Chey Taewon: "Social Value Creation Should Also Be Rewarded" ... Proposes New Capitalism

Calls for Expanding Social Performance Measurement and Reward Systems
Social Innovation Leaders from 15 Countries Gather in Seoul
"Market Rules Must Change to Recognize Social Value"

SK Group Chairman Choi Taewon emphasized the need for a new market system in which economic rewards follow the creation of social value. His proposal is to expand across the economy an experiment in measuring and rewarding social performance that has been conducted with social enterprises for more than a decade.

SK Group Chairman Choi Taewon delivers remarks at the Ecosystem Leadership Exchange (ELE) program of the Social Enterprise World Forum (SEWF), held in Seoul on the 12th. Center for Social Value Enhancement Studies.

According to the Center for Social Value Enhancement Studies, Choi stressed the importance of a performance-based reward system tied to the creation of social value at the first “Ecosystem Leadership Exchange (ELE)” program, held on October 12 in Seoul as part of the Social Enterprise World Forum (SEWF).

The event, co-hosted by SEWF and the Center for Social Value Enhancement Studies, runs for four days through October 15. South Korea was selected as the first host country for the ELE, with social innovation professionals from 19 organizations in 15 countries taking part. Participants are scheduled to visit the National Assembly, public institutions and businesses to learn about South Korea’s policies for supporting social enterprises and its finance and investment systems.

In his speech that day, Choi noted that corporate social responsibility (CSR) activities have traditionally focused on budget allocations and publicity, limiting their ability to measure actual social impact.

“Relying solely on altruism cannot provide the scale needed to address growing social problems,” he said. “A sophisticated, performance-based incentive system that motivates people voluntarily is essential.” He added that artificial intelligence (AI) could reduce the high costs of measuring social value.

At the World Economic Forum (WEF) in Davos in 2013, Choi proposed the concept of Social Progress Credit (SPC), which measures the results of efforts to solve social problems and rewards organizations in proportion to those results. Since 2015, SK has run a program that converts the social value created by social enterprises into monetary terms and pays them cash incentives.

Choi stressed that this experiment should evolve beyond supporting social enterprises into a model for changing how the market economy works. The aim is to change market rules so that organizations receive economic rewards in proportion to their contributions to solving social problems.

The same idea is reflected in the report “The Impact Economy: Turning Disclosure into Demand,” jointly published on October 8 by the World Economic Forum’s Schwab Foundation and the Center for Social Value Enhancement Studies.

The report finds that awareness of the importance of social value and the measurement of social performance are growing, but that this has not necessarily translated into actual investment and funding. While the benefits of social performance are shared among multiple parties, only some bear the costs. In addition, long-term results are not adequately factored into companies’ short-term investment decisions.

The report therefore proposed regulatory, financial and investment systems that can link the creation of social value to economic rewards. It defines an economy in which social and environmental performance is recognized and rewarded through markets and financial systems as an “Impact Economy.”

In the report’s joint foreword, Choi said, “We need rules and mechanisms that make social value work economically,” emphasizing that “rather than responding after market failures occur, we must change the rules of the market.”

In his speech that day, Choi also proposed a transition to “New Capitalism,” in which the creation of social value is rewarded.

Meanwhile, SEWF and the Center for Social Value Enhancement Studies also published a joint report analyzing South Korea’s social enterprise ecosystem to coincide with the event. The report presents South Korea as a testing ground where the government, businesses and civil society work together to develop ways to create social value.

Na Seokgwon, CEO of the Center for Social Value Enhancement Studies, said, “Investing capital in solving social problems does not deplete economic resources. It reduces the drag on growth caused by social costs and builds a foundation for greater growth.” He added, “This is the time to find new solutions that connect social and economic performance.”

This content was produced with the assistance of AI translation services.