Min Hee Han
Word Count-1536 / PIN-10528
CSR (corporate social responsibility) is a Matter of Existence, Not a Matter of Choice. Min Hee Han Last year, the Federation of Korean Industries (FKI), which is a multifunctional association for domestic industries which exists in the form of an incorporated body, released the statement about a creative plan to improve the level of moral management and transparent management. That is every company must set up a CSR committee. FKI believed that companies could check whether a violation has occurred and systemically expand their CSR through a CSR committee. It is needless to say that the majority of businesses aim to make a profit. If so, why companies have to care about CSR? Indeed, today most companies in the world endeavor to involve themselves in CSR. In short, more companies are focusing on CSR to be a valued and respected company, not just profit seeking. Only before several years, companies had no problem increasing their sales and profits if they had had good products, technology and marketing ability. However, the lever of social consciousness of consumers, stakeholders and employees around company has increased. They never judge companies only by price or quality of product anymore. They care more about how much interests the companies take in various fields like environment, human rights and labor. “The worse business is, the more customers have a tendency to buy „something they like‟ rather than „something they need‟. At this time, customers want to make sure whether the company which makes the product hold up their end of social responsibility” said Shin Bea Kim, CEO of SK Telecom which is Korean mobile communication service company at an Business for Social Responsibility(BSR) conference held in New York 7, November,2008. It reflects the importance of CSR. Even if you are very smart, handsome and have special talent, nobody would like you if you have no consideration for others. Companies are the same. There would be no consumer to buy products made by companies which never consider social responsibility. That‟s why CSR is a matter of existence, not a matter of choice. Recently, there are a lot of SRI (Social Responsible Investment) fund investing in companies that are actively engaging in CSR. SRI funds are very big scale taking up about 12 % of whole fund market in U.S. and these funds guarantee high-rate profits. It means CSR makes good images about companies and it is automatically reflected to the value of stock. Furthermore, ISO (International Organization for Standardization) which is the world's largest developer and publisher of International Standards established ISO 26000 standard providing voluntary guidance on social responsibility. It concludes: “ISO 26000 will be a distillation of international expertise on social responsibility – what it means, what issues an organization needs to address in order to operate in socially responsible, and what is best practice in implementing social responsibility. Recently, CSR has been emphasized to be successful in business as an essential quality and many studies have shown that the number of companies taking CSR has been increasing. However, not a few companies still hesitate to implement SCR. What are the main problems they face? And how can we solve it? Firstly, a lot of companies regard CSR as „cost‟. That‟s why they have been reluctant to CSR. However, CSR is definitely „investment for the future‟. I think that only a few companies thoroughly understand this concept „CSR=investment for the future‟. Most
Min Hee Han
companies still treat CSR as cost or just contribution and they believe that they need to have a strong sense of duty for CSR. However, they have to have a correct understanding about it „CSR is one of the activities to get profits.‟ That‟s why CSR also needs clear purpose, specific plans, sophisticated strategies and powerful marketing as a process of other products which create profits is. They have to choose and support CSR which can match the vision, management philosophy and image of the company and do best to lead CSR to excellent result. Kookmin Bank(KB), the Korea's largest commercial lender is a good example of how well-organized CSR can positively affect its business management. KB bank is carrying out a wide variety of social contribution projects as part of efforts to fulfill CSR. They has been trying to find areas where it can contribute, - and not merely one-off donations - to offer a sustainable impact. KB bank has been focusing on English education for underprivileged children. KB bank established social contribution program named „KB bank English camp‟ and built a library for children. Furthermore, KB bank made financial product „kangaroo passbook‟ for children and improved the living environment of children by providing financial aid and volunteer work. Another financial product is „woman free savings‟ this product offers higher interest rates to women who do volunteer work over five hours or adopt children during admission period. Like this, KB bank implemented successful CSR through efficient targeting and financial products. KB bank could encourage people to be interested in social problems through various social contribution and financial products which evoke social issues like poverty and the weak. Of course, KB bank could improve its images and increase profits. Second, a lot of companies have the limited definition of CSR. It naturally causes CSR more monotonous and less creative. Many companies still regard CSR as making such a large donation for mass starvation in Africa or environmental protection. Even though ISO offers standard guideline and check list, actually there is no precise definition to define the boundary of CSR. It includes many things like environment, human right, labor practices, organizational governance, community involvement and society development, fair business practice and consumer issue etc. In addition, every other activity considering social responsibility can be CSR. We can say that to abolish unethical production method, to admit the defective product and compensate and correct it as soon as possible are also CSR. Hanwha group which is the manufacturing and construction company in Korea made „green safe purchasing system‟. It is a kind of pre-assessment to select desirable cooperation enterprise. This pre-assessment consist of environment, safe and health sectors. It also includes a guide to choose high saving energy products or recycling products when employees buy office supplies. Furthermore, Hanwha is trying to use anti-volatile organic compound materials, make landscape gardening by using abandoned logging and use environment-friendly materials which never emit dioxins and dioxin-like PCB. These activities enable Hanwha to get a good reputation. Third, a lot of companies have no idea why CSR needs PR activities. If you realize that CSR is a kind of „investment‟, you have to recognize that CSR also need PR activities like other products which companies sell. In the past, demand was more than supply so that consumers did not have choice. Advances in technology gave consumers power in the market. Companies had to focus on making superior products and improving them over time. However, the marketing concept emerged in the mid-1950s. Instead of a product-centered, „make-and-sell‟ philosophy, business shifted to a customer-centered,‟ sense-and respond‟ philosophy. It implies every company has to find more effective marketing strategy and PR Global Initiatives Symposium in Taiwan 2009
strategy in order to attract customer‟s attention. Recently, almost all customers buy brand, not just product and brand means the images of the company. There is no better way to entice consumers than introducing companies‟ CSR as PR activities. Who is most reluctant to do CSR? Yes, probably shake holders. They would think that CSR is costs and costs deprive their power toward the company. However, if stake holders understand there is a good connection between CSR and profits, they would cheerfully support CSR. That is why PR activities are important to enhance the effect of CSR. In short, PR activities for CSR could maximize the effect of CSR and improve the value of the company. More customers would have a friendly feeling toward the company, it would directly connect to profits, and profits would make stake holders support CSR. As a result, CSR would be more popular. It is no secret that the world economy is struggling today. The economic crisis is widely spreading across the world and no company can predict tomorrow. Then, how can we overcome this rigorous challenge? Unfortunately, there is no clear answer. However, it is times like this that many economists view as an opportunity to implement needed change to ensure future competitiveness and create new opportunities. And I believe that CSR could be the core for companies to strengthen the competitiveness. As I mentioned, if companies regard CSR as „investment for future‟, if companies break confined meaning of CSR and mix much more creative method for CSR and if companies implement PR activities about CSR which they did, I am sure every company could be leading company which overcome financial crisis in the near future. Naturally, if social stability is threatened, this means that the lives of individuals are also changing as market colonization progresses. Economists talk of individuals making rational, selfish and well informed decisions in the marketplace. However, as old say goes" If you share pleasure, it will be twice more and if you share sadness, it will be a half less." If companies try to share society‟s sadness together through CSR, I‟m sure that customers would give them more love.
Bliss or Misery? Contemplating the Engagement of Cultural Forms and Economic Progress
Min Hee Han
Global Initiatives Symposium in Taiwan 2009