Being Responsible in Korea

Transcription

1 Hankyoreh Economic Research Institute Being Responsible in Korea Wonjae Lee Hankyoreh Economic Research Institute

2 TABLE OF CONTENT 1. Background 2. Being Responsible in East Asia case research 3. East Asia 30 evaluation 4. Discussions and Conclusion 2

3 1. Background_Korea(see attached) 60s~70s [Economic Growth] CSR = Mass production, distribution and exports 80s [Labor Issues] More than 3,700 strikes in 1987 Labor unions at large companies were established Early 90s [Environmental Concerns] Doosan Electronics dumped 320 tons of phenol waste into the Nakdong Rive (1991) Oil accident by Honam Petrochemical Corp. (1997) Late 90s [Financial Crisis] Massive IMF bailout package (1997) Reforming the Chaebol structure (1998) Early 2000s [Ethical Management] Anti-corruption Act (2001) Fraudulent accounting scandals by Daewoo & SK (2003) Korean 1 st sustainability reports published by Samsung SDI, Hyundai Motor Company & Hanwha Chemical (2003) 3 Late 2000s [Green & Mutual Growth] Presidential Committee on Green Growth (2009) Presidential Committee on Win-win Growth (2010)

4 2. Case Research_target 4 Country Company Name Industry Baidu Internet Information Search Engine China Minmetals Corporation Industrial Metals & Mining China Japan Korea China Ocean Shipping Group (COSCO) Industrial Transportation Esquel Group Textile and Apparel Manufacturing Lenovo Technology Hardware & Equipment State Grid Corporation of China (SGCC) Electric Power Aeon Co., Ltd. General Retailers Fuji Xerox Co., Ltd. Technology Hardware & Equipment Itochu Corporation Support Services Nissan Motor Co., Ltd. Automobiles & Parts Ricoh Company Ltd. Industrial Engineering Shiseido Co., Ltd. Household Goods AmorePacific Corporation Cosmetics & Household Goods Hyundai Motor Company Automobiles & Parts LG Electronics Inc. Technology Hardware & Equipment Lotte Shopping Co., Ltd. General Retailers SK Telecom Mobile Telecommunications Yuhan-Kimberly Household Goods

5 Initiatives Policy System Reporting Impact 2. Case Research_SCM Initiatives and motivation to enhance SCM regard to CSR Boundary and period Setting sta ndards for suppliers Specific issues concerned with SCM Executive s responsibility Communication between corporation and suppliers Monitoring and inspection SCM Education SCM Promotion & Punishment SCM reporting SCM measurement Impact and contribution to company generated by SCM Impact and contribution to local community generated by SCM 5

6 2. Case Research_SH dialogue (1) Initiatives (2) Identification (3) Process (4) Approach (5) Response Initiatives and motivation to enhance SCM regarding CSR Whom to engage List of stakeholder group Organisational process for defining stakeholder group Type and frequency of formal dialogues Specific method to reach individual stakeholder group Key topics and concerns arising through stakeholder engagement 6

7 2. Case Research_gender Scope 1: Corporations (1)Leader s commitment (2)Equal opportunity (3)Safe and healthy work environment (4)Education & training Scope 2: SCM (5)Enterprise development, supply chain and marketing practices Scope 3: Community (6)Community leadership and engagement (7)Work-life Balance 7 (8)Measuring and Reporting

8 2. Case Research_(ex) LG s SCM Expanding the Scope of CSR through the Supplier Code of Conduct LGE developed its own Code of Conduct after joining EICC in Aug All the entities in supply chain must comply with the Code Creating Value for Customers Respecting Human Dignity Code of Ethics All LGE Business Sites Global Labor Policy Global EESH Policy Code of Conduct 8 Labor & Human Rights Health & Safety Supplier Code of Conduct Environmental Impact Ethics Legal Mining Management System All LGE Suppliers

9 2. Case Research: Conc.(SCM) Mutual growth and win-win partnership are the most important initiatives Wider range of supply chain management Hyundai Motor Company, LG Electronics and SK Telecom include not only 1sttier but also 2 nd and 3 rd tier suppliers AMOREPACIFIC, Lotte Shopping and Yuhan-Kimberly include direct sales agencies, vendors and wholesalers Fair trade between partners is another significant concern 9

10 2. Case Research: Conc.(SHD) Definition Major stakeholders: stockholders, customers, business partners (or suppliers), employees, local community The government can be considered as a stakeholder, only if the company conduct government project, but not essential Way of dialogues Off-line surveys Stakeholder s committee meetings with external specialists representing individual groups of stakeholders 10

11 2. Case Research: Conc.(gender) All of selected companies comply with the governmental regulations regarding gender equality and maternity protections Equal opportunities in hiring, promotion and wages for both genders Maternity/paternity leaves for child giving and caring Various educational programs and financial support for WLB Although, those who provide superior family-friendly management systems present higher participation level of women at work place Executive Level [%] Managerial Level [%] Total Employment [%] New Recruits [%] AP HMC LGE Lotte SKT YK

12 3. East Asia 30_what According to the Asia CSR Evaluation Model made up by Asia CSR Expert Committee, 30 companies evaluated to be the best are named East Asia 30. Asia CSR Expert Committee Comprised of ten Chinese, Japanese, and South Korean experts in the fields of environment, society and governance East Asia 30

13 3. East Asia 30_goal established Asia CSR Evaluation Model reflecting the Asian context as well as meeting global standards, and then select East Asia 30 with the Model. Global Standard (UNGC 10 principles, GRI G3 Guidelines, ISO26000) Asian Context (Participation of CSR expert committee) Asia CSR Evaluation Model EAST ASIA 30

14 3. East Asia 30_governance takes charge of the East Asia 30 project and EiRIS, a credible data research institute, provides data for the objective and authoritative result. CSR experts from China, Japan and Korea are to participate in evaluation process CSR expert committee : 2010 CSR Expert Committee composes of CSR experts from CJK and each national team includes 3 experts; the total number of the committee members is ten including a chair. -Organizer:, Korea s leading CSR research [Organization] Environ ment Korea Governa Society nce [Assessment Process] Selecting Corporations Making Evaluation Model Collecting Data Set institute which primarily focuses on sustainability management, takes charge of this project Environ ment Chair Environ ment Evaluation & Analysis -Data Provider: EiRIS, a leading global CSR research Society China Governa nce Society Japan Governa nce Experts Reviewing institute in the UK and KOCSR in Korea provide data for the project Final list of East Asia 30

15 3. East Asia 30_process The evaluation model was applied to companies of China, Japan and Korea that are listed on the FTSE and have published CSR-related reports. Step 1 Step 2 Step 3 Step 4 Development of Accountability Evaluation result Confirming the Asia CSR Evaluation Model 1) Constituting of 20 criteria in 3 areas(environment, - Report on CSR performance - Scores of each crite ria are converted into 100 th percentile base d on the measureme nt of to what extent f actors of each criteria final list 1) Negative screening 2) Experts discussion Society, Governance) 2) Confirming weightings are met and then pre determined weights a pplies to each criteria.

16 3. East Asia 30_model The weight assignment method is following two principles - Principle 1: The sum of area weight value is one hundred - Principle 2: The sum of Criteria weight value is one hundred East Asia 30 E NVIRONMENT Core Environment(27.5) Climate change(20.5) Water management(12) Biodiversity(11) Chemical safety(12) Environmental solutions(17.5) S OCIETY Health and Safety(13) Labor issues(15) Job creation and Security(14.5) Equal opportunities and Woman empowerment(12.5) Social contribution(11) Communication with Stakeholder(13.5) Supply chain(12) Human rights management(8.5) G OVERNANCE Board practice(20.5) CSR risk management(15) Ethics(20.5) Anti-corruption(18) Women on the board(9.5) Leadership accountability(16.5)

17 3. East Asia 30_model Environment takes the largest weight among three areas and Society and Governance have the same weightings. Within each area, criteria reflected the Asian context were considered to have bigger weightings. E S NVIRONMENT OCIETY OVERNANCE G Core Environment Climate Change Labor Issue Board Practice Ethical Management Environmental performance, Climate Change, Labor Issue, Board Practice, Ethics were assigned larger weights than those of other criteria.

18 3. East Asia 30_analysis 2011 East Asia 30 Evaluation Model reflects integrative perspective as a various of stakeholder issue management. East Asia 30 Society and Governance areas are getting more significance in the global economy Stakeholder-centric view and legitimacy view of CSR are reflected in the model Added Woman on the Board, Anti-Corruption, Water Management criteria to emphasize integrative perspective, however, the results in the region are still not satisfactory - Environment area average: 62.8, Water Management average: Society area average: Governance area Average: 62.3, Woman on the Board average: 15.4, Anti- Corruption average: 39.2 Differences Japan put more emphasis on Environment area China put more emphasis on Society area Korea pay more attention to Society such as labor Issue.

19 4. Sugesstions for practitioners 1. More emphasis on corporate governance & stakeholder issues - Better board structure to engage larger stakeholders to recognize and react to social contracts. 2. Economic rationality Social contract Institutional regulation - Different strategies to different stages 3. Better legal framework to improve disclosure - More sophisticated third party verification - Stronger mandatory information disclosure framework