SK Chemicals Publishes '2023 TCFD Report'... Response Strategies for Climate Change Scenarios

Cover of SK Chemicals Climate Change Response Report

Amid the global strengthening of financial disclosure requirements related to sustainability, SK Chemicals announced on the 1st that it has published the '2023 TCFD Report,' which includes response strategies for climate change scenarios.

This report supplements climate change response strategies in four areas?governance, strategy, risk management, and metrics and targets?based on the TCFD (Task Force on Climate-related Financial Disclosures) framework to comply with the recently finalized climate disclosure standard 'IFRS S2' by the International Sustainability Standards Board (ISSB). It also provides detailed scenario-based financial impact analyses.

According to the report, SK Chemicals established a 'Risk Management Committee' last year and established a board-centered governance structure for climate change response. Through the Risk Management Committee, the company reviews important ESG matters across management, including climate change response, identifies risks linked to business operations, and develops strategies for each factor, striving for systematic risk management.

Additionally, to respond to climate change risks, SK Chemicals has concretized three strategies: 'achieving net zero across all business sites,' 'building a circular economy,' and 'shifting the portfolio to green materials business.'

To achieve net zero, SK Chemicals plans to reduce 100% (including offsets) of direct and indirect greenhouse gas emissions (Scope 1 & 2) generated at business sites by 2040 through production process efficiency improvements, the spread of renewable energy across all business sites, and switching to eco-friendly fuels such as LNG and hydrogen.

Alongside this, the report notably specifies the greenhouse gas reduction targets and methods for Scope 3 (greenhouse gas emissions across the entire value chain), which are difficult to measure, continuing from last year.

SK Chemicals aims to reduce greenhouse gas emissions (Scope 3) generated in the value chain by up to 96% by 2050 compared to the 2021 greenhouse gas emission forecast (BAU, Business as Usual) through the 'circular economy ecosystem construction' based on a circular recycling business system. In line with the circular recycling business, the company plans to expand the use of recycled raw materials and increase the recycling rate of discarded plastics to reduce greenhouse gases.

In particular, the financial impact analysis based on climate change scenarios disclosed in this report is expected to attract the attention of many domestic and international investors.

SK Chemicals analyzed and disclosed carbon cost risks based on three scenarios of global temperature rise?1.5℃, below 2℃, and above 3℃?in line with the Paris Agreement. All three scenarios predicted that investments to achieve net zero by 2040 would have a financially positive impact in the long term. Additionally, the report assessed potential risks and analyzed financial impacts of physical losses caused by climate change under four different scenarios.

Jaehyun Ahn, CEO of SK Chemicals, emphasized, "We are continuously pursuing efforts and investments for 'Eco Transition' to take responsibility for the climate crisis and resolve it," adding, "We plan to actively communicate with stakeholders regarding the implementation performance of climate response strategy tasks going forward."

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