2010-01-04 

2009 Global CSR Evaluation Project

Corporate Social Responsibility (CSR) is now an inevitable key factor to all 21st century businesses. Earning the trust of stakeholders, such as local communities, consumers, and employees, is now an important activity for corporations along with making good investments, hiring the right people, buying right products, and selling well. 

Companies’ financial successes are thoroughly analyzed by traditional financial analysts on their costs, sales, and profits. However, corporations’ social responsibility accomplishments are not yet consistently evaluated. This approach from investors and the wider market has encouraged companies to put more efforts into improving their CSR. 

This is why we need the constructive and scrutinized evaluation on Korean companies’ CSR level. Global financial markets are already putting more and more weight on the CSR. For example, global Socially Responsible Investment (SRI) investors are now increasingly investing in corporations exercising better CSR. It is time for Korea to have a reliable evaluation, so that the SRI investors will be able to invest in corporations that will bring better corporate social responsibilities in return. With this in mind HERI evaluated 111 Korean companies’ CSR level working with EIRIS and KOCSR. 

Approach The CSR performance was evaluated after all companies’ and their information was assessed against three indices - Environment, Social, and Governance. The Environment index includes the environmental policy, system, and reporting; Social index includes human rights, health and safety and supply chain labour issues; and the Governance index includes the Board composition and their codes of ethics. 

Overall winner POSCO was the collective winner, as it received the highest assessment in each of the three ESG indices (Environment, Social, and Governance) evaluated. It not only was very constructive in establishing, managing, reporting, and estimating the outcome of environment related policies, but also actively responded to the issue of climate change. POSCO’s governance system was equally well constructed. Its code of ethics were established throughout the corporation. All workers actively participated in reporting any and every type of irregularities and corruptions, and used self-testing tables to check their company’s level of ethics. Moreover, the corporation is providing various supportive methods for employees’ as a way to increase their workplace devotion. 

Sector winners Among 66 manufacturing companies, Korean Gas Corporation was the one receiving the Manufacturing Sector’s ESG Collective Award. Its board of practice, anti-bribery, and code of ethics helped the company to perform exceptionally well in the Governance index. Performance in social and environmental areas was also graded highly. The company had Environmental Performance Evaluation (EPE) yearly, constructively controlling the environmental management. 

Among 45 service sector-serving companies, KT was awarded with the Service Sector’s ESG Collective Award. Similar to other awardees, KT performed well in Governance. It also had a notable score in the Social index; due to its policies and systems treating its customers and suppliers. Matching Grant System is the company’s way of dedicating themselves to perform and report the socially responsible activities in the semi-long term perspective. 

Leadership awards Top two companies with highest score in each index were awarded for the Leadership Awards. Korean Gas Corporation and Korean Electric Power Corporation won the Governance Leadership Award. Korean Electric Power Corporation internally distributed the code of ethics, and now runs a “property registration system at free-will”, which is the program designed to promote transparency amongst high executives. Three corporations; Daegu Bank, Dongbu Insurance Co. Ltd., and S-Oil Corporation, tied and became the winner of the Social Leadership Award, together. All of them had well-programmed policy for customers and supply chains, and also was found to take part in activities for local communities. Moreover, they putted very clear emphasis on stakeholder management, therefore actively reporting the result of the communication with their stakeholders. 

Environmentally, Samsung SDI Co. Ltd., and Hynix Semiconductor Inc. performed best. Hynix has a very thorough control system over their supply chain’s ESG matters. They tried to make sure that not only themselves but their supply chains, as well, will run the environment-friendly businesses. Samsung SDI was the same, pro-environment, with its SM Administrative Commission, where all board of directors participate to manage the corporation’s social and environmental responsibility. 

CSR is not only something companies do because they feel obligations for their society. Companies actively manage and care about the CSR, because if companies do not maintain social values, such as environment, human rights, welfare of employees, customer safety, and transparent board of practice system, enough, their customers, investors, and stakeholders may turn their back from these companies. Though in a different perspective, CSR can be a chance to appeal, for companies who do manage all above ESG indices well. 

‘2009 Global CSR Awards’ has its purpose on estimating and evaluating the possibility of 111 Korean companies, which are now listed in the Financial Times Stock Exchange (FTSE) All World Developed Index (AWI), if they will be able to get investments from global SRI investors. We hope that the Korean companies will manage the risks they face, find chances while doing so, and therefore reach out to the world- all through CSR management.