현대제철 통합보고서

As global society becomes aware of the seriousness of the climate change issue, advanced economies and developing countries have committed to the Paris Agreement and, beginning in 2016, submitted voluntary GHG emission reduction targets. In accordance with this agreement, UN member states will submit long-term low greenhouse gas emission development strategies(LEDS) and Nationally Determined Contributions(NDCs) in an effort to keep global warming to below 2°C – and ideally below 1.5°C. In October 2020, the South Korean government, which ratified the Paris Agreement in 2016, pledged to become carbon neutral by 2050, announcing its '2050 Long-Term Low-Carbon Power Generation Strategy' and '2030 National GHG Reduction Target'. Hyundai Steel analyzes the risks and opportunities arising from global climate change-related issues, and is taking action to identify and minimize the associated transition risks across our business operations.

In accordance with the UN Framework Convention on Climate Change, Korea enacted the Greenhouse Gas Emissions Trading Act, which came into effect in 2015. Hyundai Steel was subject to carbon credit allocation in 2015, and has since complied with the emission trading system in earnest. Internally, we hold company-wide energy meetings to check and implement energy saving activities at each business site, such as optimizing the operation of heating furnaces, improving hot stove efficiency, and recovery of waste heat. Externally, we also participate in overseas projects to secure carbon credits, including the provision of cook stoves and water purifiers to the least developed countries. In this manner, we are taking proactive action to reduce greenhouse gases both at home and abroad, and are preemptively responding to the 'Basic Roadmap to Achieve the National Greenhouse Gas Reduction Targets by 2030'.

Six steel companies, including Hyundai Steel, made a joint declaration to achieve carbon neutrality by 2050 and launched the Green Steel Committee, which is composed of industry, academia, research institutes, and government ministries. Accordingly, we plan to develop new technologies(hydrogen-based DRI), reduce carbon emissions by changing production configurations, promote information sharing through the Green Steel Committee, identify government policy tasks, and promote international cooperation. We will also make continuous investments and develop innovative technologies, thereby transforming the steel industry into a green industry and contributing to Korea's leadership on carbon neutrality.

Through our participation in the Carbon Disclosure Project(CDP) since 2012, Hyundai Steel has been transparently disclosing, to global financial investors and stakeholders, our efforts to respond to climate change. In recognition of this, we have been presented with awards, such as sector leadership awards, for outstanding corporate responses to climate change. Moreover, we publicly disclose information concerning our climate change-related activities in accordance with international standards(GRI Standards, SASB, WEF, TCFD, etc.) via our integrated report, which is consistently released on an annual basis.

Hyundai Steel has been providing high-efficiency, energy-saving equipment to our suppliers free of charge since 2014, as part of our commitment to environmental risk management for the entire supply chain. Solar power equipment provided by Hyundai Steel to Junghan Precision Co., Samwoo Eco Co. and Woorim Machinery Co. has enabled these three suppliers to reduce their electricity costs by KRW 10 million a year. Such electricity savings are expected to enable our suppliers reduce GHG emissions of around 790 tons. In addition, by registering these reductions, and converting them to emissions credits, the Company has been able to save approximately KRW 27 million in procurement costs. We plan to continue supporting environmental management at our suppliers and hence build an effective climate change response system encompassing our entire supply chain.

Hyundai Steel is considering the establishment of a climate change management system and information disclosure in accordance with the recommendations of the TCFD¹⁾, which is a global consultative body established in 2015 to disclose climate change-related information. This management system includes what we do relating to governance, strategy, risk management, and measurement standards and targets, which are the four major disclosure items outlined in the TCFD recommendation. With that, we aim to provide information that is helpful in key decision-making by our stakeholders, including our investors.

In accordance with the K-EV100 Project²⁾ under the Ministry of Environment, Hyundai Steel has announced that it is converting its vehicle fleet to zero-emissions models and will report its plans and progress on a regular basis. Currently, Hyundai Steel has a total of 342 vehicles(11 owned, 331 leased), two of which are electric. In 2021, we expect to acquire 10 additional hydrogen cars, and follow up with a mid- to long-term roadmap and performance report. By taking part in this project, Hyundai Steel will receive support for the expense occurred for the conversion to zero-emissions vehicles, thereby reducing the cost burden, as well as GHG emissions and the cost of emissions credits. Furthermore, we seek to solidify the company's position as an eco-friendly business by proactively responding to the global trend toward carbon neutrality.

The use of data is becoming increasingly important in terms of Environmental Product Declarations(EPD) certification and improving the environmental and energy efficiency of steel products. Accordingly, Hyundai Steel has developed an environmental performance analysis system for our products, thereby securing transparency in the analysis and evaluation of our products' environmental impacts. This system automatically collects and processes all product data, including raw and subsidiary materials, utilities, by-products and environmental pollution. These measurements enable us to verify the monthly environmental impact of each product, thus conduct real-time monitoring, and automatically accumulated big data help us to optimize environmental impact management to each product. With our steel product analysis system, Hyundai Steel will respond proactively to the needs of our clients, who demand eco-friendly steel.

There is a global trend that the environmental performance of products is reflected in import regulations, as seen in the EU's 'Carbon Border Adjustment Mechanism' and California's 'Buy Clean California Act'. Hence, environmental performance is becoming increasingly important for steel products, too. Accordingly, Hyundai Steel has obtained EPD³⁾ certification for its sheet products, including Hot Rolled Sheet, Cold-rolled Sheets, Galvanized Steel Sheets and Plates. Environmental Product Declarations indicate, in a measurable way, the environmental impacts of the processes involved in all products and services, from the sourcing of raw materials to production, transportation, logistics, use and disposal, thus helping consumers to compare and choose environmentally-friendly products. Hyundai Steel acquired the globally recognized International EPD, based in Sweden, which will serve as a bridgehead for its entry into the strictly regulated European market. The certification reflected the latest standards, such as quantifying GHG reductions from the recycling of steel materials, which is not yet covered by Korea's domestic standards, and the effect of using by-products generated in the steel-making process. Accordingly, we expect to raise the global competitiveness of our steel sheets, including Automotive Steel Sheets and Plates for shipbuilding.

The steel-making process generates waste heat in various forms. High-temperature waste heat is recycled in steam production and heat reactors, but mid-temperature waste heat is difficult to recycle due to limited recovery methods and low efficiency. Consequently, Hyundai Steel is developing thermoelectric technology that recovers waste heat in electrical form from low-temperature heat areas, as a way to improve the energy efficiency of our steelworks. The advantage of this technology is that it requires facilities of simple configuration, low probability of failure, and smaller size compared to conventional power generation – such as thermal and hydro power. It is also expected to help the Company reduce production costs, as green energy can be produced without generating greenhouse gases.

According to a report by the Intergovernmental Panel on Climate Change(IPCC), sustained global warming caused by climate change will result in an increasing number of natural disasters, such as heatwaves on land and at sea, floods, earthquakes, a greater frequency of tropical storms, and rises in coastal sea levels. Through scenario analyses, Hyundai Steel is striving to preemptively identify such physical risks and develop effective countermeasures in response.

Hyundai Steel is conducting a scenario analysis of mid- to long-term risks relating to abnormally high temperatures⁴⁾ in South Chungcheon Province(Chungnam), where we maintain a business presence. As a result of global warming, our sites in areas such as Incheon, Dangjin, and Pohang are exposed to abnormally high temperatures and drought every year. In particular, analysis reveals that Chungnam, where our Dangjin site is located, is expected to become a subtropical region by 2050 due to the rising temperatures.

Hyundai Steel signed an MOU with the city of Dangjin on October 29, 2020, pledging win-win cooperation in reducing GHG emissions from steelworks and improving the environment. To reduce GHG emissions, the MOU includes installing pollution treatment equipment, improving prevention equipment, and expanding internal by-product recycling and reduction of environmental load. The aim is to recover waste heat, save fuel, improve energy efficiency and improve the environment. To implement this agreement, Hyundai Steel plans to make additional investments of KRW 490 billion over the five years from 2021. Furthermore, by installing coke dry quenching units(CDQ) by 2025, we will contribute to GHG reductions by recovering waste heat from the coke oven cooling process and using it as a renewable method of generating steam and electricity. Accordingly, we expect to achieve an annual GHG reduction of approximately 500,000 tons. Additionally, to reduce emissions of air pollutants, we plan to carry out all-around environmental improvements with additional installations and upgrades of prevention equipment and the installation of Alternative Marine Power (AMP) for ships in port. Above all, Hyundai Steel will strive to preemptively address environmental problems, going above and beyond the standards of environmental regulations by developing advanced environmental systems and establishing improvement measures.