ESG Report 2022-2023 - Flipbook - Page 74
HIGHLIGHTS
TCFD
INTRO
ESG MANAGEMENT SYSTEM
(Task force data-on Climate-related
Financial Disclosures)
PRIORITY AREA
APPENDIX
Hankook Tire & Technology ESG Report 2022/23
In line with the TCFD recommendations, we make the following disclosures in the four areas of Governance, Strategy, Risk Management,
and Metrics & Targets for climate-related risks and opportunities.
Governance
Strategy
The Board’s oversight of climate-related risks
and opportunities
Disclose the impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
Hankook Tire & Technology has established the ESG Committee under the
Board of Directors to manage and oversee our response to climate change
from the highest decision-making body in 2021. With sustainability as our
core value, we discuss our ESG management strategy and mid/long-term
business plans, and climate-related agendas are reported at least once a year
to present the progress and investment reviews made on such key tasks as
the carbon neutral roadmap and company-wide GHG emissions reductions.
In 2021, our ‘carbon neutral roadmap’ was approved. Then in 2022, we
reported on our purchases of renewable energy and on our energy-saving
activities and efforts to join the SBTi to back the objectivity of our GHG
emission reduction target.
Climate-related Risks
Duration
Category
Shortterm
Policy and
legal risk
(current)
✓
Policy and
legal risk
(emerging)
CDP Mapping ― C1.1, C1.1a, C1.1b
Describe management’s role in assessing
and managing climate-related risks and opportunities
Midterm
✓
✓
Technology
risk
Response and Plan
- Increases in GHG emissions reduction rates and allowance auctioning
- Increasing direct/indirect costs (implementation,
allowance purchase, regulatory response)
- Develop the carbon neutral roadmap and strategies
- Monitor institutional changes and requirements concerning laws,
market information, and issues
- Implement energy and GHG emissions reduction activities by worksite
- Tighten allowances management including allowance trading strategy
and allowance cancelation
Legislation of climate disclosures
- Tightening stakeholder monitoring and emerging green washing
issues
- Increasing indirect costs (regulatory response)
- Decreasing profits (failure to meet stakeholder
needs)
- Create a Scope 3 inventory and establish a data management system
- Analyze climate-related risks and tighten response to the TCFD
Legislation for supply chain due diligence
- Supply chain management risks and securing of sustainable
suppliers
- Increasing direct/indirect costs(on-site due diligence, - Provide sustainability guidance to suppliers and establish a supplier
regulatory response)
due diligence system
CBAM (Carbon Border Adjustment Mechanism)
- Limitation on imports of carbon-intensive products
- Increasing direct costs (tariff, etc.), decreasing profits
- Conduct R&D on low-carbon products and raw materials and achieve
certification
- Implement GHG emissions reduction activities in the manufacturing
phase
Transition to low-carbon technology/raw materials
Development of resource circularity technology
(recycling, etc.)
- Risk of failure for investing in low-carbon technology/business
- Increasing R&D investment expenses to secure low-carbon
technology/raw materials
- Leading companies as a first mover in the market and acquiring core
technology
- Risk of declining competitiveness in costs and prices
- Increasing direct/indirect costs and capital expenses
(investment and transition expenses)
- Secure low-carbon raw material technology (preemptively discover
sustainable raw materials)
- Conduct R&D on eco-friendly products that are lightweight
with improved rolling resistance and analyze their suitability for
commercialization
- Review resource circulation technology (tire pyrolysis, recycling, etc.)
✓
Increasing customer demand for carbon emission
reductions and increased eco-friendly production
- Increasing expenses to purchase renewable energy
- Growing demand to manage the carbon footprint of products and
opt for low-carbon raw materials
- Failure to obtain contracts with customers
- Increasing direct/indirect costs (REC and renewable
energy purchase, rising raw material prices)
- Establish a renewable energy use strategy and review long-term
contracts (PPA, etc.)
- Pursue product LCAs
C2.2,
- Secure low-carbon raw materials and achieve certification (ISCC PLUS,
C2.2a,
etc.)
C2.3a
- Purchase renewable energy certificates, including green premiums
and RECs
✓
✓
✓
Key Risk
Policies related to GHG emissions reduction
regulations
- GHG emissions trading systems
- Country-specific NDCs and net zero framework acts
CDP Mapping ― C1.2, C1.2a
Market risk
Reputational
risk
Acute
✓
✓
✓
✓
Increasing fluctuations in fossil fuel prices
- Increasing energy expenses (electricity/LNG, etc.)
- Increasing direct costs (energy purchase)
- Review energy transition investments (PV installation, etc.)
✓
✓
Prevalent disapproval for the use of petroleum-based
raw materials
- Growing demand for use of eco-friendly(bio-based)/low-carbon raw
materials
- Increasing direct costs (raw material costs),
decreasing profits when customer needs go unmet
- Conduct R&D on bio-based raw materials (silica extracted from rice
husks, raw materials extracted from dandelions, etc.)
✓
✓
- Declining demand for products due to changing consumption
Changing trends in eco-friendly consumption
patterns i.e.: the expanding car sharing market and shift to micro
Discontinuation of internal combustion engine vehicle
mobility
sales (transition to EVs)
- Declining demand for existing products due to the discontinuation
of internal combustion engine vehicles
- Decreasing profits (decline in product demand/
sales)
- Continue efforts for new business investments/discovery and
business diversification
- Develop and produce EV-exclusive tires
✓
✓
✓
Fulfilling the net zero commitment
- Declining external credibility due to substandard deliveries
- Declining corporate value
- Lay the basis for sustained implementation (ESG operation/
internalization/management system)
✓
✓
✓
Expanding ESG assessments and increasing demand
to respond to ESG assessments
- Lower scores/grades in external ESG assessments
- Declining corporate investment value/share prices/credibility
- Declining corporate value and investments
- Identify and implement improvement tasks based on ESG assessment
results
- Proactively respond to the CDP and other global initiatives
✓
✓
Increasing frequency of abnormal and extreme
weather conditions including typhoons, torrential
downpour, heavy snowfall and hurricanes
- Damage to production/infrastructure due to cold waves/typhoons
affecting the areas where we operate
Change in climate/ecosystem due to rising average
temperatures
- Disruption to raw material supply and rising prices due to abnormal
weather conditions affecting the areas supplying imported raw/
subsidiary materials (natural rubber and others)
- Increasing frequency of physical risks and direct damage to
operational sites correlated to rising sea levels
- Increasing direct/indirect costs (factory
maintenance, damage recovery, rising production
costs, etc.)
- Engage in regular worksite maintenance (leak prevention and
waterproof work)
- Strengthen safety training for emergency preparedness
- Support the activities of the GPSNR
Physical
risk
Chronic
Potential Risk
CDP
Mapping
Potential Financial Impact
Longterm
Transition
risk
Hankook Tire & Technology’s CEO chairs the ESG Strategy Committee which
establishes company-wide directions for climate change adaptation and
makes critical investment decisions. The CAO (Chief Administrative Office)
is responsible for heading and overseeing our climate change strategy
and implementing relevant tasks. To ensure climate change adaptation
throughout the entire value chain, Chairs (responsible executives) of
the three committees of the Climate Change Committee, the Product
Environment Committee, and the Supplier Committee identify key tasks
and execute relevant investments to implement such tasks to bolster
management’s accountability.
The ESG Team, as a dedicated organization responding to ESG, manages
overall climate change adaptation, including our carbon neutral roadmap
and SBTi implementation, as well as TCFD disclosures, and regularly
reports relevant issues to responsible executives and the CAO while directly
escalating key issues to the Board of Directors. The ESG Strategy Committee,
attended by the CEO and C-suite members, meets once a year and the ESG
Steering Committees convene three times a year to review quarterly pending
issues and identify necessary improvements.
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