We at SKC seek win-win relationships and cooperation with our subcontractors based on the principle of mutual trust. As such, we treat them as equal partners in all our activities related to environment, society, and governance structure (transparent management), and aim to strengthen our cooperation with them in order to establish a sustainable management system to be shared with our subcontractors.
In close cooperation with our subcontractors, we are striving to expand the procurement of eco-friendly goods and services to cope with climate change and to equip ourselves with a support system for improving the environmental management capabilities of the subcontractors, in order to take the lead in creating economic and social value based on shared growth through the provision of support in such areas as education, finance, and technology.
SKC has declared 2021 as the initial year of implementing ESG management; and, in terms of value chain management, SKC will comply the prevailing laws and ethics jointly with the subcontractors to reduce risk factors in the value chain.
Eco-friendly Green Purchases
We recognize our responsibility to pass on a clean and healthy environment to future generations, and to continue with our efforts to expand the range of eco-friendly goods and services, in order to address the issue of climate change and put the goal of environmental management into practice with the aim of achieving the target of Net Zero 2040.
We entered into an agreement on voluntary green purchasing with the engea Environmental Industry & Technology Institute (KEITI) in 2014, and since then have practiced eco-friendly green purchasing on a permanent basis.
Amount of Eco-friendly Green Purchases, 2015-2020 KRW 49.3 billion
- Eco-friendly Certified Products*(Recycle) Office supplies, construction materials, household goods, etc.
- Outstanding Recycled Products(Reuse) Packing materials composed of waste paper & waste wood, etc.
- Low-carbon Certified Products(Reduce) Household goods, construction materials, food materials, etc.
- Energy-saving Products Electronic products, etc.
* Goods designated by the KEITI; goods judged to be suitable based on the environmental standards and equivalent products etc.
SKC’s current eco-friendly purchase policy, which is limited to partial items that can be reused two or more times by SKC and its primary customers, will be expanded to include construction and maintenance goods and services, with the focus on 3R (Recycle, Reuse, Reduce) products and energy-saving products. From 2022, the policy will be operated not only by SKC, but also by companies in which SKC has invested, in order to reinforce the implementation of the policy through the use of recycled raw materials.
In addition, to overcome the limitations on expanding the purchase of eco-friendly goods and services due to the traditional purchase method centered on quality, cost and delivery, incentives have been applied to the adoption process in a bid to expand the purchase of eco-friendly goods and services, while environmental capabilities have been reinforced through ESG management with SKC’s subcontractors.
Method of Promoting the Reinforcement of Vendors’ Environmental Capability
Policy for Supporting Shared Growth with Subcontractors
We aim to foster a culture of pursuing fair transactions with our subcontractors, build mutually trusting relationships, and establish a mutually sustainable management system. To this end, we provide support for our subcontractors’ technologies, financial issues, and training, etc. to help them enhance their competitiveness, all of which leads to the creation of social value.
Our support programs include those linked to our affiliates and customized programs for us and SKC-invested businesses. In 2021, we expanded the level and range of support for the programs linked to our affiliates by including even SKC-invested businesses’ subcontractors.
Policy for Supporting Shared Growth with Subcontractors
||SK Shared Growth Fund
||Provision of operational/facility fund at low interest rate to subcontractors (in tandem with IBK).
||KRW 3 billion/year
||KRW 4 billion/year Expanded to include SKC-invested businesses
|Improvement of Payment Condition
||Payment conditions changed to cash payment.
||SMEs 100% (2025)
||Technical Support for R&D
||Support for analysis/testing processes related to our/SKC-invested businesses‘ use of analysis equipment; support for R&D/technological development capability through the dispatch of researchers.
||Expansion of subcontractors receiving support and SKC-invested businesses
|Technical Support on SHE
||Operation of SHE technological support program including training on risk factors and health & safety education.
||Expansion of support for subcontractors and SKC-invested businesses
||New material technology-based open platform
||Enhancement of businesses’ operational capabilities by providing professional consulting to startups, social enterprises, ventures, SMEs, subcontractors, businesses in local communities based on R&D, management infrastructure, safety/environmental core capabilities held by us and other institutions taking part in the platform.
||Participation of more than 300 professional institutions/businesses
||Expansion of relevant institutions/participating businesses
||Holding of periodic informal meetings with subcontractors; promotion of mutual understanding through the sharing of information on the status of business operations and relevant issues.
|One-on-one communication through open channels at all times.
|Job expo-related support
||Job expo held for more than 100 primary/secondary subcontractors in tandem with affiliates.
||Plan aborted due to the COVID-19 pandemic (1 business in 2019)
||CEO Seminar on SK’s Shared Growth - Integrated MBA course
||Enhancement of CEO’s perspective and strengthened networking for primary subcontractors.
Education on strategy, accounting, financial, marketing, personnel and organizational capabilities.
||24 people from 17 businesses
||Increased to 30 people from 30 SKC-invested businesses
|CEO Seminar for win-win with semiconductor business
||Lecture on semiconductor-related biz/tech insights
||5 people from 5 businesses
||Increased to 10 people from 10 secondary/tertiary suppliers
|Training of subcontractors’ recruits (in connection with the group)
||Training to equip employees with capabilities focused on job-related knowledge
||Plan aborted due to the COVID-19 crisis.
As our subcontractor support programs are focused on making our policy increasingly sophisticated, we will continuously operate such programs and improve their quality, as well as developing new programs. As of 2021, we plan to enter Phase 3 of our shared growth support initiative and to strengthen ESG-centered joint cooperation in order to establish a sustainable value chain system. We will provide support to our subcontractors to help them with their ESG management activities and minimize their risks. In addition, we will strengthen communication with them by establishing a communication channel within the procurement system, while our ESG Committee, led by the CEO, will evaluate and study subcontractors’ ESG risks and management/shared growth so that we can provide them with substantial and effective support. Moreover, we will form and operate the relevant committees under the Board of Directors to exclusively deliberate on key items of agenda.
Subcontractor support policy roadmap
ESG Risk Support Policy for Subcontractors
SKC announced 2021 as the inaugural year of its ESG management, under which we will recognize all our subcontractors as our partners in ESG practices. Accordingly, SKC emphasizes subcontractors’ compliance with our ESG policies and obtains their pledges to take part in activities geared to ESG assessment and improvement in order to achieve our ESG goals and minimize any risks. Our subcontractor-related ESG management is focused on two broad perspectives: i) strengthening management execution and ii) revising and/or supplementing our existing policies.
Reinforcement of Implementation of ESG Risk Management/Support for Subcontractors
So far, our subcontractor-related management has been pursued with the focus on existing QCD and social value; however, from 2022, our evaluation* of subcontractors’ capabilities will include ESG factors. For those assessed to have poor management capabilities, we will mark them as being high-risk and incentivize them to improve their existing practices to meet our standards.
* Evaluation/management of the following: 3 environmental sectors; 2 health & safety sectors; 7 labor/personnel sectors; and 5 ethics sectors.
Subcontractor ESG risk management and improvement process
Objectives of ESG risk support for subcontractors
In order to establish a stable supply chain, SKC conducts subcontractor-related ESG assessments and due diligence each year.
We identify subcontractors that require improvement (high-risk group), using the results and findings of our assessment, and conduct due diligence in the
field(once/every other year), implementing supporting and consulting packages for subcontractors at the same time.
We are striving to make our subcontractor-related ESG management policy ever more sophisticated and to expand the scope of those entities subject to
assessment in order to grow and develop with them.
협력사 ESG Risk 지원 목표
- Establishment of ESG management policy / Joint performance by all SKC-invested businesses
- Number of subcontractors subject to ESG evaluation: 40
- Collection of pledges to implement ESG: Subcontractors subject to priority control.
- Sophistication of the subcontractor-related ESG management system
- Number of subcontractors subject to ESG evaluation: 100
- Collection of pledges to implement ESG :70%
- Number of subcontractors showing improvement : 100%
- Expansion of subcontractors subject to evaluation - evaluation/application.
- Number of subcontractors subject to ESG evaluation : 200
- Collection of pledges to implement ESG :100%
- Number of subcontractors showing improvement : 100%
Establishment of subcontractor-related ESG management methods
- Setting the criteria for identifying subcontractors that require priority control.
- Establishment of the diagnosis/assessment policy.
- Establishment of improvement/support methods.
- Pilot evaluation of major subcontractors.
- Establishment of methods for identifying high-risk subcontractors.
- Collection of pledges to implement ESG from subcontractors subject to priority control.
Evaluation of subcontractors engaged in transactions over the past year.
Make subcontractor-related ESG management methods more sophisticated
- Evaluation of subcontractors engaged in transactions with us over the past year
- Specification of subcontractor-related ESG management methods by reflecting the results of the 2021 evaluation.
- Improvement of the evaluation-related system.
- Expansion of the evaluation of subcontractors.
- Development of improvement/support programs.
- Perform due diligence of high-risk businesses and provide support for improvement.
- Check reliability of self-evaluation.
- Evaluation of subcontractors engaged in transactions over the past two years.
- Establishment of support for the subcontractor-related ESG management system.
- Establishment of support/monitoring methods.