SK Square

Climate Change Response

SK Square discusses climate change response strategies with the Board of Directors and management. We manage the impact on overall management through risk and opportunity identification and response processes.

Climate Change Response

Governance

SK Square reviews and approves company-wide climate change countermeasures and strategic directions through the ESG Committee under the BOD.
The ESG Committee manages and oversees the performance of the company’s response to environmental issues, which includes its climate change strategies.
The ESG committee is held regularly. It has an efficient climate change response process, including deliberation of climate change-related agendas that have been proposed through discussions with the management and the working-level consultative body.
In order to respond to climate change in a practical and effective way, SK Square evaluates the management's performance by environmental factors, including climate change strategy.

Climate Change Response Process

Manager
ESG Working-level Consultative Body
Management (Executive in Charge)
ESG Committee

The BOD Discussions on Climate Change Response

Net-Zero 2040

2040 Carbon Neutral Implementation Plan

SK Square responds to climate change by analyzing risk and opportunity factors by period. In addition, we have established and systematically managed the climate change risk management processes.

Climate Change Strategy(Risks/
Opportunities and Business Impacts)

Risks
	Physical risks	Transitional risks
Short-term (until 2024)	Increased costs from damage to worksites due to extreme weather conditions such as heat waves, fires, floods, water shortages and rise of sea levels	Increased additional costs due to the purchase of electric vehicles and renewable energy When there is negative feedback from various stakeholders on the response to climate change, the corporate value (stock price) declines, and the response cost increases
Mid-to- long-term (2025-2040)		Continuous cost increase due to the transition to renewable energy purchases Tightening of domestic and foreign eco-friendly regulations Increased cost of support and upgrading the environmental management of investment portfolio

Opportunities
Gain customer trust following participation in global initiatives, which increases the corporate value and profits Secure green business portfolio and increase return on investment thanks to increased value

Financial impact analysis and business strategies
Annual cost is expected to be more than approx. KRW 4 million** a year due to purchasing renewable energy(via Green Premium System*) Need to set a strategy to adopt REC and other reductionary measures, if the cost of purchase increases due to severe competition in bids

Category		Short-term (until 2024)	Mid-to-long-term (2025-2040)
Risks	Physical risks	Increased costs from damage to worksites due to extreme weather conditions such as heat waves, fires, floods, water shortages and rise of sea levels
Risks	Transitional risks	Increased additional costs due to the purchase of electric vehicles and renewable energy When there is negative feedback from various stakeholders on the response to climate change, the corporate value (stock price) declines, and the response cost increases	Continuous cost increase due to the transition to renewable energy purchases Tightening of domestic and foreign eco-friendly regulations Increased cost of support and upgrading the environmental management of investment portfolio
Opportunities		Gain customer trust following participation in global initiatives, which increases the corporate value and profits Secure green business portfolio and increase return on investment thanks to increased value
Financial impact analysis and business strategies		Annual cost is expected to be more than approx. KRW 4 million** a year due to purchasing renewable energy(via Green Premium System*) Need to set a strategy to adopt REC and other reductionary measures, if the cost of purchase increases due to severe competition in bids

* The green premium system allows electricity consumers to pay an additional premium to the existing electricity costs to KEPCO in order to purchase electrical power produced from renewable energy.

** 180.3t (reduction target in 2023) ÷ 0.0004594 (emission coefficient, tCO2eq/kWh) = 393MWh, 400MWh bid was made in consideration of the error in the emission coefficient. (Expected cost of KRW 4 million by applying KRW 10 per kWh, the lowest bidding price.)

Risk Management (company-wide risk identification and management process)

Identify
- Identify climate impact risks / opportunities
- Classified by risk area
Evaluate
- Business impact and financial assessment
- Assessing the impact of risk management aspects
Manage
- Establishment, implementation, management, and supervision of measures to respond to climate change
- Monitoring risk factors

Sustainability