Figure 1. SK hynix received the Best ESG Bond award at the 2023 IFR Asia Awards dinner

The Inner Workings of SK hynix’s Triple-Tranche Bond

SK hynix’s triple-tranche bond was noted for being creative and offering a variety of investment options while adhering to the needs of both the issuer and investors. The bond was comprised of three segments: a USD 750 million 6.25% 3-year conventional bond, a USD 1 billion 6.375% 5-year sustainability-linked bond (SLB)¹, and a USD 750 million 10-year 6.5% green bond². The balance of the SLB and green bond in the same transaction drew particular attention for offering something unique to the market.

The SLB, which was a first for a global semiconductor memory manufacturer, has a core environmental-related KPI. By 2026, it aims for at least a 57% reduction in Scope 1 and Scope 2³ greenhouse gas (GHG) emissions intensity⁴ compared to a 2020 baseline.

¹Sustainability-linked bond (SLB): A fixed-income bond tied to predefined ESG objectives that are measured through predefined KPIs. The interest rates of the bond can vary depending on whether the issuer achieves its objectives.
²Green bond: A debt security issued by an organization to finance or refinance projects that are positive for the environment and/or the climate.
³Scope 1 and 2: Scope 1 refers to direct emissions generated in the production stage, while Scope 2 describes indirect energy-related emissions generated in the process of making electricity or steam used in the workplace.
⁴Greenhouse gas (GHG) emissions intensity: The amount of GHG released per production capacity for SK hynix’s semiconductor memory.

Meanwhile, the net proceeds from the green bond have been allocated towards the financing or refinancing of environmental projects outlined in SK hynix’s Green Financing Framework. These include sustainable water and wastewater management, energy efficiency, pollution prevention and control, and terrestrial and aquatic biodiversity conservation.

These bonds play a key role in helping SK hynix reach its sustainability goals, such as reaching net zero emissions by 2050. Its environmental commitments are further highlighted by its status as a founding member of the global Semiconductor Climate Consortium, the first consultative body which targets GHG reductions throughout the semiconductor value chain.

Green Bond Funds a More Sustainable Semiconductor Ecosystem

Figure 2. Allocation by category of the green bond’s USD 750 million proceeds

In addition to being the most popular portion of the triple tranche deal, the green bond has realized significant advancements in SK hynix’s products as well as its environmental efforts. A total of 92.8%, or USD 696 million, of the bond’s total proceeds (USD 750 million) was allocated by the third quarter of 2023, with all of the funds expected to be allocated by the end of 2023 (awaiting confirmation of fourth quarter data).

[Read the 2024 green bond annual report for more information on its impact here]

Figure 3. The green bond’s positive effect on water management from 2020 to 2023

Among the funds, USD 6.90 million was allocated to sustainable water and wastewater management. Efforts included work on a regional municipal water project, construction of a drainage reuse system for a cooling tower, and improvements on a water pollution treatment facility. As a result, the company expects to see an increase in its water reuse rate and a reduction in wastewater discharge.

Figure 4. DDR5 offers reduced power consumption compared to its predecessor

SK hynix allocated its largest portion of the green bond’s proceeds for improving energy efficiency as the company invested USD 681.16 million in realizing significant related advancements in the company’s products. These developments included its industry-leading server DRAM DDR5 achieving a 70% increase in server bandwidth compared to DDR4, while its power consumption decreased by 14.4% compared to the previous generation. The performance per watt of the company’s latest SSD product, PS1010 E3.S, also improved by 85% from the earlier generation PE8110 E1.S.

Figure 5. An ecological park near SK hynix’s Icheon main campus which uses recycled water

A further USD 750,000 was allocated to terrestrial and aquatic biodiversity conservation. These funds supported construction of a large public ecological park near SK hynix’s Icheon campus which stretches the area of nearly four American football fields. At the park, crystal-clear water comes from the campus’ wastewater treatment plant and flows into the Jukdang Stream in Icheon.

Figure 6. Reduction of NOx emissions in tons at the Icheon and Cheongju fabs

Another USD 6.96 million was allocated to pollution prevention and control. The proceeds funded monitoring systems for atmospheric management, infrastructure for nitrogen oxide reduction, and a temperature reduction system in both the company’s Icheon and Cheongju fabs. Consequently, from 2020 to 2023, emissions of nitrogen oxides (NOx) were reduced by around 530 tons in these two major fabs. In addition, air pollutant analysis systems and water quality measurement systems have been installed in the fabs to monitor for environmental problems, minimize environmental harm, and make restoration efforts.

Figure 7. Financial Management Head Hyungmo Yang highlights how the bond supports SK hynix’s environmental goals

“Our triple-tranche bond offers varied investment opportunities while also supporting our sustainability efforts,” said Hyungmo Yang, head of Financial Management. “In particular, the green bond funds environmental innovations such as increased product energy efficiency, improved wastewater management, and pollution reduction. Going forward, the bond’s proceeds will continue to help us meet our environmental goals.”

The post SK hynix Wins IFR Asia Award for Innovative Sustainability Bond first appeared on SK hynix Newsroom.

• Semiconductor memory industry’s first issuance of ESG target-linked bond
• Carbon emissions reduction target highlights commitment to climate action
• Investors’ orders surpass initial plan to raise USD 500 million
• “Successful issuance underlines expectations for a turnaround in semiconductor industry and investors’ trust in SK hynix’s ESG management”

Seoul, January 11, 2023

SK hynix Inc. (or “the company”, www.skhynix.com) announced today that it successfully issued a Sustainability-Linked Bond (SLB) with a total amount of USD 1 billion.

“The company is highly encouraged by the large-scale investment even during the downturn in the semiconductor industry,” SK hynix said. “We see this as a result of global investors’ trust in the company’s commitment to climate action, along with the prospects of a turnaround in the semiconductor industry later this year.”

Orders from more than 304 global institutions surpassed the company’s expectations and thus, resulted in a decision to increase the total amount of the issuance from USD 500 million to USD 1 billion.

SLB is a type of bond for which the interest rates can vary depending on whether the issuer achieves predefined environmental, social, and governance (ESG) management objectives. SK hynix aims to reduce Scope 1 and 2* greenhouse gas (GHG) emissions intensity** by 57% compared to the company’s 2020 baseline by 2026.

* Scope 1 and 2: Scope 1 is direct emissions generated in the production stage, while Scope 2 is indirect energy-related emissions generated in the process of making electricity or steam used in workplace

** GHG emissions intensity: carbon dioxide emissions per unit(1Gb eq.) of semiconductor memory production

With SLB recently having been thrust into the limelight as one of the corporate sustainability management strategies, SK hynix became the first global semiconductor memory manufacturer to issue such bond.

The company plans to disclose the performance against target for GHG emissions reduction transparently in its Sustainability Reporting System (SRS) every year. The company, subsequently after 2026, will also measure the final target achievement during the first half of the following year and adjust interest rates according to the results.

Prior to the issuance, SK hynix received second-party opinions from global verification organizations on its predefined ESG targets. Moody’s and DNV*** evaluated that the company’s sustainability performance target is “ambitious” and that it will have a “significant contribution” to corporate sustainability management when achieved.

*** DNV (Det Norske Veritas): A global verification organization headquartered in Norway

Woo-hyun Kim, Head of Finance at SK hynix said, “The successful issuance of SLB is seen as a result of global investors’ recognition of the company’s commitment to climate action,” adding the company “will continue to lead ESG management and contribute to increasing both economic value (EV) and social value (SV).”

Meanwhile, along with SLB, SK hynix issued a green bond with an amount of USD 750 million along with SLB. Green bond is a type of bond with a special purpose, limited to use only to fund environmentally friendly projects. The company plans to invest in eco-friendly projects including water quality management, energy efficiency improvement, pollution prevention and ecological restoration with the funds raised through the green bond.

Disclaimer

“These materials are not an offer for sale of the securities of SK hynix Inc. in the United States. The securities may not be offered or sold in the United States absent registration with the U.S. Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. SK hynix Inc. does not intend to register any offering in the United States or to conduct a public offering of securities in the United States.”

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
Joori Roh
E-Mail: global_newsroom@skhynix.com

The post SK hynix Issues Industry’s First Sustainability-Linked Bond first appeared on SK hynix Newsroom.

Promoting Long-term Vision for Social Value

SK hynix cares about the way products are manufactured and treated, and firmly believes the social value it created must equal economic value. In October 2020, SK hynix announced a financial story that envisions the fortification of its business competitiveness with both DRAM and NAND Flash segment, while engaging in social value creation via ESG activities simultaneously. In January 2021, the company put forward the Green 2030 based on SV 2030 and is committed to achieving five goals by 2030: establishing RE100-related goals that can be achieved by 2030 (and fulfilling the RE100 commitment by 2050); achieving net zero by 2050, zero additional emissions of air pollutants, a gold rating at ZWTL at global production sites; and increasing in water resource savings by 300%.

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Currently, SK hynix has begun to implement the Green2030 and has achieved phased progress in some core areas.

Achieving RE100 Benchmark by 2050: On November 2, 2020, SK hynix announcedwith other SK Group subsidiaries that they will use 100% new renewable energy by 2050 and join the “RE100 (Renewable Energy 100%)” environmental movement initiative, an event launched in 2014, and 263 global companies including Google, Apple, GM, and IKEA have also announced their participation.

Prior to this, SK hynix had already embarked on initial measures to introduce renewable energy. The most representative examples are the installation of 641 kW solar power generation facilities in 2019 and two hydro-generators in 2018 at the Icheon Site in South Korea.

Figure 1: Solar Power Panels at Icheon Site

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Figure 2: Inverter Panel for Solar Power Modules at Icheon Site

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Figure 3: Hydro-generators at Icheon Site

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Achieving Net Zero by 2050: In order to achieve net zero by 2050, SK hynix will apply green tariff plans and PPA, promoting RE100 for Chinese production sites, and participating in carbon reduction projects in developing countries; the company will also promote CO2 reduction by supplying low-power semiconductors.

Figure 4: Operation of the Emissions Trading System

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Strengthening Water Resources Management: In line with the global trend, SK hynix is also committing itself to water management. According to the Green2030 plan, SK hynix has formulated core goals in the water management field, include maximizing water management efficiency through the expansion of reuse and securing ecological health. From this perspective, SK hynix plans to increase the amount of water saved in 2030 by 300% compared with 2019. Also, it will conduct real-time monitoring of the influence of effluent water on the aquatic ecosystem and carrying out more activities to secure biodiversity and prove the healthiness of water quality.

Figure5: Wastewater Recycling System & Cooling Tower Reuse System of SK hynix

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Figure 6: Diagram of Water Flow at SK hynix’s Sites

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Specifically, SK hynix is committed to improving the water resources management system through continuous facility investment. Representative examples include SK hynix’s Wastewater Reuse System, Cooling Tower Reuse facility, and water-free scrubber (WFS), etc. Through the process like these, SK hynix carries out quality control strictly according to the water quality standards required for each use. The capacity of wastewater reuse system is 60,000 tons a day as of 2021. Furthermore, the amount of water reused per day through the cooling tower system is 1,800 tons as of the first quarter of 2021. In the future, SK hynix anticipates to increase the capacity of wastewater reuse system to 80,000 tons a day.

Figure 7: SK hynix winning grand prize of Water Security 2019 Awarded by CDP²

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Figure 8: SK hynix Discovered Otters near SK hynix Icheon Production Site

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Reducing Air Pollutant Emission: SK hynix realizes that air pollution has risen as a major environmental problem. By strengthening the systematic management of pollutant emissions, SK hynix not only actively participates in activities to reduce air pollutants and greenhouse gas emissions, but also has established a treatment process in which it simultaneously removes fine dust generated while processing greenhouse gases.

Figure 9: GHG & Fine Dust Treatment Process through SK hynix’s Scrubber

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SK hynix has already achieved phased results in its overseas sites. For example, SK hynix Wuxi production site has effectively reduced 2,397 tons of greenhouse gas emissions through greenhouse gas emission reduction activities in 2019. The site maintains ISO14064 and ISO50001 energy greenhouse gas certification qualifications every year and established a renewable energy TF to continue to operate and carry out greenhouse gas emission reduction activities. In 2019, the greenhouse gas and natural gas emissions of SK hynix Chongqing production sites were reduced by 1,345 tons and 360,639 m³ respectively.

In the future, SK hynix will actively explore and apply potential new technologies to reduce the environmental impact of company operations, and help neighboring communities carry out atmospheric environmental management.

Obtaining ZWTL Validation: Another major indicator of Green2030 is to successfully obtain the Zero Waste to Landfill (ZWTL) gold rating for all production sites. SK hynix has successfully obtained ZWTL Validationin all production sites worldwide by the end of 2019. All the production sites including Icheon (Silver), Cheongju (Silver) production sites in South Korea, and Wuxi (Gold), Chongqing (Silver) production sites in China have established the management systems.

SK hynix is committed to the recycling and utilization of waste in all processes of the company’s manufacturing and operations, including the recycling of high value-added by-products that accompany the chip production process such as tungsten trioxide (WO3), or that of OAC membrane for air conditioning system as Solid Refuse Fuel (SRF). In addition, SK hynix will proactively apply environmentally friendly policies including the reduction of plastic product usage and the waste plastic recycling in our sites.

In the future, the company will make concerted efforts to maximize the operation of waste resource management in all sites and to reduce waste output while increasing its recycling rate as much as possible.

Issuing a Green Bond to Fund Environmentally Friendly Projects

In January 2021, SK hynix issued a green bond with a total value of USD 1 billion to invest in environmentally friendly business projects for accelerating ESG management. A green bond is a type of bond with a special purpose, limited to use only to fund environmentally friendly projects. At present, more than 230 global institutions have participated in the issuance of green bonds, with a total subscription amount of USD 5.4 billion.

Figure 10. Concept and Classification of ESG bonds

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As the world’s first semiconductor memory manufacturing company to issue green bonds, SK hynix plans to use the finances raised to invest in environmentally friendly projects which are associated with water quality management, energy efficiency improvement, pollution prevention, and ecological environment restoration. In particular, SK hynix plans to prioritize the establishment of a new state-of-the-art wastewater disposal plant and a water recycling system as water management is extremely critical in the semiconductor industry. Also, the company will proceed with various projects including the development of low-power solid state drives (SSDs), in order to reduce carbon emission throughout the IT ecosystem in general.

Seok-Hee Lee, SK hynix CEO, emphasized in his recent IRPS2021 speech: “If HDDs in data centers around the world are replaced with low-power SSDs, greenhouse gas emissions are expected to be reduced by 41 million tons based on business-as-usual (BAU³) estimates, which is equivalent to USD 3.8 billion of social value.”

Establishing ESG Management Committee, Opening a new Chapter for Transparent ESG management

SK hynix also strives to raise the level of ESG management from corporate operation and management perspectives. The company established ESG Management Committee this year. It is a new meeting body led directly by the CEO and meets quarterly to supervise and manage the progress of SK hynix’s SV 2030 goals, formulate mid-to-long-term ESG-related policies and issue ESG-related strategic decisions. It is believed that such measures will also contribute to the early realization of the Green2030 goals.

Caring for the Earth

As a forward-looking company, SK hynix is always growing and looking to the potential of tomorrow, and the day after that. In the future, the company will continue to maintain cooperation with business partners from the viewpoint of social value, and take environmental protection as our corporate responsibility, adhere to an environmentally friendly management policy, and continue to work to protect and improve the environment.

¹) Financial 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.

²CDP (Carbon Disclosure Project): An organization that evaluates companies’ responses to the reduction of carbon dioxide, targeting “FT 500 Global Index” companies, which are the world’s top 500 companies based on the market capitalization (In the case of Korea, top 50 companies based on the market capitalization); headquartered in the UK, a non-profit organization founded in 2000 with the support of 35 European institutional investors; since 2003, the organization has been investigating corporate risks related to climate change, social enterprises, carbon emission reduction methods, annual reduction plans, etc., of major global companies to publish the results.

³Business as usual (BAU): A total amount of greenhouse gas expected if no artificial measures are taken to reduce greenhouse gas emissions

The post Caring for the Earth: SK hynix’s Green 2030 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

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