Ushering in an era of giving
In a time of economic uncertainty, many business leaders in profit-oriented private firms are facing a major managerial dilemma: whether to seriously invest in corporate social responsibility (CSR) projects, or merely use them as a tool to avoid public criticism for their disproportionately high revenue streams.
To find an answer, over 600 entrepreneurs, politicians, activists and bureaucrats from 15 countries convened in Seoul to participate in the Global CSR Conference 2011, Korea’s first large-scale conference on the issue that wrapped up on Wednesday.
With growing international criticism of enterprises’ alleged greediness, including those developing from the Occupy Wall Street protest in New York, business leaders and activists in Korea said that such overtures to society were crucial to restore trust and confidence from shareholders and consumers, even though they may undermine next-quarter profits.
Lee Seung-han, president of the Global Compact Korea Network and CEO of Homeplus, the Korean affiliate of Tesco, and other high-profile industry figures spoke with the Korea JoongAng Daily on Wednesday on where current trends are leading.
“Current ideas about trade no longer hold true for today’s economy,” Lee said. “At a congress of the United Nations Global Compact [UNGC] in New York last year, an Accenture report came out showing that 93 percent of CEOs said sustainability needs to be integrated into corporate management. At present, fewer than 200 Korean companies have joined the UNGC, and I believe that CEOs in Korea should be more aggressive in getting involved in CSR initiatives.”
The three-day event was hosted by the Global Compact Korea Network, the Seoul bureau of the UNGC.
Q. Could you explain the significance of the ‘Seoul Declaration’ that was adopted on the final day of the conference?
Kell: It elevates CSR as a national agenda ... From the UN perspective, we’re extremely delighted because the Seoul declaration sets a benchmark for all our other country networks to embrace ambitious forward-looking action plans.
Miriklis: We’re delighted that the issue of empowering women has been included in the first sentence of the declaration. I’m very encouraged to see CEOs from prominent companies express their willingness to learn more about these issues.
Lee: This conference gives social leaders a new sense of momentum. Groups start to understand the values and principles of UNGC. It is the first CSR conference not only in Korea, but in Asia. We’re facing a lot of uncertainties right now, so we need [to find a new business framework]. Without balancing growth and profit with social contributions, companies cannot grow above a certain limit.
In a time of economic uncertainty, more companies are paying attention to profits. Why are you emphasizing CSR?
Kell: In a time of recession, despite hardship, companies are in serious search of long-term value creation. When shocks occur like the one in 2008, and the one currently taking place in the world, there’s a search going on to see how we manage this, and how we respond to it. Social discontent and debates on inequality are prevalent. Social issues are rising to the top again. Corporations have renewed their efforts to search for suitable business models addressing such concerns. Long-term thinking is critical.
Lee: The definition of ‘normal’ has changed. So far, companies have grown on the basis of how competitive their product lines are. The rise of neoliberalism has led to economic disparities and polarization, which is being intensified by the economic crisis. In this phase of what I would like to call capitalism 4.0. - a market economy with a softer, more human edge - business environments are changing rapidly. Under this new business model, social innovation and responsibility is not an option. It’s a must.
Except for LG Electronics and Hyundai Motor, Korea’s other representative companies have not signed up as UNGC members. What’s your take on this?
Kell: In my previous visits to Korea, it took me a long time to win some [companies] over. Korean companies want to be perfect. The UNGC is a learning platform. But Korean companies first want to be perfect before joining us. What matters is that you want to improve, and it’s the intention that matters.
Lee: Korea is already a leader in a lot of commodities. If more executives rethink the way they perceive their business cycle, we could be a leader in CSR, too.
If a product sold at Homeplus turned out to be a different from how it was originally promoted to customers, what is Homeplus’s risk-management strategy for this?
Lee: Even if it was the fault of the manufacturer, some consumers would blame the retailer and we could lose people’s trust.
Our policy is to refund or exchange items, even if consumers change their mind after buying, or if they simply aren’t happy with their purchase. This also holds true when the wrong product is sold due to a mistake on the part of the manufacturer.
In March, we ran a promotion for LED monitors with integrated stereo speakers, but the product that ended up in the hands of our customers didn’t contain speakers. People complained and I ordered my staff to immediately inform them of what had happened, and let them exchange the product for other LED monitors with speakers.
Some suggested that customers should have to come into stores and collect their exchanged items, but I ordered them to directly deliver them to people’s homes. At the end of the day, it was the supplier’s fault. Our supplier didn’t keep a promise to give us the product that we requested. However, even if the retailer was not directly responsible, it should never respond to matters like this in a half-hearted manner, or try to sweep them under the carpet.
By Kim Mi-ju [firstname.lastname@example.org]
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