Since returning to office in 2015, SK Group’s chief Chey Tae-won has come up with what appears to be an unorthodox business philosophy: Boosting social contribution is the best way to maximize corporate profits.
While this has been raised at public events, including a meeting with global business leaders at the World Economic Forum in Davos, doubts have persisted over whether it is possible to quantitatively assess the company’s contribution to society.
For the first time since it began to crunch related numbers in 2017, SK Group said Tuesday its key affiliates are now prepared to answer the question -- it was worth about 12.3 trillion won ($10.3 billion) last year.
“While the (calculation) system may not be perfect, it is important that we have started work,” said Chey, according to SK Group. “It means that we have set our goal with a willingness to make up for what we lack.”
Creating social value has been one of the most overriding business initiatives for the country’s third-largest conglomerate. In his book published in 2014 when he was imprisoned for misappropriating corporate funds, Chey advocated the need for social contributions.
The figures released Tuesday were based on data from three major arms of SK Group -- SK Innovation, SK Telecom and SK hynix. They were among the 16 affiliates participating in the research. Data of the other 13 affiliates will be released soon.
Chipmaker SK hynix created about 9.5 trillion won worth of social value, according to the SK Group. Its oil refiner SK Innovation and mobile carrier SK Telecom produced 1.1 trillion won and 1.6 trillion won, respectively.
“We have been very cautious about what kinds of mathematical methods we should use to avoid embarrassment, said Lee Hyung-hee, who leads the social value committee at the group. “We don’t want to make it look subjective.”
As for the benchmarks used for research, SK Group said its social value was measured in three areas: economy, business and society. Based on the impacts on these areas, the company said it can figure out how to monetize social contributions.
According to SK Group, economic impact refers to its indirect contribution to the economy, such as tax payments and dividends. Business impact can be measured by its involvement in curbing environmental pollution, and social impact can be assessed through donations and voluntary works.
“The methodology can be changed and it needs constant research,” said Lee of SK Group. “We have come up with these indicators by working with academic experts.”
SK Group said it will reveal the monetized social contribution, such as in the form of financial statements and other business reports. Each affiliate can determine independently when to publish the results.
The company also said it will use employees’ contribution to social value in business evaluation. For instance, 50 percent of the performance assessment will be based on how much social value was created.
Meanwhile, the company has also adopted a new approach in the workplace. SK Group affiliates SK Holdings and SK SUPEX committee are allowing a four-day workweek for employees, every other week.