LG Life’s Good Award : Life’s Good Award Conference - Full | LG
Good afternoon, everyone, and welcome to Life’s Good Award conference. Please allow me to introduce myself. My name is Misorang Seo; you can call me Natasha, and it is an absolute honor and delight to be serving as your MC for this very momentous occasion. The very last leg of Life’s Good Award, which is part of LG Electronics’ global innovation challenge aimed at discovering and promoting innovative solutions to the global challenges faced by our society and our planet. This global contest began back in September of last year, and applications ended in October.
After three months of intense deliberation and evaluation, the four finalists were announced this year just a few weeks ago, on the fourth of this month at CES. Today is the grand finale of Life’s Good Award, and this is what we have in store for today. We have well-renowned judges, who will deliver special lectures to us, And the four presenters, the four companies, finalists, they will deliver pitches for their companies.
And, of course, we will end with the award ceremony where we announce the rank. Today’s conference is held in a dual format with on-site participants here at the Magok LG Science Park and online participants joining us via YouTube. And for your convenience, for our on-site participants, we do provide simultaneous interpretation to and from Korean. So, to use this, please make notice of the receivers placed on the table in front of you, and for Korean, tune in to channel one, and for English, channel 2. And to all presenters and speakers and finalists who will be talking on the stage this afternoon, we have a special request.
Please remember to take your masks off before you come up to the stage. Alright, we will begin with a short introductory video of the Life’s Good Award, as well as the four finalists. We ask for your attention to the screen.
Alone, we can do so little. Together we can change the world. Countless souls are working to find solutions to make a better life for all and for our planet. From 61 nations, 334 teams, we want to recognize four teams in our Life’s Good Award. SOLUTUM may have the solution for green earth. They want to stay in the convenience of plastic while eliminating the waste.
Their bioplastic dissolves and degrees in water, leaving almost no trace behind. I want to eliminate plastic waste for good. (Sharon Barak, CTO Founder, SOLUTUM) DOT Inc. dreams of an equal world.
They believe the visually impaired have the right to see what we see. Their portable device, 20 times smaller and ten times lighter than the legacy devices, gives the visually impaired unprecedented access to visual information anytime and anywhere. This will allow the visually impaired to reconnect with their families and with society.
Eric Ju Yoon Kim, CEO, Co-founder, DOT Inc Ki Kwang Sung, CBDO, Co-founder, DOT Inc Day1Lab is a group of people who are obsessed with plastic. They want to completely change our perception of plastic. Their plastic alternative is fabricated from natural materials, and it will return to nature after its life as a product.
Let’s begin day one of a world without plastics. Ju Bong Lee, CEO, Co-founder, Day1Lab NONA Technologies has a new take on desalination. They want to provide fresh water on demand for all. Their portable device can make seawater drinkable. We hope to make a difference for people in the harshest environments.
Jung Hyo Yoon, CTO, NONA Technologies Bruce Crawford, CEO, NONA Technologies For our planet and our people, Life’s Good Award Yes, I think we would all agree with me when I say that we were able to see how LG Electronics and the four global innovators, the finalists, they are continually striving to find solutions for the global challenges that we currently face, both in terms of societal problems and the environmental problems. So, we certainly look forward to the solutions that have been innovated by our four companies, the finalists. Alright, before we proceed further, I would like to acknowledge our distinguished guests here in attendance. As I call their names, everyone, please join me in greeting them with a warm round of applause.
First, from LG Electronics, we are joined by the CSO of LG Electronics, Mr. Sam soo Lee. Continuing on, the CTO of LG Electronics, Mr. Byoung-hoon Kim. And now the judging panel; first, the professors. From the professor of London Business School, Mr. Alex Edmans. Professor of Cambridge Judge Business School, Mr. Christopher Marquis. And professor of Hanyang University Business School, Mr. Hyun-sang Shin.
And now the LG executives who participated as the judges. Senior Vice President, and head of Global Marketing Center, Mr. Jeong-Seok Lee. Research fellow at Devices and Materials Lab of Device Materials Research Center, Mr. Jae-Hyung Yi.
ESG Strategy Department Leader Mr. Sung-Min Hong. And last but not least, please give a big round of applause to CEO of LG Technology Ventures, Mr. Dong-soo Kim Once again, thank you very much to all judges for using your expertise for a fair and just evaluation.
Next, we have the welcoming address, which will be delivered by the head of Global Marketing Center of LG Electronics, Mr. Jeong-Seok Lee. Please greet him with a big round of applause. Hello everyone. Welcome to the Life’s Good Award. Thank you for all being here today, both in person and online.
Life‘s Good is at the heart of what we strongly believe in at LG Electronics. Through our technology and innovations, we strive to help everyone experience Life‘s Good in every moment of their lives. Our efforts extend beyond improving people’s quality of life to addressing concerns about our planet’s future.
LG announced the Better Life Plan 2030, which laid out detailed action plans for the betterment of the planet such as achieving carbon neutrality and proactive usage of recycled materials. We also continue to improve usability, ensuring our products and solutions are accessible to everyone. We are adding voice guidance and braille instruction to more products. Also, our annual Global IT Challenge strives for a more diverse and inclusive society.
Even so, making a better life for all isn’t something LG can do alone. We must work together with experts in various fields and innovators from all over the world. That’s why we initiated the Life’s Good Award. A total 334 teams from 61 nations applied with solutions in both the innovation for people and innovation for the planet categories.
As I reviewed the solutions from all applicants, I was surprised by the sheer number of we received and the quality of these potential opportunities. It was incredibly inspiring to see the high degree of ingenuity shown by each team through their innovative solutions. I tangibly felt that creating a better life for all was more than just a dream, but something we can make into reality.
Here with me today are professor Alex Edmans from London Business School, professor Christopher Marquis from Cambridge Judge Business School, professor Hyunsang Shin from Hanyang University, as well as executives from LG who served as judges. Will it have a positive impact on the world? Is it based on innovative technology? Is it feasible? On the basis of these three criteria, we took about a month to review them and selected four finalists. At CES 2023 this year, we announced four finalists and briefly shared their solutions with the world. And now, it’s time for the finalists to introduce their solutions in detail. Keep an eye on these four finalists today. They are true innovators who continue to challenge themselves in their respective fields to make the world a better place.
The same goes for the judges who sincerely reviewed these solutions together. Once again, thank you all. I also hope each of you in attendance will gain fresh ideas for your own respective fields while listening to the presentations and discussions today. Again, we at LG Electronics promise to continue to do our best to create a better life for all through collaborations with many global innovators. Thank you. Thank you very much, Mr. Jeong-Seok Lee, head of Global Marketing Center at LG Electronics.
Yes, as was mentioned, positive impact, innovative technology, and feasibility were the three pillars through which we bade our evaluations for selecting the four finalists who will help us move into that better future. Alright, now, let’s meet the three professors who will explain the purpose of Life’s Good Award. First, London Business School professor Alex Edmans will give a talk titled “Grow the Pie.” Please welcome professor Alex Edmans. Thank you very much. It's a huge pleasure to be here and to be involved in this award,
trying to solve some of the biggest problems facing society and the planet. So what I'm going to speak about is the power of purpose in encouraging innovation, not just to serve wider society, but also to be good for business. So, my job is a professor of finance, and so finance is about creating shareholder value, making money, serving profits, and so often think that this is at the expense of wider society. But what I like to highlight is by having a sense of purpose, companies can deliver both profits for shareholders, but also value for wider society.
So how can that be? So, let me start with an example. So, I'm going to take us back to 2003 and Vodafone, which is the UK telecoms company. They noticed that in Kenya, Kenyan citizens were using their phones to transfer mobile minutes to each other as a form of currency. And this gave them an idea. What if we could develop a technology that would allow people to transfer not mobile minutes but actual cash? Because, at the time, 15 million Kenyan adults were unbanked, they had to rely on cash which could be forged or lost, or stolen. So, if they could pull it off, the social impact would be huge.
And indeed, four years later, Vodafone launched M-Pesa, which is a mobile money service that allowed people to transfer money from phone to phone just as easily as we could send a text message or send a photo today. And this completely transformed citizens' lives. So, within the first seven years, it lifted 200,000 households out of poverty. And many of these households were headed up by women because it allowed them to move from agriculture to business and retail. So, there was a large effect on gender equality.
But also interestingly, this was something that later led to profit for Vodafone, because even though they generally started this idea to solve a social problem of financial inclusion in Kenya, Ultimately, they were able to monetize it and turn it into a profit. Why? Because if you create value for society, ultimately, somebody will be willing to pay you for this. So why am I starting my talk with this example? It's to get us to ask the following two questions. So the first question is, how much value did Vodafone’s M-Pesa create for wider society? And the second question is, if Vodafone did not launch M-Pesa, what would have been the damage to its ESG rating or reputation? I'm not going to pole anybody because I'm sure people would agree with the answer. So, for the first question, how much value did M-Pesa create for wider society? A huge amount of value.
It lifted 200,000 households out of poverty, and it contributed to gender equality. But if I turn to the second question, what would have been the public outrage if Vodafone had not launched M-Pesa? It would have been nothing. There would have been no media backlash, there would have been no customer boycott. Nobody would have ever put Vodafone in trouble because nobody would have even thought it was possible to launch this crazy idea of banking without a bank.
And so, this is my view of purpose. Often, we think, well, what does it mean to be a responsible business? We want to answer that second question. We don't want to get involved in the scandal. We want to avoid an environmental disaster. We want to avoid mistreating our workers. We want to avoid underpaying our taxes. We often think, what is it to be a responsible business in 2023? We do no harm, we don't harm the planet, we don't harm people.
But I'm saying that this is not enough. It is not enough for a company to say, I am doing no harm to society. Instead, companies need to answer the first question and to actively do good. And so, this is why, for me, it's a huge pleasure to be involved in this competition, because these are innovations which are actively creating value for society. Nobody was forcing the four finalists to come up with these ideas. They didn't need to do this to avoid a scandal or a media backlash.
They instead did this in order to create value and positively impact our world. And so, why do I think this is the correct way to think about purpose and responsibility today? It is because of the theme of growing the pie, which is the theme of the talk. So, what is the pie? Well, we can think about the pie as the value that a company creates, and we can divide this between profits to investors, that's the blue and value to wider society, that's the orange. And that could be something like fair wages, fair taxes, and fair prices. And we often think, well, what does it mean to be a responsible business? It means we split the pie more fairly: we pay workers more than we need to, we charge customers lower prices than we can get away with, and we might pay more taxes than the bare minimum. And absolutely, part of responsibility is a fair split of the pie. But I would argue that that is not enough. It is not enough for a company to think about responsibility as redistribution.
Why? Because a purpose involves splitting the pie differently Then many CEOs won't want to do it. Why would I want to do something that makes my company less profitable? And we have this big problem of greenwashing where companies claim I'm going to serve wider society, but they don't put it into practice. And why would they, if purpose means my company will be less profitable, then let me just say some nice statements and never actually deliver. So, this is why my view of responsible business is it's about growing the pie. Absolutely we do want to increase the orange, but the way we do this is not by giving a greater slice of what's already there, but through innovation, through excellence, through coming up with some crazy ideas, like banking without a bank. That's what Vodafone did.
Why? Because the beauty of this is, even though that those innovations were driven by the desire to serve society, to increase the orange, by growing the pie, ultimately, the blue increases as well, and companies also become profitable. So, what this is about is, can we find ways, through innovation, of solving social challenges, but in ways which also fulfill one of the primary purposes of business, which is to deliver returns to investors? You might think, well, if I'm defining purpose and responsibility as innovation, well, do we need a purpose to do this? Why shouldn't any company want to be innovative? Isn't it enough to think about making money? Because if we want to make money, will that not drive us to innovate? So, you might think, well, why do companies come up with electric cars? But even if you did not have a concern for the environment, you might still come up with electric cars. Why? Because you could just look at the economics of the car industry, you will know that there is profit to be made out of moving from traditional to electric cars, So, you don't need a special purpose to do that.
However, there are many innovations which you might not be able to justify with purely a financial calculation. If you go back to the idea of M-Pesa, what was the profit calculation from launching that? It would have been hugely negative. The likelihood of being able to develop this technology was really low. Even if you did develop it, would you be able to make money from it serving some of the poorest people in the world in Kenya? Indeed, Vodafone had a strategy back then, and their strategy was to expand in the west and to win spectrum license auctions, because there was far more money to be made in the west. But Vodafone had a purpose, and this purpose was to build a digital society that enhances socioeconomic progress. And that's what inspired them to launch the idea of M-Pesa, even though it could have never been justified with the financial calculation.
So, the power of purpose is that we start with innovation, driven by the desire to serve society, to solve problems of people and planet, could that lead us to innovate in ways that we would not do otherwise if we just thought about traditional market analysis, where the profit opportunities were? At this point in my talk, eight minutes in, you might think, well, everything I say sounds great, but where is the evidence? What I seem to be saying is that companies are driven by the idea to serve society, magically, the pie will grow, and investors will be better off. But that seems almost too good to be true. So, this is why my day job as a professor is not to tell stories. I've told one story of Vodafone, which worked. But how do you know that I didn't just hand-pick this one story because it supports my viewpoint? Instead, as a professor, we look at large-scale evidence across hundreds of companies over many, many industries.
And what I wanted to look at is “are companies driven by the desire to serve society? Are they going to be more profitable in the long term?” So, this is one of my own studies, which I completed a while ago. Does purpose pay off? Well, how do I measure which companies were delivering value to wider society? Well, what I wanted to look at was the 100 best companies to work for in America. How do companies do in terms of treating their employees? Now, you might think, well, why is that my measure of purpose, that seems really uninspiring compared to some of the solutions we've seen to plastics to help the blind to desalination. But it's quite difficult to compare, say, a desalination technology towards a biodegradable plastic versus a Braille device, whereas employees, this is something which is comparable across every single company. And also, you might think, well, why don't I look at climate? That's really important.
But climate is important if you're in energy. It's not so important if you're, say, a social media company. So, I'm looking at employees because this is material for every single company out there. And importantly, I don't have a measure of ‘Did you avoid a scandal?’‘Did you avoid a strike or labor unrest?’ Remember, my definition of purpose was not doing no harm; it was actively doing good.
Can we go above and beyond in this case and how you treat your employees? So, this measure I have is the list of the 100 best companies to work for in America these are companies which are top of the tree in how they provided a great place to work And to get this long story short, I wanted to see, “do these companies actually outperform, or are they just fluffy companies who are distracted from the bottom line?” And what I found was that the 100 best companies to work for in America delivered shareholder returns that beat their peers by 2.3 to 3.8% per year over a 28-year period. That is 89% to 184% compounded. And so, the companies that were treating their employees well, they weren't just splitting the pie, giving up some of the pie to the employees; they were growing the pie. Employees are becoming more productive, more innovative, and more likely to stay.
You might think, well, that sounds great, but how do we know? Is it correlation, or is it causation? I seem to be claiming that if you treat your workers well, your company will do better. But maybe it's the opposite. Maybe once the company is already doing well, then employees are happy because they're able to spend more on wages. Or maybe if you're in, say, the tech industry, in the tech industry, employees are happy because there's a lot of innovation, and it's a fun place to work. And if you're in the tech industry, you are also performing well because this has been a successful sector. So, what I had to do was to rule all of this out and to suggest that if you first start by how can we create a great place to work, that will ultimately lead to profits down the line.
So, in the last part of my talk, I'm going to talk about putting purpose into practice. So, my first part is, what does it mean to be responsible, not to do no harm, to actively do good? The second part is this does lead to performance in terms of bottom-line profits. My third and final part, the most important, is, well, how do we actually become more purposeful as a company? Now, again, I'm going to start by having a little bit of a different view to what we typically hear. Often people define purpose as trying to serve everybody. You see companies with purpose statements like this one: Our purpose is to serve customers, workers, suppliers, the environment and communities, and investors.
Now, that sounds great, but it's unrealistic because you can't serve everybody, right? So, if you are an energy company and you close down a polluting plant, that's good for the environment, but it's bad for workers. And if you think about the word purpose in the English language, it doesn't mean serving everybody; it means being focused and targeted. If I do something on purpose, I do it deliberately. If I have a purposeful meeting, it's one with a clear agenda.
So how I define purpose is why a company exists, who it serves, its reason for being, and the role that it plays in the world. And that might seem quite lofty and idealistic, but to pick it apart, what I'm trying to emphasize here is we can't try to solve every single problem in the world, but to look at a couple of things like why you exist; It can't be to solve all the world's problems, but to think about a couple. We often look at the Sustainable Development Goals. There are 17 of them.
But it's not a company's responsibility to solve all 17 goals, but maybe to focus on the three or four, where it can really move the needle. So, if there's only one thing that you take away from my talk, it is this: how do we decide which of these goals to address? To ask yourself the question, what is in my hand? By this, I mean what are the resources, what is the expertise that my company has and how can I use this to serve society if I think a little bit more creatively? So, for Vodafone, what was in their hand was a technology that, at the time, was able to transfer text messages, and instead, they tried to use this to instead transfer mobile money. And notice that this is a quite different way of thinking about purpose to how most companies think about it, which is, rather than using what's in a hand, we instead react to what's out there.
So when George Floyd gets killed, a lot of companies gave money to Black Lives matter. I am clearly somebody who cares a lot about racial equality. But if you're a company like Vodafone, maybe your expertise is not knowing whether a racial equality charity is better than a cancer charity or better than an environmental charity. It is using your technology to have innovative applications such as M-Pesa. So, let me end with the rest three ways of how companies can use what is in their hands. Well, the first is to do new things.
And this is typically what people think about when they think about innovation. Right, any company will try to innovate, even if you're a company without a purpose, but you will innovate only if you see a bottom-line profit, something monetizable at the end of doing so. However, there's many other companies driven by purpose where you will innovate to serve wider society, to solve a social problem, and that will push us towards doing more innovations than what we might do otherwise.
That might be toward serving new products and services for existing clients or trying to reach new clients, to begin with, who we might have never reached before. That is the idea of Vodafone moving away from their traditional heart to somewhere like Kenya. And then how do I apply this myself as a business school professor? Well, my existing clients are my MBA students at London Business School.
My job is to teach them corporate finance. But really, will their lives change because I teach them to do the weighted average cost of capital? Probably that will not be life-changing, but one of the more important skills in the business world today is public speaking. So for me, I give a large public speaking element to my corporate finance class. And, also, yes, it's a privilege for me to teach London Business School students.
But many of the people who most require financial tools, well, they can't afford to do an MBA at London Business School because it costs a 100,000 dollars. However, I have another position with Gresham College, which is an organization which gives free lectures to the public, just like Michael Faraday used to give them science. And that is a way of reaching new people. So, this is, for me, as just one person, how I think about things beyond my day job of teaching finance to business school students; Obviously, the power of companies with far more resources, there's many analogies, I'm sure, within LG. The second thing is to do the same thing but in a different way. So even if we just don't change what we actually do, just by pursuing this with a huge amount of excellence, that is something which is really purposeful.
And in particular, for a company like LG, where the heart of what you do is already creating so much value for wider society, even if we don't think explicitly about purpose just by being excellent in innovation, in design, in customer service, that has a huge effect on wider society. So, again, to my analogy, as me as a professor, what is the best way that I add value to society? It is not by the fact that I bike to lectures rather than taking a taxi. It is by preparing my classes to make sure they're not just theoretical but they're also practical. Just excellence in the core business, professional pride in what you do at LG, maybe it's not in innovation; maybe you work in payroll, maybe you work in procurement. Just doing this as an excellent way has a huge impact on society.
The final thing is to do the same thing in the same way, but to recognize the ultimate purpose of what you're doing. So, I'm sure some of you will know this graphic. Three people are doing the same thing. One of them is building bricks, laying bricks.
The other says, I'm making a living and the third says, I'm building a cathedral. So, they're doing exactly the same thing, but they are looking at one of them is looking at the ultimate purpose of what they're doing, whereas the first person only looks at the small, immediate action. And so, again, with an LG, maybe this is somebody who works on refrigerators. On the one hand, you might be designing a small problem. On the other hand, you might think, well, ultimately, by being able to do this, I am allowing people access to fresh food and this is something which is going to transform their lives by giving them access to nutrition.
Obviously, here we have a lot of very senior people, and as a senior person, what you are able to ultimately do is, if you're customer-facing, you are seeing the ultimate impact of a company's products. And sometimes junior people don't see this themselves. So, one of the responsibilities that we might have, particularly the more senior ones who are customer-facing, is to report the impact of all of the great things LG does internally. One of the banks I work with in the UK is NatWest.
And NatWest, after the pandemic was over, the CEO, Alison Rose, she took out her senior management team to a restaurant in Covent Garden called the Darjeeling Express. And she had the restaurant owner tell the story: 30 years ago came to the UK, nobody wanted to lend her. Why? Because she was an immigrant. She was somebody who had no experience, and she was a woman.
And back then, it was even harder as a woman to get a loan than now. And she said to NatWest, by giving me this loan, I was able to hire this many people, create this many jobs, serve this many customers. And so, this story got told just internally, many times.
And so, if you were the person working on the loan to add an account of the Darjeeling Express, you might think I'm just doing some financial analysis, but this is something that ultimately created a huge amount of value. But often, as a junior person, we don't see the ultimate value that we create. And what about people who are sort of low on in the organization we're looking at here some amazing innovations, like Desalination, like biodegradable plastics, like light braille technology, but not everybody in an organization can do something that inspiring and that value creating. So, what I'm going to end with is a much more humble, smaller idea of using what's in your hand.
And this is an example from my first job at Morgan Stanley. I started off right at the bottom as a junior analyst. I thought I had nothing in my hand; nobody worked for me, I was right at the bottom. But in fact, I realized people did work for me. There was my secretary; there was my IT department, and there was perhaps the most abused department in an investment bank is graphics.
You give them an unintelligible scribble, and they turn this into some PowerPoint slides. And often people would shout at graphics for not doing what you wanted, even though it was your fault because you were not explaining it clearly enough. So, when I got good work back from graphics, I would call them up and say, Hi, this is Alex. You worked on my job. I just wanted to say thank you. You did all these things well, this other thing I never asked for, and you did it anyway And honestly, I never did this to be seen as a nice person. I just was genuinely grateful. But because I was so junior, because I was right at the bottom, I didn't have my own office. I sat on the open-plan floor.
And so, when people heard me, then they started to say thank you themselves. And so, I'm not going to claim that we changed the entire culture of Morgan Stanley, but in just that floor of that office in London, people started to treat each other a little bit more kindly. So we often think of ourselves as a thermometer. We reflect the temperature around us. If the world has cut votes, we need to cut vote, be cut voters to survive. But can we think of ourselves as a thermostat, affecting the temperature around us with our own actions, even with somebody really junior, which I was, what was in my hand; it was something as simple as my own words and my ability to say thank you.
And thank you, and I am going to end because this has just been a great experience to be part of this great competition, to see companies growing the pie with all the innovations that they've made. 감사합니다. Thank you very much. Thank you very much, professor Alex Edmans. As you mentioned, 감사합니다. Professor Alex Edmans really highlighted how to use what is in our hands to strive for excellence, be a thermostat instead of being a thermometer, and really give back and impact the wider society. Thank you very much, Professor.
Alright, so we will carry this momentum, this energetic momentum, and move on to the next presentation. This one is titled “Better Business,” and for that, I would like to invite on to the stage Cambridge Judge Business School professor Mr. Christopher Marquis. Please welcome him with a big hand.
Okay, well, thank you very much. It's really wonderful to be here and learn about all the amazing innovations that the four groups put forward today. So I'm a management professor.
And so what I focus on is the strategies and organizational management practices companies have to take innovations deep into their companies. And so, the four companies that will learn more about today, if they want to grow to be LG, you know, what can they do? What are the strategies, practices, processes that they can enact to take those forward in an authentic way? Because these are all companies that have a social and environmental mission at their core. And as Alex mentioned earlier, a lot of companies are greenwashing these days and so, we don't want to have it all sort of the vision that is sustainable, but then our practices are not. And so that's what I'm going to focus on. It's a focus of my recent book called “Better Business,” and I focus on these companies “B Corporations.”
Not because every company should be a B Corporation, actually, a very small number of companies will be the certified companies for their ESG performance but the practices that have been developed are things that all companies can use. There's a Korean version published as well. So, today it's more important than ever for companies to really take responsibility for the broader social and environmental effects. You know we have floods everywhere, we have inequalities, and these are some of the things… climate change inequalities, that some of the teams are dealing with today. And so, I think that actually helping scale these innovations… it's really important.
One of the reasons why business traditionally is not focused so much on environment on social issues is that they're very narrowly focused on their shareholders. Certainly, financial shareholders, investors are crucial to businesses, but they actually sometimes get in the way of the purpose that Alex actually just talked about. And I think that he's right on target that we don't necessarily want to focus on everyone but actually companies knowing what the core issues that are essential to them are. Many organizations around the world From the World Economic Forum… Actually, many of our colleagues may be in Davos as we speak, Right before the pandemic, the focus was on sustainable and stakeholder capitalism. There's a group at the Business Roundtable in the US is saying the same things.
Recently was the COP 27 meeting where, you know, COP being the conference of parties bringing together business, NGOs, and government to solve the biggest problems in the world. The problem is that, actually, for all this talk, there's a lot of inaction. A lot of companies actually say they want to do good but actually don't.
So, Marriott is a famous example. They're actually one of the companies that was part of the Business Roundtable saying we're going to change our purpose to be stakeholder-driven Pandemic hit. Of course, hospitality is going to have some issues and not necessarily be able to continue pulling everyone. But what they did is an addition to getting rid of all their employees… a huge number of them…so laying them off, cutting their health benefits, They also increased their dividends and gave their CEO a raise. Which really, I think, sort of says where their focus is. Coca-Cola also, many of the packages… companies say we're recycling, but actually very small percentage of them are recycling.
And I think it's really easy to sort of, you know, point at these companies and say, “You bad company! You know, you're say you're going to do well, but you actually don't.” I think that, actually, a lot of the issue is that there's an implementation challenge. Actually, maybe companies do want to do well, but they don't know how to do it. And so, the reason why is, I think a lot of the norms, institutions, laws that exist really do push companies to focus on a very short-term oriented set of problems. And so, all of these companies that we’ve talked to today, you know, the four from desalination to plastic issues to overcoming issues with visual impediments, I really challenged them to really try to build an authentic company that actually is aligned with your purpose.
And the culture, employee practices, also grow with that purpose. Because there are many norms and institution that are pushing in the opposite direction. So, here’s sort of this in the graph that a lot of times, companies say they want to be more stakeholder-driven but actually are unable to do so. Called out for greenwashing because of the problems with their practices.
So, the model that I delved in the book that I wrote recently to address these implementation challenges really has two dimensions. So, one is - you hear about a lot - ESG measurement, transparency, and accountability. And I think that you know, many companies say they're going to be doing all kinds of work in the ESG space. Maybe they do one or two things, but actually being publicly transparent, actually accountable to third parties is tremendously important The bottom one is around governance.
Here too, if a company actually wants to have a social mission, environmental mission, if actually the inside governance of the company is not aligned with that, it's actually never going to succeed in this goal. So there's a variety of governance mechanisms that I'll talk about it in a second. So, you know, you put those two together, and that's actually where these B Corporations fit in. But actually, these two dimensions or things that hundreds of thousands, probably millions of companies nowadays are actually working on as far as ESG and stakeholder governance.
Here are a few B Corporations that I have listed. There are many of them in Korea. You know, people frequently say this is a US movement. Actually, now less than 30% are US based. Europe and Latin America are the areas where this movement is most vibrant. I think because there's a much more stakeholder-focused set of capital practices in the UK… Excuse me. The EU and Latin America.
I want to talk about this first dimension. So, here's an example. Patagonia, which you're probably all familiar with.
The company is very, very well known for its long-standing commitment to the environment and trying to actually solve a variety of environmental problems. ESG management system that I mentioned, you know, covers actually five different dimensions. You can see if you would you know, Environment, Community, areas where Patagonia is really really strong is where they do very well. One of the reasons why I want to show this is that, actually, you can see over time, Patagonia has actually improved. As I interviewed a lot of companies about implementing these ESG practices, what they said is that, you know It's important for us to be transparent to our stakeholders, but it actually gives us a deeper understanding of our company, and helps us manage better and also provides a roadmap for improvement.
So, you can see that with Patagonia, they start off around 107 and end up on 151 in this ESG management score. So, they're getting better over time. It's an internal impetus for change. And this is what a lot of the companies that I’ve talked to have said.
You know, it’s a way to understand your company, continuously improve. It’s also a way to compare and learn. So, companies can look at Patagonia, see how Patagonia's practices are because it's all very open. And actually model their practices after industry leaders. So, a way to share and learn.
This is very in line with what investors are saying. So, you probably know Larry Fink. He’s the founder and CEO of BlackRock, which I think is about $8 trillion under management right now.
And over the last number of years, he has written a letter to the CEOs of companies that he invests in. Basically, telling them in a variety of ways that they should be more transparent, measure ESG, be more attentive to climate, be more attentive to stakeholders And I don’t know Larry Fink, so I don't want to try to make a comment on his motivation. My guess is that he is actually not that concerned about the social impact necessarily or environmental impact. But what he says is actually these companies have better management and actually lower risk.
So, these ESG management practices are a way to actually ensure the long-term risk management of the company. So same similarly with the US SEC. An example of this is the fashion brand Chloé. I’ve gotten to know the CEO Ricardo Bellini pretty well over the last number of years. I just was in Paris about a month ago and talked to him.
He said, you know, we actually started… You know, he was hired in 2018 to really transform the brand and to be much more sustainable. Which if you think about it, a fashion brand is not really consistent with sustainability, sort of cognitively. But he thought that actually, through materials, through design, through workforce, supply chain, that Chloé could be a really pioneering company in delivering ESG sustainability benefits. And what he said is that it actually going through… starting on this path of just trying to measure and understand things like the environmental impact materials, For instance, they moved away from a number of cotton and others are very highly environmentally damaging materials to things like linen, which are much less environmentally damaging, as an example. So, he thought this as an… again, sort of a continuous improvement process over a number of years. Actually, the company got better and better over time.
And actually ended up becoming one of these B Corporations, but that was not their goal. Actually, they started this process just to actually learn how to implement sustainability within their company. Yeah. So, this particular tool - the B Impact Assessment (BIA) Currently, over about 250(000) companies, including a lot of impact investors… Many investment companies nowadays use tools like this to get a better handle on their portfolio companies.
BDC and the Bank of Colombia… BDC is Business Development Bank of Canada. Two examples of companies that actually use this tool to assess their lendees. Again, because it gets a good view into the company in a deep level that they wouldn’t be able to get otherwise.
There's a lot of other tools you might be familiar with. GRI, SASB, Sustainability Accounting Standards Board, TCFD, the Science-Based Targets I think there's a variety of them, and I think it's really important to think about your organization. Which actually tools work best for you, stick to them and actually continue learning through your organization.
Here’s just a few slides on investors taking notice. So, when I first started teaching on these issues of social responsibility, social innovation, social entrepreneurship a number of years ago, my students would say You know, this is great ideas for small companies, but public companies, large companies, you know, maybe they're not as focused on that. And that actually has changed over these last few years. So, now all the major VC companies, VC firms have sustainable brands in their portfolios. I don't think this is greenwashing necessarily. I think it's because these companies actually are performing well, positioned well.
As of recently, there's 45 of the certified B Corporations in public markets around the world. Here are some examples in the US. This is only in the last year or two, Again, ten years ago, when I started teaching on this, my students said this would never happen. And actually, it's been happening quite a bit. Large companies too. There (are) many companies, you know,
10, 20, 30 billion-dollar companies, that are really committed to this also. So, the 2nd dimension. I talked a little bit about why it is really important to be focused on measuring, being accountable, and transparent on your ESG. The 2nd axis of this model is around governance -stakeholder governance.
In particular, I'm going to highlight a legal innovation that has been spreading around the world recently called “benefit corporations. This is a type of company that actually does not have delivering profits to shareholders as the legally defined purpose of the company, but the company articulates a purpose. And I think very similar to what, you know, Alex was saying earlier, it's important to actually know what your purpose is to know what you sort of have in your hand. And so, companies have everything from sort of serving their employees, the environment, etc.
So, it's not necessarily serving like the stakeholders, but actually knowing what your corporate purpose is and then being accountable for it. So, this law, this type of company, and there's tens of thousands, maybe even a hundred thousand, these companies around the world, Started in the US, spread around Europe- to Italy and France and then a variety places in South America. And recently, Rwanda. Actually, in Africa implemented this legal innovation.
No countries yet in Asia. Maybe you all can help with Korea. Korea being the first place. So, this is basically what I just said. Create a material positive impact on society. So, you sort of set what your purpose is, it gets encoded in the legal principles of the company, and then the purpose you articulate outside and work in your organization are well- aligned with this governance as well. And I said mentioned being accountable and transparent too.
In the UK, actually, up until about a year ago, there was a lot of traction actually of having this type of company being the default corporation. In the last year, in the UK, it has been a very tumultuous year From the Queen passing away and a variety of other political and economic issues. Hopefully, we'll get back on the agenda. But the idea being that a country actually may take this Innovation and have it be for the default type of company.
So that companies that have to think about, “Okay, what is our purpose?” Maybe for some, it would be actually delivering shareholder value. But maybe for others, it would trigger a thinking around the broader sets of community, employees, and environment that are essential to them. It’s important actually because this is about empowering directors. Maybe many times, managers and directors have a social mission, have a focus, want to focus on the environment, but they don't feel empowered necessarily to take that action.
So, this innovation actually helps with that. Hopefully, it's an obvious by now, but this is something that is really essential to culture of organizations. You read occasionally about companies that have a lot of good talk and PR, but actually have very destructive culture within Sort of going through these various ESG assessments, it actually tells the company what the key practices in regard to employees are. And many kinds…There's a variety of studies that have shown that implementing social responsibility practices actually helps with attraction and retention of talent, which are very expensive to firms. So, there’s a financial benefit to it as well. You know, Alex also showed the UN SDGs, and this is also a critical element of this system.
So again, you know, not all 17 SDGs do companies need to focus on. There are certain SDGs that are particularly relevant to those companies. And actually, this system, the B Corp system or other ESG systems like the GRI, for instance also, is similar to this, helps companies understand. Okay. What are the key SDGs that are essential to all my firm?
And then, once those have been identified, how to actually help execute against improving those. So I think sort of this language of SDGs, which we can all in the world work on, is an important topic. Finally, mainly I want to focus on consumers. I think you know this is an element of the equation that I think has been underplayed.
So, to me, as a management professor, things like the business processes, long-term risk, HR function, also attracting investors, is another one, are where I see some of the key benefits of being a sustainable business. But also, companies frequently want okay consumers to see what they're doing and have this brand lift as well. And this is actually an SDG number 12 or “Responsible Production and Consumption.” I think the evidence is still a little mixed as to whether consumers actually will buy based on sustainability. You know, if you look at surveys, particular surveys of Millennials, they say that they will, but I’m not sure if the evidence is there necessarily to show that they actually are.
However, the more and more companies they're talking about this, the more benefits of companies are seeing inside the firm, you know, it's very likely that this will actually pick up speed, and hopefully, the consumers will increasingly care about it as well. So, I guess in closing, what I want to say is that as the four finalists and other social entrepreneurs and enterprises want to build their business for the long-term, maybe tomorrow be the next tomorrow's LG basically - a gigantic, huge, and successful company, I think that these ideas of ESG management and accountability, and stakeholder governance are tremendously important, because consumers, people, employees are demanding more of companies nowadays. You know, with the climate change and inequalities, this is hugely on the agenda.
And also, ESG assessment and measurement help build better business, which is why I titled the book “Better Business.” It’s because countless number of the companies I’ve talked to have said “You know, I got into this idea because I want to be socially and environmentally responsible.” “But actually going through this issue process, I came out a better business.”
Meaning better-performing - better performing financially as well as better performing socially and environmentally. Also, having the governance aligned is important as well. Because investors are increasingly caring about this. The employees also, consumers and reputation.
So, with that, I'm going to stop. Thank you very much. Thank you very much, professor Christopher Marquis. Thank you very much for sharing your insights on how to futureproof and future-optimize our participants’ business ventures going forth. Thank you very much.
Lastly, from Hanyang University, we have professor Hyun Sang Shin who will talk about “Collective Impact.” Please welcome, professor Hyun Sang Shin with a big hand. Hello. My name is Hyun Shin. And I’m a professor at Hanyang University, and also serve as Ashoka U Change Leader and Editor-in-Chief of Stanford Social Innovation Review Korean Edition. I’m also founder and CEO of Impact Research Lab which provides impact consulting service to foundations, NGOs, social ventures, and for-profit companies.
In the past, the sole purpose of business is to maximize profit. Only financial performance, such as top price, was important as it can make the shareholders happy. In 2019 Business Round Table, however, famous CEOs from world-class companies like Amazon, Apple, and GM announced that shareholder value is not everything.
They said that companies should care about the welfare of stakeholders. Maybe you tried, at least once, chocolates like Sneakers and M&M’s. MARS is the company which produces and sells those brands, making lots of money, say, over 30 million US dollars per year. In collaboration with Oxford Saïd Business School, they developed an interesting concept called EoM, or Economics of Mutuality. The key idea is very close to growing the pie or “pieconomics,” proposed by professor Alex Edmans. If a company can strengthen the ecosystem which it belongs to, the strength of the ecosystem will make the company more sustainable.
Maybe you heard about ESG. Environmental, Social, and Governance. This means that now even investors care about non-financial information when they make investing decisions. There are so many reasons why modern companies should pay attention to social and environmental values.
One step further, people now think about business as a force for good. As professor Christopher Marquis explained, B Lab certifies companies which try to be better for the society. As such, people think that companies can do a lot for the society. Surely, companies have lots of money these days.
But beyond that, they have strong capabilities and expertise which can be used to make the world a better place for the humanity. This is an important message for business people. As we all know, there are so many social problems ranging from poverty, jobless, disease, pollution, educational gap, and so on. UN proposed SDGs or sustainable development goals calling for innovative and impactful solution, entrepreneurship, and collaboration.
Let’s talk about the innovative solution first. According to Stanford Social Innovation Review, we can define a social innovation as a novel solution to a social and/or environmental problem that is more effective, efficient, sustainable or just than existing solutions. After my talk, you will enjoy great examples of social innovations, or innovative solutions unfold through wonderful teams’ presentations. Such solutions aim to make impacts or meaningful changes for the environment and society. Impact can be defined, measured, and managed following the consensus of IMP, Impact Management Project, initiated by world-famous organizations such as World Bank, OECD, UNDP, and UNGC.
Second, we need people with strong entrepreneurship for the innovative and impactful solutions to work in the real world. Bill Drayton, founder of Ashoka, called such entrepreneurship “social entrepreneurship.” According to him, it is not sufficient to give marginalized people fish or teach them how to fish.
That is not enough. We need people who revolutionize the entire fishing industry, making system-level changes. In 2016, people gathered at Stanford University to discuss how to utilize entrepreneurship to address global social problems. As you can see from this picture, Mr. Obama, a political leader, and Mr. Zuckerberg, a business leader, and two young leaders from social sector talked about collaboration to make impactful changes.
Surely, collaboration is usually good. However, it does not always lead to a satisfactory outcome. We should be very smart to leverage the power of collaboration.
In 2011, Kramer and Kania proposed an idea of collective impact in Stanford Social Innovation Review, identifying five components of smart collaboration. This article has been downloaded over one million times, showing people’s interest and desire for smart collaboration. One interesting example of collective impact is Tree Planet, a social venture which finds solutions to plant more trees to address environmental problems and climate change issues. The initial idea behind Tree Planet was to develop a game in which you plant and raise a virtual tree. When it is fully grown, you can choose an actual deforested location. Perhaps a part of Amazon River or the desert of Mongolia where a real tree will be planted.
Then, a local NGO plants a real tree on the site of your choice, takes a picture of settling and sends it to you via social media. You can leave a message for your tree, and your family and friends can like it and share it, which will make you proud and happy. The funding comes from for-profit companies such as Hyundai Motors and Hanwha Energy, who can put their logos in game items such as fertilizer bags or watering cans. The land comes from local governments because they like the idea of getting lots of trees planted at no cost to them. In five years, Tree Planet had to plant more than half a million trees around the world. They collaborate with famous sponsors such as Shinhan Bank, Toyota, and ING and worked with local and global partners such as UN, UNICEF, and World Vision.
One key to the company’s success was its win-win model, in which no participant or stakeholder had to sacrifice. As you can see from the picture on the right side, every participant can take something away. Company can get good brand image and reputation.
NGOs can get funds for their own business. Local government can get lots of trees. And the users can have fun and rewarding experience. Now, they are diversifying their method to increase participation and get even more trees planted.
They don’t stop and keep innovating their solutions. They also try to find new solutions to plant more trees and make bigger impacts. For the past ten years, they planted around 1 million trees. Maybe not that impressive number to some of you.
However, don’t forget that around ten young people with very little money could achieve such outcomes. That is something, I think. And if they can do that, then you can do it, too. Why not? And this is why LG Electronics came up with the idea of Life’s Good Award, I think.
As I mentioned earlier, to achieve SDGs or sustainable development goals, we need innovative and impactful solutions, entrepreneurship, and collaboration. And Life’s Good Award can be a platform where entrepreneurs with innovative and impactful solutions can be identified and supported and where they can be connected with other brave entrepreneurs as well as ambitious organizations which have resources, knowledge, and commitment to solve a certain social problem, making profound impact on the lives of people and the health of the planet. Last year, Kania and his colleagues published at Stanford Social Innovation Review an article on collective impact 2.0. According to them, collective impact can be defined as a network of community members, organizations, and institutions that advance equity by learning together, aligning, and integrating their actions to achieve population and system-level change. I hope Life’s Good Award can be a powerful medium to promote and facilitate collective impact by forming a community of innovative and impactful entrepreneurs and helping them walk together for the environment and society.
Thank you. Thank you very much, professor. That was professor Hyun Sang Shin of Hanyang University, and we do hope that Life’s Good Award will serve as a good starting point for spreading good influence, as professor mentioned. Alright, it is time to meet our four finalists of Life’s Good Award. Now, as was mentioned by the head of Global Marketing Center of LG Electronics, Mr. Jeong-Seok Lee,
during the welcoming address, we were absolutely inundated with applications around the world across the entire spectrum of businesses.
2023-02-01 05:12
