"Top 500 Domestic Companies Increase Average Social Contribution Spending by 0.5% Despite COVID-19 Situation"

KEF Survey: Major Companies' Social Contribution Expenditure Last Year 2.6123 Trillion KRW
Average Spending per Company 13.67585 Billion KRW, Slight Increase from 2019
Notable Support for Vulnerable Groups and Education, Schools, Academic Support

[Asia Economy Reporter Lee Hye-young] Last year, the average social contribution expenditure of Korea's top 500 companies increased by 0.5% compared to 2019, despite the COVID-19 situation.

The Federation of Korean Industries (FKI) announced on the 26th in its ‘2021 Major Companies' Social Value Report’ that among the top 500 companies by sales in 2020, a survey was conducted on 191 companies including those that responded to the survey and those that published sustainability management reports. The total social contribution expenditure of major companies was recorded at approximately KRW 2.6123 trillion.

Although the total social contribution expenditure decreased by 12.7% compared to 2019 (about KRW 2.9928 trillion), the average social contribution expenditure per company increased by 0.5% from KRW 13.6 billion in the previous year to KRW 13.67585 billion.

By sector, support for ‘vulnerable groups’ (33.8%) and ‘education, schools, and academia’ (24.9%) stood out the most, with these two sectors accounting for more than half (58.7%) of the total expenditure. Support for ‘culture, arts, and sports’ (12.1%) and ‘emergency and disaster relief’ (4.3%) also increased about fivefold compared to the previous year.

The FKI analyzed that corporate support increased in areas where vulnerable groups were marginalized due to COVID-19, education sites suffering from severe learning loss, and places that experienced massive property damage from disasters such as typhoons and floods.

Companies with a social contribution cost increase rate exceeding 25% in 2020 accounted for 23.7% of all respondents. Companies that responded that their expenditure was the same or increased compared to the previous year accounted for 54.7%.

As reasons for the increase in social contribution expenditure, companies cited ‘increased social support demands due to the COVID-19 pandemic’ (46.9%) followed by ‘temporary cost increases due to urgent relief, national events, and other issues of the year’ (16.9%).

Companies whose social contribution expenditure decreased accounted for 45.3% of the total. These companies answered that the reduction in social contribution projects was inevitable due to ‘difficulty in implementing face-to-face social contribution programs because of social distancing’ (54.8%) and ‘reduction of social contribution budgets or personnel due to poor business performance’ (16.1%).

The FKI explained that last year, the strengthening of social distancing due to the COVID-19 pandemic caused significant disruptions to corporate social contribution activities, which mainly consist of participatory programs. Reflecting this changed environment, 70 new social contribution programs were established after 2020.

The report presented the keyword for corporate social contribution last year as ‘H.O.P.E’. ‘H.O.P.E’ stands for Health Care (support for healthcare and related workers), On-tact (non-face-to-face and online face-to-face activities), Problem-solving (participation in solving social problems), and Environment (environmentally friendly social contributions).

This reflects the external environment where social interest in health, medical care, and sustainable environment has increased after COVID-19, along with the internal corporate will to discover online programs due to the prolonged non-face-to-face daily life and to participate in solving problems faced by local communities.

Respondent companies cited ‘solving problems faced by local communities and contributing to regional development’ (36.3%) as the most important factor when operating corporate social contribution programs. ‘Social atmosphere regarding corporate social responsibility fulfillment’ (26.3%) and ‘company (CEO) mission and philosophy’ (20.4%) were also mentioned as important factors.

Additionally, as global interest in corporate sustainability has increased and ESG (Environmental, Social, Governance) has emerged as a management focus, 88.4% of surveyed companies (103 companies) responded that they consider ‘realizing social value through ESG management and investment’. Among ongoing ESG activities, the social (S) sector accounted for the largest share at 36.6%, followed by environment (E) and governance (G) at 35.7% and 27.7%, respectively.

Lee Sang-yoon, head of communications at FKI, said, “Despite increased management uncertainty due to COVID-19 last year, the slight increase in the average corporate social contribution expenditure is a hopeful message,” adding, “Even under conditions where it is difficult to operate large-scale social contribution programs due to compliance with social distancing, encouragement and attention are needed for companies striving to overcome the COVID crisis and realize social value.”

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