Corporate Social Responsibility (CSR) in South Korea faces several unique challenges as companies increasingly engage in global markets and face heightened expectations from stakeholders. While large ‘chaebols’ (family-owned conglomerates) such as Samsung, Hyundai, and LG lead the way in CSR initiatives, there are specific challenges related to ‘corporate governance’, ‘labour practices’, ‘environmental sustainability’, and ‘transparency’ that need to be addressed.
Below are some key CSR challenges in South Korea:
Corporate Governance and Transparency: One of the major CSR challenges in South Korea is corporate governance, particularly regarding the structure of ‘chaebols’. Many South Korean conglomerates have been criticised for lacking transparency, having complex ownership structures, and concentrating power within family-controlled management.
- Impact: This lack of transparency can undermine CSR efforts and raise concerns about ethical business practices, accountability, and decision-making processes. For example, in the past, high-profile corruption scandals involving chaebols like Samsung and Lotte have eroded public trust and led to a perception that some CSR efforts are more about reputation management than genuine social responsibility.
- Suggested Solution: To address this, South Korean companies need to strengthen governance structures, ensure independent oversight, and adopt more transparent reporting practices that cover both financial and non-financial aspects of business.
Labour Rights and Worker Welfare: South Korea’s rapid industrialisation has led to labour issues, including long working hours, workplace safety concerns, and insufficient attention to worker welfare in certain industries.
- Impact: These issues pose significant challenges for companies aiming to demonstrate a strong commitment to CSR, particularly when it comes to providing safe, healthy, and fair working conditions for employees. This can be especially problematic in manufacturing and construction industries. For instance, in 2019, Samsung faced criticism when reports emerged of factory workers suffering from illnesses related to exposure to hazardous chemicals, sparking debates about workplace safety and worker rights.
- Suggested Solution: Companies need to prioritise worker safety, introduce comprehensive health and safety policies, ensure fair wages, and implement labour rights initiatives that promote work-life balance and employee well-being.
Environmental Sustainability and Climate Change: Although many South Korean companies are making strides in sustainability, balancing economic growth with environmental responsibility remains a challenge. South Korea is a highly industrialised country with a reliance on manufacturing and energy-intensive industries, which makes reducing carbon emissions and environmental degradation difficult.
- Impact: With increasing global attention on climate change, South Korean companies face pressure to reduce their carbon footprint, adopt renewable energy, and transition to more sustainable business models. For example, Hyundai Motor Group is investing heavily in electric vehicles (EVs), hydrogen fuel cells, and green technology, but the company continues to face challenges in shifting fully to sustainable production and reducing emissions across its global supply chain.
- Suggested Solution: Companies must accelerate their transition to green technologies, invest in renewable energy, and set measurable carbon reduction targets to meet international sustainability standards.
Stakeholder Engagement and Community Involvement: Although many South Korean companies undertake community development projects as part of their CSR, meaningful engagement with stakeholders, including local communities, remains a challenge. CSR efforts are often top-down, and companies may not fully consider the needs and input of the communities they seek to serve.
- Impact: Without proper stakeholder engagement, CSR initiatives may fail to address the real needs of communities or create long-term positive impacts. This can lead to scepticism regarding the effectiveness of CSR programmes. We have ample instances where chaebols in spite of launching large-scale community projects, are criticised for not involving local communities in the planning and execution of these initiatives, resulting in less effective outcomes.
- Suggested Solution: Companies need to foster two-way communication with stakeholders, including communities, employees, and consumers, ensuring that CSR programmes are tailored to local needs and that stakeholders are actively involved in decision-making processes.
Greenwashing Concerns: Greenwashing, or making exaggerated or misleading claims about the environmental benefits of products or business practices, is a growing concern in South Korea. As consumers become more environmentally conscious, companies face pressure to appear sustainable, sometimes leading to overstated claims without substantial action.
- Impact: Greenwashing can damage a company’s reputation, leading to loss of trust among consumers, investors, and regulators. It also diminishes the credibility of genuine CSR efforts. For instance, several Korean companies in the cosmetics and fashion industries have been accused of greenwashing by promoting products as “eco-friendly” without providing transparent data or certifications to back up these claims.
- Suggested Solution: Companies should ensure that their environmental claims are backed by data, use third-party certifications (such as ISO standards), and adopt transparent sustainability reporting frameworks like the Global Reporting Initiative (GRI).
Lack of Comprehensive CSR Legislation: Unlike some other countries, South Korea does not have comprehensive legislation that mandates CSR reporting or activities. While companies engage in voluntary CSR, the absence of strict regulatory frameworks makes it harder to enforce accountability and transparency across industries.
- Impact: Without mandatory reporting requirements, there is often inconsistency in how CSR activities are tracked, measured, and reported, which can result in superficial CSR practices or “box-ticking” exercises. While large corporations like LG and Samsung have voluntarily adopted CSR policies, smaller companies may not be as engaged, and there is little uniformity in CSR efforts across the corporate landscape.
- Suggested Solution: Introducing or strengthening CSR legislation, especially in areas like sustainability, human rights, and transparency, could encourage more consistent and impactful CSR efforts across South Korean businesses.
Cultural Barriers to Diversity and Inclusion: South Korea has traditionally had a homogenous culture with limited focus on diversity in the workplace. Issues like gender inequality, lack of representation of minority groups, and rigid hierarchical structures pose challenges to creating more inclusive work environments.
- Impact: Lack of diversity and inclusion can hinder innovation, employee engagement, and global competitiveness. It can also undermine a company’s social responsibility efforts, particularly as global stakeholders expect greater inclusion and equity. For instance, gender inequality remains a challenge in South Korean businesses, with women often underrepresented in leadership roles. While some companies have started initiatives to promote gender equality, progress has been slow.
- Suggested Solution: Companies need to prioritise diversity and inclusion through targeted recruitment, equal pay policies, and programmes that promote women’s leadership and the representation of underrepresented groups.
Consumer Pressure for Ethical Practices: South Korean consumers are becoming increasingly aware of ethical consumption, particularly regarding the environmental and social impacts of the products they buy. Companies face growing consumer pressure to adopt responsible sourcing, fair labour practices, and sustainable production methods.
- Impact: Businesses that fail to meet these ethical expectations risk losing market share as consumers shift towards brands that demonstrate social responsibility and environmental sustainability. For example, fashion and electronics companies have faced criticism for issues related to the sourcing of raw materials, including concerns over conflict minerals and poor labour practices in global supply chains.
- Suggested Solution: Companies need to ensure ethical sourcing, improve transparency in their supply chains, and adopt responsible production methods to meet the expectations of ethically conscious consumers.
Balancing Economic Growth with Social Responsibility: South Korea is a highly industrialised nation, with many businesses focusing on growth and expansion. Balancing economic growth with social responsibility can be difficult, especially for companies in sectors that are traditionally resource-intensive.
- Impact: Companies may prioritise short-term profits over long-term sustainability, which could harm their reputation and lead to conflicts with stakeholders. While POSCO, a major steel producer, has introduced CSR programmes aimed at community development and environmental sustainability, the steel industry itself is resource-heavy, making it challenging to significantly reduce its environmental impact.
- Suggested Solution: Companies need to adopt long-term strategies that integrate sustainability into their growth plans, ensuring that profitability is not achieved at the expense of social and environmental responsibilities.
Even though CSR in South Korea is gradually evolving, it still faces several challenges, including corporate governance issues, labour rights, environmental sustainability, and greenwashing concerns. Companies must focus on improving transparency, stakeholder engagement, and ethical practices to enhance the effectiveness of their CSR initiatives. As consumers and regulators become more demanding, South Korean firms will need to prioritise social responsibility and sustainability to remain competitive in the global market. By addressing these challenges, South Korea can build a more resilient and socially responsible business environment.
About the Author: Prof (Dr) Shalini Verma ‘Lifoholic’ is Founder - SAMVAW FOUNDATION | Impact Leadership Coach | Director - Aadya Green Gifting Pvt. Ltd. | Award-winning Author with 75 Published Books | ESG Consultant | Certified Independent Director
Author may be reached at: impactleadership@lifoholicshalini.com
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