Chey Tae-won, Chairman of SK Group, proposed the concept of 'social value trading' as a novel approach to addressing social challenges, emphasizing a market-centric sustainable social innovation model.
In his keynote speech at the World Economic Forum Schwab Foundation Summit held at the Conrad Hotel in Yeouido, Seoul, on June 19, Chairman Chey argued that social values should be treated within a system where they can be exchanged and rewarded tangibly. This idea is based on SK's decade-long experience with the "Social Progress Credit" (SPC) initiative.
The summit unveiled a report co-authored by the World Economic Forum Schwab Foundation and the Center for Social Value Enhancement Studies titled "Reimagining Value: From Outcomes-Based Financing to Social Value Trading." This report is notable as the first comprehensive proposal addressing the necessity and potential of 'social value trading' across major global economies.
Chairman Chey emphasized, "Solving social issues cannot rely solely on goodwill. Performance must be quantified, and tangible financial rewards, such as tax benefits, should follow to incentivize companies to actively generate social value." He further stated, "Transforming social value into tradable forms can greatly energize the market, simultaneously achieving profit generation and social innovation."
Since 2015, SK has operated a performance-based rewards program with approximately 500 social enterprises in Korea, based on the 'Social Progress Credit' concept first proposed by Chey at the 2013 Davos Forum. The social value generated by these enterprises is estimated at around 500 billion KRW, with SK having provided approximately 70 billion KRW in incentives.
At the summit, Chey introduced the concept of a 'social value credit' system, suggesting that monetary rewards for solving social problems can be traded in a new market. In this system, social value created by enterprises would be monetarily measured, with governments or private entities purchasing or exchanging these values.
For example, the government could directly reward companies that address social problems, offer tax deductions, or support the trading of tax credits. Companies can enhance their economic value by integrating social problem-solving elements into their business models, while the market can trade these achievements or develop them into financial products, heralding "a new market where social value can generate profit."
This approach reduces the fiscal burden on governments while leveraging creative ideas and resources from the private sector to tackle social issues. It allows companies to view corporate social responsibility as a revenue model rather than a cost and provides investors with new opportunities based on social performance.
The Schwab Foundation Summit, held in Asia for the first time, highlights SK's initiatives and proposals, showcasing the development of Korea’s social economy ecosystem as an alternative solution to global social challenges.
Na Seok-kwon, head of the Center for Social Value Enhancement Studies, remarked, "SK's social performance incentives represent the world's first outcomes-based reward system led by a private company. It's time to establish a structure where enterprises that create social value are rightfully recognized and attract investment in the market.”
