For year 2020, SK Telecom has created social value worth KRW 1.946 trillion, up 4% compared to the previous year

Compared to 2019, Social value output in Business Performance and Social Contributions increased by 60.2% and 33.9%, respectively, while SV achievement in Indirect Economic Contributions decreased by 1.6%

SK Telecom (NYSE:SKM, hereinafter referred to as “SKT”) today announced that it generated a total of KRW 1.946 trillion worth of social value (SV) last year, which is a 4% increase from KRW 1.871 trillion recorded in 2019. The SV output grew for three straight years since the company began announcing the SV measurement results in 2019.

The company has been striving to create social value through diverse measures to reduce greenhouse gas emissions and build a strong social safety net, while accelerating its environmental, social and governance (ESG) management by leveraging on its ICT infrastructure and large customer base.

SV refers to a company’s achievements in resolving social issues through business activities. SKT measures social values in terms of its ‘Business Performance’ capturing values created by development, production and distribution of products and services, ‘Social Contributions’ delivered by social contribution activities for local communities; and ‘Indirect Economic Contributions’ referring to indirect contribution of corporate activities to the Korean economy.

For the year 2020, SKT’s SV output in Business Performance increased by 60.2% year-on-year (YoY) to KRW 236.2 billion and SV in Social Contributions expanded by 33.9% YoY to KRW 51.3 billion. SV in Indirect Economic Contributions slightly decreased by 1.6% YoY to KRW 1.658 trillion affected by factors including the cancellation of treasury stocks.

Business Performance

SV in Business Performance, which includes the areas of quality of life, labor, mutual growth and environment, posted sustained strong growth.

In particular, in the area of product & service, SKT has generated KRW 257.9 billion worth of SV, a dramatic rise from KRW 46.7 billion recorded in 2018 and KRW 167.0 billion in 2019, by constantly developing and implementing social value creation models based on cutting-edge ICT. In addition, T Map continued to contribute to preventing traffic accidents through features that encourage safe driving and notify sudden stops; and AI Care was recognized for helping seniors in emergency situations and reducing their loneliness and depression. Social values generated by SKT’s smart blood donation app Red Connect have been newly reflected in 2020.

In the area of labor, SKT accelerated its digital transformation in response to the changes brought by the COVID-19 pandemic. It was the first Korean conglomerate to introduce remote working on an enterprise-wide scale and also implemented the “Work from Anywhere” system by setting up a cloud-based working environment. These efforts have led the company to receive the honor of being named as a company with the best work-life balance by the Ministry of Employment and Labor in 2020.

SV performance in the area of mutual growth achieved tangible results as the company helped strengthen the competitiveness of its small-and medium-sized partners through joint development of technologies including 5G fronthaul and mobile quantum random number generator (QRNG) chipset, and provided diverse support/carried out diverse measures to ensure their management stability.

In the area of environment, SKT’s SV losses grew by 5.4% (or KRW 5.7 billion) YoY due to increased power usage caused by the deployment of 5G network infrastructure. Yet, the company was able to minimize the increase in losses by improving energy efficiency through the application of Single RAN, a technology that enables integrated operation of 3G and LTE networks.

By effectively replacing its legacy equipment with Single RAN, SKT earned 1,117 tons of carbon credits in return for the 53% power usage reduction it achieved in 2019. As of October 2020, SKT completed applying Single RAN to all applicable base stations and repeaters installed in 78 cities in Korea including Seoul and thus expects that from 2020 the annual amount of its GHG emissions reduction will increase to 10,000 tons.

As a member of Renewable Energy (RE) 100*, SKT is on its track to realize a 100 percent renewable energy goal by 2050. As part of its execution plan, the company signed a ‘green premium’ contract with KEPCO in February 2021 to use 44.6-gigawatt hours of renewable energy annually for two ICT Infracenters in Seoul (Seongsu) and Seongnam (Bundang).

SKT is making constant efforts to reduce greenhouse gas emissions by deploying 5G networks jointly with other Korean mobile operators and reducing power usage through photovoltaic power plants. It also plans to reduce resource consumption through diverse activities including ‘Habit Eco Alliance,’ a public-private environmental protection alliance that promotes good habits for reducing the use of plastics to create a sustainable environmental ecosystem, reuse of base station antenna radome; and adoption of electronic script forms by its distribution channels.

Social Contributions

In 2020, SKT played a leading role in building a social safety net by fully utilizing its advanced ICT. It has provided Nugu Care Call, an AI-powered automated check-in call service designed to monitor those under self-isolation and active surveillance related to the COVID-19, to help enhance the work efficiency of healthcare workers; adopted a zero-rating policy to provide students with free mobile data access to education website (EBS); and deployed Disaster and Safety Communications Network (Korea Safe-net).

Indirect Economic Contributions

In March 2021, SKT created four different types of committees – Future Strategy Committee, Human Resources & Reward Committee, Audit Committee, and ESG Committee – under its Board of Directors (BOD) to strengthen independence and transparency of the BOD.

SV creation in the area of dividend decreased by 2.1% (or KRW 15 billion) YoY as the company reduced the number of shares outstanding by repurchasing its stocks as part of its process for cancellation of treasury stocks worth KRW 2.6 trillion, which is equivalent to 10.76% of total number of issued shares. In March 2021, SKT changed its articles of association during its shareholders meeting to enable dividend payout on a quarterly basis.

SV in the area of employment grew by 0.6% (or 4.3 billion) YoY as the company strived to secure talents for its growth businesses including 5G, AI, data and mobility, and achieved the mandatory employment quota for the disabled (3.1% for private companies with 50 or more workers).

“SKT will continue to write new ESG stories with diverse stakeholders by developing environmentally-friendly technologies, contributing to the improvement of the social safety net and building an advanced governance framework,” said Park Jung-ho, CEO of SKT.

※ About SK’s announcement of social value measurement

Since 2019, SK Group measures the social values ​​created in the previous year based on the ‘Double Bottom Line (DBL) Management,’ which pursues both economic value (EV) and social value (SV) and announces the results every year.

Over the past three years, SK has achieved promising results in the product & service area, such as displaying meaningful social value creation achievements, and expanding employment of socially vulnerable groups. Nevertheless, SK self-evaluated that the innovation of business model (BM) based on social values ​​has not yet ridden the track, and that a breakthrough effort to drastically reduce greenhouse gas emissions is still necessary.

SK, which is implementing a financial story based on ESG, plans to actively connect its social value measurement with its ESG management, by reflecting social value measurement result in management strategies and decision-making of SK’s affiliates. It also plans to increase the reliability of measurement by transparently disclosing the greenhouse gas measurement index and formula to external stakeholders.

Meanwhile, the quantitative measurement of ESG performance is also spreading globally. The Value Balancing Alliance (VBA), launched by SK with more than 20 global companies and organizations such as BASF and Novartis in order to develop a global measurement model, is currently expanding its influence by collaborating with the International Financial Reporting Standards (IFRS) and the World Economic Forum (WEF), and Harvard Business School (HBS). SK plans to lead the global standardization of social performance measurement by strengthening cooperation with these organizations.