January 29, 2013SEN Winter School

Corporate Social Responsibility (CSR)

&Socially Responsible Investment

(SRI)

Chull-Young Lee

Chull-Young Lee

- Seoul National Univ. College of Commerce(BA, Business Adm), 1968

- Columbia Business School, NYC(MBA), 1973

- Head, Planning & Research, Sambo Securities

(Presently, Dae Woo Securities), 1973-1977

- Bausch & Lomb Korea, Founder ∙ Korean Partner ∙ CEO, 1983-2003

- Bausch & Lomb Korea, Korean Partner ∙ Co-Chairman, 2003-Present

- ARK Private Fund & Investment Advisors Inc.,

Founder ∙ Chairman & CEO, 2003-Present

(Investment Principles: Value Investing + SRI)

- Social Venture Competition Korea(SVCK), Founder ∙ CEO, 2005-2007

- Social Venture Competition Korea(SVCK), Director, 2007-2009

- Social Enterprise Network(SEN), CEO, 2010-Present

(Outgrowth of SVCK)

- Sookmyung Women’s Univ. , Visiting Professor, 2010-Present

- Ewha Womans Univ. , Adjunct Professor, 2011-Present

Social Enterprise Network

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Purposes: (1) Study & Education of Social Enterprise at Business School

(2) To grow responsible business leaders of the future

Partners: Fourteen(14) Business Schools, KDI, Work Together Foundation

and

some corporations in Korea

Programs: (1) Social Venture Competition Asia

(2) Social Enterprise Forum

(3) SEN Student Club

Related Topics: Social Entrepreneurship, CSR&SRI, Environmental Sustain-

ability,

Global Poverty & Emerging Markets(BOP), Social Capital

Market,

Strategic Philanthropy, Non-Profit Management

Contents

I. Corporate Social Responsibility

(CSR)

II. Socially Responsible Investment

(SRI)

III.Blended Value Map4

Ⅰ. Corporate Social Responsibility (CSR)

CSR & ESG Issues

- Environment: Climate Change Exxon Valdez (1989) & Mexican Bay(2010) GE

- Social: Human Right, Fair Trade, Stakeholders Theory, Good Citizenship Nike Scandal (1998), Starbucks

- Governance: Governance Structure, Ownership & Mg’t, Minority Shareholders, BOD, Transparency, Internal Transactions. Samsung & Hyundai scandals 5

달라진 삼성그룹 지배구조 ( 단위 =%)

II. Socially Responsible Investment (SRI)

Definition

Execution

- Institutional Investors

- Mutual Funds & Asset Managements

- Individuals

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Theoretical Grounds

- Limited Liability

- Stakeholders Theory

- Values Theory

- Tax Benefits

8

History(Worldwide)

- 1948: English churches decide to exclude “Sin Stocks” - 1969: Vietnam War & Dow Chemical(Napalm & Agent Or-ange) - 1971: Pax World & SRI mutual fund - 1983: Boycott of South African Gov’t(Apartheid) - 1986: Chernobyl disaster - 1989: Exxon Valdez oil spill - 1997: Climate Change & Kyoto Protocol - 2002: Enron’s bankruptcy & Dissolution of Arthur Anderson - 2008: CDP(Carbon Disclosure Project) - 2010: ISO 26000 9

Vietnamese woman born with de-formed face as a result of exposure

to Agent Orange.

History(Korea)

- 2001: Samsung & Eco Fund - 2005: ARK Private Fund & “Valuing Investing + SRI” SH Asset Mg’t launches SRI mutual fund. - 2006: Korea Corporate Governance Fund (“JangHaSung Fund”) - 2007: UN PRI - 2009: KRX SRI Index DJSI Korea

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SRI Strategies

- Screening: Pax World Calbert SRI mutual funds - Engagement: Sovereign & SK Lazard(JangHaSung) ARK - Shareholder Activism: Boycott of South African Govern-ment

※ Community Investing 12

Related Organizations

- Standards

⊙ GRI(Global Reporting Initiative): CERES & UNEP Sustainability Reporting Guidelines

⊙ ISO 26000: Int’l Organization for Standardization Guidelines for Environmental & Social Responsibilities(2010)

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- Research ⊙ EIRIS(UK): Ethical Investment Research Service

⊙ Innovest(U.S): Environment ⊙ Eco-Frontier, SUSTINVEST(Korea)

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- SRI Index

⊙ DSI (Domini Social Index: U.S.)

⊙ DJSI (Dow Jones Sustainability Index: U.S.)

⊙ FTSE4Good Index (UK & Europe)

⊙ KRX SRI Index (Korea), 2009

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UN PRI(Principles for Responsible Investment), 2005

1. We will incorporate ESG issues into investment analysis and decision-making processes.

2. We will be active owners and incorporate ESG issues into our owner-ship policies and practices.

3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4. We will promote acceptance and implementation of the Principles within the investment industry.

5. We will work together to enhance our effectiveness in implementing the Principles.

6. We will each report on our activities and progress towards implement-ing the Principles. 16

■ Investment Returns

* Domini Social Index (1991-2001) DSI S&P500

5 Years 20% 18.4%

10 Years 18.9% 17.4%

* Calpers’ Engagement with 42 Companies(1987 – 1992)

: Outperformed 41% over S&P500

* Pax World Balanced Fund ($1.1B) : 17th among 293 mutual funds (5 Years: 1996-2001)

* Korean Stock Market

KRX SRI Index KRX SRI KOSPI

2009. 1. 2 – 11. 30 41.8% 35.5%

DJSI Korea DJSI Korea KOSPI

2006. 1. 1 – 2010. 4. 5 37.8% 24.7%

ARK(Value Investing+SRI) ARK KOSPI

2003. 7. 16 – 2010. 5. 4 301.8% 139.89%

Strategic Philanthropy

Non-ProfitManagement& Governance

Social Entrepreneurship

CorporateSocial

ResponsibilityGlobal Poverty,Emerging Markets

&

Int’l Development

Environmental

Sustainability

Social Capital Market

Social Blended Value Spectrum Financial

Sustainable Development

SociallyResponsibleInvestment

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III. Blended Value Map

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