Does Our Company Really Have a Separate ESG Department?
Should a dedicated ESG organization be maintained separately, or should ESG be embedded across all departments? In 2026, we examine the organizational design turning points faced by global companies.
"Does our company have a separate ESG department?" This question sounds like a simple check of an organizational chart, but it actually touches upon the most sensitive topic in sustainable management for 2026. Just a few years ago, the "establishment of a dedicated ESG organization" was considered proof that a company was serious about sustainable management. Today, however, completely opposite trends are unfolding simultaneously. On one side, the roles and status of dedicated ESG organizations and Chief Sustainability Officers (CSOs) are being readjusted, while on the other, attempts to "internalize" ESG into the daily operations of every department are accelerating. Does the disappearance of a department mean that ESG is retreating, or does it mean it has evolved to the next stage? Before answering this question, we need to look into what is happening in the organizational charts of companies worldwide.
The Shaking "ESG Nameplate," But ESG Does Not Disappear
As we pass through 2025 and 2026, analysis indicates a noticeable increase in movements where CSO organizations are being restructured or their roles adjusted in some global companies. With overlapping market volatility, geopolitical shocks, and cost pressures, sustainability leaders find themselves in a position where they must prove their existential value before more demanding and politicized boards of directors. As high-level ESG leaders exit or organizations are reorganized in several companies, some raise concerns that the CSO title could be integrated into or subordinated to other functions such as finance, legal, or risk management.
However, the notion that "the CSO nameplate is shaking" is entirely different from "ESG disappearing." In the job market, steady demand for sustainability executives and directors continues to hold firm, and related budgets are widely evaluated as being reallocated toward regulatory compliance, data management, and disclosure system establishment rather than experiencing overall massive cuts. What is happening now is closer to restructuring than retreat. The core issue is where the responsibility and execution power of ESG are moving. While maintaining ESG oversight functions through board committees, various global companies are increasingly combining ESG with the Chief Financial Officer (CFO), enterprise risk management, legal, and external relations organizations. As climate risks and sustainability performance increasingly become clear financial issues, the momentum to bring ESG into the mainstream of management rather than keeping it as a non-financial peripheral issue is strengthening.
Integration or Dilution?
Perspectives on this restructuring are divided into two. Optimists view this as the "mainstreaming of ESG." The logic is that if ESG permeates finance, operations, procurement, and legal overall rather than remaining a specialized task of a single department, it can create even more powerful and substantive changes. The prospect that surviving CSOs will evolve not as "owners of independent functions" but as integrators and strategic advisors connecting various departments follows the same logic.
The problem is that the boundary between integration and dilution is very thin. The moment ESG becomes everyone's job, there is a risk that it may degrade into "everyone's job yet no one's job at the same time." The concern is that without visible authority, budgets, and a voice at the decision-making table, ESG could quietly slip down the priority list under the plausible pretext of "internalization." In fact, overseas reports highlight "greenhushing" phenomena, where eco-friendly performance is intentionally scaled back or left unannounced externally out of fear of regulatory and political backlash. How an organization is designed ultimately becomes the crossroads determining whether a company genuinely executes ESG or leaves it merely as a formality.
Korea's Reality — Committees Exceed Half, but the Center of Gravity Shifts to "Internalization"
Where do Korean companies stand? The proportion of the top 500 domestic companies establishing board-level ESG committees steadily rose from 44.5% in 2021 to 48.5% in 2022, and 53.7% in 2023, finally surpassing the halfway mark recently, with the latest figures reaching around 57%. However, there are significant deviations across industries. While food and beverage, shipbuilding and machinery, trading, and telecommunications sectors showed ESG committee establishment rates exceeding 80%, consumer finance and steel sectors remained below 30%. It is also confirmed that while committee establishment has become virtually universal among large corporations with massive assets, many mid-sized and small-to-medium enterprises still lack separate dedicated ESG organizations or committees.
The regulatory environment is also rapidly taking shape. In February 2026, the Financial Services Commission released a draft roadmap for domestic sustainability disclosure regulations based on International Sustainability Standards Board (ISSB) standards, presenting a phased schedule starting mandatory disclosures for large KOSPI listed companies with consolidated assets of 30 trillion won or more for 2028 (2027 business year). It also stated a policy to initially allow a certain level of safe harbor for estimation and forecasting information, operating primarily around guidance and adaptation support rather than sanctions. However, detailed discussions continue regarding the application timing and criteria (whether 30 trillion won or expanding to 2 trillion won in the future), so the final roadmap and legislative form need to be verified once more before actual implementation. What is clear is that disclosure has already moved past the question of "whether to do it or not" to "when and to what extent."
The center of gravity in corporate fields is also shifting. According to an issue brief published in November 2025 by the ESG consulting firm The CSR, in a survey of 38 client companies, the most frequently cited top priority for 2026 was "preparation for mandatory KSSB climate disclosure," followed by refinement of net-zero roadmaps, establishment of ESG data platforms, and organizational culture internalization. This organization defined 2026 as the transition point moving from "regulatory compliance ESG" to "execution-centric ESG." In the public sector as well, the Ministry of Economy and Finance announced the public sector's first ESG guidelines in December 2025, making it clear that their application is not merely a task for the ESG department alone, but is premised on cooperation among related departments such as environment, human resources, safety, procurement, and audit. The center of gravity is shifting from ESG driven solely by a dedicated department to ESG driven collectively by the entire enterprise.
Are ESG Departments Necessary, Then?
Let us return to the core. "Is there a separate ESG department?" is no longer a good question. A better question is "Does ESG operate with actual authority in our company?" There is practically no single correct answer to organizational design. Models directly managed by the CEO, models placed under the CFO, models operating separate dedicated organizations, and models distributing responsibility across all departments all exist, and the conditions for success are similar across any approach: clear assignment of responsibility at the management level, interdepartmental collaboration cutting across finance, operations, procurement, and legal, a central function with the expertise to lead ESG strategy and the authority to check decision-making, and active board involvement in long-term risks.
From an operator's perspective, the criteria for judgment become simple. If a dedicated department exists but lacks authority, budget, and data access rights, it is closer to a "signboard." Conversely, even without a dedicated department, if ESG performance is linked to executive evaluation and compensation, data is systematically collected and managed, and ESG is included as an evaluation item at every decision-making stage, that company is already close to "doing" ESG. The structure of authority, data, and responsibility is the essence, not the presence or absence of a department.
KBR View
KBR views this trend not as the "extinction of ESG" but as the "maturation of ESG." If the establishment of dedicated organizations was Act I, 2026 is close to the threshold of Act II, where the systems created by those organizations are diffused across the entire enterprise. However, we wish to point out one thing: integration is an evolution only when accompanied by authority, and integration without authority can become a quiet retreat. For "everyone's ESG" not to culminate in "no one's ESG," substantial power must be vested in that seat, wherever the name tag of responsibility is attached. Ultimately, the question companies must ask should not be "Do we have an ESG department?" but rather "Is ESG actually changing our decision-making?"