Samsung's ESG Fund Faces Challenges Amid Strict Criteria

A year after Samsung Electronics Co. and Samsung Display Co. unveiled a one trillion won (USD 716 million) environmental, social, and governance (ESG) fund, only 18.8 billion won (USD 13.5 million) has been distributed, according to a report by Pulse. This fund, initiated in September 2024 in collaboration with South Korea's financial institutions and major banks, aims to support small and mid-sized enterprises (SMEs). The Samsung affiliates channeled one trillion won into time deposits, yielding interest rates around 3.5 per cent, with anticipated annual interest earnings exceeding 30 billion won (USD 21.6 million) over six years.

Despite these projections, less than two-thirds of the annual interest has been used for SME loans in the fund's inaugural year. The scheme allows Samsung-recommended suppliers to apply for interest-free loans of up to 2 billion won (USD 1.44 million) for three years, with possible terms extensions. Given the average SME lending rates of 4.06 per cent as of August 2025, firms could save considerable sums in interest costs, but strict qualifications remain a barrier.

Eligibility demands under Korea's ESG system have proven a significant hurdle. Applicants must contribute to environmental goals like greenhouse gas reduction and comply with standards on human rights, labor, safety, and anti-corruption. Critics argue these conditions are too stringent for most SMEs, limiting participation mostly to first-tier suppliers for Samsung. This sluggish uptake has led Samsung and its banking partners to discuss lowering entry barriers and widening the range of eligible firms.