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As economic democratization gets more and more highlighted since the latest 18th presidential election, Corporate Social Responsibility (CSR) is currently receiving a bound effect. As a result, major companies in Korea, including Samsung, LG, and Hyundai, have recently started putting a considerable amount of resources and efforts into carrying out the given duty.  

CSR means enterprises’ social responsibility. It requires companies to actively take economic, legal and social responsibility for the development of the society. This assures that setting an ethical working principle, conserving the environment while producing goods, and securing employees’ personal rights, are all enterprises’ responsibility. This term has been paid attention since the idea has been on the rise from the Park Geun Hye government, which emphasizes economic democratization.

What is CSR?  

CSR can trace its roots to the early years of the 20th century and to the editor of one of America’s most influential business magazines. Proponents argue that a Chief Executive Officer (CEO) could create longer-term profits by operating their businesses, while critics argue that CSR distracts from the economic role of businesses. Others argue CSR is merely an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. Nevertheless, as society has been aware of negative outcomes of companies’ reckless hunt for profits, CSR automatically takes over some tasks that businesses must carry out. Accordingly, governments began business-playing an important role in reinforcing CSR. For example, the European Union (EU) intensifies regulations related to environment, while Korea Exchange announced the Socially Responsible Investment (SRI) index in 2009 as well. 
   
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As the study on CSR is being developed, people came up with a more advanced idea, CSV. CSV, which stands for Creating Shared Value, is commonly compared to CSR. It means a kind of business policy and activity to enhance core competitiveness while improving the economic and social condition. Michael E. Porter, who teaches at Harvard University, and Mark R Kramer firstly advocated the concept. Whereas CSR simply seeks for public profit, CSV combines social, environmental values to maximize a company’s benefit. Usually CSR unilaterally needs cost, but CSV focuses on enterprises having a competitive edge.  

To Survive: A Case of Yu-Han Kimberly 

 

The prime goals of CSR are to pro-vide jobs and a service to vulnerable social groups, reinvest profits on so-cial purpose, and use benefits for the enterprise itself or local community. Through this process, companies try to increase sustainable development with sustainable results.

Yu-Han Kimberly is one of the exemplary companies when it comes to carrying out CSR in Korea. Yu- Han Kimberly’s definition of CSR is very multi-dimensional. Primarily, Kimberly practices what CSR originally means—giving back to society. It is fully aware that the profit comes from the pockets of consumers that make up the society. Furthermore, devoting itself to conserving the environment and boosting national growth is the next logical step for Yu-Han Kimberly, since it recognizes that the community actually helps them yield profits.
   
▲ Photographed by Kwon Byoung Mok
 

Also, another approach that Kimberly has made is about the customers. According to an internal market research performed in February 2011, Kimberly has concluded that customers feel a sense of attraction towards a company that cares them. In other words, a company that gives to society could be trusted. This not only boosts their brand image but makes customers feel like they are building a personal relationship with the company. The result is a group of loyal customers, the major source of the company’s revenue.

The company also uses CSR as a keen market strategy. Since Yu-Han makes toilet paper, it is unavoidable for them to cut down trees, bringing negative impacts on the environment. Ironically, their logo is, “Making our planet greener greener.” It is true that Yu-Han Kimberly does invest some of its income on planting trees. Even though it is minimal compared to the amount of trees that they have cut down, the image that is built into people’s minds is that of a company planting trees and making a better place for us to live in.

CSR in Korea 

Now CSR management is essential for enterprises to survive in the mar-ket. As investors strongly seek for a company’s clean CSR management, it has become a more decisive element in evaluating a particular firm. From now on, Korea’s CSR management is expected to sharply increase. For the goal, a company’s effort to give better treatment to laborers, policies about human rights, systems, and reporting structure are needed and reinforce-ment on international establishments should be done. Fortunately, a poll done by Enterprise Application Inte-gration (EAI), GlobeScan and MK Busi-ness News on 30 April 2007 indicates Korea’s CSR condition is on the way of the upper class.

As a global partner of the internationally-famed England CSR rating agency EIRIS (Experts In Responsible Investment Solutions), Korea CSR Research Service (KOCSR) provided overall condition both in the Korean and Asian markets. “Korean companies’ environmental management degree is almost the same as that of Europe’s advanced countries. Nevertheless, the standard of their acts toward human rights and labor management sharply falls behind that of European business es,” KOCSR says. Also, the institute evinces that environmental and social returning parts are mainly spotlighted, but major corporations have the edge on implementing CSR. In the case of Initiating Public Offering (IPO), bigger companies can afford to do that. The reason is chiefly related to the sustainability report. To publish the report, aid from a foreign consulting company and a report verification institute are necessary that are highly expensive. Though small businesses publish CSR reports, demand toward them is low.

A Way Forward

Meanwhile, CSR seems to pursue the exact opposite of companies’ origi-nal goal. In principle, a hyphothesis that making profits for the public is not what a company is for sounds plausible. Therefore, equal stress on both areas is needed. If a company only considers the total community, it will never develop. With respect to this criticism, KOCSR holds the different viewpoint that profits and CSR do not contradict each other. KOCSR stud-ies a link between creating profits of a company and implementing CSR. “A domestic thesis about CSR done by the Hankyoreh economic laboratory proves that bankrupt companies during an economic crisis tend to have poorly managed CSR. Simply put, the study found out relativity between the CSR systems and their failure: CSR actually affected the management outcome,” states KOCSR.

At this point, we must understand that this CSR is not a one-way idea. The companies are not giving away money and contributions for free. Their contributions to the society are seeds for future prospects, an investment in the long term. It wants to grow with the society that sustains it. A company and the society are inseparable because they are bound in a relationship where one would perish without the other. This means when a company is helping the society, it is also helping the society to be sustainable. Because this new idea places its roots in a better understanding of the relationship between the company and society, it is considered by many economists to be the right direction. Experts also point out the danger of companies abusing the benefits of CSR, which is something that all should take precautions on. But most conclusively, it will build an economic structure where companies will look further away than simply short term profits and where society can trust the companies. 

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