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January 29, 2013 SEN Winter School

Corporate Social Responsibility (CSR) & Socially Responsible Investment (SRI ). January 29, 2013 SEN Winter School. Chull-Young Lee. Chull-Young Lee. - Seoul National Univ. College of Commerce(BA, Business Adm), 1968 - Columbia Business School, NYC(MBA), 1973

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January 29, 2013 SEN Winter School

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  1. Corporate Social Responsibility (CSR) & Socially Responsible Investment (SRI) January 29, 2013 SEN Winter School Chull-Young Lee

  2. 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 • - EwhaWomans Univ. , Adjunct Professor, 2011-Present

  3. Social Enterprise Network • 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 Sustainability, • Global Poverty & Emerging Markets(BOP), Social Capital Market, • Strategic Philanthropy, Non-Profit Management

  4. Contents • Corporate Social Responsibility (CSR) • Socially Responsible Investment (SRI) • Blended Value Map

  5. 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

  6. 달라진 삼성그룹 지배구조 (단위=%)

  7. II. Socially Responsible Investment (SRI) • Definition • Execution-Institutional Investors-Mutual Funds & Asset Managements-Individuals

  8. Theoretical Grounds • -Limited Liability-Stakeholders Theory • -Values Theory • -Tax Benefits

  9. History(Worldwide) • -1948: English churches decide to exclude “Sin Stocks”-1969: Vietnam War & Dow Chemical(Napalm & Agent Orange) • -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

  10. Vietnamese woman born with deformed face as a result of exposure to Agent Orange.

  11. 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

  12. SRI Strategies • - Screening: PaxWorld • Calbert • SRI mutual funds • - Engagement: Sovereign & SK • Lazard(JangHaSung) • ARK • - Shareholder Activism: Boycott of South African Government • ※ Community Investing

  13. 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)

  14. Research • ⊙ EIRIS(UK): Ethical Investment Research Service • ⊙Innovest(U.S): Environment • ⊙ Eco-Frontier, SUSTINVEST(Korea)

  15. SRI Index • ⊙ DSI (Domini Social Index: U.S.) • ⊙ DJSI (Dow Jones Sustainability Index: U.S.) • ⊙ FTSE4Good Index (UK & Europe) • ⊙ KRX SRI Index (Korea), 2009

  16. UN PRI(Principles for Responsible Investment), 2005 • We will incorporate ESG issues into investment analysis and decision-making processes. • We will be active owners and incorporate ESG issues into our ownership policies and practices. • We will seek appropriate disclosure on ESG issues by the entities in which we invest. • We will promote acceptance and implementation of the Principles within the investment industry. • We will work together to enhance our effectiveness in implementing the Principles. • We will each report on our activities and progress towards implementing the Principles.

  17. 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 KRXSRI Index KRX SRIKOSPI 2009. 1. 2 – 11. 30 41.8% 35.5% DJSI Korea DJSI KoreaKOSPI 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%

  18. III. Blended Value Map Social Financial Blended Value Spectrum • Social Entrepreneurship • Strategic • Philanthropy Corporate Social Responsibility • Global Poverty, • Emerging Markets • & • Int’l Development Environmental Sustainability Socially Responsible Investment Non-Profit Management & Governance • Social Capital Market Sustainable Development

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