Nobel Economics Laureate Stiglitz Praises 'SK Social Value' at Davos

[Asia Economy Reporter Park So-yeon] Choi Tae-won, Chairman of SK Group, promoted SK's social value management at the World Economic Forum (WEF, Davos Forum), where global political and economic leaders gather.

Efforts by SK to pursue social value attracted attention as a solution to socio-economic problems, including from Nobel laureate in Economics Joseph Stiglitz, a professor at Columbia University in the United States.

According to SK Group and the Davos Forum Secretariat on the 27th, Chairman Choi Tae-won was officially invited to the Davos Forum and participated as a panelist in the session titled "Stakeholder Capitalism in the Asian Era," where he introduced SK's efforts and achievements in pursuing social value.

The session was moderated by Kenji Kono, NHK North America Bureau Chief, and featured panelists including Joseph Stiglitz, Nobel laureate in Economics for his research on polarization and inequality; Laura Cha (史美倫), Chairwoman of the Hong Kong Stock Exchange and an Asian financial expert; and Fumiya Kokubu, Chairman of Marubeni, who has led efforts to improve environmental issues.

Professor Stiglitz emphasized that companies must establish systems that ensure they pursue the interests of not only shareholders but also stakeholders simultaneously, citing SK as an example.

He evaluated that SK’s creation of a method to verify what contributions it makes to the environment and society holds very significant meaning in this regard.

In particular, he repeatedly mentioned SK’s amendment of its articles of incorporation to reflect social value management.

On the other hand, he pointed out that although recent U.S. companies claim to move away from maximizing shareholder profits, it still appears to be just talk.

Chairman Choi has emphasized that social value should be measured just as financial performance is measured through financial statements, and that social outcomes should be enhanced through this measurement.

After Chairman Choi officially proposed the introduction of Social Performance Incentives (SPC) at the 2013 Davos Forum, SK developed methods to measure social value, applied them to social enterprises in 2014, and to SK affiliates starting in 2018.

SK affiliates reflect social value in their articles of incorporation and measure and disclose their performance.

Professor Stiglitz said, "What we want is not simply the maximization of economic scale (GDP), but the maximization of well-being and welfare in a broader sense," adding, "For this, it is necessary for companies to measure ESG (Environmental, Social, and Governance) values as well."

Laura Cha, Chairwoman of the Hong Kong Stock Exchange, also said, "Just as SK Group has already done a lot in terms of corporate social responsibility, other Asian companies should also put this on their agenda and push it forward."

At this forum, Chairman Choi said that providing benefits rather than penalties would be a more effective way to create corporate social value.

He proposed introducing an incentive system that supports companies in proportion to the social value they create, rather than a negative system that penalizes companies for damaging social value.

He stated that operating a system that provides cash incentives proportional to social value creation to over 220 social enterprises resulted in the creation of more social value.

An SK official said, "The methodology of social value management is not a completed form but an ongoing process," adding, "Going forward, Chairman Choi and SK Group will continue to develop social value management as a way to achieve sustainable growth and share greater happiness with all stakeholders."

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