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ESG

K-beauty, fashion companies ride ESG wave

Oct 14, 2020 (Gmt+09:00)

South Korea's fashion and beauty companies are jumping on the environmental, social, governance (ESG) bandwagon to lure more environmentally conscious consumers.

Local upcycling company Morethan is a startup fostered by SK Innovation Co. and a leading example of the environmental marketing trend in Korea. Founded in 2015, the company's fashion brand Continew uses byproducts from junk cars such as leather seats, airbags and seat belts to create upcycled wallets, bags and purses.

The eco-friendly brand made headlines in 2017 when global K-pop sensation BTS member RM uploaded a photo of himself in Europe touting a Continew bag. It further sparked interest in 2018 when SK Group's Chairman Chey Tae-won gifted a bag to former finance minister Kim Dong-yeon who paid for it.

BTS member RM in Italy (Courtesy of Twitter)
BTS's RM wearing a Continew bag (Courtesy of Twitter)

On Oct. 14, Korean textile company Taekwang Industrial Co. announced that its eco-friendly apparel brand Acepora-Eco, which recycles waste PET bottles into nylon, polyester and spun yarn, will supply uniforms for the Heungkuk Life Insurance Pink Spiders, a Korean women's professional volleyball team.

Some global SPA brands such as Zara, Mango, H&M and Gap have reached out to Acepora for its eco-friendly materials, according to Taekwang Industrial.

As global apparel brands pledge commitment to sustainability, industry experts say that ESG will become a standard in measuring sales of products and services, especially as consumers become more intentional in their purchases.

Acepora-Eco creates uniform for the Pink Spiders (Courtesy of Acepora-Eco)

"Nowadays consumers share information about good companies and bad companies on their social media platforms -- and news travels immediately," said Lee Eun-joo, a professor from Inha University. "ESG is becoming a matter of survival, not a publicity tool," she added.

Similar sentiments were echoed in a consumer survey conducted by The Korea Economic Daily and marketing research agency Ipsos Korea where 83% of respondents said that a product's social reputation influences their purchase. Also, around 66% of respondents said that they would buy items even if they are expensive if they trust the company.

US outdoor brand Patagonia is a prime example. The eco-friendly brand is considered to be costly for some consumers who prioritize practical value for money. On the other hand, Patagonia has become a symbol of environmental protection for consumers who advocate the brand's mission.

In Korea, Patagonia gained a huge following when celebrity Lee Hyori was frequently spotted wearing the brand. In 2019, Patagonia Korea posted around 45 billion won ($39.2 million) in revenue, marking impressive 35% annual growth over the past three years.

K-BEAUTY JOINS THE RACE

This year, the cosmetics industry has not fared well in Korea due to the COVID-19 impact, which has hiked up sales for masks while leaving makeup products in the dark with sales dropping drastically.

Meanwhile, vegan cosmetic lines that oppose animal testing and do not use animal ingredients have managed to stay afloat. Chicor, a beauty store chain operated by Korean department store giant Shinsegae, saw its vegan cosmetics exceed sales target by 20%, despite accounting for a meek 5% of the full product line, according to a Chicor souce.

Riding on the ESG wave, Korean beauty giant AmorePacific rolled out its first vegan makeup line Enough Project in June. Recently, another domestic cosmetic retailer Missha also unveiled its first vegan sheet face mask.

Write to Ji-hye Min, Hyung-suk Song, Kyung-min Kang at spop@hankyung.com

Danbee Lee edited this article.

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