SK Advances Social Value Creation... Generated 18.4 Trillion KRW SV Last Year (Comprehensive)

SK Incheon Petrochem 2.8 Billion Creation, Chairman Choi's 'DBL' Management Philosophy

Business Model Innovation Achievements
SV Measurement Formula and Data Disclosure

Employment 10.1 Trillion, Dividends 3.4 Trillion, Economic Indirect Contribution 19.3 Trillion

[Asia Economy Reporter Donghoon Jung] SK Incheon Petrochemicals achieved a greenhouse gas reduction effect last year by supplying waste heat generated during factory operations as heating and cooling energy to nearby residential complexes. This created a social value of 2.8 billion KRW. This amount was calculated by applying greenhouse gas emission factors, reduction costs, and supplied heat volume.

The total social value (SV) created by SK Group last year was estimated at 18.4 trillion KRW. This represents an increase of more than 7 trillion KRW compared to the previous year, demonstrating SK's active contribution to solving problems amid the COVID-19 pandemic and global climate change. It also reflects the success of Chairman Chey Tae-won's business model innovation, which pursues both economic value (EV) and SV simultaneously under the philosophy of ‘Double Bottom Line (DBL)’ management.

On the 23rd, SK held a press briefing at its Seorin-dong headquarters in Jongno-gu, Seoul, to announce the ‘2021 SK SV Monetization Measurement Results,’ stating, "The total SV created by all affiliates last year was 18.4 trillion KRW," and "This is about a 60% (7 trillion KRW) increase compared to the previous year."

Kim Kwang-jo, Vice Chairman of the SK Supex Council, said, "We will create more social value not only in areas where SK is doing well but also where it is lacking," adding, "Business model innovation, ESG core indicator management, and net-zero carbon emission reduction are key strategies." He continued, "I hope the social value monetization measurement results will one day help stakeholders discern which companies are more sustainable."

By SV indicator, economic indirect contribution was the largest at 19.3443 trillion KRW (employment 10.1 trillion KRW, dividends 3.4 trillion KRW, taxes 5.9 trillion KRW). This was followed by social performance at 1.9036 trillion KRW (social products and services 800 billion KRW, labor 500 billion KRW, mutual growth 300 billion KRW, social contribution 300 billion KRW). On the other hand, environmental performance decreased compared to the previous year, totaling -2.892 trillion KRW (environmental processes -3.6 trillion KRW, environmental products and services 800 billion KRW).

SK also stated that governance (G) indicators are managed focusing on non-monetary goals and performance. Tax payment (100%) and employment (39%) showed significant increases compared to 2020. In addition, social products and services (76%) and labor (93%) also showed clear growth. Conversely, environmental processes (-2%) and mutual growth (-0.07%) slightly deteriorated.

Regarding environmental indicators, SK predicted, "Although SK is making efforts to reduce carbon emissions, such as declaring ‘RE100’ to procure 100% renewable energy for carbon neutrality and product production, it will face difficulties in reducing total carbon emissions over the next 2 to 3 years due to factory expansions and increased operating rates."

SK Group has been announcing the monetized results of SV creation since 2018. As the first attempt in Korea, all SK group companies pursue this management strategy. Chairman Chey Tae-won initiated this to increase transparency by disclosing not only positive but also negative aspects of SV creation measurement results and to improve communication with external parties by preparing complementary measures.

An SK official emphasized, "The SV measurement system functions as a ‘management infrastructure’ that triggers business model innovation," adding, "As a result, each affiliate is focusing on driving changes in their business portfolios."

In fact, last October, SK announced plans to invest more than 100 trillion KRW in eco-friendly businesses such as electric vehicle batteries and hydrogen. Active investments in eco-friendly future business sectors are underway, including a joint investment of 1.8 trillion KRW by SK Inc. and SK E&S with hydrogen fuel cell company Plug Power, and SK Ecoplant’s acquisition of electric and electronic waste company TES for 1.2 trillion KRW.

SK also publicly disclosed for the first time the detailed formulas and related data for SV measurement, which had been managed internally until now. According to SK, SV measures both ‘positive performance’ (+) and ‘negative performance’ (-) across all corporate activities, from product development to production, sales, workforce, and business partner cooperation. It quantifies whether the company’s products and services exceed or fall short of the overall market average and how much they contribute to SV creation. The total amount is calculated by multiplying these figures by indicators from credible international organizations.

Lee Hyung-hee, Chairman of the SK Group SV Committee, said, "We plan to disclose the SV derivation formulas and the meaning of the results, listen to stakeholders’ opinions, and further enhance the objectivity and transparency of the measurement system."

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