The post Our ESG Progress, Visualized: Achieving Stakeholder Satisfaction Through Corporate Governance first appeared on SK hynix Newsroom.

• Indirect contribution to economy of 7.7853 trillion won, environmental performance of business activity of -1.0423 trillion won, social performance of business activity of 841.5 billion won
• Indirect contribution to economy decreased by industry downturn, social performance increased by enhanced company culture
• First SK affiliate to conduct partner SV measurement, created 1.4698 trillion won of social value from 13 partners
• “Devote to enhance social value, ESG management capabilities in the semiconductor ecosystem”

Seoul, June 12, 2023

SK hynix Inc. (or “the company”, www.skhynix.com) today announced that it generated 7.5845 trillion won in social value last year.

SK hynix’s generation decreased by 20% in 2022 from 9.4173 trillion won recorded in 2021. By category, indirect contribution to economy totaled 7.7853 trillion won, while environmental performance of business activity recorded a negative 1.0423 trillion won and social performance of business activity reached 841.5 billion won.

Indirect contribution to economy decreased 20% from a year ago due to the decrease in tax payments by semiconductor industry downturn from last year. However, SK hynix devoted 37% of SK group’s total indirect contribution to economy which accounts approximately 20.8000 trillion won.

Social performance of business activity increased 29% from a year ago due to the improvement in ‘life quality of employees’ and the expansion of support for partner companies. Last year, SK hynix implemented various benefits such as ▲Happy Friday ▲Increase in parental leave ▲Family friendly vacation system to balance work and life of employees.

In addition, the company’s efforts to vitalize the domestic semiconductor ecosystem by fostering ‘technological innovative companies’ every year and strengthening technological cooperation to localize material and equipment contributed to social performance of business activity.

In the area of environment, however, negative impact increased by 9%. “As semiconductor production increased last year with company’s all-time high annual revenue, resource consumption and greenhouse gas emission naturally increased. But, such negative result was somewhat offset by development of low-power products, adoption of greenhouse gas reduction facilities and renewable energy migration including Green Premium System,” the company said.

Meanwhile, SK hynix expanded the measurement scope of social value to supply chain for the first among SK group affiliates. This is due to company’s judgement that creating SV and enhancing ESG management capabilities in the entire ecosystem beyond the company was essential to fulfill various ESG reinforcement demands from domestic and global stakeholders.

“As a result of consulting with 13 partners* in various industries, including material, equipment, logistics and environmental service, a total of 1.4698 trillion won social value was created in 2022. With this year’s evaluation, it is meaningful that partners have set up self-sustaining management system for SV and ESG data,” the company said.

*Included partners: DAEDUCK ELECTRONICS Co., Ltd /Dong Woo Fine-Chem Co., Ltd./MiCoCeramics Ltd./Veolia Industrial Development Korea/SIMMTECH Co., Ltd./WONIK Materials Co.,Ltd./WONIK HOLDINGS CO.,LTD./Eugene Technology Co.,Ltd./ KCTECH CO., LTD/ KoMiCo Ltd./ Techwing, Inc./ PNS Logis Co.,Ltd./ Hana Micron INC.

The partners above agreed that they would continue to put efforts onward to create more social values by upgrading the management system.

Kim Youn-wook, Vice President for Corporate Sustainability Management at SK hynix, said, “the company will continue to work together with various stakeholders, including its partners, to have positive impact in the semiconductor ecosystem and the society.”

About SK hynix Inc.

SK hynix Inc., headquartered in Korea, is the world’s top tier semiconductor supplier offering Dynamic Random Access Memory chips (“DRAM”), flash memory chips (“NAND flash”) and CMOS Image Sensors (“CIS”) for a wide range of distinguished customers globally. The Company’s shares are traded on the Korea Exchange, and the Global Depository shares are listed on the Luxembourg Stock Exchange. Further information about SK hynix is available at www.skhynix.com, news.skhynix.com.

Media Contact

SK hynix Inc.
Global Public Relations

Technical Leader
Minseok Jang
E-Mail: global_newsroom@skhynix.com

Technical Leader
Kanga Kong
E-Mail: global_newsroom@skhynix.com

Technical Leader
Joori Roh
E-Mail: global_newsroom@skhynix.com

The post SK hynix Generates 7.6T Won in Social Value in 2022 first appeared on SK hynix Newsroom.

Robust environmental, social, and corporate governance (ESG) policies are quickly becoming corporate non-negotiables, and SK hynix is ensuring that its efforts exceed expectations.

The company’s ESG approach is underscored by its Double Bottom Line philosophy, which places equal importance on the economic and social value of business decisions. While economic value measures and manages financial performance, social value aims to quantify how the activities contribute to resolving social issues.

On the environmental side, SK hynix became the first memory chip manufacturer and one of the first South Korean companies to join the global RE100 initiative in November 2020. Under this initiative, the company aims to switch all its power sources to renewable energy and achieve net zero emissions by 2050.  The company’s Carbon Management Committee delivers quarterly reports to the ESG Management Committee on various factors associated with SK hynix’s efforts on this front.

Additionally, SK hynix established its “Memory ForEST” (Memory for Environment, Society, and Tomorrow) roadmap, which involves designing more energy-efficient chips and minimizing the environmental impact of manufacturing processes.

Another important environmental focus for SK hynix is comprehensively managing water supply from the manufacturing process to wastewater treatment. The company’s Water Conservation and Wastewater Reduction task force has helped the company reuse 40.5 million cubic meters in wastewater discharge and conserve 42.8 million cubic meters of water as of 2020. In 2018, SK hynix also collaborated with partner companies to develop a water-free scrubber, which treats process gas without using water. After introducing the device at its processing plants, the company saved an average of 1,744 tons of water per day between 2018 and 2020.

As a socially conscious company, SK hynix is committed to closely monitor its supply chain and encourage its suppliers to improve their ESG management through a strict evaluation process.  For example, SK hynix procures the minerals used in its products via methods that meet global human rights standards. It is a member of The Responsible Minerals Initiative (RMI), which enhances the collection, management, and disclosure of information such as conflict minerals’ origin and usage within the global supply chain. To ensure that the minerals are sourced in an environmentally friendly and socially responsible manner, SK hynix performs checks on whether the raw materials that it uses are certified and verifies the country of origin.

Governance-wise, SK hynix’s Sustainability Committee and ESG Management Committee play an important role in governing all ESG-related corporate activities.  The ESG Management Committee, at the management level, reports to the Sustainability Committee. The latter then decides on the reported agenda at the board level. Both committees’ tasks involve managing progress towards the company’s sustainability goals, and the establishment of this governance structure testifies to SK hynix’s belief in and commitment to ESG.

All these steps are helping to build a firm foundation for SK hynix’s ESG path. Not content with resting on its laurels, the company will continue to pave a more sustainable way forward for both the present generation and generations to come.

The post How SK hynix Connects the E-S-G Dots first appeared on SK hynix Newsroom.

SK hynix Inc. (or “the company”, www.skhynix.com) today announced that it generated 9.4173 trillion won in social value last year. Based on the calculations of SK Group’s social-value tracking methods, SK hynix’s generation surged by 93% in 2021 from 4.8887 trillion won recorded in 2020. The company’s performance represents more than half of 18.4 trillion won that the entire SK Group generated in social value last year.

By category, indirect contribution to economy such as tax payments, employment, and dividends totaled 9.7201 trillion won, while environmental performance of business activity recorded a negative 952.7 billion won and social performance of business activity reached 649.9 billion won.

In particular, indirect contribution to economy increased by 81%, or 4.3465 trillion won, from a year ago, helped by the company’s all-time high revenues in 2021. Social performance of business activity also rose by 44%, or 198.5 billion won, on the back of efforts to vitalize the semiconductor ecosystem and expanded philanthropic contributions for the underprivileged. But with increased greenhouse gas emissions as a result of more production to meet stronger demand for semiconductor globally, the negative impact grew by 2%, or 15 billion won, in the area of the environmental performance of business activity.

Indirect contribution to economy increased across all categories of tax payments, employment, and dividends. Tax payments soared 160%, or 2.3633 trillion won, on year as the company reported stronger financial results. A rise in the number of employees and bigger compensation package also led to an increase of 56%, or 1.7245 trillion won, in the employment category. Dividends rose by 32%, or 258.6 billion won, as the company implemented a more aggressive shareholder return policy.

In the area of environment, the company reported a negative reading for a second straight year as more resources were consumed to produce more semiconductors, also resulting in a gain in greenhouse gas emission. More precisely, negative cost increased by 3%, or 24.2 billion won, from a year ago, in the area of resource consumption/environmental pollution. Such negative result was somewhat offset by an increase of 128%, or 9.1 billion won, in the product/services segment with development of low-power products.

“SK hynix has been making efforts in various aspects, joining the Green Premium System, trying to reduce greenhouse gas emissions and expanding reuse of wastewater in order to lessen the environmental impact,” the company said. “But whatever the reasons are, we are still responsible for the impact we had on the environment. We will continue to aim for an improvement in the environment area and make endless efforts.”

*Green Premium System: A pricing system whereby a consumer of electricity pays an additional premium on existing electricity costs in order to use power from renewable energy sources

In the category of the social performance of business activity, shared growth showed the most remarkable improvement. SK hynix has for years continued its efforts to vitalize the semiconductor ecosystem by consistently providing technological support and training opportunities to its business partners. SK hynix has also contributed to localization of materials, parts, and equipment through joint technological development with its partners. As a result, shared growth performance rose by 56%, or 180.6 billion won, from a year ago.

Elsewhere, the company saw a growth of 9%, or 9.7 billion won, in the social contribution area as it continued relevant activities in a socially distanced manner during the pandemic. The performance for “life-quality improvement for the underprivileged” increased by 45%, or 8.2 billion won, thanks to its continued support for social enterprises.

Kim Youn-wook, Vice President for Corporate Sustainability Management, said that SK hynix has been communicating with relevant stakeholders transparently, making public its social value performance for the past 4 years since 2019. “We will speed up implementation of the SV2030, our mid- to long-term initiative for social-value generation, and advance our ESG management commitment further with an aim to contribute to the mankind and the community.”

*Specific examples of social value generation and detailed calculation methods can be found from the SK hynix newsroom.

About SK hynix Inc.

SK hynix Inc., headquartered in Korea, is the world’s top tier semiconductor supplier offering Dynamic Random Access Memory chips (“DRAM”), flash memory chips (“NAND flash”) and CMOS Image Sensors (“CIS”) for a wide range of distinguished customers globally. The Company’s shares are traded on the Korea Exchange, and the Global Depository shares are listed on the Luxembourg Stock Exchange. Further information about SK hynix is available at www.skhynix.com, news.skhynix.com.

Media Contact

SK hynix Inc.

Global Public Relations

Technical Leader

Kanga Kong

E-Mail: global_newsroom@skhynix.com

Technical Leader

Jaehwan Kevin Kim

E-Mail: global_newsroom@skhynix.com

The post SK hynix Generates 9.4T Won in Social Value in 2021 first appeared on SK hynix Newsroom.

Established in 2012, SK hynix celebrated its 10th anniversary this year. Since day one, SK hynix has been proactively pursuing solutions to social problems by practicing SK Group’s double-bottom-line management philosophy. The company has created social value by conducting social-contribution activities rooted in information and communication technology (ICT).

SK hynix has made efforts to realize more meaningful corporate social responsibility (CSR) programming by verifying the efficiency and validity of its philanthropic activities. As a result, the communities surrounding SK hynix’s global production facilities see customized social relief strategies implemented to meet their unique needs. SK hynix plans to fulfill its responsibilities by establishing a social safety net and growing alongside each community by continuously promoting CSR initiatives that provide practical help to each region.

Make DRAM, Make DREAM: The Wuxi Subsidiary Delivers Hope to its Community

The Wuxi subsidiary in China is an essential production hub that drives continued growth for SK hynix by operating a 12-inch DRAM FAB. Since its establishment in 2005, the Wuxi subsidiary has created approximately 12,000 jobs.

▲ View of SK hynix’s Wuxi subsidiary

Under the theme of “Make DRAM, Make Dream,” the Wuxi subsidiary has developed various social programs that target environmental, poverty, and safety-related concerns in the Wuxi region. The Wuxi subsidiary’s CSR activities came about in three distinct stages. First, in 2007, the company carried out simple volunteer activities such as picking up trash and focused on sponsorship and emergency support. In 2016, SK hynix began to carry out independent projects in collaboration with the local government. At the same time, the company started raising funds through the Happiness Public Interest Fund for the first time as a foreign-invested company. The fund helps to develop and promote SK hynix’s local social contribution projects. Finally, from 2018 to now, the Wuxi subsidiary has been expanding the scope of its activities, developing additional social value beyond relief for the surrounding community.

The Wuxi subsidiary’s Loving Heart program has provided support for vulnerable communities since 2007. Built for children with physical disabilities in mind, the program features activities that include sporting events, mural painting, do-it-yourself crafts, and visits to cultural experience centers. A total of 4,800 Wuxi subsidiary members have volunteered since the campaign began, supporting 18,500 participants. In addition, in 2008, the Happiness Sharing Fund was established to provide monetary relief for members and their families’ medical expenses following severe illness and accidents. The Happiness Sharing Fund has provided financial support for 375 individuals, with 80% of the Wuxi subsidiary members currently participating voluntarily in fundraising efforts. In addition, local environmental protection activities have also been carried out by volunteers as a part of the Happy Together initiative.

Since 2016, the scope of the Wuxi subsidiary’s CSR efforts has expanded to include independent programs built in collaboration with local governments. During this period, efforts focused on localizing programming by uncovering community-based social concerns and creating unique solutions. The company’s Philanthropic Support Insurance began providing aid to an average of 6,000 people per year who struggle to obtain general insurance and manage medical expenses. Since 2017, the subsidiary has operated the Heartful Charity project to provide educational opportunities to 4,000 teenagers a year and funded cataract surgery for the elderly through its SK Light of Hope project. Finally, the company operates a mobile clinic called the Happiness Bus. Built using an ICT-based medical service system, the mobile clinic administers free medical examinations to vulnerable individuals.

▲ Image 1-2: SK Light of Hope project offering support for the elderly with cataract surgery
Image 3-4: Happiness Bus mobile clinic providing free medical examinations

The Wuxi subsidiary also contributed significantly to improving environmental management capabilities and perceptions in the region. Since 2018, it has provided consultation to other companies through the Corporate Environmental Sharing Infrastructure program. It also established a social enterprise to provide quality jobs to individuals who struggle to qualify for traditional employment opportunities, employing about 200 people as of 2021.

As traffic accidents frequently occur in the Wuxi region, the subsidiary created the Happy Umbrella campaign in 2018. Transparent umbrellas distributed to elementary school students help prevent accidents, and at the same time, the program raises awareness about safety, receiving an overwhelmingly positive response from the local community. In 2019, the Wuxi subsidiary launched the Happiness Village project to ease medical expenses in three disadvantaged villages and the Happy Sharing initiative to make semiconductor and career education accessible to local students.

▲ Image1: SK hynix Wuxi subsidiary’s Corporate Environmental Sharing Infrastructure program
Image2: Children taking part in the Happy Umbrella campaign to raise traffic safety awareness

The Wuxi subsidiary launched its Happiness Hearts campaign in 2020, installing Automated External Defibrillators (AED) and providing safety education in schools to prevent accidents and increase safety awareness. The introduction of this campaign led to the SKHidea social contribution idea competition held in 2020. Through this competition, and alongside the Chinese government, SK hynix discovers ideas for solving major social problems in China and supports the commercialization process. Last year, the SK hynix Foreign Language School was established to contribute to expanding the local educational infrastructure. Through SKHI Change Makers, the subsidiary is taking the lead in understanding social problems from the perspective of teenagers, creating social values together, and fostering future talent.

▲ Image1: Event celebrating the SKHidea competition
Image2-4: View of the SK hynix Foreign Language School campus

The Wuxi subsidiary has been carrying out CSR initiatives for many years, delivering happiness to the local community. The total number of beneficiaries reached approximately 40,000 in 2021.

As a result, the Wuxi subsidiary was selected as the “Best Korean CSR Model Company in China” by the local community for three consecutive years from 2019 to 2021, recognizing the sincerity in its continuous social contributions. In addition, SK hynix received a presidential citation in the Global Social Contribution category of Korea’s Beloved Corporate Government Awards in 2019 and was selected as the “Most Influential Charity” in the Charity Awards hosted by Jiangsu Province in 2020. In the future, the Wuxi subsidiary aims to continue to carry out various activities and establish a stronger local social safety net.

▲Image1: SK hynix honored at Korea’s Beloved Corporate Government Awards
Image2: Participants at the Charity Awards hosted by Jiangsu Province

Make People the Root of Everything, Create the Best, and Share Happiness: The Chongqing Subsidiary’s Journey

SK hynix’s NAND flash backend production base is located in Chongqing, China, and as such, the subsidiary plays an important role in continuing SK hynix’s growth in the global NAND market. Established in 2014, the Chongqing subsidiary has steadily contributed to revitalizing the local economy and developing local industry.

▲Exterior view of SK hynix’s Chongqing subsidiary

The Chongqing subsidiary has also taken initiative in tackling local social challenges. With the motto of “Make People the Root of Everything, Create the Best, and Share Happiness,” the subsidiary carries out various CSR initiatives for a broad range of people. The subsidiary’s efforts have been focused on preserving the environment, volunteering at social facilities, and improving living conditions for the vulnerable.

The Chongqing subsidiary has been spreading its values by regularly supporting students with scholarships, donating goods to regional elementary schools, and holding annual events for Children’s Day since 2015. The company also hosts Loving Heart – Tree Planting events in an effort to preserve local greenery and biodiversity. About 400 trees in total have been planted in the Gaoxin District, Chongqing City.

▲ SK hynix Chongqing subsidiary hosting the Loving Heart – Tree Planting program

SK hynix also repairs the lighting, electric circuits, and ceilings in local schools through a program launched in 2016 designed to provide assistance for the development of safe schools and housing. The company has made additional efforts to support the disadvantaged since 2018. It held a fundraising effort alongside the Chongqing Welfare Fund for the Disabled to receive aid through the program so far. Beginning in 2019, the company set up visits to welfare centers and senior citizens who lived alone, offering volunteer support and entertaining with performances.

▲ SK hynix Chongqing subsidiary helping provide safe schooling and housing support

Members of Chongqing subsidiary have worked together with the local community, not hesitating to offer volunteer support following the pandemic and natural disasters. Through the COVID-19 prevention support activities, 13,000 facemasks were donated to local daycare centers, kindergartens, and welfare centers. The Chongqing subsidiary also conducted consolation services for police officers, public transportation drivers, and medical staff in four hospitals. In 2020, when the large flood occurred in the region, additional consolation services following the disaster were conducted for relief workers such as firefighters. It was also the first year the subsidiary started to provide support for children living apart from their parents and help for underprivileged farming households.

▲Image1: SK hynix Chongqing subsidiary donating COVID-19 protective equipment
Image2: SK hynix Chongqing subsidiary helping local children in need

As a result of the Chongqing subsidiary’s CSR efforts in the community, the Chongqing Welfare Fund for the Disabled awarded SK hynix the “Loving Heart Company to Help the Challenged” title in 2019. It was also recognized as the “Loving Heart Company” by the Hongyingtao Voluntary Association(红樱桃义工协会) of Yuzhong District, Chongqing in 2020 and “Leading Company to Help the Disabled” by the Chongqing Welfare Fund for the Disabled in 2021.

▲SK hynix Chongqing subsidiary recognized by the Hongyingtao Voluntary Association of Yuzhong District

Additionally, the social contribution activities of SK hynix are not limited to Wuxi and Chongqing subsidiaries in China. The U.S. subsidiary donated about $200,000 to support and aid victims of COVID-19 pandemic in 2020. The company also helped the local community with various volunteer support such as sorting groceries with ‘Second Harvest,’ a food bank. About 100 colleagues gladly joined the volunteer work in spite of the pandemic to relieve the pain the community had suffered.

▲Volunteers lending a hand at the Second Harvest food bank

Connecting Humans and Technology Creates Happiness: Korean CSR Betters the Whole Community

SK hynix creates social value in multiple local communities by promoting growth together with the region and finding ways to make the world a brighter place for both contributors and beneficiaries.

▲Image1: View of SK hynix’s Icheon Campus
Image2: View of SK hynix’s Cheongju Campus

In Korea, CSR initiatives focus on three key areas: ICT-based social problem solving, future talent development, and voluntary participation of members.

In 2009, SK hynix initiated various CSR programs in Korea beginning with the launch of Happiness Sharing Volunteer group. In 2011, the company took a deeper look into the social challenges local communities were facing. Together with its members, the company created the Happiness Sharing Fund. Following a Matching Grant¹ method, donations were directing across various CSR initiatives. As of 2022, cumulative donations totaled KRW 27.5 billion. By utilizing the Fund, SK hynix runs a series of social contribution activities to solve social problems and nurture future talents. For instance, the Happy IT Zone project, launched in 2011, supports the remodeling of youth welfare facilities, adding ICT equipment to provide a more creative educational environment. Furthermore, the Happiness Lunch Box project provides side dishes for children and the elderly experiencing poverty.

Educational support for youths also continues. Underprivileged youngsters have a chance to learn music without financial burden through the Happiness Sharing Orchestra with Dreams project. Scholarships are also given out to underprivileged youths that excel and children and adolescents under institutional care through the Happiness Scholarship project.

▲Image1: 2022 Happiness Sharing Fund ceremony
Image2: Plaque commemorating 10-plus years of donations to the Happiness Sharing Fund

SK hynix’s CSR programming became even more diverse in 2016. It began with the launch of Happiness GPS, an initiative that prevents the disappearance of individuals with dementia and developmental disabilities. The company also provides support to at-risk youth through its coding and programming education initiative Heinstein. Finally, the Happy Moa project works to increase employment opportunities for individuals with developmental disabilities. The 100-Year Longevity of Veterans program provides cataract surgery and hearing aids free of charge to veterans.

▲Image1: Partnering to provide free GPS devices to track missing people
Image2: Fostering future talent through the Heinstein education initiative

Since 2017, SK hynix’s Happy School Uniform (RE:BUD) project has provided the elderly with financial opportunities by collecting and upcycling old school uniforms for resale. Its Silver Friend initiative, launched in 2018, works to reduce loneliness and inconveniences and ensure the safety of elderly individuals living alone. In addition, SK hynix members offer career guidance support to teenagers looking to enter science and engineering fields like the semiconductor industry through the Happy Dreaming program. Furthermore, the company supports social enterprises by donating used ICT devices, helping to create jobs for the disabled community, and extending the life of electronic devices.

▲Image1: Providing job opportunities for the disabled through the Happy Moa project
Image2: Creating jobs for the elderly through the Happy School Uniform (RE:BUD) project

SK hynix’s CSR initiatives continued to evolve throughout the years, inspiring both beneficiaries and SK hynix’s members. Its 2020 Walk ‘N Give initiative is a prime example. As part of this campaign, donations are made based on a target number of steps members achieve. Last year, participants at SK hynix Cheongju Campus topped a cumulative 500 million steps and donating KRW 30 million for reaching their goal. This year, the program is expanding its target to all the SK hynix members. Many SK hynix members participate enthusiastically in Walk N’ Give as it presents an opportunity to contribute to the community while creating healthy lifestyle habits.

Even in the face of the pandemic last year, SK hynix’s CSR activities found ways to adapt, continuing to deliver support to the community. For instance, the Happy Bread Bakery project provides vocational education to the disabled and encourages financial independence, and the Purme Social Farm initiative supports smart farm growth through the employment of people with developmental disabilities. In addition, projects such as the ICT Reception Room and the Silver Café helped establish ICT infrastructure for the elderly and create high-quality jobs for local seniors. Furthermore, the Metaverse Academy continued its work to foster future ICT talent through coding education using Metaverse.

▲Image1: Providing vocational education for the disabled through the Happy Bread Bakery project
Image2: MOU signing to build smart farms and create jobs for people with disabilities

Advancing ICT and Fostering Future Talent: The Future of SK hynix’s CSR Initiatives

Looking to the future, SK hynix has established a roadmap for long-term CSR initiatives through 2030. It plans to continue to use ICT to support the resolution of local community issues, build a better social safety net, and develop a platform that fosters global ICT talent. In addition, the company plans to continue its efforts to create a happier society through members’ volunteer work, creating a stronger foundation for sharing their talents.

This year, SK hynix plans to expand the use of ICT devices to solve social problems. It plans to increase the cumulative supply of Happy GPS devices to more than 28,000 and upgrade the support system through close cooperation with the Ministry of Health and Welfare and the National Police Agency. The distribution of Silver Friend, an AI technology-based care service for senior citizens living alone, is also set to expand with the goal of providing support to 5,000 older individuals.

In addition, SK hynix’s drive to systemize its Social Safety Net begins this year. The company is working to determine a clear target and scope of support and to specify the beneficiary review process so that help can be delivered promptly. SK hynix expects to increase the number of face-to-face activities in line with COVID-19 becoming endemic. In the area of fostering future talent, SK hynix plans to add metaverse and IoT subjects to the Heinstein education curriculum while continuing its Happy Dreaming activities by establishing an online/offline mentoring group which consists of college students.

That’s a quick look at the global CSR activities being undertaken at SK hynix locations around the world. SK hynix plans to continue various CSR activities and create happiness using ICT as a foundation to offer support for the underprivileged in our communities and grow together with our local areas.

¹Matching Grant: A donation model in which companies add the same value of monetary donations as members voluntarily contribute. In other words, it is a donation model with a “1 plus 1” concept in which members and companies join forces to donate.

The post SK hynix’s Global CSR Initiatives: Creating Happiness by Connecting People & Technology first appeared on SK hynix Newsroom.

SK hynix has already made various efforts to better communicate with the society and address social issues. And early this year, the company announced its ‘SV2030’ roadmap aimed at maximizing social value (SV). SK hynix is also accelerating its efforts on ESG management by establishing an ESG decision-making structure that enhances management’s responsibility and the Board of Directors’ supervision of environmental, social, and governance issues.

And recently, SK hynix has published its latest Sustainability Report that contains its ESG footprint of last year. Reflecting growing interest in ESG issues by stakeholders, SK hynix tried to make the report more accessible and informative. Let’s take a look at SK hynix 2021 Sustainability Report and find out more on what has been done in the past year and should be done in the months to come.

Sustainability Report, the Communication Channel between Company and Stakeholders

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ESG has now become a hot keyword among companies regardless of the industries they belong to.  It refers to a comprehensive consideration of non-financial factors such as environmental, social, and governance when conducting business activities. It is growing fast in accordance with interests in global issues such as COVID-19 or climate change. The COVID-19 pandemic was a good reminder for companies of the importance of crisis management capability, while responding to environmental changes that can no longer be put aside has become a top priority. As a result, a growing number of stakeholders are now turning to ESG indicators to understand and analyze how valuable a corporate is.

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The best communication channel that stakeholders can take advantage of to see if a company is faithfully implementing its ESG commitments would be the ‘sustainability report.’

With sustainability reports attracting more attention every year, an increasing number of companies are making public their sustainability reports annually. In January, the Financial Supervisory Service and the Financial Services Commission announced that all Kospi-listed companies with more than KRW 2 trillion in assets will be required to submit ESG filings starting from 2025. The authorities plan to expand the rule to all Kospi-listed companies from 2030.

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SK hynix has been publishing its Sustainability Report since 2008 to provide information on its economic, social, and environmental activities to stakeholders transparently.

2021 Sustainability Report

This year, SK hynix focused on its responses on major global issues and changes in business environment in its latest sustainability report. In the newly-added ‘Global Challenge’ section, SK hynix explained how it responded to the global issues like COVID-19 and climate change. ‘Our Business’ section demonstrates the company’s plan to carry out ESG commitments from a business perspective to eventually realize its Financial Story. ‘ESG Focus’ section is about SK hynix’s activities and achievements in key ESG issues, including green management, safety and health, and supply chain-related responsibility. Detailed information recommended by the Sustainability Accounting Standards Board (SASB)¹ Standards, which are sustainability-related accounting standards, and Task Force on Climate-related Financial Disclosures (TCFD), can be also found in the ‘Appendix.’

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Enhanced TCFD Disclosures: Report that Meets the Needs of External Stakeholders

There are more than 600 organizations that assess ESG management globally. SK hynix has enhanced sustainability report disclosures in accordance with SASB Standards and TCFD Recommendations, given their credibility, influence, and information usefulness in the capital market. It especially provided detailed information on how it’s tackling climate change in accordance with TCFD guideline throughout the entire report.

TCFD Recommendations are structured around Governance, Strategy, Risk Management, and Metrics and Targets. It recommends organizations identify climate-related risks and opportunities according to the frameworks for the four thematic areas and disclose their expected financial impact. Among the recommendations, SK hynix particularly focused on disclosures of ‘governance’ and ‘strategy’ areas.

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In the ‘Response to Climate Change’ of ‘Global Challenge’ section, the report touches heavily on SK hynix’s Governance System on Climate Change. In December 2020, SK hynix newly installed directly under the CEO a department dedicated to ESG Strategy to enable efficient response to key ESG issues at home and abroad. And since February, it has been running an ‘ESG Management Committee’ comprised of key executives including the CEO. The ESG Management Committee, a body that establishes the company-wide ESG strategy, shares in-depth discussions on mid-to-long-term ESG strategy direction and specific action plans such as ways to achieve net zero and water management strategy.

SK hynix also identified potential risks and opportunities of climate change to reflect them into its long-term strategy and carry into action, while analyzing their financial impact in the report.

Human Rights Report: Leading the Way

An increasing number of investors are joining a call from the organizations including the Corporate Human Rights Benchmark (CHRB) in demanding companies disclose human rights-related information. Also, with relevant legislations underway both at home and abroad, the need to preemptively disclose relevant information and remove legal risks is rising.

SK hynix has published the ‘Human Rights Report’ separate from the Sustainability Report for the first time this year to beef up disclosures on human rights management and responses by assessing potential impacts of the issues and providing the assessment results comprehensively. Previously, information on human rights was covered only as part of the sustainability reports.

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The Human Rights Report shows the company’s responses to potential human rights risks identified by the human rights impact assessment (HRIA) and the management status of each issue. SK hynix conducted HRIA on its local units, global subsidiaries, and joint ventures for manufacturing, and identified potential human rights issues.

When it comes to human rights issues, it is important to demonstrate what actions have been taken when an issue occurred and whether a company has in place the appropriate system for prevention. It is meaningful that SK hynix has published an independent Human Rights Report separate from the Sustainability Report as not many companies share information on human rights domestically.

Epilogue… Behind the Publication of the 2021 Sustainability Report

ESG Innovation Team Jungeun Yoon TL, Sunghyun Jeon TL, and Jongchan Kim TL

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Q. What are the key topics of SK hynix’s ESG management in 2021?

The most important change for the ESG management this year, no doubt, was establishment of the ‘ESG Management Committee.’ Building the right governance is the starting point for implementation of ESG management. We now have an established body where the top management, executives and the relevant teams can set up ESG strategy together and enhance execution.

Q. This year marks the 13th that SK hynix has published its Sustainability Report. Looking back on the past 14 years of sustainable management activities, what makes this year’s report special?

It would be the first time that we published the report solely based on the ESG perspective. Starting from the very first planning stage, our aim was to create a report not just for us, but all our external stakeholders. So, we tried to reflect recent ESG trends and requirements of external stakeholders and applied TCFD, SASB standards to provide fair and transparent information. In addition, we not only explained calculation methods for data values, but also additionally disclosed data that were not provided previously.

Q. Any particular part of the report you would like to recommend to readers as the entire report is quite extensive?

We strongly suggest readers check the ‘CEO’s Message’ part on pages 3 and 4. It’s a nice overview of the ESG management blueprint that SK hynix aims to unfold. Same for the Human Rights Report. We also like the ‘ESG Management’ (p.30~31) part as it describes the governance and role of organization in managing risks and identifying new business opportunities by integrating ESG into the long-term strategy. Another recommendation would be the ‘Response to COVID-19’ (p.11~17) part, which demonstrates our global risk-management capacity. Others include the ‘Response to Climate Change’ (p.18~21) and ‘ESG Focus-Green Management’ (p.39~44) parts.

Q. What is the objective of the ESG Strategy including the ESG Innovation Team?

We have three key topics on our agenda. First, we aim to solidify the system to help the ESG decision-making structure settle across the entire company. Second, we will establish a comprehensive ESG risk management system that conducts review of company-wide implementations by identifying ESG risks and establishing response strategies. Lastly, we will continue to provide information on ESG management and improvement progress transparently through SK hynix official website and the Sustainability Report to strengthen communication with stakeholders including investors to build a stronger relationship based on trust.

Q. What is the ultimate message that SK hynix aims to deliver through its 2021 Sustainability Report?

As mentioned in the CEO’s Message, ESG is ‘a path to be taken firmly, and one to be taken first’ for SK hynix. It will not be easy and few changes may be seen or felt immediately, but SK hynix is dedicated to leading ESG management in the era of big changes.

¹Newly launched as the Value Reporting Foundation after a merger with the International Integrated Reporting Council (IIRC) in June 2021

The post [2021 Sustainability Report] How SK hynix Embraces the ‘Era of Changes’ first appeared on SK hynix Newsroom.

Especially, at the beginning of this year, SK hynix issued a “green bond” with a value of USD 1 billion to accelerate its ESG management, for the first time among the global memory semiconductor companies. Green bonds are a type of bond with a special purpose, limited to use only to fund environmentally friendly projects. SK hynix also presented its blueprints of carrying out various eco-friendly projects with the funds secured through this bond to strengthen its position as an eco-friendly company.

The newsroom team met key personnel in charge of issuing the green bond, including Head of Finance Management Hyungmo Yang, Project Leader (PL) of Financial Solution Je Woo Heo, and Technical Leader (TL) of Financial Solution Jae Han Park. Through the interview, the newsroom team could hear about the background and the process of SK hynix’s issuance of the green bond, as well as various future eco-friendly projects led by SK hynix using the funds.

The Era of “Social Responsibility” of Companies: Increase in the Issuance of the “ESG Bonds”

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ESG bonds refer to bonds with a special purpose issued to raise the funds for socially responsible investment, such as improving the environment, society, and governance. Although there is no accredited standard internationally unified, the standards of the International Capital Market Association (ICMA) and the Climate Bonds Initiative (CBI) are followed in general.

ESG bonds can be divided into the following types according to the purpose and scope of use: “green bond” issued for eco-friendly projects; “social bond” issued to solve social problems, such as job creation, support for the vulnerable, and social infrastructure establishment; and “sustainability bond” where the green bonds and social bonds are combined, for the use for more varied purposes.

Head of Finance Management Hyungmo Yang said, “As the importance of ESG has been highlighted worldwide, interest in ESG bonds for investment in related fields has increased as well. While the conventional management method was focusing on financial performance, the recent method, especially as the company size grows, is emphasizing the level of expectations from stakeholders and the company’s sustainability. This has led to an era where more attention is paid to ESG to actively solve social problems.”

In particular, the basic trend among investors is changing. The United Nations Principles for Responsible Investment (UNPRI)³ announced by the UN in 2006 reflected the ESG issue, making it public worldwide and steadily increasing the proportion of investments focused on ESG. Larry Fink, CEO of BlackRock Inc., the world’s largest asset management corporation highlighted environmental sustainability in his 2021 letter to CEOs, saying that climate risk is investment risk and consistent and improved disclosure of major data should be accessible to assess such risk.

According to statistics from the Global Sustainable Investment Alliance (GSIA), the amount invested in ESG globally in 2018 recorded USD 30,680 billion, showing a three-fold increase compared to 2012. By investment assets, ESG bonds accounted for 36% of the total ESG investment assets, which is the second-largest portion following the stocks (51%). This trend is apparent in Korea as well. As of May 2020, ESG bonds of 413 types and a total of KRW 59 trillion worth were issued, increased by more than 65 times compared to the end of 2018. Issuing companies are also expanding from public corporations and the banking sector to private companies and the secondary banking sector.⁴

From the perspective of investors, ESG bonds have the advantage of ensuring the stability of investment since the details of the fund use are disclosed transparently, as well as solving the stakeholders’ pain points, that is, social problems. Moreover, from the perspective of companies, ESG bonds allow them to raise the funds necessary for the ESG management stably, and these activities are also used as corporate evaluation factors, enhancing the brand value. As there are advantages in both supply and demand, it is expected that the size of ESG bond issuance will continue to increase further.

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Among the ESG bond types, green bonds have the highest proportion. According to SK Securities, green bonds accounted for about 63% of the entire global ESG bonds as of 2020, while social bonds and sustainability bonds accounted for 23% and 14% respectively. The amount of green bond issuance is expected to increase continuously. According to the CBI, it is expected that the scale of the global green bond issuance will greatly increase from USD 269.5 billion in 2020 to USD 400 billion to 450 billion.⁵

Why are green bonds accounting for a large portion of the ESG bonds? This is mainly because the international community’s interest has increased with the intensified concerns about climate change. Many countries are competitively presenting eco-friendly policies such as greenhouse gas reduction to solve global issues. In line with this, companies have also joined in the action for a sustainable planet. Global companies are now promoting various eco-friendly projects, using green bonds as a means of raising funds for the projects.

The environment sector is also a field where the project performance can be displayed most visibly among the ESG. TL Jae Han Park said, “In the case of projects for the social and governance fields, it is difficult to express the effects quantitatively. For the environment field, however, it is relatively easy to measure the effects with various indicators such as greenhouse gas reduction, energy savings, and pollution degree. This enables preparing a relatively clear framework⁶, providing the numbers and figures that investors want to see, in an intuitive way.”

SK hynix Issues a USD 1 Billion Green Bond for its “Eco-Friendly Projects”, Accelerating the ESG Management

Recently, SK hynix also joined this trend and issued a green bond to invest in eco-friendly projects, as one of the measures to accelerate its ESG management. This is to inform global investors of various eco-friendly projects currently led by SK hynix such as fab construction and operation, as well as to enhance its reputation as an eco-friendly company.

For the issuance of a green bond, SK hynix prepared a framework to review the eligibility of eco-friendly projects by collaborating with financial, ESG, and environmental organizations. The eligibility of the green bond was evaluated by a third-party verification organization called “Vigeo Eiris”⁷. Since the work after the issuance is also important especially for a green bond, SK hynix plans to organize and operate a “Green Bond Working Group” with relevant departments.

Head of Finance Management Hyungmo Yang

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The evaluation result was very positive. The result was the “Robust” grade, which is the second-highest among the four grades of Advanced, Robust, Limited, and Weak. This means that the environmental improvement impact of the eco-friendly projects included in the framework is clear and the investment decision-making process is well established. Head of Finance Management Hyungmo Yang said, “Green bond eco-friendly projects are selected and the investment decisions are made through the ‘ESG Management Committee’, the highest decision-making body related to the company’s ESG activities. Vigeo Eiris also evaluated that companies with this kind of system are rare.”

SK hynix held an investment briefing and proceeded with the procedures for the issuance in earnest. Initially, the company planned to raise orders worth around USD 500 million with a maturity of 10 years, but orders of USD 5.4 billion from over 230 institutional investors from around the world were made, allowing the company to succeed in raise orders over five times the amount issued. In the end, SK hynix could issue a green bond of USD 1 billion worth, beyond the issuance scale originally targeted.

TL of Financial Solution Jae Han Park

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Despite the bond’s maturity of 10 years, which can be burdensome for investors, how could the bond attract so many orders beyond the expectations? TL of Financial Solution Jae Han Park said, “Earlier this year, SK hynix declared ‘Social Value 2020’. At the same time, it seems that the company’s sincerity to implement its ‘Financial Story’, which is SK hynix’s vision to contribute to humanity and society by strengthening the ESG management, while pursuing a balanced growth of DRAM and NAND Flash businesses at the same time. This seems to be the result of the investors’ recognition for the company’s long-term growth potential, Green 2030⁸ project, and consistent movements for the environment continued for long, such as joining the RE100⁹ for the first time in Korea.”

PL of Financial Solution Je Woo Heo

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The memory semiconductor business, the so-called “smokestack industry”, consumes a lot of energy and toxic raw and subsidiary materials, making it perceived as an industry far from eco-friendliness. SK hynix, however, succeeded in issuing a green bond for the first time among global memory semiconductor companies, breaking such stereotypes and securing the initiative as an eco-friendly company.

PL of Financial Solution Je Woo Heo evaluated this by saying, “The issuance of a green bond this time is an important turning point where SK hynix secured a driving force for maintaining the initiative as an eco-friendly company.” He also said, “We will continue to pursue the right direction as an eco-friendly company by discovering many eco-friendly items and actively carrying out related projects, based on the ESG management philosophy.”

“Sustainable Growth as an Eco-friendly Company through the Green Bond and Expectation to Spread Good Influence in the Semiconductor Industry”

How and where will SK hynix use the funds secured by the green bond? SK hynix plans to use the funds to carry out projects in various fields including sustainable water quality control, energy efficiency improvement, pollution prevention, and ecological environment creation. Each of these project fields was selected in consideration of the characteristics of the semiconductor industry where a large amount of energy and water is consumed and the resulting environmental impact.

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Firstly, for the “Sustainable Water Quality Control” project, the company plans to continue to invest in treatment facilities for recycling a large amount of water used in the production process as well as wastewater treatment plants to upgrade them. As water is used the most in the semiconductor production process, investment in water treatment accounts for a high proportion of the overall project. Also, the company plans to create various social values related to “water” by supplying clean water to local communities where SK hynix’s business sites are located through wide-area water supply projects.

Secondly, the “Energy Efficiency Improvement” project seeks ways to use energy more efficiently through product development, equipment replacement, work environment optimization, and so on. In particular, reducing greenhouse gas emissions through the development of low-power solid-state drives (SSDs) is the key task. The power consumption of low-power SSDs is 94% less than that of hard disk drives (HDDs). If HDDs in data centers around the world are replaced with low-power SSDs, greenhouse gas emissions are expected to be reduced by more than 40 million tons by 2030.

Thirdly, the “Pollution Prevention” project is to contribute to the reduction of pollutants through the establishment of nitrogen oxide (NOx) reduction infrastructure and reduction of environmental pollutants. For this project, the establishment of an environmental analysis system that can test in advance whether harmful substances are generated from raw and subsidiary materials was selected as a key task.

Lastly, the “Ecological Environment Creation” project aims to contribute to the conservation of terrestrial and aquatic ecosystems through the creation of ecological parks. The ecological parks are expected to provide a space for locals to enjoy leisure activities. Moreover, even if wastewater is leaked out due to an unexpected accident, the wastewater will be induced to flow into the water storage tank (a device installed to collect rainwater, sewage, or wastewater) located in the ecological park so that it can serve as a protective device for the environmental safety.

In the implementation process of each project, various departments will collaborate organically through the “Green Bond Working Group” to closely examine the business feasibility and environmental improvement effects of the eco-friendly project. At the same time, the “ESG Management Committee” plans to decide whether to promote a project and execute the investments raised through the green bond. Also, through a follow-up report, the usage of the funds, the following results, and the unallocated fund amount will be transparently disclosed annually on the SK hynix website.

PL Heo said, “Although it is a 10-year maturity bond, it is expected that all funds will be used within three years, considering investors’ expectations and project implementation plans.”

SK hynix plans to commit itself to create social values and pursuing the happiness of stakeholders through ESG management. Also, the company is establishing a plan to secure additional funds for this plan. A green loan¹⁰ can be implemented by using the green bond framework at the moment, and there is a possibility of additionally issuing a social bond or sustainability bond.

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Lastly, the newsroom team heard about the future that SK hynix is drawing up through various eco-friendly projects mentioned earlier.

“The ultimate goal is to develop into a company that pursues the happiness of stakeholders while creating social values at the same time, not simply pursuing economic profits. A company where each of its employees discovers the possibilities of creating ESG in their tasks and participates in the related activities voluntarily and a company that achieves sustainable growth by running ethical and eco-friendly businesses are the future that SK hynix is aiming for. To achieve this, we will continue to discover and promote projects suitable for ESG management.”

¹Financial Story: SK Group’s new management strategy to increase the total value that includes corporate value by presenting the growth strategy and future vision of each subsidiary company of SK to various stakeholders such as customers, investors, and the market, generating trust and sympathy. SK hynix has established and initiated in earnest its Financial Story to contribute to humanity and society by strengthening ESG while pursuing continuous business growth through DRAM and NAND as two main pillars.
²ESG: An abbreviation for the environment, social, and governance, which stands for a standard for determining a company’s non-financial performance; it is not imperative to do good things, but an empirical standard of improving corporate sustainability by pursuing ESG. The term ESG was first introduced in “Who Cares Wins: Connecting Financial Markets to a Changing World”, a report used in a letter in 2004 by the UN Secretary-General Kofi Annan to 50 CEOs of global investment institutions in order to request their participation in the UN Global Compact. In January 2005, at a conference co-hosted by the UNGC, the World Bank Group (WBG), and the Government of Switzerland, the term ESG appeared with the presentation “Who Cares Wins: Investing for Long-Term Value”.
³United Nations Principles for Responsible Investment: Principles of investing in companies exerting a positive influence on the environment (E) or society (S), or companies with excellent corporate governance (G)
⁴Recent Global ESG Investment and Policy Trends, Jung-sun Ryu, Korea Financial Investment Association (KOFIA) (June 2020)
⁵Source: https://www.climatebonds.net/2021/01/record-2695bn-green-issuance-2020-late-surge-sees-pandemic-year-pip-2019-total-3bn
⁶Framework: Report on the use of invested funds and expected effects of the investment
⁷To issue a green bond, it is necessary to go through a procedure for the evaluation of the eligibility of the green bond by a verification organization specialized in green bonds; although no laws and standards are stipulating the requirements, the “Green Bond Principles (GBP)” of the International Capital Market Association (ICMA) or the “Climate Bond Standards” of the Climate Bonds Initiative (CBI) are followed in general.
⁸Green 2030: Plan in the environmental sector among the SK hynix’s mid-to-long-term plan “SV 2030” roadmaps to maximize the social value creation, with a goal to be achieved by 2030
⁹RE100: Renewable Energy 100; Convened in 2014 by The Climate Group, a non-profit organization headquartered in the UK, RE100 is an initiative of businesses committed to 100% renewable electricity, and over 280 companies around the world are joining this initiative (as of 2021)
¹⁰Green loan: Loan instruments made available exclusively to finance eco-friendly projects and eco-friendly infrastructure businesses, such as new and renewable energy and electric cars

The post SK hynix Issues USD 1 Billion Green Bond: How Will the Investment Be Used? first appeared on SK hynix Newsroom.

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Amid the intensifying climate crisis, such as the longest rainy season this year, typhoons, unprecedented heatwaves, and hurricanes, the environmental management capabilities of companies are becoming more important. In particular, from 2021, the mandatory reduction of greenhouse gas (GHG) emissions will be implemented in major countries across the world. Accordingly, the efforts of global companies to reduce carbon emissions are emerging as a key agenda that can determine the future of a company, beyond an activity for environmental protection.

SK hynix is also moving responsively for this. In 2018, SK hynix announced the Environmental & Clean Operation (ECO) Vision 2022 and began preparations for an eco-friendly production system. In addition, it is actively participating in the efforts to overcome the global climate crisis through many activities for carbon emission reduction, as well as building a sustainable green management model as one of the leaders in the field.

The newsroom team met with Sang Geun Min, Technical Leader (TL) of SHE R&D Team and Sang Jun Lim, TL of Global Logistics Team to hear about the direction and progress of SK hynix’s efforts for the environmental sustainability.

ECO Vision 2022: An Eco-Friendly Semiconductor Production Plant for the Future of SK hynix

With the expiration of the Kyoto Protocol in 2020¹, the Paris Agreement, which will be the basis of the new climate system, was adopted at the 21st session of the Conference of the Parties (COP21)² of the United Nations Framework Convention on Climate Change (UNFCCC)³. Under this agreement, all 195 parties which account for more than 90% of the global GHG emissions have decided to reduce GHG emissions step by step, with the long-term global goal of making efforts not to increase the global average temperature by more than 2℃ compared to the level in the pre-industrial time. In the case of Korea, it proposed a voluntary goal of “30% reduction compared to the 2020 business-as-usual (BAU)⁴ GHG level” in 2009, in recognition of climate change as an opportunity to create new economic growth power. To achieve this, Korea has laid the legal basis for the implementation for the target by enacting the Framework Act on Law Carbon, Green Growth in 2011. In 2012, the GHG & Energy Target Management System was implemented and the GHG reduction roadmap was established in 2014. Also, from 2015, the Emissions Trading System has been implemented.

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The Emissions Trading System allows the government to allocate emission permits at a lower level than before to major companies that emit GHG and to permit the remaining emissions to be traded in the market if less carbon is emitted through the activities to reduce emission. Since the amount of emission allocated to each company is small in order to effectively achieve the national GHG reduction target, it naturally induces activities to reduce GHG emissions.

This limitation of carbon emissions can lead to a decrease in productivity and efficiency in manufacturing; however, SK hynix considered a preemptive strategy for responding to the climate crisis, beyond passively participating in government policies. In 2018, SK hynix announced the ECO Vision 2022, which includes measures to realize eco-friendly semiconductor production processes.

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ECO Vision 2022 presents specific implementation goals in each of the fields including “environmental activities”, “strengthening the semiconductor ecosystem”, and “contributing to solving social issues”. One of the main goals in the field of environmental activities is to reduce GHG by 40% compared to BAU in 2016 by 2022. To achieve this goal, SK hynix is currently pursuing three strategies, which include the following: reduction of consumption and cost through energy system optimization, reduction of GHG emissions through technology development and equipment improvement; and establishment of alternative energy infrastructure which does not emit carbon.

Sang Geun Min, TL of SHE R&D Team said, “SK hynix has already recognized the importance of reducing GHG emissions from long ago. The company agreed on a voluntary reduction target of the World Semiconductor Council (WSC) and achieved a 10% reduction in perfluorocarbons (PFCs)⁵ emissions by 2010 compared to 1997. Since 2008, the company has been making continuous efforts to reduce GHG emissions by participating in the Carbon Disclosure Project (CDP), and its efforts were highly recognized by being selected as the ‘Best Carbon Management Company’ for seven consecutive years.” He added, “SK hynix is doing its best to reduce GHG emissions in workplaces in various ways, such as introducing the Best Available Technology (BAT)⁶ and equipment.

SK hynix’s Efforts to Reduce GHG Emissions: From Eco-Friendly Technology Development to Electric Vehicles

Just like unplugging plugs which are not being used for saving energy at home, SK hynix’s activities for energy reduction began with reducing the amount of wasted energy. One of the examples is introducing a standardized energy operation system called ISO50001 to minimize the amount of electricity used to operate buildings and equipment. At the same time, SK hynix improved the scrubber equipment which treats GHG generated in the process which contributed to greatly reducing the amount discharged outside the workplace. In addition to this, it is preparing to make its plants “Green Plants” which ultimately do not emit carbon, by building alternative energy infrastructure. SK hynix also obtained the Environmental Product Declaration⁷ (Five carbon footprint certifications and six low carbon product certifications), which is only given to eco-friendly semiconductor products. Now, let’s take a closer look at SK hynix’s efforts for the environment.

▶ Mission 1: Optimization of the Energy Use System in the Workplace to “Avoid Energy Leakage”

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Semiconductor plants which are usually operated 24 hours a day, run a lot of equipment and consume an enormous amount of power in the process of cooling down the heat of the operated equipment, which in turn leads to an increase in GHG emissions. Therefore, it can be said that preventing energy leakage and reducing power consumption by optimizing the energy use system is the first step to take for the transition to a low-carbon eco-friendly company.

To realize this, SK hynix has reorganized the company-wide energy operation system. The company has been monitoring the energy use in all business sites and grasping the effect of energy reduction activities through continuous performance indicator management. As a result, it obtained the Energy Management System (ISO50001)⁸ certification, an international standard related to eco-friendly energy management, from the British Standards Institution (BSI).

One of the representative examples of identifying improvements and realizing energy reduction through the ISO50001 operation is the “Project for the Improvement of the Energy Efficiency of the Out Air Conditioner (OAC)”. By applying artificial intelligence (AI) analysis technology to the OAC, a device that circulates air inside and outside the clean room, the amount of power consumed to operate the device was greatly reduced, resulting in saving a total energy cost of KRW 2.75 billion.

▶ Mission 2: Reduction of Process Gas and Fine Dust though Technology Development to “Reduce GHG Generation”

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In semiconductor manufacturing equipment where various types of chemicals are used, process gases which cause GHG such as PFCs, sulfur hexafluoride (SF6), and nitrogen dioxide (N₂O) are used. SK hynix is disassembling the process gases through a three-step treatment procedure which involves the point of use (POU) scrubber, middle wet scrubber, and main wet scrubber.

Among them, the POU scrubber is a very important device that is correctly connected to manufacturing equipment to process more than 90% of the total process gases. To maintain constant processing efficiency, performance tests are periodically conducted through a Fourier transform infrared spectroscopy (FT-IR)⁹. Through the existing FT-IR equipment, however, it was difficult to obtain an accurate result of the process gas concentration due to the dilution caused by the air introduced inside the POU scrubber chamber¹⁰. Depending on the equipment, incorrect results were obtained as if the processing efficiency was higher than the actual one.

To solve this problem, SK hynix, together with the Korea Research Institute of Standards and Science (KRISS), has developed a measurement technology that uses measurement equipment called quadruple mass spectrometer (QMS) which detects the air dilution effect inside the POU scrubber. By measuring the residual process gas concentration in the POU scrubber through the FT-IR equipment and measuring the air dilution through QMS, obtaining an accurate treatment efficiency value became possible. Through this, it became possible to perform performance inspection and equipment improvement for the overall POU scrubbers in the workplace. As a result, the reduction rate of process gas emissions by PFC gas, based on the Icheon Campus, doubled compared to 2015.

Along with this, a technology to remove nitrogen oxides (NOx), which is one of the by-products of the POU scrubber and also one of the causes of fine dust has been developed. The De-NOx system utilizing the principle of the reduction-oxidation reaction¹¹ was installed on the middle wet scrubber, enabling it to treat nitrogen oxides that could be not dealt with by the existing wet treatment method. The De-NOx system which boasts a high NOx removal rate of more than 90% is expected to be expanded and installed at Icheon Campus, mainly at the M14 plant, the new Fab M16, and Cheongju Campus. TL Min said, “The introduction of the QMS and the De-NOx system is expected to play a role in treating GHG, as well as NOx generated in the process of GHG, just like killing “two birds with one stone”.

▶ Mission 3: Building an Alternative Energy Infrastructure to “Build Clean Workplaces”

Eco-friendly electric vehicles at the Icheon Campus

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Numerous vehicles come and go 24 hours a day at the SK hynix’s business sites. These vehicles are in charge of intra-site logistics and cooperative logistics transport between Icheon and Cheongju Campuses. More than 100 large-sized diesel vehicles carry various materials back and forth over 1,600 times a day and a total distance of 23,000 km along the 40 routes established inside and outside the business sites. The amount of fumes generated from these vehicles is around 8 tons per day and 2,600 tons per year.

To solve this pollution problem, SK hynix began replacing its freight transport vehicles operating in its business sites with electric vehicles this year. As soon as an electric freight vehicle for enterprises was released at the end of last year, the company started replacing them. Considering that the maximum capacity of this vehicle is 1 ton, it was decided to gradually replace the small 1-ton trucks first, which account for 40 units out of 100 vehicles. Ten vehicles with old exhaust systems due to their old age were selected as the targets to be replaced with the top priority, and seven and three electric vehicles are in operation at the Ichoen Campus and Cheonju Campus respectively.

By the end of this year, a total of three electric vehicle charging facilities will be installed, including one in the Icheon Campus and two in the Cheongju Campus. In the next five years, all 1-ton vehicles in the business sites are expected to be replaced with electric vehicles. When this goal is achieved, it is expected to reduce GHG emissions by 400 tons per year. Sang Jun Lim, TL of Global Logistics Team said, “When the electric-vehicle-related technologies such as battery manufacturing technology is developed further and large vehicles of 2.5 tons and 5 tones can be replaced with electric vehicles, the effect will be even greater. We will be continuously monitoring the changes in the trend of related technology.”

A New ECO Vision Preparing for the Next Decade with the Goal of “Zero Carbon Emissions”

It has been three years since the ECO Vision 2022 was announced. As the projects that have been carried out by SK hynix so far are showing desired results, it is time to find out the next steps in SK hynix’s strategy to respond to the climate crisis.

Sang Geun Min, TL of SHE R&D Team

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ECO Vision 2022, established as a five-year plan, has set detailed targets for each year and has been implementing them step by step. The remaining activities of the ECO Vision 2022, including De-NOx and expansion of the installation of the solar power generation facilities, will be carried out in accordance with the short-term goals and directions of 2021.

In addition, as the time for achieving the goal of the ECO Vision 2022 is approaching, SK hynix is now reviewing a new mid- to long-term roadmap for environmental protection activities after 2022. TL Min said, “We are also establishing a long-term plan to build an eco-friendly energy system that will make SK hynix become a ‘Carbon Net Zero¹²’ company.” He added, “We started to improve our constitution as a green plant company that produces eco-friendly energy on its own, rather than passively consuming limited energy resources.”

SK hynix has formed a company-wide task force for renewable energy to monitor domestic and foreign policies regarding renewable energy and is gradually increasing solar power generation facilities centered on new factories and major business sites. One of the most representative examples is the recent installation of 641 kW solar power generation facilities at the Icheon Campus. These facilities currently produce about 60 MWh of renewable energy per month and supply their own power to the lighting system of restaurants in the building.

Sang Jun Lim, TL of Global Logistics Team

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SK hynix is also seeking ways to reduce the consumption of plastics used in the production and distribution process. TL Lim said, “A large amount of plastic is used in the packaging process to prevent damage to semiconductor chips. We are constantly collaborating with related organizations to discover eco-friendly materials that can replace plastic packaging materials.”

(From left) Sang Jun Lim, TL of Global Logistics Team and Sang Geun Min,
TL of SHE R&D Team

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Amid the accelerating climate change, SK hynix is ready to become an eco-friendly company with the preparation and efforts one step ahead. Lastly, the two TLs urged all employees to give active participation and efforts to these changes.

“GHG reduction is no longer an issue only for a few companies, but a globally important issue in terms of survival of human beings. At times like this, it is necessary for everyone to participate in actions in life, even though it is small, with the mindset of ‘it is related to me’. We want to ask for more interest and participation in activities related to GHG reduction promoted by companies and governments, starting with small efforts, such as saving electricity in offices.”

¹ Kyoto Protocol: Specific implementation measures to regulate and prevent the global warming, such as imposing an obligation to reduce GHG emissions by an average of 5.2% compared to the level in 1990 during the first commitment period (2018 to 2012) to developed countries, with a definition on the six GHGs, the main cause of climate change, which include carbon dioxide, methane, nitrogen dioxide, hydrogen fluorocarbon, perfluorocarbon, and sulfur hexafluoride
² Conference of Parties (COP): The highest meeting held once a year by the Parties to review key issues, including how to implement the agreed matters, as the highest decision-making body related to the Climate Change Convention
³ United Nations Framework Convention on Climate Change (UNFCCC): A convention agreed by countries around the world to prevent global warming by limiting the GHG emissions including carbon dioxide
⁴ Business As Usual (BAU): Total amount of GHG expected if no artificial measures are taken to reduce GHG emissions
⁵ Perfluorocarbons (PFCs): A type of GHG mainly used in semiconductor manufacturing as compounds of carbon (C) and fluorine (F); Its Global Warming Potential (GWP) is thousands to tens of thousands of times that of carbon dioxide and some substances have a lifetime in the atmosphere of 50,000 years.
⁶ Best Available Technology (BAT): The most efficient, economically and technically available activity or operation method for GHG reduction and energy saving, in accordance with the “Administrative Guideline for the Greenhouse Gas and Energy Target Management System” by the Ministry of Environment
⁷ Environmental Product Declaration: A certification system from the Ministry of Environment that quantitatively displays the impact of pollutant emitted in the entire process of a product, such as raw material collection, manufacturing, use, and disposal, on the global environment, given to products that meet appropriate standards; When the environmental impact is transparently disclosed through a life cycle assessment (LCA) in the carbon emission sector, a “Carbon Footprint” certification is granted and a “Low Carbon Product” certification is granted if the carbon emission is reduced compared to existing products by applying low-carbon technology, among products that have obtained the “Carbon Footprint” certification.
⁸ Energy Management System (ISO50001): A system that allows energy users or energy supplies to set management goals that can improve energy use efficiency; a management activity system that systematically and continuously manages human and material resources and management systems according to certain procedures and methods to achieve the management goals
⁹ Fourier transform infrared spectroscopy (FTIR)
A technique of conducting Fourier transform on the interference stripes obtained by using two luminous flux interferometers instead of a distributed spectrometer in the optical system; it uses the Fourier transform as signal processing means, among methods of obtaining infrared absorption spectrum (Fourier transform: An algorithm to approximate a function; when assuming that there is an amount f (t) that fluctuates with time (t), it contains various frequency components, and if these components are extracted and rearranged as a distribution F(ω) of the component intensity of each frequency ω, the nature of a phenomenon can be more easily understood.)
¹⁰ Chamber: An instrument used for heating materials or specifically used at a certain temperature
¹¹ Reduction-oxidation reaction: A chemical reaction where an oxidation reaction that gives electrons and a reduction reaction that receives electrons occur simultaneously between two substances
¹² Carbon Net Zero: To offset GHG emissions that cause global warming, through GHG reduction and absorption activities such as renewable energy generation, making the total amount of net ‘0 (zero)’

The post SK hynix Responds to the Climate Crisis: A Step Forward Achieving Carbon Net Zero first appeared on SK hynix Newsroom.

In the era of uncertainty caused by COVID-19, ESG may seem like an unrealistic, utopian ideology; however, companies are rushing to prepare for the post-COVID-19 era by presenting a new management principle focusing on the ESG. SK hynix has also recently launched a related task force (TF) to internalize ESG management and make fundamental improvements. The newsroom team looked into the current status of ESG and the future with SK hynix.

ESG Management, a New Management Trend Sweeping the World

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Last month, SK Group Chairman Tae-won Chey sent an e-mail to all group members ahead of the Korean Thanksgiving Day (Chuseok). The main topic of the e-mail was the “ESG”. Chairman Chey defined ESG as “to empathize with future generations, prioritize social values, and consider sound corporate governance.” He also said in the e-mail, “The strongest and the only way for survival is not to show us by only numbers such as sales or operating profit, but to recognize performance, stock price and our dreams related to social values as one.”

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Chairman Chey’s e-mail shows that the global management trend is now changing. The conventional management was focusing on financial performance; however, the perspective of stakeholders towards a company has changed significantly. No matter how good a product is, if it has adverse effects on the environment in the production process, the product will not be chosen by consumers. Also, if a company causes social criticism in the human rights and labor fields, the company will lose trust and empathy. ESG management is not simply becoming a “good” company but becoming a “sustainable” company.

As this awareness spreads, more investors are considering non-financial factors such as environmental impact, social responsibility, and transparency of governance, rather than simply looking at financial performance. At the beginning of this year, the world’s largest asset management company called BlackRock emphasized the company’s obligation to comply with ESG by saying “We will consider sustainability as the basis of making investment decisions.”

COVID-19 was also the reason of spread of ESG management of companies. Amid the severe damage to numerous companies around the world due to COVID-19, a consensus that “sustainability is important” was formed, and the demands of stakeholders for social responsibility of companies have been further strengthened.

SK hynix’s ESG Management, How Far Has It Come?

SK hynix has already been pursuing Double Bottom Line (DBL), which is a management philosophy to pursue economic value and social value at the same time. It is based on the SK Group’s philosophy that “a company cannot survive only by earning money, and it can create economic value by increasing social value.” Under this philosophy, SK hynix has established its own systematic indicator by converting social value (SV) into monetary value. In addition, the company is performing various ESG activities in four areas, which are the environment, supply chain management, social contribution, and corporate culture. The activities in the four areas are based on ▲ Green 2030, ▲ Advance Together ▲ Social Safety Net, and ▲ Employee Development respectively, reflecting the stakeholders’ needs for social value and global social issues. In other words, to grow into a sustainable company, SK hynix is focusing on the DBL management that simultaneously pursues economic and social values through the ESG management that manages risks in each area of environment, society, and governance.

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In the semiconductor production process, a large amount of energy and water resources are used. SK hynix is continuously setting up and implementing specific tasks such as reducing greenhouse gas emissions, recycling waste, managing water resources, and expanding the use of renewable energy. Furthermore, it has formed “ECO Alliance” with about 40 partner companies to work together to solve the environmental problems in the semiconductor ecosystem. An otter which recently appeared at a stream called Jukdangcheon right near the SK hynix’s Icheon Campus shows that these efforts are paying off. Otters are an indicator of water quality and the safety of the ecosystem. Inhabitation of otters in that area means that the effluent is being treated cleanly.

“Mutual growth” is also one of the important values that SK hynix pursues. SK hynix is generously sharing its semiconductor knowledge and know-how with partner companies to strengthen the domestic semiconductor ecosystem. It is operating diverse programs for mutual growth such as analysis and measurement support project, pattern wafer support project, ESG consulting service for partner companies, and Hy-Five program for youths. In addition, its ICT-based social contribution activities to provide an artificial intelligence (AI) speaker called “Silver Friend” for the elderly living alone and a location tracking-based roaming detector called “Happy GPS” for the dotard and children with developmental disabilities are receiving positive reviews. Recently, the company is working to establish a safety net by carrying out support activities throughout the local communities that are suffering from the COVID-19 outbreak.

Along with this, SK hynix is making a lot of effort to establish sound corporate governance to secure the trust of stakeholders and implement the management of responsibility. It retained the transparency and independence of the board of directors by stipulating that the ratio of non-executive directors to maintain a majority of all directors. In addition, the company separated the chairman of the board of directors and the CEO to reinforce the functions of monitoring and checking the management. Various training programs for non-executive directors were provided to strengthen professionality as well.

Furthermore, SK hynix has been publishing sustainability reports annually to transparently disclose its various ESG activities and performances. Through this, stakeholders can see SK hynix’s efforts to fulfill its role as a sound corporate citizen and identify its management strategies to respond to the uncertain future at the same time.

“SK hynix’s ESG is Still in Its Introductory Stage, But It Will Be Done Properly”, Launch of ESG TF

SK hynix launched an ESG TF under the immediate control of CEO on September 1st to become an ESG-friendly company. The newsroom team met Hyeong Soo Kim in charge of safety, health, and environment (SHE) and who leads the TF to hear about the future direction of SK hynix.

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ESG TF was launched because the necessity of the ESG management and communication strategy suitable for the status of a global company was emerging. SK hynix has been growing rapidly as the No.2 company in the domestic corporate value and the No.2 global memory semiconductor company. Accordingly, the need for a dedicated department to review the direction of the ESG strategy from a company-wide perspective, link it with the business strategy, and coordinate collaboration between multiple departments was raised from the inside and outside of the company.

Recently, investors tend to consider ESG-related performance as an important indicator. In fact, many research results show that companies with excellent ESG performance have great financial performance. Therefore, it should be able to tell investors directly or through external evaluation agencies that the company is doing well with ESG; however, the current ESG evaluation has an issue in that there are some differences in evaluation results by different agencies.

TSMC, a Taiwanese semiconductor foundry company, re-established its water resource management policy and role and responsibility (R&R) for each department by applying an international standard called Alliance for Water Stewardship (AWS)¹ standard to strengthen its eco-friendly manufacturing capabilities. As a result, it obtained an AWS Platinum-level certification for the first time in the semiconductor industry.

Hyeong Soo Kim said, “There are over 300 investment institutions that evaluate the ESG activities of a company, and each institution has its own evaluation criteria and indicators. Of course, it is important for companies to carry out ESG activities systematically, but if the evaluation criteria of the institutions are more consistent, it will be helpful for companies to manage ESG activities.” He also added, “SK hynix had been passively responding to the needs of stakeholders, and the dedicated organization and R&R had been dispersed. To increase the executive ability of the ESG management, a TF which connects across the company with decisions by the CEO was organized.”

Many global companies are already expressing their willingness to pursue the ESG, led by the CEO. Kim said, “Amazon’s Jeff Bezos has declared the goal of achieving carbon neutral² by 2040 and contributed his own fund to establish “Bezos Earth Fund” that supports scientists, environmentalists, and non-profit organizations taking the lead in responding to climate change.” He added, “For global companies, ESG has already become a CEO-level agenda.”

Newly-organized ESG TF of SK hynix will function as a practical “ESG Control Tower”. Kim said, “First of all, from a strategic point of view, we are planning to start promoting ourselves to the outside world through ‘One Body Single Voice’, a way to communicate internally and externally with a consistent message and through one single window. By analyzing the difference between actual activity status and evaluation results, we are planning to derive strategic tasks and execute them preemptively. Also, we will promote them strategically to increase synergy with the business organization.” The TF is expected to be converted into a regular organization from next year to carry out ESG-related tasks in a more systematic way.

Meanwhile, a “CEO Seminar” where CEOs of major affiliates of SK Group gather to discuss management strategies was held on October 21st to 23rd. At this seminar, Chairman Chey emphasized a new management philosophy of “Financial Story³” methodology, including the ESG values. All affiliates of SK Group, including SK hynix, plan to accelerate the ESG management based on this Financial Story methodology.

¹AWS: An organization comprised of major corporations, non-profit organizations, organizations in the public sector, and academic institutions with a common goal of encouraging socially, economically, and environmentally responsible water use for all
²Carbon neutral: To offset the greenhouse gas emissions which cause global warming through greenhouse reduction and absorption activities such as generating electricity by using renewable energy, and make the total net amount of emissions to zero.
³Financial Story: The company’s future growth story from a DBL perspective to maximize the company’s value; a methodology for effective communication with financial investors by linking the company’s orientation with the ESG strategic direction

The post ESG, a New Perspective for Companies: How Far Has SK hynix Come? first appeared on SK hynix Newsroom.