SK Incheon Petrochem 2.8 Billion Creation, etc.
Chairman Choi's 'DBL' Management Philosophy
Business Model Innovation Achievements
SV Measurement Formula and Data Disclosure
Employment 10.1 Trillion, Dividends 3.4 Trillion, etc.
Economic Indirect Contribution Performance 19.3 Trillion
[Asia Economy Reporter Jeong Dong-hoon] 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, indicating 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 headquarters in Seorin-dong, 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."
By SV indicator, economic indirect contributions were 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 contributions 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 payments (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 SV creation results monetized since 2018. This is the first attempt in Korea, with all SK group companies pursuing this management strategy. Chairman Chey Tae-won initiated this to increase transparency by publicly disclosing not only positive but also negative results of SV creation and to improve communication with external parties by preparing supplementary 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 promoting changes in their business portfolios."
In fact, SK announced last October that it would invest more than 100 trillion KRW in eco-friendly businesses such as electric vehicle batteries and hydrogen. Investments in eco-friendly future business sectors are actively underway, including joint investments of 1.8 trillion KRW with Plug Power, a hydrogen fuel cell company of SK Inc. and SK E&S, and SK Ecoplant’s acquisition of TES, an electric and electronic waste company, 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 its 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 values by indicator figures 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."
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