Climate Response : HYOSUNG ADVANCED MATERIALS

Climate Action Vision

Climate Action Policy

SHE Policy
Hyosung Advanced Materials operates the Sustainability Steering Committee(SSC) composed of the company's top management to systematically and continuously encourage and ensure that sustainability is a consideration for employees‘ daily work. The CEO, PU presidents, CSO, CFO, CAO, Chief Procurement Officer, and Heads of EU, Vietnam, and China operations serve as committee members. The SSC reports sustainability activities and performance to the top management on a regular basis, in which the top management deliberates on major agendas. The SSC also discusses and decides the direction of the company's future sustainability management based on the current industry conditions and trends, which are shared with the sub-committees so that activities to derive actual change take place.
Global SHE Policy
Carbon Reduction Guidelines for Suppliers
Hyosung Advanced Materials plans to make various efforts to reduce GHG emissions across the entire value chain such as providing Supplier Emissions Reduction Target Guidelines to our major suppliers, requesting avocation for social actions.
Carbon Reduction Guidelines for Suppliers

Climate Action Target
Hyosung Advanced Materials has set a progressive climate action goal to contribute to limiting the rise of global temperature within 1.5℃. We updated the existing “Vision 2030”(reduction of GHG emissions by 24.9% by 2030 compared to 2017) which was based on Korea’s NDC and established Near-term SBT(Science-based Targets) at all global business sites for Scope 1, 2, and 3 emission, in 2023. We will reduce 42.0% of Scope 1+2 emissions and 25.0% of Scope 3 emissions(Category 1, 3) by 2030 against 2021 as the base year. We target to obtain the approval from SBTi(Science-based Targets initiative) by the end of 2024.

Climate Action Strategy
Hyosung Advanced Materials has established three strategies and six action plans, which will be implemented in stages. We are presenting a practical direction to achieve the reduction target by setting an action plan for each strategy under the structure of reducing Scope 1 and 2 emissions in domestic and overseas business sites and Scope 3 emissions throughout our supply chain.

Governance
Hyosung Advanced Materials strives to take corporate responsibility with sustainable growth in the process of value creation for various stakeholders. To this end, we have established and are operating our green management system based on a global-level environmental operation and management process under the leadership of the Green Management Committee. Our green management governance provides precise green management information and refines green management activities in a sustainable way by meeting the expectations and demands of stakeholders.

Climate Action System
Hyosung Advanced Materials has established and is operating a global inventory for scope 1, 2, and 3 emissions, aiming to identify the characteristics of greenhouse gas emissions and factors predicted to have a significant impact on them. In addition to reliable data collection, we have implemented a carbon asset management system that facilitates efficient target management, cumulative carbon asset management, and compliance with legal and regulatory requirements. To promote energy efficiency, we are enhancing our energy management system and conducting financial evaluations of carbon assets to inform investment decisions that consider carbon costs. With a focus on accurate data, we are committed to systematically and transparently managing GHG emissions in collaboration with our partners, customers, employees, and subsidiaries across the entire value chain.

Carbon Asset Management System

Hyosung Advanced Materials uses the carbon asset management system to regularly monitor GHG emissions as well as energy consumption by business site, facility, and measuring instrument. In response to the K-ETS(Korea Emission Trading System), we are managing the emission of each facility in comparison to the KAU(Korea Allowance Unit) in real-time. Through the yearly reduction simulation that reflect several factors, such as production amount, emissions plan, estimated emissions, and emission-reduction projects, we not only perform GHG reduction activities systematically but also efficiently manage carbon assets. By doing so, we actively predict, diagnose, and respond to climate-related risks. We plan to add overseas business sites to the carbon asset management system so that we can monitor their emissions and reduction activities on a regular basis.

Energy Management System

To ensure more systematic management of energy use, major business sites of Hyosung Advanced Materials acquired ISO 50001 certification. We inspect the internal process of energy use and management to make sure that our business sites practice efficient energy management. We assess each site's sustainability together with their management systems such as energy-saving and efficiency improvement in a comprehensive manner, helping them evolve into a business site with a clear goal and systematic process in the energy sector.

Internal Carbon Pricing

Hyosung Advanced Materials introduced internal carbon pricing in 2021 to identify risks and opportunities associated with climate change. We use this information to establish company-wide business direction and investment decisions. Internal carbon pricing entails the company voluntarily internalizing the economic cost of GHG emissions by establishing a price for carbon emitted from business activities. We convert both the amount of carbon emitted and the amount of carbon emissions cut resulting from energy savings into a monetary value, and incorporate it into economic evaluation. This is then used during CAPEX evaluation for energy facility replacement, new business expansion, and business investment.

Green Plant

Process Efficiency

Hyosung Advanced Materials manages all energy data to derive the optimal way to lower GHG emissions and enhance energy efficiency. In addition, we maximize the efficiency of facilities and equipment by replacing deteriorated ones and installing highly efficient equipment, and we ensure energy efficiency through energy management at workplaces. In particular, we expand investments in energy-saving, such as replacing motors and refrigerators with high-efficiency ones and installing highly efficient heaters. We have a smart factory system in place that connects process operation-related data and secures the optimal operational conditions based on collected data. Through enhanced process efficiency, we are building a production system for operating efficient factories with increased production yield and lower energy consumption.

Sustainable Energy Use

In an effort to achieve the goal of limiting the global temperature rise below 1.5℃, Hyosung Advanced Materials has transitioned to sustainable energy or recycled fossil fuels to cut GHG emissions in business sites.

Low-carbon Energy Use

As one of our primary action plans to contribute to limiting the global temperature rise to 1.5°C, Hyosung Advanced Materials makes every effort to convert the energy used at its business sites to low-carbon energy. We have reduced GHG emissions by substituting bunker fuel(high sulfur heavy oil) with LPG and LNG, which produce less GHG emissions, and we are gradually increasing the replacement rate, having ceased domestic use of bunker fuel in November 2019.
Renewable Energy Use

Starting with domestic business sites in 2015, Hyosung Advanced Materials has installed solar panels in Jiaxing and Qingdao, China in 2020 to contribute to reducing indirect GHG emissions and electricity purchases by consuming green electricity generated within the site. Moreover, GST Romania actively secures renewable energy by purchasing wind power and hydropower electricity which ultimately lower GHG emissions.
Thermal Energy Recycling

Hyosung Advanced Materials improved its steam production system to collect and reuse waste heat generated during business operation of its business as well as other neighboring companies. This way, we use less fossil fuels and make economic profits by selling the collected waste heat using the steam tubes in the plant.
Energy Storage System

Since it is challenging to generate electricity at the desired time when using renewable energy, we run an ESS(Energy Storage system) power infrastructure to utilize waste heat. ESS devices control the output of energy generation that fluctuates like renewable energy, facilitating the use of electricity at the desired time. While the devices are already installed in the Ulsan plant and Jiaxing, we plan to install more in overseas business sites.

Employee Awareness Building
Hyosung Advanced Materials conducts regular training and education to build the awareness and capacity for climate change and energy management of all employees. We provide two hours of climate change and energy-saving education annually to raise awareness of GHG emissions reduction by sharing related exemplary cases and to encourage our employees to consider climate change-related risks during their work through active participation in energy-saving initiatives. We conduct group training on energy conservation activities as well as training on reduction methods so that the production, process, and technology-related departments at business sites that implement energy conservation and GHG reduction can deduce cost-effective reduction measures. In addition, our sustainability course for new recruits focuses on climate change and carbon neutrality. Employees can also choose from a range of online courses, including green management and ESG. We also hold an internal contest for energy-saving and GHG reduction ideas, where we award employees with the best idea in different categories, such as energy-saving at the workplace and product commercialization and reduction campaigns. As we are in the process of expanding our eco-friendly material business for less GHG emissions, we seek ways to encourage the active participation of employees as well as various stakeholders.

Climate Response KPIs
Hyosung Advanced Materials added KPIs to employee performance evaluation and provides incentives according to the results to motivate and raise employees' awareness of climate change. For instance, we have set energy-saving as a KPI for the Chief Production Officer(CPO) and plant managers, a GHG reduction goal for team members in charge of responding to the emissions trading scheme and environmental information management. All employees are compensated according to the evaluation results. In addition, to embed ESG management into our corporate culture, we carry out performance evaluations after setting the ESG management KPIs and reporting to the BoD. Accordingly, we have setup climate change indicators to evaluate all teams associated with energy conservation and greenhouse gas reduction, such as the Sustainability Management Team, Business Management Team, Production Team, and Power Supply Team, as well as relevant executives(including C-level).

Green Solution

We forecast future demands rapidly to provide better values and solutions. At the supply chain level where raw materials are delivered for production, we provide technical support to our partners to encourage them to supply low-carbon products. During manufacturing, we will focus on developing eco-friendly methods and materials. We will also contribute to less emissions at the stage of product use and disposal, and provide easy-to-recycle products to maximize resource recycling.

Green Chain

Selection and Evaluation of Sustainable Suppliers
When selecting new suppliers, Hyosung Advanced Materials takes into account the supplier's environmental and climate change responses along with conventional criteria such as credit, sales performance, purchasing, quality, and supply stability. We conduct preliminary risk management in accordance with the new supplier evaluation criteria. Additional points are awarded to suppliers that have achieved a certain score or higher from external ESG evaluation institutions. In addition, suppliers conduct a yearly evaluation of the quality, price, and delivery time, as well as activities related to environmental and climate change response, and we assist them in developing improvement measures and improvement activities. We, as a global company, make every effort to respond to climate change by cutting carbon emissions in all supply chains related to our businesses.
Product Carbon Footprint Calculation Support Plan
In order to manage emissions from raw materials, we quantitatively calculate the emissions of raw materials in concert with suppliers building a foundation for effective supply chain emissions management. We intend to devise a GHG management plan according to the properties of raw materials and products supplied by each supplier and grant incentives to suppliers that have shown excellent performance.
Support for Supply Chain Emissions Management
Hyosung Advanced Materials evaluates the level of energy management of its suppliers by participating in government-supported projects. Since signing business agreements for shared growth with large enterprises and SMEs with the Korea Energy Agency, we have been offering energy diagnosis and consulting services to suppliers. After a process of identifying factors that reduce energy and GHG emissions through on-site diagnosis, we undergo problem and economic analysis and discover improvement themes. We endeavor to save energy and reduce GHG emissions by continuously supporting our suppliers whenever necessary. Our plans include advancing ESG management in the supply chain, such as applying ESG management systems to overseas business sites.
Climate Response Awareness Building
At a startup idea contest hosted by Hyosung Group and Jeollabuk-do Province, the grand prize winner in the carbon fiber application field was an umbrella that strengthened durability by using carbon fiber. It also reduced the possibility of loss or theft by employing bluetooth technology. Hyosung Group has been holding various contests and projects to expand environmental awareness in society. We will exert efforts to raise the interests of many stakeholders in climate response.

HYOSUNG ADVANCED MATERIALS Sustainability

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