Seoul's conglomerates need to change their ways; executive Heekyung Jo Min thinks they should stop obsessing about shareholders.
FORTUNE — Last May, one of South Korea’s largest dairy companies, Namyang, came under fire for corporate malpractice. A company official was caught on tape threatening a small distributor into buying expired products than he couldn’t afford. The issue turned into a modern day version of David and Goliath. The dairy giant issued an apology and paid a fine, but it continues to face widespread boycotts and protests.
Heekyung Jo Min will be the first to tell you that corporate misconduct is still quite common in South Korea. As an executive vice president for CJ Corporation, the 14th largest Korean conglomerate, Min says that the country’s hierarchical system can sometimes lead to abuses of power or bad behavior in the name of expanding profits and pleasing higher ups.
Min is championing a profound shift in Korean corporate culture. By focusing on creating value for all stakeholders – not just shareholders , Min believes disasters like Namyang’s can be avoided in the future.
“The shareholders alone are not the main players of the economy,” Min says. “There are more people involved that just shareholders, like our employees, our customers and the communities that we serve.”
Min says CJ is the first company to launch a department committed to “Common Shared Value” — or CSV — in Korea, spearheading a call to action for sustainable business management. As the head of CJ’s Global CSV program, Min, who spoke with Fortune while in New York this week for a shared value summit, is working with the company’s divisions (which include the largest food manufacturer and the largest home shopping network in Korea) to focus not only on driving profits for shareholders, but also on how business practices can impact customers and the surrounding communities.
The term CSV was coined in 2011 by Harvard professors Michael Porter and Mark Kramer to encourage companies to think more about the impact their businesses have on society at large. The professors point out that companies may be prospering in the stock market, but can still be to blame for major social, environment and economic problems.
Unlike corporate social responsibility, CSV is about creating new business opportunities that can strengthen a companies competitive positioning, according to Min.
“It not just teaching people to fish, but it is making a fisherman and then we all catch more fish together,” says Min. “With corporate social responsibility, you just give away the fish.”
In just one year since launching the CSV program, CJ has already seen a tangible impact on its bottom line, she says. A partnership with small and medium sized food businesses, for example, has increased CJ’s product offerings while supporting local farmers and creating new job opportunities. CJ is also working on rural development in Vietnam where it sources many agricultural products like chili peppers. By providing communities with more advanced farming technologies as well as building schools and proper bathrooms, Min forecasts that local farmers will be roughly 200% more productive next year.
CJ is also working internally to combat Korea’s notoriously unsustainable work culture for women. If a woman leaves her job for more than year to start a family or any other reason, many Korean corporations will not allow her to even take the entrance exam to get back into the workforce. As a result, Korea’s labor force participation rate for women is much lower than similar-sized economies. To tackle this problem, CJ created a “returnship” program targeted at women who have been out of work for two or more years. The program includes flexible hours, mentoring and special training from managers.
Min acknowledges that CJ and her peer conglomerates have a long way to go to match CSV effort she has seen outside of Korea. The Columbia Business School graduate recalls going to leadership conferences in the mid-2000s and being impressed by initiatives by Pfizer PFE , Johnson & Johnson JNJ and others to ensure the surrounding communities and employees benefits from the companies’ success. As South Korea play catch up, Min says it’s important that corporations keep in mind the importance of balance.
“It used to be that I would proudly say that I never left the office before 10:30 at night. But we don’t have to work our employees that way anymore.” Min says with a laugh. “It is a constant balance and if you want to have common shared value, you cannot do it alone. You have to involve the community and your employees.”