A Business-Driven ESG Strategy: A Case Study of Hansol Paper in South Korea

Abstract

In this study, we aimed to analyze whether ESG strategies can be utilized as sustainable strategies with practical necessity and effectiveness in solving problems within a realistic business environment. To this end, through an in-depth case analysis of Hansol Paper, South Korea’s leading paper company and a global paper manufacturer, we explored the conditions and processes under which ESG strategies can be implemented as practical problem-solving and sustainable strategies within the business environment. Hansol Paper addressed specific business crises such as supply chain instability, rising energy costs and declining paper demand by integrating ESG strategies, through which the company achieved results in problem-solving and innovation within the business value chain, building trust with external stakeholders and achieving high ESG performance. The foundation for the integration of ESG and business strategies and their sustained implementation was established through enhanced professionalism and transparency within the company’s governance structure, including an increase in the number of external directors and female executives. This study presents the processes and conditions under which ESG strategies are designed and implemented with the purpose of actively addressing business challenges, using Hansol Paper as an in-depth case study. Our findings are expected to contribute to the academic and practical development of strategies that can enable companies to adapt to changes in industrial structures and business environments.

1. Introduction

ESG (Environmental, Social, Governance) management has emerged as a core strategy for ensuring corporate sustainability and long-term performance. In particular, since 2020, ESG has been adopted as a new standard for corporate management across global financial markets and industries, with major companies in Korea and other countries actively pursuing various initiatives such as establishing ESG strategies, disclosing non-financial information, and responding to ESG evaluations.

However, recent external environmental changes such as high interest rates, economic slowdown, and sharp increases in energy prices have led to a reduction in ESG-related investments and implementation (Furness, 2025), and, as a result, skepticism on the effectiveness and sustainability of ESG management is spreading (Kräussl et al., 2025). In particular, activities focused solely on external disclosure or image enhancement have drawn criticism for greenwashing or ESG fatigue (ESG News, 2024), and debates over whether ESG can be linked to actual business innovation or performance have intensified.

Ultimately, there is an increasing need for research to prove the feasibility and effectiveness of ESG management as a strategic means of solving actual business problems or achieving management performance. This is particularly important in South Korea, where ESG strategies tend to remain within the scope of existing ethical management or social responsibility and have been implemented at the institutional level (Fan, 2024).

In this study, we aim to analyze whether ESG strategies can be utilized as sustainable strategies with practical necessity and effectiveness in solving problems within real business environments. To this end, we conducted an in-depth case study of Korean companies with representative and verifiable ESG implementation. A comprehensive case analysis of Hansol Paper (Hansol Group, 2025), South Korea’s leading paper company and a global paper manufacturer, will explore the conditions and processes under which ESG strategies can address real-world challenges in the business environment and be implemented as sustainable management strategies.

2. Literature Review

2.1. Integrating ESG and Business Strategy

Recent ESG-related research shows that the way companies establish and implement ESG strategies is fundamentally changing. From 2020 to 2023, ESG was primarily addressed as a strategy for risk mitigation, regulatory compliance, or ethical responsibility fulfillment. Key studies during this period noted that while ESG activities could negatively impact financial performance in the short term due to resource dispersion and increased costs, they could lead to enhanced corporate credibility and strengthened market competitiveness in the long term.

For example, Chen et al. (2021) conducted an empirical study analyzing 311 Chinese companies and found that ESG implementation had a negative impact on performance in the short term through a substitution effect, but improved performance in the long term through publicity effects resulting from improved corporate image and trust. Almaqtari et al. (2022) used data from 1914 companies in the UK and Turkey to confirm that ESG indicators are more closely related to long-term value indicators such as Tobin’s Q than to short-term stock prices. Kong et al.’s (2023) study demonstrated that ESG investment contributes to profitability and future market value (PE ratio) for global technology leaders, emphasizing that ESG acts as a key factor in securing competitive advantage in technology-based industries.

However, studies conducted after 2024 have begun to address ESG integration at the level of core business strategy. ESG is now being approached as a strategic tool integrated with key competitive strategies such as product innovation, supply chain management, and financial and operational decision-making. Michalski (2024) argues that integrating ESG factors into the Balanced Scorecard (BSC) can simultaneously enhance sustainability and business competitiveness. Gazzola et al. (2024) analyzed the process by which leading manufacturing companies build sustainable business models by embedding UN SDG-based environmental sustainability goals into their corporate strategies. They classified companies into five types based on the level and speed of integrating ESG into their strategies, confirming that companies are actually applying ESG goals to their business strategies. Raden Pujiyono et al. (2025) suggested that business models reflecting ESG principles strengthen supply chain resilience and economic performance, using the Indonesian paint industry as a case study.

However, while many studies on integrating ESG into corporate business strategies have focused on the quantitative correlation between ESG and financial performance, research analyzing the process by which ESG strategies are established and implemented within companies and how they are linked to business strategies remains relatively scarce. Through a case study, we aim to address this limitation by examining how ESG strategies are connected to key strategic areas within Hansol Paper through a case study.

2.2. Changes in ESG Strategy in Compliance with IFRS S1·S2

The disclosure requirements for sustainability information have been rapidly institutionalized over the past few years, and ESG disclosure in particular is no longer considered optional reporting but rather key financial information. The International Sustainability Standards Board (ISSB) established IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) in June 2023 as standards for the disclosure of sustainability-related financial information (IFRS Foundation, 2023). IFRS S1 requires companies to disclose how sustainability-related risks and opportunities affect their business strategy, business model, and financial plans. Companies must describe how sustainability-related risks and opportunities influence their strategy and decision-making, and this integrated explanation is a mandatory component of the disclosure (IFRS Foundation, 2023).

These standards took effect internationally on 1 January 2024, but each country’s regulatory authorities are required to decide separately on the applicability and schedule for their domestic companies. South Korea has already announced disclosure guidelines for 2024 and is considering a plan to implement them for listed companies starting in 2026.

The EU is promoting harmonization with international standards while first implementing its own standards, the ESRS (European Sustainability Reporting Standards). As such, discussions are underway regarding the extent to which the global disclosure standards through IFRS S1 and S2 can ensure uniformity and comparability, given the differences in policy choices and institutional foundations among countries.

Some studies have concluded that international standards have improved the comparability of disclosures between companies and countries (Li, 2024), but point out that differences in the interpretation and application of standards may arise due to differences in industry characteristics, institutional acceptance, and corporate capabilities in the actual implementation process (Wahyuni, 2025; Pratama et al., 2025). This suggests a gap between the goal of policy ensuring the uniformity of international disclosure standards and practical constraints.

Numerous analyses have also been conducted on the disclosure capabilities and readiness levels of actual companies. Milhem (2025) pointed out that the disclosure levels of Palestinian listed companies fall short of standards, particularly in terms of quantitative indicators. Pratama et al. (2025) derived ed a research results focused on the mining industry, revealing that while large firms demonstrate a certain level of compliance, small and medium-sized enterprises (SMEs) face difficulties in meeting standards due to resource and technological constraints.

Empirical analyses of market reactions to disclosure are also actively underway. Dwiyandi (2025) concluded that while disclosure regarding corporate strategy and governance may trigger negative market reactions, risk management disclosure has a positive impact on corporate value. Yunita (2025) proposed that the establishment of corporate social responsibility, corporate governance, and climate disclosure positively contributes to corporate performance in the palm oil industry.

As such, existing studies have examined the structural interpretation of IFRS S1 and S2 standards, the level of corporate response, and the market impact of disclosure from various perspectives. However, it is necessary to seek specific standards on how ESG disclosure should be integrated into corporate strategy and risk management.

2.3. Governance and ESG Performance

For a company’s ESG strategy to be effectively implemented and yield tangible results, a robust institutional framework is essential, with governance at its core. Governance serves as one of the three pillars of ESG and acts as the central mechanism supporting the other two elements—environmental (E) and social (S) strategies.

A board of directors with transparent and independent governance ensures that strategies for corporate sustainability are not compromised by short-term profits and supports the consistency and execution of strategies. Previous studies have emphasized that the independence and diversity of governance are key factors determining the strength and effectiveness of ESG strategy execution.

Amore and Bennedsen (2016) analyzed European companies and found that of the total patents of companies with weak governance structures, a lower proportion were eco-friendly. The study emphasized that companies with a low proportion of institutional investors or limited experience in eco-friendly activities may have weaker ESG-related innovation capabilities. Gerged (2021) analyzed companies in emerging markets and argued that the independence and diversity of board composition substantially improve a company’s ESG disclosure level. Kang et al. (2022) analyzed the governance reports of Korean listed companies and found that the operation of committees within the board, the independence of audit bodies, and the level of disclosure of compensation policies have a significant positive relationship with environmental and social performance. Gerged et al. (2023) also confirmed in a study of African companies that the establishment of an environmental committee within the board and gender diversity have a synergistic effect on improving ESG disclosure levels.

Recent studies have focused on board diversity, and particularly the role of female directors. Omenihu et al. (2025) analyzed 45 companies in developed countries from 2012 to 2023 and found a significant positive relationship between board gender diversity and ESG disclosure levels. Xu et al. (2025) systematically reviewed 74 studies and confirmed that board diversity is a key factor in promoting environmental disclosure. In particular, Babiker et al. (2025) analyzed Saudi Arabian listed companies and empirically verified that companies that ensure and encourage female representation on the board of directors are more likely to provide ESG disclosure than those that do not.

As such, various domestic and international studies and cases suggest that corporate governance has a decisive impact on the effectiveness, transparency, and sustainability of ESG strategies. Therefore, to enhance the effectiveness of ESG strategies, structural designs such as strengthening board independence, ensuring diversity and expertise in committee composition, establishing fair compensation systems, and improving the quantitative and qualitative levels of information disclosure must be implemented concurrently. A robust governance framework serves as a prerequisite for successfully integrating ESG strategies into business strategies.

3. Research Design

3.1. Subject of Analysis: Hansol Paper

The subject of this study is Hansol Paper. Hansol Paper is a representative Korean paper company established in 1965 and was selected as the subject of this study for the following reasons.

First, Hansol Paper has the largest paper production capacity in Korea and the largest production capacity for thermal paper in the world (Hansol Group, 2025). This quantitative position suggests that Hansol Paper is a clear representative of the paper industry in Korea and abroad and an appropriate case to examine the feasibility and sustainability of ESG strategies within this industry.

Second, its strategy formulation, implementation, and performance are completely publicly disclosed, making them highly verifiable. Hansol Paper’s ESG strategy consists of various tasks, such as developing eco-friendly products, expanding its use of renewable raw materials, and reducing greenhouse gas emissions, which can be objectively verified through official sources such as sustainability and audit reports and prospectuses. In addition, the strategy’s effectiveness has been verified through external evaluation, as the company received two consecutive platinum ratings (positioning it in the top 1% of companies internationally) from the global ESG rating agency EcoVadis in 2023 and 2024 (Hansol, 2025).

The paper industry in particular is a fixed-cost manufacturing industry with high energy consumption and carbon emissions (Hansol Paper Co., Ltd., 2025), which creates structural barriers to green transformation. As such, Hansol Paper is an example of a company that has established a strategy for ESG management and achieved results even under relatively difficult conditions, making this analysis both realistic and relevant.

3.2. Analytical Methods

This study was conducted to examine whether ESG management can function as a strategic tool that goes beyond meeting mere ethical and normative requirements and is linked to actual business performance. To do so, we analyzed the rationale and logic behind ESG strategies, their specific implementation, and how they are externally evaluated in the context of the structural business risks faced by a company.

In particular, we focused on exploring the alignment of structural conditions and implementation that is necessary for an ESG strategy to move beyond a formal activity and function as a substantive management strategy. To accomplish these objectives, this study adopted the qualitative case study methodology of inductive theory building proposed by Eisenhardt (1989). This methodology is recognized as an effective approach for deriving concepts and constructs from empirical cases in areas where the theoretical foundations are relatively weak or initial conceptualization is required.

In this study, we selected data from 2021 onwards, when ESG began to gain traction, as the criteria for selecting data for the case analysis of Hansol Paper. The selected documents are audit reports, sustainability reports, and investment prospectuses, each with the following purposes:

• First, the audit reports (2021–2024) were used to identify how ESG-related cost items, such as energy costs, have changed over time, based on accurate financial figures verified by external auditors.
• The sustainability reports (2022–2024) were analyzed with a focus on confirming how Hansol Paper’s ESG strategy was planned and executed, and what results were achieved. The 2021 report was excluded as it was not published in the relevant year.
• The prospectuses (2021, 2022, 2023, 2025) are documents published at the time of corporate bond issuance, providing external investors with information on the company’s business operations, market conditions, and business risks. As there was no corporate bond issuance in 2024, the relevant document does not exist for this year.

This study did not include quantitative analysis, but rather a qualitative content analysis based on the collected documents. It did not include interviews with internal employees, and the analysis was limited to materials accessible from outside the company to ensure its objectivity and reproducibility.

4. Analysis of ESG Strategies for Resolving Business Issues at Hansol Paper

4.1. Hansol Paper

4.1.1. Hansol Paper Overview

Hansol Paper is a leading paper manufacturer in South Korea and an industry leader with a strong position in the global market. It was founded in 1965 as the paper division of Samsung Group, later separating from them in 1992 and becoming an independent company under Hansol Group, growing into a leading company in the industry (Hansol Paper Co., Ltd., 2024a, p. 9).

The company’s key milestones, historical developments and organization are summarized in

Table 1. Hansol Paper’s history.

Year	Event
1965	Established Saehan Paper Co., Ltd. (Jeonju, Republic of Korea)
1965	Samsung acquired Saehan Paper Co., Ltd. (Jeonju, Republic of Korea)
1991	Declared independent management separate from Samsung Group
1992	Changed company name to Hansol Paper Co., Ltd. (Seoul, Republic of Korea)
2008	Acquired specialty paper business from Hansol Patech
2017	M&A of Hansol Art-one Paper
2022	M&A of Hansol EME and introduction of environmental business management

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2024a).

and Figure 1. With sales of approximately KRW 2.158 trillion (USD 1,641,327,722 @ KRW 1350/USD) as of 2024 (Hansol Paper Co., Ltd., 2024b), Hansol Paper produces a wide range of paper products, including printing, industrial, thermal, and specialty paper (Hansol Paper Co., Ltd., 2024a). It has the largest paper production capacity in the Korean market and is the number one global producer of thermal paper. Based on this competitiveness, the company exports its products to 103 countries around the world (Hansol Paper Co., Ltd., 2024a) and is among the top companies in the global paper industry.

4.1.2. Environmental Changes in the Paper Industry and Business Issues at Hansol Paper

The pulp and paper industry is an environmentally polluting industry that generates water and air pollutants during manufacturing processes such as pulp pulping, bleaching, and drying. It is classified as a traditional manufacturing industry that consumes large amounts of heat and electricity in large-scale manufacturing facilities (Hansol Paper Co., Ltd., 2025). These industrial characteristics, coupled with external environmental changes such as the spread of ESG management, rising energy costs, strengthened carbon neutrality policies, and the restructuring of global supply chains, are intensifying structural transformation pressures across the industry.

In particular, South Korea’s paper industry is divided into the production of industrial paper, printing paper, and newsprint. Industrial paper and printing paper, which Hansol Paper’s primary products, are produced within an oligopolistic market structure with a high market concentration, dominated by a few companies. However, despite this oligopolistic structure, the industry exhibits intense competition between suppliers due to factors such as stagnant domestic demand, global supply excess, imports of paper, and limited product differentiation.

In order to systematically identify the structural business issues faced by Hansol Paper in this case study, four items were established based on the value chain of the paper business (Porter, 1985): resource procurement, product manufacturing, sales, and external market environment. The structural risk factors identified for Hansol Paper’s business are as Figure 2.

The raw materials for manufacturing paper are pulp and recycled paper resources. Pulp is entirely imported, and there is instability in the global supply chain due to global maritime logistics disruptions, a monopolistic supply structure, and environmental regulations. Regarding recycled paper, more than 90% is sourced domestically, but the supply is still unstable as most of the traders are small businesses (Hansol Paper Co., Ltd., 2021b, 2024a, 2025).

In terms of the product manufacturing process, raw materials and energy account for 60% of the total manufacturing cost. Raw materials account for 45% of the total cost, and since Hansol has lower bargaining power for pulp—the largest component—than international pulp manufacturers, it accepts internationally determined prices (Hansol Paper Co., Ltd., 2022c, 2023c, 2025). Hansol Paper’s energy costs are constantly rising. According to audit reports, Hansol Paper’s energy costs were KRW 189.6 billion in 2021, KRW 254.5 billion in 2022, and KRW 263.3 billion in 2023, an increase in more than KRW 70 billion in two years (Hansol Paper Co., Ltd., 2021a, 2022b, 2023b). In addition, according to ICAP (International Carbon Action Partnership), the proportion of paid allocation in Korea’s emission trading system is expected to rise significantly after 2025 (ICAP, 2024), so carbon emissions are anticipated to be directly reflected in the cost.

In terms of the market environment, Korea’s paper market is experiencing a decline in demand due to the spread of electronic devices, advancements in information and communication technology, and a prolonged oversupply situation. In addition, the demand for eco-friendly products has been increasing since the implementation of the Carbon Neutrality Basic Act in 2022 (Hansol Paper Co., Ltd., 2021b, 2022c, 2023c, 2023a, 2024a), which is expected to further accelerate the decline in demand for conventional paper products.

In terms of institutional and socio-environmental aspects, air pollutants and industrial wastewater are generated during the paper manufacturing process, which can result in breaches of various environmental protection regulations if not properly managed. In particular, drying facilities are subject to inspections for efficient energy use, which, if failed, may result in a stop-use order and potentially the suspension of paper production. The international community is demanding differentiated GHG (Greenhouse Gas) reduction actions from Korea as an OECD (Organisation for Economic Co-operation and Development) member (Hansol Paper Co., Ltd., 2021b, 2022c, 2023c, 2025). These environmental risks have been increasing and becoming more relevant in recent years, as public interest in environmental issues continues to grow and civic monitoring of corporate practices becomes more active.

As can be seen from the above analysis, Hansol Paper is facing complex external pressure factors such as increasing instability in raw material procurement, a continuous rise in raw material and energy costs, the strengthening of environmental regulations and an increased likelihood of civil complaints, and a structural decline in the demand for conventional paper. These issues are systematically summarized in

Table 2. Review of Hansol Paper’s business issues.

Category		Issue
Raw Material Procurement	Pulp	Most pulp is imported, with more than 90% of renewable raw materials sourced domestically
		Global supply instability due to maritime logistics issues, monopolistic supply, and environmental factors
	Recycled paper resources	Recycled paper resources are predominantly traded with a wide range of small and medium-sized enterprises (SMEs)
Product Manufacturing	Raw material costs	About 45% of total cost
		Low purchasing bargaining power compared to international pulp mills
		Pulp prices have increased since 2022 due to supply chain issues caused by the Russia–Ukraine war and strikes by major producers
	Energy costs	15% of total costs
		Energy is a major cost component
		Paper manufacturing is an energy-intensive industry
		Paid allocation of carbon credits to be significantly expanded
		2021 energy costs were KRW 189.6 billion (approx. USD 140.4 million)
		2022 energy costs were KRW 255.5 billion (approx. USD 189.2 million)
		2023 energy costs were KRW 263.3 billion (approx. USD 195.0 million)
Product Sales	Demand for legacy products	Advancement of electronics → reduced demand for paper
		Development of information and communication technology → decrease in paper demand
		Overall oversupply issues continue
	Demand for green economy products	Demand for products linked to green economy is expected to spread gradually
		Increased demand for eco-friendly products
Institution/ Environment	Environmental complaints	Fuel incineration process generates soot and industrial wastewater
		Subject to various regulations related to environmental protection
		International community demands differentiated GHG reduction behavior as OECD member
		Paper drying facilities are subject to inspections for efficient energy use; inspections can result in shutdowns of entire paper production facilities

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2021a, 2021b, 2022b, 2022c, 2023a, 2023b, 2023c, 2024a, 2025) and ICAP (2024).

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4.2. Hansol Paper’s Business Issues and ESG Strategy

4.2.1. Strengthen Partnerships to Address Increasing Instability in Raw Material Sourcing (S)

• Business Issue—Increased Instability in Raw Material Sourcing

As of 2023, Hansol Paper used 1.08 million tons of raw materials per year, of which 490,000 tons were recycled paper resources and 590,000 tons were pulp (Hansol Paper Co., Ltd., 2024a). These raw material consumption trends are summarized in

Table 3. Hansol Paper’s non-recycled pulp and recycled paper resource consumption trends. (Unit: 10 thousand metric tons.).

Category	2021	2022	2023
Recycled paper resource usage	58.7	52.2	49.4
Non-recycled pulp usage	63.5	64.9	58.5
Total	122.2	121.1	107.9

Source: Hansol Paper Co., Ltd. (2024a, p. 107).

. Since all pulp is imported from overseas, it can be difficult to procure pulp depending on the international supply and demand or global logistics situation. In particular, recent de-globalization and regional blocking are increasing the instability of the global supply chain and, accordingly, Hansol Paper’s raw material procurement. Although all recycled paper resources are procured domestically, supply instability still exists as most of the suppliers are small businesses.

• ESG Management—Sourcing Renewable Raw Materials and Supporting and Strengthening Supplier Relationships (S)

Hansol Paper is diversifying its pulp supply lines to ensure the stability of pulp supply and reducing the amount of pulp used by expanding the incorporation of renewable raw materials. To secure a stable recycled paper resource supply, Hansol Paper is strengthening its cooperative relationships with its suppliers and operating win–win support programs (Hansol Paper Co., Ltd., 2024a). These strategies are summarized in

Table 4. Hansol Paper’s plan to secure stability of raw material supply.

Category	Strategy
Non-Recycled Pulp	Mitigate risk of supply instability by expanding range of pulp supplies Enhance use of recycled materials through expansion of deinking facility capacity Increase recycling rate of paper cartons for milk, juice, etc. ✓ Recycling rate of 14% in 2022 → to 50% in 2025 ✓ Agreement on collection system between paper carton manufacturers, paper carton user organization, collectors, and Hansol Paper
Recycled Paper Resources	Strengthen collaboration with suppliers ✓ Establish unions, operate joint warehouses, and strengthen networks Win–win support program ✓ Provide financial low-interest support for suppliers after establishing a mutual growth fund ✓ Education/safety/risk management support ✓ Identification and implementation of joint projects

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2024a).

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4.2.2. Going Carbon Neutral to Address Increasing Energy Costs

• Business Issue—Increasing Energy Costs

Hansol Paper utilizes large-scale facilities and energy to produce paper. As a result, its energy costs account for 15% of the total costs, making energy the second-largest cost. As shown in

Table 5. Hansol Paper’s energy usage trends (Unit: TJ).

Year	2021	2022	2023
LNG	2334	2167	1461
Electricity	8920	9171	8674
District heating	3941	4234	4537
Renewable energy	1280	1387	1518
Others	13	9	14
Total	16,488	16,968	16,204

Source: Hansol Paper Co., Ltd. (2024a, p. 105).

and

Table 6. Changes in energy unit cost and Hansol Paper’s energy cost trend.

Category		Unit	2021	2022	2023
Energy unit cost	Natural gas rates for electricity generation	KRW/Nm3	578.52	1231.95	1085.81
	Industrial power unit price	KRW/Kwh	105	119	154
Hansol Paper’s energy cost (power/fuel/water/LNG)		KRW 100 million	1896	2555	2633

Source 1: Natural gas rates for power generation (KGC, 2025). Source 2: Unit price of industrial electricity (EPSIS, 2025). Source 3: Hansol Paper’s energy cost (power/fuel/water/LNG) (Hansol Paper Co., Ltd., 2021a, 2022b, 2023b).

, although the company’s energy usage decreased in 2023 compared to that in 2021 (Hansol Paper Co., Ltd., 2024a), Korea Gas Corporation (KGC) and Electric Power Statistics Information System (EPSIS) report that LNG and electricity unit prices have increased (KGC, 2025; EPSIS, 2025), leading to higher energy costs. As a result, Hansol Paper’s energy costs increased by about KRW 70 billion in 2023 compared to those in 2021, putting pressure on its profitability (Hansol Paper Co., Ltd., 2021a, 2022b, 2023b).

• ESG Management—Efficient Energy Use and Carbon Neutrality

Until 2024, Hansol Paper focused on increasing its energy use efficiency to reduce its energy consumption in response to the rise in energy unit prices. However, the Korean government announced that from 2025, it will increase the amount of paid carbon emission allowances (ICAP, 2024), and according to the European Commission (EC), the European Carbon Border Tax will be applied starting in 2026 (EC, 2025), so carbon emissions might be reflected in energy costs. Accordingly, Hansol Paper has established a mid- to long-term plan to achieve carbon neutrality by 2050, in addition to increasing its energy efficiency. The company’s phased carbon neutrality strategy and its past energy-saving performance are summarized in

Table 7. Hansol Paper’s energy efficiency performance and carbon neutrality plan.

Category	Strategy
Energy efficiency	Year	2021	2022	2023
	Energy saving project	41 cases	2 cases	20 cases
	Energy cost savings	2.5 billion KRW	400 million KRW	4.8 billion KRW
Carbon neutrality plan	Phase 1: 2025 to 2030 ✓ Prioritize cost competitiveness by maximizing their own energy savings. · Power: Installing high-efficiency equipment. · Steam: Increased thermal efficiency. · Carbon capture: CCUS business development. Phase 2: 2031–2040 ✓ Achieve zero direct emissions through the adoption of advanced technologies. · Low-carbon fuel transition. · Expand CCUS business. · Promote green power adoption, etc. Phase 3: 2041–2050 ✓ Achieve zero indirect emissions through alignment with the carbon neutrality policies of external power producers. · Switch to carbon-free fuel. · Increase adoption of green power, etc.

Source: Hansol Paper Co., Ltd. (2024a, pp. 38, 106).

(Hansol Paper Co., Ltd., 2024a).

4.2.3. Expanding Its Eco-Friendly Product Portfolio to Address the Declining Demand for Paper (E)

• Business Issue—Decreasing Paper Demand

The paper industry, Hansol’s main business, is continually shrinking. According to a report by the Korea Paper Association (KPA), as summarized in

Table 8. Paper production in Korea (yearly). (Unit: ten thousand metric tons.).

Year	Newsprint	Printing Paper	Wrapping Paper	Sanitary Paper	Carton Board	Corrugated Cardboard	Other	Total
2019	72	260	16	56	163	531	36	1134
2020	57	232	23	58	147	578	38	1133
2021	47	244	25	56	144	598	45	1159
2022	50	242	23	55	148	565	43	1126
2023	45	219	22	53	142	545	42	1068

Source: KPA (2024).

, South Korea’s paper production decreased by an average annual rate of 0.95% from 2019 to 2024. In particular, the production of printing paper and carton board, Hansol Paper’s main products, decreased by an average annual rate of 2.8% and 2.3%, respectively (KPA, 2024). Thermal paper production, another core business, is also experiencing stagnant demand due to the economic downturn causing decreased credit card usage. As a result, Hansol Paper has reached the limit of its growth through its existing paper manufacturing business and is facing a business environment that requires it to explore new business strategies.

• ESG Management—Expanding the Portfolio of Environmentally Friendly Products

Hansol Paper is expanding its eco-friendly product portfolio to respond to the steadily declining demand for paper. Due to the government’s enactment of the Carbon Neutrality Basic Act in 2022, the demand for eco-certified paper products is increasing, so the company is expanding its production of these by increasing the proportion of eco-friendly, renewable raw materials it uses. As for new products, Hansol Paper has already commercialized eco-friendly packaging materials such as Protego and Terravas. Currently, the company is further enhancing their functionality and expanding their application to more product categories as part of its strategy to replace plastic and reduce environmental impact. In the long term, Hansol Paper is developing technology to extract nanocellulose, which is one-fifth the weight of iron but more than five times as strong, from pulp, a wood-based raw material, and apply it in various industries such as composite materials and cosmetics (Hansol Paper Co., Ltd., 2024a). If the technology is commercialized, it is expected to be highly utilized to obtain eco-friendly materials, with an explosive increase in demand in related markets. Hansol Paper’s eco-friendly product portfolio, including both its upgraded legacy offerings and new product innovations, is summarized in

Table 9. Hansol Paper’s eco-friendly product portfolio.

Category	Strategy
Legacy products	Increase percentage of renewable raw materials used → increase production of eco-friendly products (using renewable raw materials) ✓ Increased percentage of recycled raw materials used from 46% in 2023 → 50% in 2025 ✓ Measures to increase use of recycled materials: · Increase recycling rate of paper cartons · Expand in-house recycled material production facility · Develop eco-friendly alternative sub-materials
New products	Protego: Eco-friendly paper packaging and alternative to plastic packaging ✓ Self-developed moisture- and air-blocking surface coating ✓ Paper can be disposed of separately, reducing greenhouse gas emissions by up to 80% compared with those associated with plastic Terrabas: Eco-friendly paper containers and cups ✓ Self-developed water-based coating for use inside paper containers—harmless to humans, biodegradable · Conventional paper containers with polyethylene coating inside (controversial) Nanocellulose: Polymeric material derived from pulp · 1/5th weight of iron, 5× its strength; lightweight/highly elastic/high strength · Successful trial production in 2018; trial sales under way

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2024a).

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4.2.4. Strengthen Local Community Partnerships in Response to Increased Environmental Pollution Complaints (S)

• Business Issue—Increased Likelihood of Environmental Complaints

The paper industry is a representative environmental polluter. Paper is made by dissolving pulp or recycled paper in the form of hard chips in water, washing and refining it, and then forming it into sheets, which are then dewatered and dried. Water pollutants are generated during the washing and refining of pulp and recycled paper, and air pollutants are generated during the drying process (Hansol Paper Co., Ltd., 2025).

The paper industry often comes into conflict with local communities due to the water and air pollutants generated by the paper production process. This can lead to the closure or relocation of mills, making conflict management a major risk factor for paper companies. In recognition of this risk, Hansol Paper has made efforts to proactively respond to environmental issues and to strengthen communication with local communities.

• ESG Management—Efforts to Reduce Environmental Pollutants and Strengthen Partnerships with Local Communities

Recognizing that environmental risks can have a significant impact on factory operations and its corporate image, Hansol Paper has strengthened its environmental management system and established a foundation for cooperation with local communities as part of its ESG strategy.

Regarding the environmental aspect (E) of this strategy, Hansol Paper is systematically performing waste reduction and managing its resource circulation system and water and air pollutants to reduce its environmental pollutant production. To address water and air pollution, it is continuously investing in management procedures stricter than the legal standards and reducing its environmental pollutant production, and its resource circulation system and waste reduction efforts are being advanced year after year. The table (

Table 10. Hansol Paper’s efforts to reduce its production of environmental pollutants.

Category	Strategy
Resource Circulation System	Expanded investment in paper recycling facilities Establishment of a resource circulation ecosystem for paper cartons
Waste Reduction	Reutilization of incineration ash from incinerator operations Recycling steam from dryers used in paper production Promoting the recycling of sewage sludge and food waste through solid fuel production
Water Management	Managing water quality at 80% of legal standards Investing in water pollution improvement facilities Continuing water quality improvement activities
Air Pollutant Management	Applying stricter emission standards Reducing production of air pollutants through fuel switching, process improvement, and equipment replacement Reducing production of air pollutants by utilizing renewable energy such as solar power

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2022a, 2023a, 2024a).

) below summarizes the relevant highlights of Hansol Paper’s three-year sustainability report (Hansol Paper Co., Ltd., 2022a, 2023a, 2024a).

In terms of the social aspect (S) of its ESG strategy, Hansol Paper is also strengthening communication and coexistence efforts to restore the trust of local communities. Each mill has systematized ESG activities such as factory tours for residents, community donation activities, scholarship support, and participation in joint environmental campaigns to expand contact with residents. In particular, in the case of plants to which local communities are highly sensitive, it is enhancing information transparency and building a foundation for mutual understanding through the operation of resident councils and regular briefings. These efforts to build relationships with local communities are summarized in

Table 11. Hansol Paper’s efforts to enhance communication with local communities.

Category	Strategy
Daejeon Mill	Volunteer activities, twinning with local welfare facilities Supporting nursing homes, boys, girls, and the elderly living alone
Cheonan Mill	Participating in village events and gathering residents’ suggestions Participated in and sponsored three village events
Shintanjin Mill	Sharing its status with and gathering opinions from autonomous residents’ council and women’s association Supporting the payment of electricity bills for the village’s common water intake and participating in community events
Janghang Mill	Scholarship support for local middle and high schools Adoption of pet beaches and regular cleanup activities Support for future generations

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2022a, 2023a, 2024a).

(Hansol Paper Co., Ltd., 2022a, 2023a, 2024a).

4.2.5. Establishing Governance Structures to Sustain ESG Management (G)

• ESG Management—Developing Transparent Governance

Hansol Paper has placed a strong emphasis on establishing a transparent governance structure from the outset, prioritizing transparent information disclosure, board independence, and transparency. Upon reviewing the annual disclosure system and disclosure materials, it was confirmed that Hansol Paper has disclosed various reports and established an audit committee at an early stage. Hansol Paper’s early disclosure of key information and early adoption of governance mechanisms are summarized in

Table 12. Early disclosure of information and early adoption.

Category	Strategy
Early disclosure	Early disclosure of the 2014 sustainability report ✓ Listed companies with assets of <KRW 2 trillion will be subject to mandatory reporting from 2030; Hansol Paper has voluntarily disclosed its reports since 2014 Early disclosure of 2017 corporate governance report ✓ Although it has been subject to mandatory disclosures since 2022, the company has disclosed its sustainability reports since 2017
Improved governance	Early adoption of an audit committee in 2015 ✓ Although Hansol Paper was not obligated to establish an audit committee following its 2015 transition into an investment and operations company, it voluntarily formed one early to strengthen its corporate governance transparency

Source: Author’s own compilation and collation based on Laws of the Republic of Korea and Hansol’s public disclosures.

.

Additionally, the board of directors consists of more than half external directors, and three out of the four members of the external director nomination committee are external directors, effectively ensuring the independence of the board of directors, is summarized in

Table 13. Board independence and transparency improvements.

Category		Strategy
Agenda		Agenda items requiring board approval ✓ Sales and production activities, securities issued, investment activities, debt obligations, profit and loss, settlement, governance, existence, litigation, shareholder meetings, etc.
Board composition	Independent director ratio	Composition of the board with a majority of external directors ✓ Five external directors, four internal directors
	Female independent directors	One female director per five independent directors
Board committee	Audit committee	Audit committee comprising three external directors Two accounting and finance professionals among the three members
	Independent directors nominating committee	Three of four nominating members are independent directors Appointed independent director as Chairperson of nominating committee
Board support organization	Risk management team	Support independent directors in fulfilling their professional duties
	Human resource team	Hold board and committee meetings, advance provision of agenda materials, and provide separate briefings as needed

Source: Author’s own compilation and collation based on Hansol Paper Co., Ltd. (2024a).

(Hansol Paper Co., Ltd., 2024a, pp. 82–85).

4.2.6. Hansol Paper’s ESG Management System

Figure 3 presents a conceptual diagram that illustrates the structure of Hansol Paper’s ESG management system.

The most distinctive feature of this system lies in its “reality-based approach,” which aims to address the operational challenges faced by Hansol Paper through ESG policies. Structural risks such as raw material imports, energy costs, declining demand, and environmental pollution conflicts are addressed through specific policies in the social (S) and environmental (E) domains, and these policies are supported by a governance structure (G) that ensures their sustainability over the long term, rather than being mere short-term declarations. In particular, the implementation and sustainability of ESG policies are institutionally ensured through decision-making and oversight by a board of directors composed of external directors with specialized expertise. Thus, governance serves as the core foundation ensuring the sustainability and consistency of ESG policies.

Therefore, Hansol Paper’s ESG system follows a structure that ensures the sustainability of ESG policies through a process where strategies are derived and implemented to address real-world business challenges, coupled with a transparent governance structure.

4.3. Hansol Paper’s ESG Achievements

Hansol Paper has consistently received excellent ratings from EcoVadis, a global ESG rating agency, for the past five years. EcoVadis assesses the sustainability of more than 150,000 companies in 185 countries around the world across four areas: the environment, labor and human rights, ethics, and sustainable purchasing (EcoVadis, 2025). These results reflect Hansol Paper’s continuous efforts to develop and implement business-based ESG strategies over the past several years. As a result, the company received the highest rating of platinum (top 1%) for two consecutive years in 2023 and 2024 and maintained a gold rating (top 5%) in 2020 and 2022 (Hansol, 2025). These annual ESG rating results are summarized in

Table 14. Hansol Paper’s ESG ratings by EcoVadis.

Year	Rating	Remark
2020	Gold	Awarded rating corresponding to top 5% of companies
2021	Gold
2022	Gold
2023	Platinum	Awarded rating corresponding to top 1% of companies
2024	Platinum

Source: Hansol (2025).

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5. Conclusions

5.1. Findings

In this study, Hansol Paper linked its ESG strategy directly to its core business issues, thereby securing both the practical effectiveness and sustainability of its ESG strategy. Through a case analysis, the following processes and structures were derived for the ESG strategies to be effective.

First, ESG management can secure both ESG performance and sustainability when it is promoted in conjunction with the company’s core business issues.

Hansol Paper addressed specific business crises such as supply chain instability, rising energy costs, and declining paper demand by integrating them into its ESG strategy. This approach enabled the company to achieve results in business problem-solving and innovation, building trust with external stakeholders, and delivering ESG outcomes.

Second, business-based ESG strategies must be executed in conjunction with a long-term roadmap aligned with the company’s mid- to long-term strategic objectives.

The results of business-based ESG strategies tend to accumulate gradually and be-come visible externally over time. Hansol Paper has systematically implemented ESG activities linked to its mid- to long-term strategies, such as setting carbon neutrality goals, strengthening community cooperation systems, and establishing supply chain sustainability standards, thereby building a foundation for innovation and growth.

Third, the foundation for the linkage and sustained execution of ESG and business strategies must be maintained through the professionalism and transparency of the company’s governance structure.

Hansol Paper has a board of directors where over half of the members are independent directors, and the independent director nomination committee is also decided upon by independent directors, ensuring transparency in the board of directors. In particular, major ESG-related policies are approved through a process where they are reviewed by the board of directors, with independent directors taking the lead, ensuring the sustainability of ESG management.

5.2. Implications

This study presents more specific academic and practical implications from the perspective that a company’s ESG should be implemented as a strategy to solve business problems and drive growth and innovation.

First, building on the perspective that ESG can serve as a key factor in securing competitive advantage in technology-based industries, as argued by Kong et al. (2023), we conducted an analysis focused on the pulp and paper industry, which faces significant pressures from technological innovation and environmental changes, and presented a process for establishing and implementing ESG-linked strategies to address the business challenges within the value chain.

This is consistent with the findings of Raden Pujiyono et al. (2025), who concluded that business models reflecting ESG principles strengthen supply chain resilience and economic performance, and also presented a process for solving specific value chain issues such as raw material procurement, supply chain expansion, and overcoming demand reduction.

In addition, with the global adoption of IFRS S1 standards, specific standards and processes can be applied to disclose how sustainability-related risks and opportunities affect business strategies, business models, and financial plans.

Finally, existing studies support the importance of ensuring the independence and diversity of corporate governance as the foundation for the mid- to long-term implementation of such business-based ESG strategies.

In particular, in countries like Korea, where corporate culture is traditionally characterized by owner- and male-dominated governance structures, expanding the independence of governance through the appointment of external directors and ensuring diversity by increasing the proportion of female directors can significantly contribute to the long-term sustainability of corporate decision-making in response to business crises and cooperation with external stakeholders.

This study demonstrates that ESG research should now evolve into a long-term business strategy centered on an integrated process to address issues such as environmental responses and innovation demands that companies face.

In particular, through more specific and segmented approaches tailored to individual countries, industries, and companies, intensive research should be expanded to explore the business characteristics that can facilitate the innovation and high performance of companies through ESG, as well as the connections between ESG and internal and external issues, thereby advancing the theoretical development of ESG.

To achieve this, in addition to the empirical studies conducted so far on the links between ESG and corporate performance, there is a need to expand the use of various research methods, including exploratory case studies and qualitative research that focus on the strategic processes of internal ESG planning, implementation, and performance within individual industries and companies.

5.3. Limitations and Future Research

However, the results of this study are limited in their generalizability to all companies, as they are based on an analysis of a single company, Hansol Paper, a Korean firm. The business issues faced by each company and the processes of integrating their ESG strategies vary depending on the industry sector and the external environment in which the company operates. Therefore, further research is needed across various industries and companies to better understand these dynamics.

Therefore, in future studies, we plan to apply the problem identification process at each stage of the corporate value chain, the linkage process with ESG strategies, and the characteristics of governance structures that serve as the foundation for mid- to long-term implementation, as presented in this study, to various industries and companies across multiple countries, and continuously conduct single-case and multi-case comparisons.

Additionally, we aim to empirically analyze the relationship between business-based ESG strategies and long-term corporate performance to confirm their potential contribution to enhancing both tangible and intangible corporate value.

This study is expected to contribute to the academic and practical development of strategies that can respond to changes in industrial structure and business environments by presenting the processes and conditions under which ESG strategies are designed and implemented with the purpose of actively addressing business issues, using the in-depth case study of Hansol Paper.