Being Model Company Is Stressful

A majority of companies complain that they are under a lot of pressure from the ongoing “corporate social responsibility (CSR)” campaign.

An official of one of Korea’s big companies who is in charge of ethics management said, “Despite its good intentions, too much pressure from the government is likely to discourage business activities. CSRs should be left at each company’s disposal.”

The Ministry of Commerce, Industry and Energy will announce its comprehensive plan to expand “sustainable management,” and include it in its working plan for next year, according to the ministry and the business sector on Monday. The ministry also plans to grant awards from the president and the commerce minister on November to companies that show excellence in drawing up reports on sustainable management, and that introduce them to the public.

Businesses expect that, in the long run, the government will reinforce relevant regulations in order to make the submitting of the report mandatory, though it is not mandatory right now.

An official of the Federation of Korean Industries told reporters, “Businesses are fretting that they will suffer a disadvantage if they fail to submit the report to the authorities, and they are also worried about the preparation of the report being another regulation. Some of them expanded related organizations, gearing up for possible problems.”

Other ministries are also competing to put pressure on businesses. The Ministry of Health and Welfare established in June the “Information Center for Social Services” to encourage companies’ social services, and the Korea Independent Commission Against Corruption joined forces with the Board of Audit and Inspection of Korea and the Ministry of Justice to set up a task force for transparent business management.

Businesses should make efforts on their own initiative -

At the beginning of this year, 28 local companies, including Samsung Electronics, Hyundai Motors, and LG.Philips LCD, were requested by the “Carbon Disclosure Project (CDP)” consisting of some 300 financial companies worldwide to disclose information on how much greenhouse gas they emit.

Since they cannot afford to ignore the influence of overseas financial companies, which factor into corporate social responsibilities when they make investment decisions, the requested domestic companies opened up the information to the CDP.

Similarly, the overseas financial community is putting great emphasis on “Social Responsibility Investment (SRI)” in which CSR is a prerequisite. The volume of SRI funds in the U.S. quadrupled to $2.29 trillion in 2005 from $639 billion in 1995, accounting for over 12% of the U.S. fund market. In the case of Korea, the National Pension Service is running a pilot program with 300 billion won worth of SRI funds and plans to expand its volume until it reaches that of advanced countries.

Song In-gyeong, director at Ecofrontier, a consulting firm, pointed out, “Gone are the days when companies boosted their image with a huge amount of donations. As fulfilling their social responsibilities is a must, they should make voluntary efforts in doing so.”

However, an official from the business circle commented, “In fact, quite a few businesses are voicing concerns that increasing burdens from additional regulations will crimp their business activities.”

abc@donga.com