[Lee Jong-Ik's ESG Story 7] 'ESG Item' Entrepreneurial Boom... Leading the Expansion of Value Products
Value consumption with a social mission MZ generation pays attention
The future of 'K-ESG' is bright when connected to the value chain of large corporations
In order for a company to properly conduct ESG management, it expands its responsibilities throughout the company's value chain (R&D, manufacturing, production, distribution, customer management, marketing, etc.) The importance of cooperation and solidarity has been emphasized.
Recently, startups that establish companies based on ESG missions, create and operate business models in line with the ESG era are in the limelight.
What these startups have in common is that the founders themselves recognize the importance of ESG and have an entrepreneurial spirit that actively seeks to develop solutions that solve social problems.
Unlike large corporations that have recently made efforts to transform into ESG companies, ESG startups are based on environment (E), society (S), and governance (G) fields such as environment, climate change response, agricultural technology, inclusive finance, and innovative technology. You are launching a product or service.
Let's take a look at the cases of ESG startups that are writing a leap and growth diary by riding the wave of ESG change that has recently become a trend.
Social (S) Sector_ Craypas Solution As the laws and regulations of supervisory authorities have been strengthened since the foreign exchange crisis, the threshold of financial institutions is getting higher and higher for the financially underprivileged, such as young people and working people who do not have or have low credit or collateral.
In the end, many of them fall into credit delinquents or go bankrupt due to default on debt due to their dependence on high-interest loan companies or private loans.
Craypas Solution helps young people to use financial services by evaluating their credit based on non-financial information instead of financial credit scores, which are inevitable or low for young people.
Financial institutions are scrambling to promote ESG finance, but it is difficult to carry out ESG finance under current finance-related laws, while startups are making it a reality based on innovative technologies.
Social (S) sector_ bluereo In our society, there are surprisingly many people who have a hard time brushing their teeth. There are many people, including the disabled and the elderly, who find it difficult to brush their teeth and spit out water.
bluereo has developed a toothbrush with a function to store brushing water to help them brush their teeth. It can be seen as similar to the principle of sucking up cleaning materials (suction function) during dental treatment.
Making products for the disabled, not non-disabled people, is a market that large consumer goods companies are ignoring due to lack of business in terms of profitability. bluereo contributes to solving social problems and creating social values by making both functional products for non-disabled people and products for the disabled.
It is an innovative product that can be used functionally by non-disabled people such as surgery patients, the elderly, and infants as well as the disabled who have difficulty brushing their teeth voluntarily.
Social (S) Sector_ Medi&B Tech The pain suffered by bedridden patients and their caregivers who cannot move their bodies properly is beyond imagination. In particular, defecation and post-processing, which are basic needs, are the most difficult parts. Patients and guardians in hospital beds are not even respected for their basic rights.
To solve this problem, MedinB Tech is a start-up that researched and developed an automatic processor that allows bedridden patients to lie down and urinate.
A toilet for bedridden patients is also a type of bidet as a special bidet, but large and medium-sized companies competing in the domestic bidet market worth 500 billion won are not interested.
This is because there is not much demand, the function is complicated and technically difficult to implement, and it does not match the characteristics of bidet products that emphasize cleanliness.
Even in the global market, only one Japanese company is entering the market, and the price of the product is over 10 million won. Despite the high price, it is a reality that it is difficult for patients with financial difficulties to use it because of the uncomfortable odor, noise, and post-processing.
The representative of the company, who encountered the suffering of patients, succeeded in developing a product with high functionality and a price lower than half after years of trial and error.
At one-third the price, features made it more innovative. The company plans to drastically improve the human rights and quality of life of bedridden patients at home and abroad by starting domestic supply this year.
Environment (E) Division_ Broccoli Company This is a company that makes cosmetics under the brand UGLYCHIC with ugly agricultural products that have become furnishings just because they are ugly.
Young consumers are very enthusiastic about making cosmetics that are harmless to the human body with discarded agricultural products such as eco-friendly organic tangerines, apples, peaches, broccoli, and Schisandra chinensis.
Now, the MZ generation, which has emerged as a major consumer class, places great importance on the value of the entire process, from the manufacturing process, raw materials, and procurement of raw materials to customer management when buying a single cosmetic product.
It is showing strategies, business models, and products that are fundamentally differentiated from large cosmetics companies that maximize cost-saving profits through cheap raw materials and mass production.
Environment (E) Sector_ Rehavest Domestic food by-products emitted per year are 572kg per person, and more than 70% of them end up in landfills. The resulting environmental pollution and carbon emissions are also staggering.
Reharvest takes the lead in reducing resources and energy such as carbon, electricity, and water by upcycling discarded food by-products to make alternative raw materials.
The market that this company paid attention to is beer and sikhye. Based on brewer's grain and yeast, which are nutritionally excellent, reprocessed, high protein content and dietary fiber content, and 30% lower calorie, similar to wheat flour, are produced at a price 30% lower than wheat flour.
Energy bars, frozen pizzas, and pizza dough are produced with synergy powder produced by receiving beer by-products from OB Beer.
As such, the success of ESG management lies in expanding responsibility and ecosystem cooperation and solidarity. With the expansion of ESG management, cooperation between large companies and startups is also becoming more active. Like Rehabest, there are many cases in which open innovation programs are initially connected to the value chain of large corporations from start-up.
The future of ESG society in Korea is expected to be bright as ESG-based start-ups take their place in the mainstream ecosystem from the start, and as cooperation with large corporations becomes more active and more consumers preferentially purchase value products.
** Lee Jong-Ik is the CEO of Korea Social Investment, a foundation established in 2012. Korea Social Investment is conducting management consulting, accelerating, and impact investing for social innovation organizations such as startups, social ventures, and social enterprises that solve social problems.