Corporate social responsibility

Corporate social responsibility (CSR, 기업의 사회적 책임) is a new trend of corporate self-regulation associated with a business model.

CSR policy functions as a built-in, self-regulating mechanism whereby big corporations enhance their corporate image by emphasizing active compliance with law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities and other stakeholders.

CSR is titled to aid an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. ISO 26000 is the recognized international standard for CSR. Public sector organizations used to adhere to the triple - fiscal, social, environmental - bottom line (TBL). The UN has developed the Principles for Responsible Investment as guidelines for investing entities.

Key words
corporate social responsibility (CSR), socially responsible investment (SRI), UNEP, triple bottom line (TBL)

Background
Foreign investors have got a stronger voice than ever before since the volume of foreign investments in the Korean stock market is on the steady increase.

After the IMF Crisis through the 2000s, foreign investors' holdings remain around 40 percent of the total market value of publicly listed companies. Though foreign investors' preference is focused on a few corporations like Samsung Electronics, POSCO, Kookmin Bank, etc., other ordinary companies are also paying more and more attention to the movement of foreign investors.

In order to attract the foreign investors' favor, Korean entrepreneurs are increasingly careful of the transparency of management and investor relation.

CSR and SRI
It should be noted that a large number of investors from the United States and the European countries have been interested in the socially responsible investment (SRI) as well as financial performances. It means that they are reluctant to invest in such companies as yield high profits but deserve social criticism.

In addition, a number of governments and international institutions like the United Nations Environment Programme (UNEP) and the International Finance Corporation (IFC) are encouraging sustainable development by means of SRI-oriented financial products or financial markets. Though developing countries usher in few socially responsible investment so far, it seems to be the unique solution for affluent foreign investments and sound corporate governance.

Initially, SRI started in the United States as a religious investment campaign against drug and alcohol, gambling industries. In the 1990s, more and more investors and investment analysts were required to pay more attention to social and environmental responsibilities. Also the management of U.S. companies regarded the corporate social responsibility (CSR) as an effective tool for risk management and worldwide marketing.

In reality, particularly in the United States, SRI is usually carried out by the following approaches:

- Portfolio screeing posite or negative

- Shareholders activism related with corporate governance

- Community development investment

Korean Perspective
In the aftermath of the illegal political money scandals, the general public seem to be unfavorable to Korean companies. If the Korean businessmen respect SRI or CSR seriously, and efficient communications with shareholders and stakeholders alike take place, there will be favorable atmosphere for Korean companies to enjoy a new dimension of business environment.