ESG Report 2022-2023 - Flipbook - Page 62
HIGHLIGHTS
INTRO
ESG MANAGEMENT SYSTEM
PRIORITY AREA
APPENDIX
Hankook Tire & Technology ESG Report 2021/22
62
Strategy
Disclose the impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
c) Describe the resilience of the organization’s strategy, taking into consideration
Type
Climate-related Opportunity
Potential Financial Impact
- Declining cost of purchasing raw materials
· Reduce waste from the workplace and
expand the use of renewable/recycled raw
materials
- Increase sales by launching high efficiency,
eco-friendly products
Hankook Tire & Technology referred to International Energy Agency’ (IEA)s Sustainable
Resource
efficiency
- Efficiently use and recycle limited
resources
- Develop eco-friendly raw materials and
improve the efficiency of materials
through recycling end-of-life tires
- Increase sales by reducing energy expenses
and manufacturing costs
- Attract investments from financial and
investment institutions through securing a
reputation for sustainability
- Generate profits through the strategic trading
of emission allowances
- Prepare for rising fossil fuel prices
The Sustainable Development Scenario (SDS) proposed by the IEA adheres to the
Energy
resources
- Improve the management and efficiency
of energy in the plant and distribution
system
- Secure sufficient emission allowances or
engage in strategic trading through the
reduction of emissions at the worksites
subject to the Emissions Trading System
- Favor eco-friendly fuel sources over fossil
fuel in manufacturing
- Increasing demand for eco-friendly
products
- R&D on new technology/products to
respond to climate change
- Improve sales by cornering new markets and
boosting the sales of low-carbon products
Markets,
products
and
services
- Diversify businesses and participate in
Resilience renewable energy business to mitigate
the shock of climate change
- Elevate market value through flexible planning
(infrastructure, buildings, land, etc.)
- Achieve carbon neutrality in a cost-effective
way
- Create new business opportunities through
business diversification
different climate-related scenarios, including a 2°C or lower scenario
Development Scenario and IPCC’s RCP 8.5 scenario in assessing our transition risks
and physical risks that stem from climate change.
Transition Risk
“Well below 2°C” pathway that represents a gateway to the outcomes targeted by
the Paris Agreement. This scenario presumes that net zero emissions will be achieved
by advanced economies by 2050, by China by 2060, and by 2070 for other world
economies. This scenario is consistent with limiting the global temperature rise to 1.65
°C with a 50% probability, and to 1.5°C after 2070. The SDS sets parameters such
as country-specific economic growth rates, changes in energy mix, fossil fuel prices,
and future carbon prices for each scenario and provides policy assumptions and costs
for each core technology to achieve the set scenarios. We focused on examining
prospects and policy advice for energy mix, carbon pricing and transport that are
closely associated with our business, and the analysis outcomes were integrated into
the implementation strategy, vision, and reduction target of our carbon neutrality
roadmap. The analysis of transition scenarios serves to illustrate this point as it
revealed that Emissions Trading System and carbon taxes could have the most direct
impact on our business operations. This prompted us to prioritize reducing GHG
emissions at our Korean and Hungarian operations that are subject to the Emissions
Trading System and to reflect implementation strategies spanning the use of
renewable energy, the optimization of energy efficiency, and energy-saving plans into
our carbon neutrality roadmap. The carbon neutrality roadmap was approved at the
regular Board meeting and was shared across the company. Its future implementation
status will be monitored each year through the ESG Strategy Committee and relevant
details are reported to ESG committees under the Board on an ongoing basis.
Physical Risk
The Representative Concentration Pathway (RCP) 8.5 was proposed in the IPCC’s 5th
Assessment Report under the assumption that GHG emissions continue at the current
level: this scenario predicts that human activity will cause CO2 concentrations to reach
940ppm by the end of the 21st century (2070 – 2099), with the average global
temperature rising by 4.8ºC and precipitation by 6.0%. If the RCP 8.5 is realized in
Korea, Korea’s average temperature will increase by 6.0ºC and precipitation by 20.4%
by the end of the 21st century (2070 – 2099), indicating Asia’s relative vulnerability to
climate change compared to the rest of the world. Presently, we operate eight plants,
five of which are located in Asia. According to the above climate prediction scenario,
our assets and plant operations could be disrupted along with the supply/demand
of raw tire materials. Natural rubber assumes the highest share of the total tire raw
material purchase value, of which most is imported from Southeast Asia. The rapid
rise in temperatures and the increasing frequency of torrential rainfalls, droughts and
other extreme climate events could erode the cultivation environment and disrupt
the supply of natural rubber, leading to severe fluctuations in raw material prices.
As such, we set our mid/long-term goal for the sustainable use of raw materials and
reflected this goal in our carbon neutrality roadmap, which was further supplemented
by the development of implementation plans including the review of alternative raw
materials. To mitigate GHG emissions in the distribution phase under our carbon
neutrality roadmap, we added plans to transition to eco-friendly means of transport
and optimize transport distances. In preparation for annual monsoon seasons and
natural disasters, we are examining leaks and conduct repairs, and will increase the
level of our monitoring in line with constantly developing weather events to further
systemize our field management.