[CSR Public Opinion Brief No. 2] Corporate Social Responsibility: Is the Paradigm Shifting?

[CSR Public Opinion Brief No. 2]

1. The Paradigm Must Shift / The Coming CSR Round / Responsibility to Consumers Takes Precedence Over Perfunctory Charity

2. How is Corporate Social Responsibility Assessed? / Korea's Top/Bottom 10 Socially Responsible Corporations Voted by the Public

How is Corporate Social Responsibility Assessed?

Jeong Won-chil, EAI Governance Center

It is impossible for the average consumer to individually gather and evaluate specific information about the numerous social activities of various corporations. In this survey, 61% of Korean citizens reported having encountered information about corporate social responsibility activities. Koreans primarily obtain information about corporate social activities through mass media and the internet. News media (89.5%) and corporate advertisements (79.9%) were overwhelmingly dominant, with internet information gathering also reaching 55.4%. The utilization of the internet was higher than that of citizens in the United States (45.6%) or the United Kingdom (37.1%). Recently, as Korean companies have begun publishing reports on their social contribution activities, similar to companies in developed countries, 41.3% reported having encountered information through corporate reports and publications. However, only 20.5% actively visited corporate websites to collect information.

What, then, are the indicators that lend credibility to a company fulfilling its social responsibilities? Koreans, for instance, prioritize certification marks indicating that a product was manufactured through reliable processes (32%) and collaboration with civic or charitable organizations (31%) as evidence of a company fulfilling its social responsibilities. In the United States, collaboration with civic organizations (30%) and annual corporate reports detailing company activities (22%) were highly ranked. China uses certification marks (35%) and government-level certifications of a company's social responsibility (23%) as grounds for judgment.

Certification marks for social responsibility are a convenient method for consumers, allowing them to quickly ascertain product credibility. While various certification systems have emerged in Korea recently, they are still in their nascent stages. A comparison with European cases, which are actively developing certification systems for corporate social responsibility, is warranted. At the 1997 European Union Summit, corporate social responsibility was officially adopted as an agenda item. In some countries, reports or compendiums on corporate social responsibility are published annually, even at the parliamentary level.

Notably, the International Organization for Standardization (ISO) is planning to release ISO 26000, which will certify the concept of Social Responsibility (SR) encompassing corporations, governments, workers, consumers, and civic organizations, starting in 2008, moving beyond international standard certifications for corporate social responsibility. The international standardization of social responsibility among societal members is progressing faster than anticipated. The development of more systematic corporate social responsibility programs and the establishment of Korea's own verification system are urgently needed.

[Figure 1] CSR Evidence in Four Countries

[Figure 2] Channels for Obtaining Information on Corporate Social Responsibility

Korea's Top/Bottom 10 Socially Responsible Corporations Voted by the Public

Jeong Han-ul, EAI Public Opinion Analysis Center

Note: Sum of 1st and 2nd rank responses. Responses indicating general industry categories were excluded from ranking.

When asked about how well domestic and international companies fulfill their social responsibilities, Samsung was ranked first for both the companies that do the best and those that do the worst. This ranking is based on the sum of two responses for companies that perform well and companies that perform poorly, gathered through open-ended questions.

For Samsung, which overwhelmingly secured the first position among domestic companies, the basis for its high evaluation stemmed from its brand image and economic achievements, such as being a 'trusted brand' and 'enhancing national prestige as a global company,' rather than specific social responsibility activities. For LG, the primary factor cited was the high evaluation of 'product and service quality.' Hyundai's evaluation cited various factors, with notable mention of its 'historical contributions to improving inter-Korean relations and fostering the growth of the Korean economy,' including inter-Korean exchanges. For SK and POSCO, over half of the respondents cited 'social charity and donation activities' as key factors for high trust.

Conversely, examining the reasons for selecting companies as performing poorly, Samsung was primarily criticized for the intense workload of its employees and its anti-union policies. Daewoo's selection was attributed to distrust stemming from its excessive diversification during the IMF crisis and its alleged collusion with political circles. Doosan faced criticism regarding conflicts among siblings over ownership and issues related to employee treatment. Hyundai's poor performance was specifically attributed to its handling of employee welfare and labor unions. SK's negative image was largely influenced by its perceived passivity in environmental protection. It is important to note that respondents may have based their answers on corporate images that did not reflect information about companies operating under the same brand name but as effectively separate entities, or companies whose ownership structures have recently changed. Furthermore, as this survey was conducted in December 2005, it does not reflect public opinion shifts regarding the investigations into the irregular succession at Samsung and Hyundai Motor, nor the subsequent 800 billion KRW donation.

Despite these points, the survey results offer significant implications for companies regarding social contribution activities. Among the top 10 companies recognized for fulfilling their social responsibilities, the relatively smaller companies Yuhan/Yuhan-Kimberly stand prominently alongside major conglomerates such as Samsung, LG, Hyundai, and SK. This can be attributed to Yuhan/Yuhan-Kimberly's consistent pursuit of environmentally friendly management strategies even before the concept of environmental and social contribution activities was firmly established in Korea.

It is highly likely that failure will result if corporate social responsibility management is understood merely as a long-term strategy or a short-term image improvement initiative. This is because it necessitates an expansion of perspective beyond the narrow view of companies as solely economic actors, to recognizing them as members of society as a larger entity.