SK Chairman Chey Taewon: "Good Intentions Are Not Enough... Social Problem Solving Should Be Traded in the Market"

Report on 'Trading Social Value' Released
at the World Economic Forum Schwab Foundation Annual Meeting

SK Chairman Chey Taewon has proposed the introduction of a new market mechanism, stating that "social value can also become a tradable asset." This is a theory for creating a social value market, where outcomes from solving social issues are measured and traded in monetary terms. It further concretizes his earlier concept of the Social Performance Incentive (SPC), which he first proposed ten years ago.

Photo by Choi Taewon, SK Chairman. Asia Economy DB

On June 19, at the World Economic Forum Schwab Foundation Annual Meeting held at the Conrad Hotel in Yeongdeungpo-gu, Seoul, Chairman Chey proposed a "method for trading social value." He said, "Social problems cannot be solved by good intentions alone," and added, "If outcomes are measured accurately in monetary terms and financial incentives such as tax benefits are provided, companies will create more social value."

He continued, "If we can use market mechanisms to recognize social value as a tradable asset, the market system will become more dynamic," and emphasized, "It will be possible to achieve both profit generation and social innovation at the same time."

At the opening ceremony of the event, Chairman Chey introduced SK's experience with the Social Performance Incentive, the collaboration between companies and social enterprises to solve social problems, and proposed a new market system that rewards achievements in solving social issues.

Also at the opening ceremony, the World Economic Forum Schwab Foundation and the Center for Social Value Research jointly released a report titled "Redefining Value: From Outcome-Based Finance to Trading Social Value." This is the world's first report to propose the necessity and feasibility of trading social value to the mainstream economy.

Trading social value refers to a market mechanism that converts positive social outcomes into tradable assets and uses this to address urgent social problems. When companies solve social problems, the outcomes are measured in monetary terms, and credits of some form are provided and exchanged through a market system.

Chairman Chey stated, "Through the joint foreword of the report, this will be an attempt to fundamentally reimagine the global economy, which is facing various social issues."

Previously, at the 2013 World Economic Forum, Chairman Chey proposed the SPC concept, which refers to "financial support based on outcomes from solving social problems." Since 2015, SK has conducted the "Social Performance Incentive" project for about ten years, measuring the outcomes of social enterprises in Korea in solving social issues and providing cash incentives. Over the past ten years, approximately 500 social enterprises have participated in this project, and the estimated social problem-solving outcomes generated by these companies amount to about KRW 500 billion. The incentives provided by SK to these companies as rewards total approximately KRW 70 billion.