Meaning and Importance of ESG

1.Meaning

ESG is an acronym for Environmental, Social, and Governance, which represents the first letters of each term in English.
It has gained attention as a critical issue for achieving the sustainability of corporate management.

• Environmental
  Climate Change response
  Pollution Management
  Carbon Emissions
  Biodiversity Protection
• Social
  Human Rights
  Health and Safety
  Information Protection
  Community Relations
• Governance
  Corporate Governance
  Board Independence
  Ethical & Anti-corruption
  Supply Chain ESG Management

2.Importance of ESG

In the past, financial metrics that focused on how much profit a company made were considered important in corporate valuation. However, nowadays, there is a growing recognition that non-financial values such as climate change and social responsibility are more substantial in evaluating a company's worth. As a result, stakeholders such as shareholders, creditors, and governments are demanding ESG (environmental, social, and governance) as a non-financial value in addition to financial metrics when evaluating a company's value.

The Importance of Supply Chain ESG

1.Significance

More than ever before, there is heightened global interest in supply chain risk due to natural disasters, interstate wars, COVID-19 lockdowns, logistics crises, and other challenges. From a business continuity management perspective, maintaining the sustainability of global companies like Hyundai Steel requires evaluating the sustainability of their suppliers who provide goods and services to Hyundai Steel, as it is an important issue.

Supply Chain ESG Policy

1. Hyundai Steel Management Strategy

Hyundai Steel adopts "Supply Chain ESG Management" as a key management policy among various ESG management strategies, and continuously strives for improvement based on this policy. It aims to contribute to the establishment of a competitive steel ecosystem through the sustainable development of the supply chain.

2. Supply Chain Management Strategy

Hyundai Steel regularly diagnoses the ESG management environment of its partners and provides professional advice and support for improving their ESG performance. Furthermore, it promises to conduct ESG management environment diagnoses for partners within the scope that does not interfere with their management. Improving and enhancing partners' ESG performance is based on their voluntary participation and is reflected in Hyundai Steel's purchasing policies.

3. ESG-Based Procurement Strategy

① Hyundai Steel's procurement policies are operated in conjunction with the Supplier Code of Conduct and are continuously reviewed to
      prevent potential conflicts with ESG requirements.
② Suppliers may be excluded from contracts if they fail to achieve the minimum ESG requirements within the specified period.
③ The evaluation of suppliers' operations takes into account their ESG performance, providing an opportunity for superior-performing companies
      to be selected preferentially.
④ Hyundai Steel regularly conducts training for internal purchasers and/or internal stakeholders to implement the ESG-based procurement strategy.