensifying under depopulation, and access to capital requires companies to align themselves with investors’ ESG mandates. Our results demonstrate that adopting a gender positive ESG policy does contribute to improved financial performance in South Korean corporations.

Keywords: Economic Demography, Human Capital, Education, and Work, Inequality, Disadvantage and Discrimination

See extended abstract.