CSR refers to the responsibility that a company takes for the impact of its business activities over society, the environment and its customers. Companies' contribution to the society became more active since 2000, after the IMF economic crisis in Korea and when the Korean economy was recovering from the shock. As the economic situation improved, companies were more and more aware of their role in the community not only as a private business entity but also as a community contributor. The increasing demand from the citizens and foreign entities about transparency on Korean company management, the augmented number of under-represented people due to the economic shock, the increasing interest and trend on CSR issues globally and the fast economic recovery were one of the main factors which have influenced conglomerates and Korean companies to be socially responsible. It has been around 10 years since Korea suffered from the economic crisis, and the clear line between private and public sectors is becoming more and more vague. At this period, EKF observed the current CSR environment in Korea.

Definitely, Korean companies' CSR activities increased during 2002, 2003 and it is still increasing that even it is easy to see public commercials promoting company's CSR these days on the media. According to a survey conducted by the Federation of Korean Industries in 2007, today, 64.3% among the participating Korean companies replied that they were operating CSR program in order to 'perform their socially responsible duties as business entities'. The second largest number of companies replied that it was to 'improve their company image and enhance their business value' and 'because of the overall environment that encourages companies to be responsible'. Among the answers, a significant portion of companies replied that they are performing CSR activities to 'increase the loyalty of their employees and for HR reasons'. In fact, the increasing Matching Grant System is one of the most observed phenomena among the companies in Korea these days.

According to the Korea Chamber of Commerce and Industry, most companies in Korea are concentrating their CSR activities into supporting the under-represented people such as charity activities either directly by their own volunteer groups or through NGOs. (35.1%). Meanwhile, companies were equally interested in contributing for academic activities such as scholarship programs and high education support (15.8%), catastrophe recovery (15.8%), and community development (15.3%). Interestingly, most Koreans think that although companies are interested in philanthropic activities, they expend less than foreign companies do. However, figures show that Korean companies have been expending more than foreign companies. While foreign companies in the US, Japan or in the UK spent around 1% of their ordinary income, Korean companies spent 846.2 billion won last year which is around 2.25% of their ordinary income. In fact, in the US, companies used to spend 1.3% (2004) and 1.5% (2003) in Japan. Usually, the top 30 companies are one of the most active entities in this field. Most of them now have their own CSR divisions or have their own volunteer groups. According to a survey conducted in 2004 by the FKI, 93.7% of the top 5 conglomerates, 80.0% of the top 30 companies and 48.84% of the rest had already organized a special volunteer group within their company and this trend is expanding among the KFI members to small and middle size companies as well. An interesting thing is that most big companies are not only managing CSR within a volunteer group basis, but they have established their own foundations and are strategically moving. Even the number of company owned foundations are increasing and their assets and activity scope is yearly increasing. In 2006, these company foundations spent 172,3 billion won, and their expenditure increased 30% more than in 2005. This phenomena is increasing these days and is becoming more as a trend among Korean companies.

Whether the amount of the donation and expenses for CSR activities are in line with their activity effect is still another story for Koreans. Korean companies have been pouring their resources to CSR activities but lacking in strategy and vision, having mis-perception about the CSR culture and values. As a consequence, Koreans consider that CSR activities are means to cover company bad management, corruption and a PR tool. This is the reason why recently, Korean entrepreneurs and related parties are striving to change this perception starting to have a CSR Culture Festival in the City Plaza, and promoting many CSR related programs both in the field and in academia. It is to deliver the message that companies have changed, and that in order to perform a sustainable development, companies cannot run alone but in collaboration with the community. In fact, since 2002, the amount of simple donation from companies has started to decrease from 79.0% to 64.3% in 2005. Instead, companies were starting to focus on strategic donation and CSR policies that will become their long-term program. Companies started to be more thorough in choosing an NGO to support; NGOs which are in line with their philosophy, which are transparent enough, which can increase their value and/or which are effectively performing. At the same time, these CSR activities started to become more localized, depending on their business interests.

Despite all the efforts the companies are making, there are some structural improvements needed in terms of government led incentives, companies say. Companies state that the government should increase the range of tax deduction on financial donations (55.4%), and reduce the allotment on environment (25.3%), provide financial incentives such as increasing their credit ratings (9.3%) according to the Korea Chamber of Commerce and Industry. As the companies’ participation towards the community increases, they are expecting the government to acknowledge their contribution and structurally and systematically increase the benefit they can receive through their contribution. Also, the fact that there are no government division or organization which is in charge of the CSR environment overall in Korea is also pointed as a problem since the scattered government entities and guidelines are asking every time different documentations and standards of performance. Also, companies should be able to be objectively evaluated about their contribution. To be able to be properly evaluated, a lot of companies are preparing their sustainable report not only to introduce their activities but also to prove that they are a partner worthwhile investing which performs sustainable management to their investors. At the same time, it is often mentioned that Korean companies are not exposing their CSR activities freely in public, which blocks the communication and trust-building between the companies and the society. In an NGO level, companies argue that NGOs should also improve their operation skills as well as being more transparent. In a nutshell, the CSR environment in Korea is still in its early stage. However, compared to the number of activities, and the budget companies are willing to spend for CSR programs, and the fact that they are becoming more and more strategic, demonstrate that companies are willing to establish long-term corporate social responsibility policies, which will eventually benefit the society and not for single PR marketing purposes.