SK Innovation "‘Donghaeng’ Achievements Growing ESG Capabilities of Partners"

Customized Support Including Practical Consulting
"Realizing a Sustainable Supply Chain Ecosystem"

At the '2022 ESG Excellent Partner Certification' event held last July at the SK Seorin Building in Jongno-gu, Seoul, Kim Yang-seop, Head of Finance at SK Innovation (holding the sign on the right in the center), along with SK Innovation and partner company representatives, are taking a commemorative photo pledging to strengthen ESG capabilities. Photo by SK Innovation

[Asia Economy Reporter Choi Seoyoon] SK Innovation announced on the 26th that its efforts to strengthen the ESG (Environmental, Social, and Governance) capabilities of its partners, focusing on area-specific evaluations and customized consulting, are yielding results both internally and externally. This is based on the judgment that the ESG capabilities of partners are crucial for achieving net zero by 2050 and all-time net zero by 2062. The company plans to continue support across the entire supply chain, including purchasing policies, systems, and frameworks.

SK Innovation conducts an annual ‘ESG Risk Assessment’ targeting its partners. The process not only identifies ESG vulnerabilities of partners but also uncovers the causes of weaknesses for each company and works on improvements. SK Innovation covers all costs to promote voluntary enhancement of ESG capabilities among its partners.

Last year, SK Innovation evaluated 204 key partners and reviewed the results with 111 companies that volunteered, providing suggestions for improvements. Among these, 52 companies voluntarily participated in ‘intensive consulting’ to improve their weak ESG areas. The evaluation results are rated on an absolute scale from Grade 1 to Grade 7, categorized as Excellent (Grades 1?2), Average (Grades 3?4), and Needs Improvement (Grades 5?7).

In this year’s evaluation, among the 52 partners who underwent intensive consulting last year, the proportion rated as Excellent increased by 20 percentage points (p) to 39%, confirming improvements in partners’ ESG capabilities through the indicators. The proportion of companies needing improvement decreased from 10% to 2%.

Partner A, specializing in technical testing, inspection, and analysis, improved from an Average rating in 2021 to Excellent this year. Before consulting, the company lacked the capability to measure greenhouse gas emissions levels, but after consulting, it not only identified greenhouse gas emissions but also established a system to independently calculate and manage greenhouse gas quantities.

Partner B, in the transportation sector, was rated Average in the Social (S) aspect of ESG in 2021 due to weaknesses in legal standards and hazard identification for workplace safety. However, through consulting on site safety inspections, operational systems, and management plans, the company developed detailed manuals for fire prevention and collision prevention during loading and unloading operations, achieving an Excellent rating in this area this year.

Thanks to SK Innovation’s ESG win-win efforts, SK Geocentric has been recognized for significantly contributing to strengthening partners’ technological competitiveness and improving wages and welfare, receiving the ‘Best’ grade for 10 consecutive years in the ‘Win-Win Growth Index Evaluation’ announced annually by the Win-Win Growth Committee. SK Innovation is actively encouraging partners to strengthen their ESG capabilities by establishing the ‘ESG Excellent Partner Certification System’ this year and holding certification and award events for 25 partners on July 25.

Kim Yangseop, Chief Financial Officer of SK Innovation, stated, “Active interest and cooperation from our partners are necessary to realize SK Innovation’s commitment to ESG management. We will demonstrate responsible corporate behavior to all stakeholders, including partners, and pursue a sustainable supply chain ecosystem.”

This content was produced with the assistance of AI translation services.