Last Friday afternoon, October 4, our World Reporters team visited Impact Finance Korea (IFK)’s headquarters in Myeongdong and had a cozy meeting with the organization’s CEO, Mr Chongsoo Lee. Two hours of talking might seem short but it was enough for us to learn many valuable lessons from this amazing CEO.
Because finance is such a difficult and specific field, before discussing the work of IFK in details, Mr Chongsoo Lee gave us a short introduction about Korea's current financial situation as well as the story behind the establishment of the company. From such a low starting point when almost the whole country was destroyed by the war, Korea has made an incredible progress with remarkable achievements, becoming the world’s 13th largest economy. However, this advancement has come with the cost of various social issues that are often faced by other developed counties worldwide as well, such as unemployment, aging, environmental pollution and even poverty. In relation to this, in 2015 all of the United Nations member states adopted the Sustainable Development Goals (SDGs) in order to end poverty, protect the planet and ensure that everyone in the world enjoys peace and prosperity. Bearing this in mind, Mr Lee focused on the fact that disparities and socio-economic malaise are threatening the sustainable future of Korea's society. He presented statistics, according to which the largest part of Korea's national budget is being used for social welfare and employment purposes, emphasizing that in 2018 their share was even higher than the growth rate of the government expenses in total. Those problems keep increasing because there is a limitation to both the approach and the grants of the government banks, where the traditional welfare system seems to be insufficient.
In that situation, the role of the private sector funds should be emphasized and, as a result, social investment can be considered the new solution for social imbalances. Financing through investment, loans and other consolidated services is a long-term, fundamental solution which presents a virtuous circle of capital. Following this logic, Mr Chongsoo Lee has found the key to handling some of the nation's current social issues to be in the balance of “conventional welfare grants” and “social investment”. Therefore, impact finance emerges with the aim of serving the real economy and enabling new business models to meet the demands of both social values and financial needs. Unlike the past, when the government was the only one with the right to decide on the distribution of funds and private sectors just followed its line, impact finances have currently formed an alternative market in order to raise new funds, provide funding for the economically excluded as well as finance social enterprises and projects.
In general terms, impact finance is the combination of both social and financial values which contributes to a sustainable society and tackles social issues. Mr Lee showed us comprehensible examples of impact finance all over the world and the way it works economically. Besides that, he briefly introduced related projects he had taken part in or conducted, such as Happy Bridge, SOCAR, Energy Peace, COOP Taxi, Housing, etc. Moreover, Mr Chongsoo Lee worked on a Social Finance Network (SFN) which includes 3 working groups: Social Impact Evaluation, Impact Investing and Social Finance Research. It was founded in response to the need to allocate necessary capital to social enterprises and agents in Korea's social finance market. Its participants are organizations from the field of social finances, researchers, agencies and other organizations that support the social enterprise ecosystem.
After the explanation about impact finance, Mr Chongsoo Lee shared with us his career story which we found interesting and inspiring. He had a really hard time looking for a job. Because of personal reasons, many companies rejected his application and that is how he decided to join the world of banking where no background check was required. He gained 13 years of experience working for a commercial bank with his main job being establishing bank branches in Hong Kong, Indonesia, Cambodia. As you probably know, the situation of Asian countries in 1997 was at its worst because of the financial crisis that had struck the region, and Korea was not an exception. Mr Lee came back to Korea in 1999 and he found it necessary to do something for his country. That was the main reason why he established the Social Solidarity Bank, the first microcredit bank in Korea. However, he did not stop there and 10 years later he established two more organizations, namely Korea Social Investment and Korea Social Investment Foundation, which provide finance support for social enterprises and more than 140 social projects such as housing, work-training etc. Finally, not long ago he founded the IFK company and has been working there as its CEO ever since. He jokingly exclaimed: “My hobby is establishing banks!”.
If you are interested to learn more about Mr Lee and his views, please read our next article to take a closer look on his career and social values through the short interview we have conducted.
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