[CSR EAI Briefing No. 3] Current Status of CSR in Korea: Perception and Practice 2

[CSR EAI Briefing No. 3]

1. Korean Consumers' Perception of CSR – A Double Burden for Companies / Evaluation of CSR Activities of 30 Major Companies by the Public / Preview of ISO 26000 – What are the Issues? / Status of Corporate Social Responsibility Report Publication

2. Scope of Corporate Social Responsibility Demanded by Koreans / How Far Has Ethical Consumerism Come? / Evaluation of CSR Activities by Industry / CSR BEST5, WORST5

To What Extent Should Large Corporations Be Socially Responsible?

Priority on Environmental and Economic Responsibility, High Support for Comprehensive Social Responsibilities Difficult for Individual Companies to Fulfill

The scope of responsibility demanded from large corporations by the public is rapidly expanding compared to two years ago. However, emphasis is placed on environmental and basic economic areas such as eco-friendly production, production of quality goods, and fair treatment of employees, rather than general social issues like improving human rights or reducing the wealth gap.

82% agreed with the statement, 'Large corporations should ensure their products or production processes do not negatively impact the environment.' The highest agreement was for 'Providing good products at low prices to consumers' (69%) and 'Treating employees fairly' (68%). The necessity of social contribution activities, such as 'Charitable donations' (60%) and 'Educational programs in the local community' (58%), which companies are currently partially pursuing, was also recognized.

[Figure 1] Scope of Corporate Social Responsibility Activities: Agreement Rate (%) by GlobeScan's 13 Indicators

Note 1) Source: GlobeScan • EAI • Maeil Business Newspaper (2007)

Note 2) For each item, the sum of responses for '1. Strongly agree' and '2. Somewhat agree'.

However, there was also high recognition for 'Responding sensitively to public opinion' (59%) and 'Producing under the same ethical standards globally' (59%). This implies that companies should consider not only consumers but also employees, local communities, domestic public opinion, and the reactions of countries where they operate. This is expected to act as pressure to expand the scope of corporate social responsibility.

Simultaneously, a considerable proportion recognized comprehensive global, national, and societal issues such as 'Reducing impact on climate change' (48%), 'Improving the wealth gap' (47%), and 'Improving global human rights' (40%) as responsibilities of large corporations. This appears to be a result of evaluating socially responsible management from an ethical and normative perspective, rather than linking it to practical issues of profit and cost. However, only 31.3% viewed 'Supporting proactive government policies' as a corporate responsibility.

International Comparison of Ethical Consumerism

Duality of Korean Consumers: Confident in Pressuring for CSR, but Practical Action is Nascent

Korean Public Confident in Consumer Pressure on CSR, Comparable to Developed Countries like the US, Australia, and Canada

Le « consumérisme éthique », par lequel l'évaluation par les consommateurs des activités de responsabilité sociale des entreprises (RSE) modifie l'image de l'entreprise et influence ultimement l'achat de produits, est un moteur et un moyen de sanction importants pour la diffusion de la gestion responsable. Sans une conscience et des comportements de consommation matures, il n'est pas exagéré de dire qu'il n'existe pratiquement aucun moyen d'inciter ou de contrôler la gestion responsable des entreprises de manière volontaire. Dans ce cas, le contrôle de la responsabilité sociale des entreprises dépendrait de la réglementation gouvernementale ou de luttes sociales extrêmes.

Une attitude ambiguë des consommateurs coréens vis-à-vis du comportement des consommateurs basé sur les activités de responsabilité sociale des entreprises est clairement apparue. Les consommateurs sont très confiants quant à leur capacité à exercer une pression réelle sur les activités de responsabilité sociale des entreprises. Cependant, il est apparu que l'évaluation de la qualité des activités de responsabilité sociale des entreprises n'avait pas une influence significative sur le comportement d'achat réel des consommateurs pour les produits concernés.

Alors qu'un débat fait rage quant au rôle des consommateurs dans les activités de responsabilité sociale, nous avons demandé aux citoyens de 24 pays s'ils estimaient que les consommateurs pouvaient influencer les activités de gestion responsable des entreprises. Pas moins de 72 % des citoyens coréens croient que les consommateurs individuels peuvent avoir une influence significative sur les activités de RSE des entreprises. Ceci n'est pas en reste par rapport aux pays développés tels que les États-Unis (76 %), le Royaume-Uni (76 %) et le Canada (80 %), où l'influence des consommateurs est réputée forte. C'est même un chiffre plus élevé que celui de la France (65 %) et de l'Allemagne (52 %), où la réglementation gouvernementale est relativement stricte.

Contrairement à cette confiance, les consommateurs coréens sont peu enclins à des actions concrètes pour exercer réellement leur influence. Dans les pays anglo-saxons, qui sont à l'avant-garde de la RSE, les mouvements de consommateurs qui font la promotion active de l'évaluation par les consommateurs des activités de RSE de certaines entreprises, y compris la prise en charge par les consommateurs d'une partie des coûts générés par les activités de RSE, sont en expansion. De plus, le « consumérisme éthique », où les consommateurs choisissent d'acheter les produits d'entreprises qui mènent des activités éthiques et sociales responsables et évitent ceux des entreprises qui ne le font pas, se renforce.

Les résultats de l'enquête ont montré que très peu de personnes en Corée mettent en pratique ce comportement de consommation éthique. Premièrement, lorsqu'il a été demandé si les répondants étaient disposés à supporter une augmentation de prix de plus de 10 % due aux activités de responsabilité sociale des entreprises, seulement 44 % des répondants ont accepté, se classant 22e sur 24 pays étudiés. Cela contraste fortement avec les 68 % des 25 112 répondants des 24 pays qui ont déclaré être disposés à le faire.

[Figure 1] Comparison (%) of consumer influence on corporate CSR activities and willingness to share CSR costs

Source: GlobeScan, EAI, Maeil Business Newspaper (2007)

Note 1) Percentage of agreement with the statement: “As a consumer, I can influence how responsibly a company acts.” Responses are based on the proportion of people who answered 1. Strongly agree or 2. Somewhat agree.

Note 2) Percentage of agreement with the statement: “I would buy a company’s product even if the price were more than 10% higher if the company made greater social contributions.” Responses are based on the proportion of people who answered 1. Strongly agree or 2. Somewhat agree.

Ethical consumer behavior is in its infancy

Only 33% of South Korean respondents reported having experience “publicly commending socially responsible companies or purchasing their products more often.” This shows a significant gap compared to countries with active consumer movements such as the United States (48%), Australia (49%), and Canada (45%). Among those who had experience with consumer action, only 4% responded “very often,” while 24% responded “several times,” and 66% responded “sometimes.” Conversely, only 25% of South Koreans reported having experience “disseminating dissatisfaction or boycotting companies that act irresponsibly or their products.” This is less than half of the figures for the United States (56%), Australia (56%), and Canada (54%). Ultimately, while public consensus on corporate social responsibility is growing in South Korea, consumer awareness and practices are not keeping pace.

In a joint declaration in 2003, the G8 leaders emphasized the need to transition to a “responsible market economy” to achieve sustainable growth. A responsible market economy is neither an inhumane market that unconditionally justifies profit-seeking, nor a regulatory economy that unilaterally imposes responsibilities on corporations. The primary condition for a responsible market economy to function ultimately depends on the market's ability to autonomously incentivize corporate responsibility. If it is the responsibility of corporations to voluntarily address social and environmental issues, then it is the responsibility of consumers to properly recognize and evaluate the corporate social responsibility activities of these companies. Corporate social responsibility does not solely imply the responsibility of the corporation itself■.

[Table 1] GlobeScan, EAI, Maeil Business Newspaper CSR MONITOR 25-Country International Public Opinion Survey (2007)

Note 1) Percentage of agreement with the statement: “As a consumer, I can influence how responsibly a company acts.” Responses are based on the proportion of people who answered 1. Strongly agree or 2. Somewhat agree.

Note 2) Percentage of respondents who answered 3. Have had experience, out of the options: 1. Have never considered it, 2. Have considered it but not practiced it, 3. Have had experience.

Note 3) Percentage of respondents who answered 3. Have had experience, out of the options: 1. Have never considered it, 2. Have considered it but not practiced it, 3. Have had experience.

South Korea: Increasingly Strict Evaluation of Corporate Social Responsibility

Evaluations for all industries have worsened compared to two years ago.

Negative perceptions have significantly increased across all industries compared to two years ago, due to stricter ethical evaluations of companies.

□ Positive evaluations outweigh negative ones only in the IT/computer industry; negative perceptions dominate in most others.

□ Industries with negative perceptions regarding corporate social responsibility: Tobacco (84%) > Oil Refining (58.9%) > Banking/Finance (54.3%)

□ Industries with positive perceptions regarding corporate social responsibility: High-tech IT (43%) > Telecommunications (27.9%) > Apparel (17.6%)

Examining the evaluations of corporate social responsibility by industry, negative perceptions generally outweigh positive perceptions, except for the IT/computer industry, and have significantly worsened compared to two years ago.

Public opinion was most negative towards industries related to public health, the environment, and finance. The tobacco industry recorded a staggering 84% of respondents indicating it acts irresponsibly (mostly irresponsible + very irresponsible), and the food industry received 53% negative responses. Oil refining companies scored 59%, and the chemical industry 52%. It is noteworthy that the banking and finance industry, which is not directly linked to public health or the environment, was also categorized as socially irresponsible. While banking and financial services have improved, their independence is often questioned whenever government or corporate scandals erupt. Furthermore, the perceived high barrier to entry for ordinary citizens may also contribute to this sentiment.

Conversely, the high-tech computer industry received relatively favorable evaluations for its corporate social responsibility activities. Only 20% of respondents viewed it negatively, followed by the apparel industry at 28% and the telecommunications industry at 36%. The media, including TV and newspapers, had 42% negative responses. However, for most industries, excluding high-tech computer and telecommunications, the proportion of respondents evaluating their social responsibility activities positively was below 10%.

Compared to 2005, negative perceptions have significantly increased across all industries. Even the computer industry, which enjoys high favorable public ratings, shows an increase in negative public opinion compared to 2005. The worsening evaluation of corporate social responsibility over the past two years is likely due to a combination of factors. Firstly, the continuous corporate scandals and corruption cases over the past two years have likely had a negative impact on the public perception overall. Additionally, South Korea tends to evaluate corporate social responsibility based on ethical standards more strongly than Western countries. Under strict ethical scrutiny, it is difficult to meet the criteria. The most fundamental and serious issue is that South Korean society has been rapidly shifting towards a low-trust society, and corporations are no exception■.

[Figure 1] Industries performing poorly in corporate social responsibility (Mostly irresponsible + Very irresponsible) (%)

Note 1) Source: GlobeScan, EAI, Maeil Business Newspaper (2007; 2005)

Note 2) Figures represent the proportion of respondents who answered 4. Mostly irresponsible or 5. Very irresponsible, out of the options: 1. Very responsible, 2. Somewhat responsible, 3. Neutral, 4. Mostly irresponsible, 5. Very irresponsible. "Irresponsible" is defined as (%)

Note 3) Blank data for 2005 in Figure 1 indicates that the question was not asked in the 2005 survey.

Top 5 CSR Companies and Worst 5 CSR Companies Chosen by Koreans

- Comparison of data from 2005 and 2007

□ "Samsung" ranked first globally for performing corporate social responsibility well, while "McDonald's" ranked first for performing poorly.

□ "Samsung's" CSR evaluation has improved compared to two years ago, but concerns remain.

When asked to name two companies, among all global companies including Korean ones, that fulfill their corporate social responsibilities, Samsung has been mentioned most frequently by respondents for three consecutive years. Microsoft has consistently held the second position for three years, followed by Johnson & Johnson (15.8%), LG (10.4%), and Coca-Cola (6.7%). These companies have maintained top rankings in CSR performance annually.

Samsung ranked first for three consecutive years in performing CSR well (combined results for 1st and 2nd place).

Samsung (42.8%) > Microsoft (20.1%) > Johnson & Johnson (15.8%) > LG (10.4%)

When asked to name two companies, domestic or foreign, that perform corporate social responsibility well and two that perform poorly, Samsung and LG have consistently ranked within the top 5 domestic companies. For Samsung, despite frequent controversies such as allegations of irregular inheritance transfers, the proportion of respondents who selected Samsung as performing best increased significantly from 25.3% in the 2005 survey to 42.8% in the 2007 survey. LG also saw its support increase from 7.1% in 2005 to 10.4% in 2007, moving up one spot from fifth to fourth place. Samsung's strong performance appears to be a result of public sentiment becoming more favorable due to the worsening economic conditions, despite negative perceptions surrounding irregular inheritance transfers. Notably, the promise of 800 billion KRW in personal assets donated by the Lee Kun-hee family in February 2006 also likely played a significant role.

[Table 1] Companies with the Best Corporate Social Responsibility Among Global Companies (Combined percentage of 1st and 2nd place responses)

Note 1) Combined percentage of respondents who chose 1st or 2nd place (%).

Note 2) Responses referring to general industry sectors (e.g., tobacco companies, oil companies) were excluded from the rankings.

Looking only at 1st place responses, the proportion of respondents who selected "Samsung" plummeted from 19% in 2005 to 7.4% in 2007.

Si l'on considère uniquement les répondants de premier choix, LG devance Samsung avec 9,3 %.

Par rapport à 2005, la base de l'opinion favorable à Samsung s'est élargie, mais son intensité s'est considérablement affaiblie. Si l'on ne considère que les réponses de premier choix pour les entreprises performantes, 19 % des répondants ont désigné Samsung comme l'entreprise la plus responsable socialement en 2005. Ce chiffre est tombé à 7,4 % dans les données de 2007. En ne considérant que les réponses de premier choix, LG a obtenu 9,3 % de soutien, dépassant ainsi Samsung, et a chuté de trois places au classement général pour se retrouver à la quatrième place. Compte tenu du fait que, comme l'a dit le président Lee Kun-hee, le succès de Samsung en tant qu'entreprise de classe mondiale a été soutenu par le soutien de la société et du public, il s'agit d'un facteur d'instabilité qui ne peut être négligé.

[Tableau 2] Pourcentage des répondants désignant l'entreprise la plus responsable socialement parmi les entreprises mondiales (1er choix)

* Source : GlobeScan ․ EAI ․ Maeil Business Newspaper (2007; 2005)

Note 1) Pourcentage des seuls répondants de premier choix (%)

Note 2) Les réponses concernant des catégories générales d'entreprises (par exemple, entreprises de tabac, entreprises pétrolières, etc.) n'ont pas été prises en compte pour le classement.

Entreprises les moins responsables socialement

McDonald's (26,6 %) > Coca-Cola (20,4 %) > Walmart (5,4 %) > Samsung (4,4 %)

Les entreprises désignées par le public sud-coréen comme « entreprises peu responsables socialement » étaient principalement McDonald's (26,6 %) et Coca-Cola (20,4 %), suivies de Walmart (5,6 %) et Samsung (4,4 %). Il est intéressant de noter que Coca-Cola et McDonald's, mal évaluées en Corée, sont considérées comme parmi les entreprises les plus responsables socialement en Amérique du Sud et en Afrique. Walmart est également considérée comme une entreprise socialement responsable par le public américain.

La raison pour laquelle ces entreprises, bien qu'appréciées dans certains pays, peinent en Corée peut être attribuée au fait que leur rôle de leaders de l'industrie de la restauration rapide est reflété dans la conscience publique. En Corée, les préoccupations concernant l'obésité et d'autres maladies causées par la restauration rapide ne sont pas nouvelles. Lors de l'enquête de l'année dernière, plus de la moitié des Sud-Coréens ont répondu que les grandes entreprises devraient développer des produits sûrs et bénéfiques pour la santé dans le cadre de leur responsabilité sociale. Cette tendance n'est pas unique à la Corée ; elle est courante dans les pays où les problèmes de subsistance sont dans une certaine mesure résolus.

L'opinion publique ne devrait être utilisée que comme un signal d'alarme pour la gestion de la responsabilité sociale, et non comme un critère absolu.

Il est douteux que l'opinion publique dispose d'informations précises pour juger des activités de responsabilité sociale des entreprises individuelles. Par conséquent, accorder une importance excessive aux classements issus des sondages d'opinion est même dangereux. Cependant, en Corée, des fonds qui décident des investissements en fonction des activités de responsabilité sociale apparaissent, et les actions proactives des consommateurs à l'égard des entreprises irresponsables se concrétisent. De plus, l'image de l'entreprise reflétée dans la conscience du public a un impact sur le comportement d'achat, ce qui ne peut être ignoré. Bien qu'il soit risqué d'utiliser les résultats des sondages d'opinion comme un critère absolu pour juger des activités de responsabilité sociale d'une entreprise, ils ont une valeur suffisante pour servir de signal d'alarme concernant l'image de l'entreprise■.

[Tableau 3] Entreprises les moins responsables socialement parmi les entreprises mondiales (somme des pourcentages de 1er et 2e choix)

* Source : GlobeScan ․ EAI ․ Maeil Business Newspaper (2007)

Note 1) Pourcentage combiné des répondants de premier et deuxième choix (%)

Note 2) Les réponses concernant des catégories générales d'entreprises (par exemple, entreprises de tabac, entreprises pétrolières, etc.) n'ont pas été prises en compte pour le classement.