By Ryu Jin
Staff Reporter
Corporate Social Responsibility (CSR), an issue of policy debates on corporate agendas, has recently emerged as an essential condition for sustainable growth of enterprises in the changing business environment of the 21st century.
In South Korea, an increasing number of companies have been engaged in various ``extra-business'' activities in recent years. Critics, however, still point out that more should be done in terms of social contribution.
International pressure has also increased: the International Organization for Standardization (ISO) has already set up a CRS guidance called ``ISO 26000'' and more standards will be drawn up in seven fields including environment, corporate governance and fair business.
Advanced countries including Japan as well as France and other Western countries are bracing themselves for the standards for corporate responsibility, which could be a new type of trade barrier in the era of free trade agreements.
``Global standards, which cover all areas from labor and the environment to consumer protection and other corporate responsibility, could emerge as a great burden for enterprises in coming years,'' said Kim Sang-hyo, a researcher at the Institute of Corporate Culture.
According to consulting firm in Korea, CSR, late last month, South Korean companies spent about 1.7 trillion won ($1.8 billion) on social contributions in 2006, up 17.2 percent from the previous year's 1.4 trillion won and more than five times the amount a decade ago.
Research by the Samsung Economic Research Institute (SERI) showed that corporate interest in CSR activities, largely characterized by ``eco-friendly management,'' ``righteous management'' and ``social contribution'' has increased.
POSCO executives and employees participate monthly in the ``Sharing Saturday'' campaign in about 70 welfare facilities across the country in the third week of each month. People of the global steel maker spent about 14.6 hours a year on average on such activities.
Beside POSCO and Samsung SDI, both included in the honorable list of Dow Jones Sustainability Indexes (DJSI), many other firms are involved in such activities including leading conglomerates, LG Group and Hyundai Motor.
Unlike the outward expansion, however, there is criticism that many of the CSR activities remain largely at the level of window-dressing.
In particular, it was only after some business tycoons offered to donate huge amounts of money to the society in a gesture of atonement for their past business illegalities that CSR emerged as a public issue.
Samsung Group Chairman Lee Kun-hee donated 800 billion won last year in the face of a public backlash against his company following a string of scandals. Hyundai-Kia Automotive Group Chairman Chung Mong-koo also offered to donate 840 billion won.
Moreover, some companies even appear to be more interested in ``side profits'' that could accompany the CSR activities, such as publicity effects and good brand image among consumers.
``South Korea ranks highest in terms of money spent by the country's top 30 enterprises for social responsibility activities,'' Korea CSR CEO Yoo Myung-hoon said. ``But most of them lack clear vision for such activities.''
In a country where public antipathy and mistrust still linger against chaebol, corporate contribution to society could be a good way to turn negative public opinion into something favorable.
A survey by the Korea Chamber of Commerce & Industry (KCCI) and the Hyundai Research Institute (HRI) in July found a downturn in the Corporate Favorite Index (CFI) in the first half of 2007, for the first time in four years.
Researchers ascribed the decline largely to poor scores in the fields of corporate social responsibility and ethics management, despite relatively good marks in such fields as international competitiveness and contribution to the national economy.
Critics, therefore, suggest that the companies should now draw up more concrete and specific CSR programs for the public and society more systematically, beyond today's short-term ad-hoc activities.
Some companies are setting examples already. SK Telecom and KT, for instance, are focusing their efforts on information technology (IT), while Doosan funnels its efforts to the academic and educational fields.
Foreign-invested firms are also actively involved in CSR activities. Jinro Ballantines supports high school students of traditional arts, while Renault Samsung Motors specializes in transportation safety education for children.
But the companies are now encouraged to do ``responsible business'' from the initial stage of setting up their own business plans with more of a sense of duty.
Beth Brooke, global vice chairwoman of Ernst & Young, who visited Seoul for the World Women Forum last week, cautioned that the term ``social responsibility'' could only divide CSR and profit-making, which should not be dealt with separately any longer.