ESG Report 2022-2023 - Flipbook - Page 61
HIGHLIGHTS
INTRO
ESG MANAGEMENT SYSTEM
PRIORITY AREA
TCFD
APPENDIX
Hankook Tire & Technology ESG Report 2021/22
61
In accordance with the TCFD recommendations, we make the following disclosures regarding climate-related risks and opportunities in the four areas of
Governance, Strategy, Risk Management, and Metrics and Targets.
(Task force data-on Climate-related Financial Disclosures)
Governance
Strategy
Disclose the organization’s governance around climate-related risks and opportunities
Disclose the impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
a) Describe the board’s oversight of climate-related risks and opportunities
- ESG committees under the Board of Directors deliberate and decide on issues
a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term
b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
concerning ESG risks, including climate change issues, across all our business
operations.
Type
- ESG committees under the Board hold regular quarterly meetings and ad-hoc
- Tightening climate-related governmental regulations in line with the
announced carbon neutrality initiatives of respective countries
- Tightening Emissions Trading System regulations and the resulting rising
obligation for the reduction of GHG emissions
- EU’s introduction of supply chain due diligence regulations
January 2022, the ‘carbon neutrality roadmap’ was reported and approved.
b) Describe management’s role in assessing and managing climate-related risks and
opportunities
- Increasing costs for investing in GHG/energy reduction technology and purchasing renewable energy in line with the adoption of the
GHG Emissions Trading System and the Carbon Border Adjustment Mechanism
- Elevated cost of purchasing allowances and the tax burden for the emissions that were not reduced
· Increasing expenses not foreseen in the initial financial plans due to the recent surge in prices of credits and electricity in Europe
- Declining sales from adverse impacts along the supply chain, their resulting damage liabilities and the negative sway they impose on
corporate reputation
Technology and market (short-term)
- The Chief Administrative Office (CAO) holds the authority and responsibility
headquarters are responsible for executing and implementing climate-related
Potential Financial Impact
Policy and law (short-term)
meetings to address ESG issues each year. At the regular Board meeting held in
to develop climate change response strategies, and heads of plants and/or
Climate-related Risk
Transition risk
investments. In particular, the CAO decides on major climate-related issues
- Declining use of vehicles in line with the realignment of the transport
system and evolving work conditions
- Growing demand to reduce GHG emissions along the tire manufacturing
supply chain
- Long-term deficit in passenger car/tire demand stemming from increased use of public transport, the expanding car-sharing market,
and the wider adoption of remote/work-from-home accommodations
- Need to explore and invest in innovative reduction technologies across diverse areas, including the shift to low-carbon materials,
improvement in the energy efficiency of products, and the establishment of a low-carbon distribution system
Reputation (short-term)
associated with implementing the carbon neutrality initiative, purchasing renewable
- Increasing expenses for GHG reduction activities (purchasing of renewable power, improvements in energy efficiency, fuel switching, and
- Demand the inclusion of climate-related activities such as the RE100 and
eco-friendly product certifications) to respond to ESG rating agencies
carbon neutrality in the terms of new tire supply contracts signed with car
- Expanding investments in developing high-efficiency, low-carbon products and achieving eco-friendly product certifications
OEMs and large-scale retailers
· R&D on tire rolling resistance reduction technology and lightweight features that impact the efficiency of energy consumption in the
- Customer demand (car OEMs, RE tire consumers) for eco-friendly products
tire use phase
- Reputational risks stemming from the assessments made by global ESG
· R&D on durability and wear resistance performance
rating agencies on climate change response metrics (GHG emissions
- Passive responses and low ratings leading to reputation degradation and decreasing investment value which could negatively impact
intensity, energy intensity, renewable energy consumption, etc.)
product sales and investments
renewable energy, and trading emission allowances.
- The ESG Team communicates climate-related trends and response strategies to
corresponding teams at the ESG Strategy Committee attended by the CEO annually
and to the Climate Change Committee and the Product Environment Committee
which convene three times each year. The Team also directly attends Board
meetings to report on climate-related issues.
Acute (long-term)
- Growing frequency and intensity of torrential rainfall, typhoons, hurricanes - Losses occurring due to damaged facilities, suspended production and/or damage recovery in the event of a natural disaster directly
and cyclones
impacting a plant or logistics center
Physical risk
Chronic (long-term)
- Rising average temperatures
- Increased number of natural disasters resulting from climate change
- Declining production of natural rubber due to climate change
- Increasing production costs in line with rising energy consumption for uses such as cooling
- Temporary suspension of production or delay in product distribution due to natural disasters in the raw material procurement or product
distribution process, leading to decreased sales and the need for damage recovery
- Rising cost of raw materials, such as natural rubber