Awarding Korean Companies for Social Responsibility
Human Rights Dialogue 1.9 (Summer 1997): "Innovative Human Rights Strategies in East Asia"
June 5, 1997
Korea’s rapid economic development over the last thirty years has occurred with little attention paid to ethical standards. Today, widespread corporate corruption and violations of human rights cast a shadow over Korean economic life. In 1991 the Citizens’ Coalition for Eco-nomic Justice, a Korean NGO that was formed in the late 1980s to seek an ethical overhaul of the economic system in Korea, founded the Korean Economic Justice Institute (KEJI) to evaluate the ethical performance of large Kor-ean corporations. Through a series of seminars and dis-cussions with representatives of universities, the media, government, human rights and other NGOs, labor unions, public and private research institutes, and corporations, the Institute devised the KEJI Index and the KEJI Awards to evaluate companies and publicize those “worthy of social respect,” patronage, and investment.
Typically, companies have been evaluated solely on business and financial criteria—by investment and credit indexes that measure growth and stability. These methods do not take into account social costs incurred in the profit-making process, such as unfair labor practices (for example, employment discrimination), unhealthy work conditions, environmental degradation, unfair trading practices, and tax evasion. Nor do they allow for the possible beneficial effects of companies’ contributions to social and economic development, such as exemplary labor management (for example, employment of the physically challenged), the expansion of employ-ment opportunities, and environmentally sound practices.
The KEJI Index includes sixty items that measure these social costs and benefits. Index data is gathered from government agencies such as the National Assembly, the Securities Supervisory Board, and the Consumer Protection Agency, and from surveys of the targeted corporations and their trade unions. Companies are grouped according to business sector and size and are awarded and docked points for certain activities. Those with the highest scores in each group are then investigated further to determine their participation in related industrial councils and their reputation with their trade unions and other labor organizations.
Each year KEJI Awards are given to the highest-scoring companies in each size and industry grouping, and a Top Economic Justice Award is given to one company. Among the selection standards for the KEJI Awards are: “prevention of industrial and environmental pollution,” “improvement in the areas of employee training, working conditions, industrial safety, and sound labor-management relations,” and “faithful performance of a role in the larger community: social welfare, culture, development of local society, etc.”
The publicity award-winning companies receive has made them more attractive in the eyes of ordinary citizens and increased public demand for corporate responsibility. Editorials in the magazines of the chaebol, or business conglomerates, have led to acknowledgments by other businesses of the need for greater corporate responsibility. In a 1996 survey conducted by KEJI, the index was recognized by 57 percent of Korean companies as a useful benchmark for improving operations by measuring contributions to economic development, fairness, social service, consumer protection, employee satisfaction, and environmental protection. According to information collected by KEJI, company operations have improved with respect to environmental soundness, equal employment, and fair trade since the awards started; however there is not yet proof of increased investment in and sales by “responsible” companies.
Most important of all, the objective and holistic evaluation process employed by the KEJI Index can be used by environmental, consumer, labor, human rights, and other civil society organizations to discriminate between socially harmful companies and “good” companies with sustainable business operations that provide benefits for the country and people. This information can then be used to carry out more effective lobbying and reform movements.