It is an honour to be here today. Speaking last won’t be easy after such a talented and distinguished line-up. To make things worse, I am the last man standing between you and your lunch. So I shall try to be brief!
Premier Li, may I begin by congratulating you for holding two productive sessions in Beijing. You demonstrated a determination for structural reform in China in the face of a challenging economic environment. As a foreign company with operations in China we welcome your new foreign investment law and the powerful signal for openness it sends to the investment community.
Ladies and gentlemen, I have come here to make a case for social value. In fact, I will argue that economic and social value should be given equal importance. And, if you allow me, I believe we need to focus our efforts on two important areas: measurement and incentives.
First, we cannot increase social value if we cannot measure it. If you think about it, we are all familiar with financial accounting and the measurement of economic value. We have developed accounting methods to increase our resource allocation efficiency and our financial returns. But I believe we can do the same for social value. It may take a while, but in the end we should also be able to measure and improve our impact.
I am happy to announce that our SK affiliates will be reporting all social value generated in 2018 by the second quarter of 2019. This initiative we called the Double Bottom Line (DBL), as we shall be reporting both our financial returns and social value in our financial statements. We view this as a commitment. We are now committed to seeing improvements from year to year.
Moreover, we have recently joined forces with China’s State-owned Assets Supervision and Administration Commission (SASAC). We will be exchanging notes and expertise in social value creation. We invite other public and private stakeholders, including corporates, NGOs and members of civil society, to join our initiative, and to learn more about how we intend to foster a more sustainable society.
And now: my second and last point. To increase social value we must set incentives and create an ecosystem for social value generation.
It is of course a crucial role of government to tax economic value in order to redistribute and create social value. But pressure points on society are increasing. Challenges are rising faster than our ability to address them, and government cannot do this alone.
We clearly need to involve a wider range of stakeholders to pool resources, capital and talent. But we cannot always rely on good will. To attract new players, we will need to set up a more creative and compelling framework where economic and social value are generated simultaneously. Let us think about the right incentives to bring about this idea: public recognition, tax benefits or negative-tax for example.
We are currently conducting experiments at SK on measurement techniques and setting the right incentives. I am excited about our progress: if we can have some early success, this will build momentum and will spur innovation and job creation. I am confident we can unlock a significant amount of value.
We would be delighted to tell you more about our initiatives and some of our early promising results – feel free to drop by our booth! In the meantime, I thank you for your time and wish you a productive time in Hainan.
Opening remarks, Boao Forum