# CASE STUDYSocial Progress Credits Rewarding social enterprises in South Korea for social impact performance ## About Social Progress Credits (SPC) SPC, introduced by SK Group Chairman Tae-won Chey at the World Economic Forum Annual Meeting 2013, addresses the question, “How can companies sustain their motivation to create social value?”. The initiative centers on incentivizing social performance through monetary rewards, leveraging market mechanisms. By establishing a market where social performance credits can be traded, SPC encourages companies to innovate business models that drive economic and social value, fostering greater corporate engagement in social innovation while enriching markets, enhancing quality of life, and boosting corporate value. [Learn more about SPC](https://www.cses.re.kr/resources/eng/pdf/What%20is%20SPC.pdf) ## How SPC works Since 2015, SK Group and CSES have jointly operated the SPC program for Korean social enterprises, structured into three phases: recruitment, measurement, and reward. Recruitment begins every June and participating social enterprises are selected based on mission alignment and capacity. From October to December, social performance indicators and formulas are determined collaboratively with participants. The following February to April, social performance for the prior year is measured using a standardized system, tailored to each enterprise. Finally, in May and June, cash incentives—averaging 25% of measured social performance—are distributed, with variations based on years of participation. ## Timeline *Chronological events and milestones* ## Methodology The SPC measurement methodology converts the social performance of social enterprises into monetary terms to incorporate social value into the price mechanism in the social market. It applies the Social Return on Investment (SROI) methodology to convert social performance into monetary value. These methods rely on conservative, market-based benchmarks to ensure accuracy and comparability, applying principles like stakeholder accounting and reference market pricing. Adjustments are made to tailor measurements to the unique context of each enterprise. [Download the Measurement Manual](https://www.cses.re.kr/files/liveFile/spc-file/2024/05/20240523140620Wuq7.pdf) ## Catalog *Browse catalog items* ## Results to date Since the launch of the SPC in 2015, the participating companies have created a cumulative total of 353 million USD in social performance and cumulative total of 51 million USD in cash incentives have been paid in proportion to their social performance. [Access the SPC Database](https://svhub.co.kr/eng/intro) ## Lessons Learned [Access the SSIR Case Study](https://ssir.org/articles/entry/korea-pay-for-success) ### Impact measurement is crucial but complex SPC demonstrated the importance of quantifying social performance in monetary terms. However, measurement challenges exist, especially for qualitative outcomes, which are harder to monetize accurately. ### Focus on encouraging systemic change By rewarding social enterprises for measurable social outcomes, SPC fostered a virtuous cycle of innovation, performance improvement, and increased corporate engagement in solving social problems. ### Reducing information asymmetry The SPC helped bridge the gap between social enterprises and investors by offering data-driven evidence of performance, thereby improving transparency and investment decisions between the parties. ### Building capacity for better impact The participation in Social Progress Credits improved the understanding of social enterprises about their social value, enabling them to make better strategic decisions and resource management. ### Providing flexible funding Unlike traditional grants, SPC provide unrestricted incentives, allowing enterprises to allocate funds as needed, such as for R&D, salaries, or expansions. ### Ecosystem development SPCs promoted a culture of measurement and accountability, influencing government agencies and private entities to adopt similar performance-based approaches. ### Challenges with monetization The process of assigning monetary value to social outcomes revealed issues like the overemphasis on quantifiable outcomes while neglecting qualitative impacts. ## Featured Content ### Public sector collaboration and institutionalization The SK Group's Center for Social Value Enhancement Studies (CSES) has been striving to institutionalize outcome-based funding for social entrepreneurs, leveraging evidence and data derived from SPC operations. To date, CSES has collaborated with six local governments in South Korea, including Seoul, to implement support programs for social enterprises based on the SPC model.In June 2024, Jeju-province became the first among them to institutionalize the SPC model as a local ordinance. Through such efforts, the institutional foundation for a model that financially rewards social value has been significantly strengthened. ## Partners This case study has been prepared by the SK Group's Center for Value Enhancements Studies. *Partner organizations and sponsors* This website is published by the Schwab Foundation for Social Entrepreneurship in partnership with the World Economic Forum as a contribution to a project or initiative. The data, insights, findings, interpretations, and conclusions expressed herein have been provided by one of the participating organizations of the project and may not construe an endorsement of the project or necessarily represent the views of the Schwab Foundation or the World Economic Forum, nor the entirety of its Members, Partners or other stakeholders.