A Big Bang is coming in Korea, but not the kind you may think

Sara Olsen
Founding Partner, Social Venture Technology Group

I hesitated to tell my parents that I was heading to Seoul on December 5, less than two weeks after North Korea shelled a South Korean island killing two soldiers and two civilians. Pretty much the only geopolitical scenarios any of us had thought or heard about for years when it came to the two Koreas were either increasingly brittle tensions, massive armed conflict, or all-out nuclear holocaust, and right about then the latter two possibilities seemed a little too real. But the invitation I’d received was far too enticing to decline: it was to speak at the first Asian International Symposium on Social Return on Investment (SROI), hosted by the esteemed KAIST Business School and the Ministry of Employment and Labor of Korea (MOEL). So I went, and my sense of the future for North and South Korea was turned on its head.

Over 200 participants gathered on the 7^th at the event precipitated by the Korean government’s Social Enterprise Promotion Act. High unemployment and shrinking real wages for workers drove this 2007 law, which both the government and the opposition party supported, since above all it aimed to create jobs. The contracts it made with (government-certified) social enterprises were for a term of three years. Now that the contracts with that first cohort of over 300 social enterprises are coming due, the questions at the fore are, What is the return on this social investment?  What is the best way for the government and its business allies gauge it? And how do the results inform the next stage of investment?

Seung-Kyu Rhee, the director of KAIST’s Center for Corporate Social Responsibility, set the stage, saying, “Social Return on Investment (SROI) is rising as one of the most widely accepted tools for measuring social values created by social enterprises and other entities. As we’re moving into a new exciting phase of the social innovation and social entrepreneurship in Korea, there is a growing interest and need in ways to accurately and practically measure social impact.  Scholars, practitioners, and the government are all working diligently to find the ways to meet such needs and to stimulate the sector by providing effective tools. Such an important task can be done only by the closer partnership among all related parties in pioneering the models that are theoretically more comprehensive and practically applicable.”

Afterwards I spoke with some of the attendees, Chanhyun Sim (“call me Sim,” he said), Han Young “Tim” Do, and Young Jin Pyun, three passionate members of the team behind Impact Square, SVT Group’s kindred spirit in Seoul that launched this year to support social innovation in Korea and internationally (their projects already include an animal bank in Burkina Faso and, soon, The Hub-Seoul). Sim said, “2011 is going to be the big bang,” but not the way you might think. He explained: “Many people are really focused on those first companies that are graduating from government support and whether they can really survive or not. Next year will be the big bang. The Ministry of Employment and Labor is really eager to adopt SROI to prove whether their enterprises have generated value,“ he said. 

What interests you about SROI?

“We found that SROI is most familiar with or similar with the financial tools – very rigorous tools in use in finance. The framework of SROI is very developed by some institutions or specialists over a long time. We saw REDF’s library and tools, and got some impression from their tools and theory for the evaluation of social impact and financial impact, with some cost or investment perspective. Especially other impact measurement tools are not able to cover the financial issues, or the social impact issues, they do just one side. But SROI tries to cover both sides of impact. That is the most important thing for us to study about SROI.”

The rapprochement between the two Koreas seemed to be gaining steam in the prior administration, but seems now to be receding. How do you see the prospects today?

Sim: “There are ups and downs. But in looking into the modern history of Korea, the older generation experienced the Korean War 50 years ago, and they’ve been through anti-communism in their education. So they really cannot think of the softer way of having a relationship with North Korea. And of course North Korea is not changing either. But we believe the younger generation is freer- I have been mentoring North Korean defectors, and they’ve been having an honest talk about both our systems.

“Officially there are 20,000 defectors now in South Korea. The government assumes there are more in other countries- in China, or Southeast Asia. The people I know put the good and the bad things together. Most of them are kind of satisfied with their state of living [in South Korea] right now, but they have the same challenges that we have right now: jobs, education, and there is some [anti-North Korean] discrimination here.”

Tim: “I have some contact with people who lived in North Korea. We look at Germany– after Germany reunified, East German people felt kind of junior to the West German people. And economically, we can see that the West Germans kind of absorbed East Germany. Some East German people, especially the older generation, are having a hard time adopting those new systems based on efficiency- and that’s where discrimination [by West Germans against former East Germans] began.

“…In North Korea today, there is poverty, no food, no pills– there are very fundamental issues. Education, brainwashing is a very important problem. The North Korean government cannot allow the Western or South Korean side of knowledge or technology. They don’t want to import these- they only have things built by the government.”

How does someone get unbrainwashed?

Tim: “The Internet is doing the job.”

What do you want Social Edge readers to know about Korea’s social entrepreneurship scene?

Sim: “We strongly believe that Seoul is a really important base for social entrepreneurship in Asia. Japan already has established their own system of operation in their society, and it’s really hard for foreigners to get into that system. And China, because of all the political and cultural limitations it’s hard. But Korea, it’s a free market and there are lots of opportunities.  And politically, culturally, historically, southeast Asia, Japan, China and Korea are strongly tied. They have less negative feeling when we try to approach them. So we think Seoul is a great base.

“And we have really great initiatives that other people might be really fascinated with. We are in conflict with North Korea, and there are a lot of issues to solve before we become reunified: cultural, social, economic. Most people only focus on the military conflict. But to the younger generations it’s really more about the lifestyle matter. When the relationships between the two Koreas become more developed, and as we open communication in various aspects like money and people, that will cause a really huge social entrepreneurship issue, here and in North Korea– and a really huge opportunity. And Seoul could be the base camp.”

It sounds like between the Internet and social entrepreneurship, you’re saying peace is in the Korean peninsula’s future?

Sim: “We don’t know when exactly the change will come. But, it will come.

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Here’s a bit more on social enterprise and the ISSROI conference:

Worth a read is this detail-rich background summary on how and why the South Korean government is engaging in social entrepreneurship, written by Lee Eun Ae, Board Member of sponsor Seed:S Corporation. During the symposium, Korean speakers Prof. Lee Seung-kyu of KAIST and Prof. La Jun-young of the Catholic University of Korea introduced the SROI model that the Corporate Social Responsibility Research Center of KAIST is in the process of developing with the support of MOEL. Prof. Kim He-won of Korea National University of Education, Na Young-don, a Director-General of MOEL, and Park Chan-min, a General Manager of SK (the fourth largest conglomerate in Korea), discussed the model, and Na Young-don, Director-General of the Employment Service Bureau, MOEL, said, “The attempt to develop the SROI model is the first of its kind in Korea. Active discussions among international and domestic experts will contribute to the further development of Korea’s SROI model.”

This time those experts were Cliff Brown of Environmental Capital Group, who discussed his firm’s landmark work with CalPERS measuring the net environmental benefits of what amounts to $9Bn in environmental technology private equity investment assets; Jeremy Nicholls, CEO of the UK-based SROI Network, which now numbers over 600 members worldwide and is shepherding continuous improvements to the methodology; Ken Ito, a Partner in Social Venture Partners Tokyo; Magnus Young, with Impact Investment Shujog in affiliation with the Asia Impact Investment Exchange out of Singapore, who has worked with both GIIRS, SROI and IRIS methodologies and commented on their complementarities; and I set the stage with a US perspective on where SROI has been and where it’s going.