SK ecoengineering

SK ecoengineering prevents risks in the supply chain and supports the sustainable management of our suppliers in accordance with the Supplier Code of Conduct set forth by our parent company, SK ecoplant, for the purpose of establishing a supply chain management system. The Supplier Code of Conduct was developed in line with global guidelines such as the Universal Declaration of Human Rights, the 10 Principles of the UN Global Compact, and the International Labor Organization's Declaration on Fundamental Principles and Rights at Work. Detailed guidelines are provided in areas such as human rights, labor, safety, health, environment, business ethics, and legal raw material acquisition to help suppliers build a sustainable management framework. From 2022, we have created and implemented a compliance agreement system for business partners upon registration¹⁾. We also run the Business Partner ESG Improvement Support Program to help enhance the ESG management level of our business partners who face challenges such as cost burden and lack of information and knowledge in the process of transitioning to ESG management. We subsidize the cost of the assessment to encourage the active participation of business partners in the program, and provide incentives based on the assessment rating. The support program conducts ESG assessments for key partners and newly registered partners, and as a policy, we track the improvement status every year for partners whose ESG management level is not up to par. Even after the assessment, we monitor the progress of the improvement tasks identified for each partner, and support the overall process, including ESG policy, organization, and training operations, through the Value-up Program.

1) Members of ECO Partners, SK ecoplant's consortium of trusted suppliers, are prioritized, and we select business partners based on a comprehensive review of their trade volume with the company, core construction processes, and extent of cooperation, and recommend ESG assessments on an annual basis.

From 2023, we will regularly report the results of supply chain assessments, the risk levels in the supply chain, and follow-up monitoring results to the Board of Directors so as to ensure that issues around supply chain sustainability are reviewed and managed together with our parent company, SK ecoplant, at the leadership level. In 2023, we plan to proceed with ESG evaluations on 200 business partners (62% of the key partners) based on evaluation elements within the area of environmental, social, and governance, and we are planning to increase the number of partners subject to intensive management to 30 companies (15%). In addition, we are planning to gradually expand the voluntary participation rate of business partners by expanding the target of support for ESG evaluations to 70% in 2024 and 80% in 2025 of all key partners.

In alignment with our parent company, we advise key business partners to undergo ESG assessment once a year, and the improvements made by the partners subject to intensive management is tracked every year as a general rule. In 2022, we conducted ESG assessment for 157 business partners (48% of key partners) using criteria in each area of ESG, resulting in 18 (11%) business partners being assessed for intensive management. Through the Value-up Program, we support the process of improvement measures on the overall operation of ESG policy, organization, and training. Specifically, we produce the ESG information newsletter “Eco ESG Bridge” every quarter to deliver ESG information and share it with our business partners. Furthermore, we hold online briefings for business partners, provide “One Point Coaching” and on-site guidance sessions to pinpoint and address weak points, considering the different levels of different partners. We also operate the ESG Help Desk for continuous support.