Since 2015, SK has implemented the Social Progress Credit (SPC) project in which social values created by business organizations are measured in monetary terms and incentives are provided in proportion to those social values. SK also hosts the SPC Award ceremony every year to recognize the contribution and hard work of social enterprises participating in the SPC project. We introduce the SPC project revitalizing the ecosystem of social enterprises by measuring and rewarding social values. The 5th SPC Online Award is held for five days from May 25, 2020 to 29.
Measurement & Reward for Greater Virtuous Cycle
Since launching in 2015, the SPC project has been described by Chairman Chey Tae Won’s philosophy that if business organizations are rewarded for the social progress created by them, they can be rendered financially more stable and motivated to contribute to greater social progress in a virtuous cycle. The project takes place annually, managed by the Center for Social value Enhancement Studies (CSES), SK Group’s not-for-profit research foundation. Social values created by social enterprises competitively selected at an acceptance rate of five to one are measured in four categories: job creation; social service delivery; resolution of environmental issues; and resolution of ecological issues. Selected enterprises are entitled to incentives for three years.
200 business organizations participated in the SPC project in 2019, creating social progress valued 59.8 billion won. SK Group will pay them 10.6 billion won in incentives. Since 2015, when the SPC project was inaugurated, to 2019, business enterprises participating in the program have created social values worth 168.2 billion won, earning 33.9 billion won in incentive payments. Annual average revenue per participating enterprise ramped up from 1.61 billion won in 2015 to 1.7 billion won in 2019, while average annual social values per participating enterprise increased from 240 million won in 2015 to 300 million won in 2019, indicating the positive impact of the SPC project on the financial stability and social performance of the participating enterprises.
The 5th SPC Online Award in 2020
The 5th SPC Award ceremony in 2020 is held online through SK and CSES’ official YouTube channels to help suppress the spread of COVID-19. For five days from May 25 to 29, special awards are granted online to social entrepreneurs who take the initiative in tacking social issues, congratulatory messages are delivered by many distinguished personages, and the SPC incentive performance is introduced by video clips uploaded each of the five days.
Chairman Chey Tae Won’s Speech for the 5th SPC Awards
Greetings to all of you. This is SK Group Chairman Chey Tae Won. I would greet you in person in the SOVAC (Social Value Connect) event if things were the same as in the past, but unfortunately we had to meet online this year due to the COVID-19 outbreak. I also feel sorry for not being able to properly welcome the 34 enterprises that were newly selected last year.
Progress & Limitation of SPC in the past five years
You all have done a great job, as ever, of addressing social issues last year. I would like to congratulate the 200 enterprises on each and every one of your social contribution.
In spite of being busy with the Group management responsibilities, I have personally taken care of the SPC (Social Progress Credit) program. I have not shunned away from lengthy discussions with working-level staff members, and I have actively listened to feedback from relevant experts. This has led me to think of three questions: firstly, is our ‘Social Value Measurement System’ well made?; secondly, are the SPCs effective?; and thirdly, does the SPC program serve to engage non-social enterprises in addressing social issues?
At first, many questioned whether it would be possible to measure social progress in monetary terms. After five years, however, SK affiliates are measuring social progress in monetary values. Furthermore, Korean public organizations, Chinese government agencies and public organizations, global companies and accounting firms are studying how to measure social progress in monetary terms.
More verification is still needed, but the incentive system has been proven to be effective. Those companies participating in the SPC program showed a statistically meaningful growth in social contribution compared to those that are not incentivized. In addition, they are believed to hire more socially disadvantaged individuals and pay higher wages to them.
However, it is yet to be seen whether the SPC program succeeded in engaging non-social enterprises in addressing social value as well. For the past five years, we have worked on developing a social progress measurement system and verified the effectiveness of the system. For the next five years, we will focus on incorporating it into company’s framework. We will expand the scope of the SPC program and organize a group of experts to develop relevant policies. We will also promote the concept of SPC in the global community. I would like to ask for you to encourage your peers and colleagues to join the SPC program to have their social process measured and rewarded.
Safety Net Built by an “Independent-Yet-United” Spirit
I was told that SPC-participating companies are helping less fortunate neighbors affected by the COVID-19 outbreak. Your social contribution activities served as a ‘safety net’ and have saved those who suffered.
SK People and I are greatly interested in building a post-COVID-19 safety net. I always try to bring the safety net issue to the table for every executive management meeting, and have video meetings with those responsible for the safety net development. Three things are critical in the safety net development: ‘people-centric’ approach, ‘independent-yet-united’ spirit, and ‘measurement and reward.’
Firstly, when we take a ‘people-centric’ approach, we can specifically figure out ‘what’ needs to be done in ‘which areas.’
Let me give you an example. SK hynix carefully examined what challenges the outbreak has brought to the local communities in Icheon and Cheongju where its plants are located. Then, SK hynix purchased flowers and flower pots from the local flower farmers to decorate the office and local agricultural products for the cafeteria. Some SK People also bought milk from those who are not able to supply to schools anymore due to the school shut-down. Some SK affiliates donated masks to disadvantaged people in local communities and provided COVID-19 test kits to medical workers. This great idea of customized assistance packages can be attributed to the people-centric approach.
Secondly, we can build a safety net faster at a more affordable cost if each ‘independent’ player contributes its resources in a ‘united’ manner.
Many children reportedly had to skip meals in the Daegu/Gyeongbuk region as their schools were shut down following the COVID-19 outbreak. To help them, ‘independent’ partner organizations got ‘united.’ SK joined forces with ‘Donghaeng (Traveling Companion)’, a public catering service company participating in the SPC program, three lunchbox vendors and two delivery service agents to promptly build a lunchbox delivery network.
In addition, SK forged the ‘Happiness Alliance’ with over 50 business organizations to make ‘happy boxes’ worth KRW100,000, each containing masks, vitamin pills, snacks and side dishes to make sure that ‘no children are left unfed’. SK People in the Daegu/Gyeongbuk region volunteered 400 hours to deliver lunchboxes and happy boxes to children in remote mountainous villages.
Thirdly, ‘measurement and reward’ enable us to plan and forecast ahead of time.
The SPC-participating enterprises’ social contribution during the outbreak was measured and rewarded separately from our regular SPC program. A total of 33 enterprises in the country claimed rewards in just two months, and the social progress achieved by them in overcoming the viral outbreak was valued at KRW1.74 billion in total. Cheongmil, a member of the SPC program, donated household item packages worth KRW370 million to the Daegu/Gyeongbuk region. O2M provided masks worth KRW 180 million to local governments, public health centers, and fire stations. Dawoo Environment also offered disinfection services worth KRW180 million to local childcare centers and senior citizens living alone. What is interesting is that 60% of the donation packages were already implemented even before SK announced the special SPC reward program, and that new donation packages accounting for 40% of the total were added after the announcement. The additional donation packages are estimated to be equal to KRW700 million in social progress credits, and the participating enterprises and SK were able to measure their SPCs even at a finer resolution. For instance, the sanitary service package was equal to KRW310 million in SPCs; personal safety items KRW110 million; and childcare service KRW10 million.
When we can plan and forecast ahead of time with ‘measurement and reward,’ we can identify areas in need of more resources, and can fill the gap by providing more incentives to lure in more participation in such areas. That way, we can build a better bombproof safety net. Let us render the safety net of our society tighter and stronger by making it ‘people-centric’, ‘built with an ‘independent-yet-united’ spirit, and the ‘measurement and reward’ system. Companies participating in the SPC program can play leading roles in building such a safety net.
I hope this short video clip will convey my affection for social enterprises. Although we cannot hold hands in person as we did in last year’s SOVAC event, we shall defeat the crisis and meet again in the SOVAC event early September.
Thank you for your attention.