SK Group committed to sustainable growth

SK Group Chairman Chey Tae-won speaks about the importance of corporate social responsibility (CSR) during a meeting hosted by the United Nations Global Compact last year. Chey is a vocal advocate of CSR, highlighting the responsibility of big companies to reduce social problems such as poverty, income disparity and youth unemployment. / Courtesy of SK Group

Sustainability is a buzzword frequently used by business leaders and CEOs of global companies since the 2008-09 global financial crisis changed the world’s economic landscape.

Firms that are sustainable have something in common. They are more innovative and adaptive to change. In addition, they maintain resiliency over time, creating economic value and contributing to environmental systems and society.

When it comes to business sustainability in Korea, SK Group is ahead of other conglomerates. Group Chairman Chey Tae-won has shifted the focus of his group’s strategy to sustainability from rapid expansion and it is busy looking for new sustainable growth engines.

The 52-year-old tycoon has traveled the country as well as the globe to preach the importance of corporate social responsibility (CSR) and, for his part, established or sponsored dozens of social enterprises to help resolve various social problems such as poverty, income disparity, and youth unemployment.

He recently initiated a project to establish an online platform that will create an “ecosystem for autonomous development” for social enterprise around the world. SK is now working with an elite Korean university to launch an MBA program specializing in CSR. Chey has pledged that his dedication to CSR activities, particularly the establishment of social enterprise, will continue.

“Donation and other conventional CRS activities create social and economic values that are on average three times the material imputed, while the same amount of input into social enterprise creates more than ten times that in additional value,” he said. “In that sense, I believe the establishment of social enterprise is one of the most cost-efficient measures to solve social problems.”

SK Group has engaged in CSR activities since 2005, establishing or sponsoring nearly 70 social enterprises and creating 6,000 new jobs by the end of last year. It plans to establish more social companies to create 4,000 more jobs by next year for which the conglomerate has launched a fund totaling 50 billion won ($43.3 million).

In a speech at the Rio+20 Corporate Sustainability Forum in Brazil last week, Chey said his company will join forces with United Nations Global Compact (UNGC) to establish the Global Action Hub, an online platform that will help create an ecosystem for the autonomous development of social enterprise around the world.

The platform will make its debut by 2014, through which investors, experts, and social entrepreneurs exchange information and make investments in each other, SK said. The conglomerate will also run an MBA program introduced by the Korean Advanced Institute of Science and Technology in tandem with the U.N. Principles for Responsible Investment.

“We need to bring innovation to traditional CSR activities,” Chey said. “Considering the increasing influence of the private sector, developing and supporting social entrepreneurship will be an effective alternative for social participation activities.”

He emphasized that the Global Action Hub is “not just a simple IT platform but a comprehensive one” for networking and information exchanges to further enhance the positive effects of social enterprise.

He said the establishment of the CSR MBA program would promote the values of the United Nations that are naturally permeated through activities of social entrepreneurs.

SK has launched a 100 billion won private equity fund in cooperation with the state-run Korea Finance Cooperation to invest in small subcontractors that show proven growth potential. It said the fund was created by affiliates SK Securities, SK Telecom, and SK Global Chemical along with the Korea Finance Corporation and KDB Capital.

SK said Chey suggested the idea in a meeting with heads of subcontractors in October last year.

The fund will operate under SK Securities and KDB Capital until 2018, during which time they will select beneficiaries through thorough, multi-level assessment and purchase up to 5 billion won in shares of each firm as a direct investment. The group plans to offer non-financial education programs for executives of its subcontractors.

SK Group is operating another 321 billion won fund, providing cash-strapped subcontractors with up to 500 million won with lower-than-market interest rates. SK Telecom, the country’s largest mobile network operator, offers various training and research programs for information technology startups. <The Korea Times/Park Si-soo>

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