SK Group’s Transformation and the Rise of Social Value in Korea

MYSC often collaborate with big corporates to address social problems.

One of those collaboration projects was actually a fascinating case study that highlights a significant shift in corporate strategy and social innovation within South Korea.

This case revolves around the SK Group, a major Korean conglomerate, and its pioneering efforts to integrate social value into its business model.

The Emergence of Social Value in Business

Before we dive in, you’ve got to understand how social value became relevant and even critical for some firms. Here’s some backgorunds.

In May 2018, SK Group’s chairman, Chey Tae-won, along with over 70 CEOs and executives, gathered at the Grand Walkerhill Seoul hotel to discuss new management strategies. The focus was on how businesses could maximize social value alongside financial returns.

In his keynote speech, Chey Tae-won emphasized, “Corporations that create social value can become respectable and widely loved in the future. The value of society-friendly as well as customer-friendly corporations will eventually grow due to their social responsibility and innovation, despite the possibility of short-term loss.” This statement marked the beginning of SK Group’s commitment to integrating “double bottom lines” into their business model—a first for a Korean corporation of its size.

Shifting Corporate Objectives

Traditionally, Korean conglomerates, or chaebols, like Samsung, Hyundai, and SK Group, focused primarily on maximizing profitability and economic growth. Their goals were centered on sales, market expansion, and profit maximization.

But around 2018, more and more consumers and stakeholders began to expect businesses to address social and environmental issues. This shift has led companies to redefine their objectives to include social value creation as a core component of their strategies.

Recent Developments

Government noticed this shift or changing landscape. In fact, it should be a key part of this shift, right? Under President Moon Jae-in’s leadership, the South Korean government launched a series of policy programs with substantial fund for social ventures, signaling strong support for the social economy. This effort, of course, included new sets of policies to foster inclusive growth and the appointment of a secretary on social innovation.

As a result, state-led companies are now required to measure social value as part of their business success metrics. For example, Korea Land & Housing Corporation developed a social value performance evaluation framework according to 12 social issues, including human rights protection, sustainable environment, and disaster safety, and adopted an internal policy to put the framework into effect.

To help the public sector better understand the social economy and how collaboration can occur between public organizations and social ventures, MYSC hosts forums on social value creation. South Korea-based impact investors, such as Crevisse Partners and The Wells Investment, work with the government as general partners (GP), which manage the social impact investment fund with the Korean government as well as investors.

Lessons and implications

• Integration of Social Value:

Corporations that effectively integrate social value into their business models can achieve long-term success and positive reputation. The SK Group’s shift to double bottom lines illustrates this approach.

• Collaboration and Innovation:

Collaborations between traditional businesses and social ventures can drive innovation and amplify social impact. Programs like AIA Open Innovation and Hana Financial Group’s CSR initiatives showcase this potential.

• Government Support:

Government initiatives and policies play a crucial role in fostering a social economy and encouraging businesses to adopt social value metrics.

In conclusion, SK Group’s transition to a double bottom line approach and the rise of social ventures in Korea highlight a significant shift in corporate strategies.

By integrating social value with financial goals, these companies are not only addressing societal challenges but also positioning themselves for long-term success.