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Hyundai's ESG and Sustainability Insights

General Report January 9, 2025
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TABLE OF CONTENTS

  1. Summary
  2. Environmental Management
  3. Social Responsibility
  4. Governance
  5. Conclusion

1. Summary

  • Hyundai Motor Company's approach to Environmental, Social, and Governance (ESG) management highlights its comprehensive commitment to sustainable practices. The company focuses on reducing environmental impact through carbon neutrality efforts, climate change initiatives, and fostering a circular economy. This includes setting ambitious targets for emissions reductions, enhancing energy efficiency, and protecting biodiversity. Socially, Hyundai prioritizes human rights management and the well-being of employees, alongside maintaining a sustainable supply chain. Governance is ensured via a structured framework that emphasizes board independence, ethical management, and risk assessment. These initiatives collectively underscore Hyundai’s strategy for fostering sustainable growth and meeting global ESG standards.

2. Environmental Management

  • 2-1. 2.1 Environmental Management System

  • Hyundai Motor Company has established a comprehensive environmental management governance framework that involves participation from its highest decision-making body. This governance ensures management and supervision of environmental practices at the company level based on the company's environmental policy. All production plants are certified under ISO 14001, and environmental assessments are conducted annually to preemptively identify impacts and risks. Any negative impacts identified are addressed through specific improvement measures. This systematic approach strengthens Hyundai’s capability to respond to global environmental challenges, including climate change, the circular economy, and biodiversity.

  • 2-2. 2.2 Response to Climate Change

  • Hyundai recognizes its responsibility in addressing climate change and has implemented strategic initiatives to mitigate greenhouse gas emissions while actively participating in global carbon neutrality trends. The company adopts distinct approaches based on its sustainable technology, ensuring its operations are environmentally responsible. A governance structure is in place which includes the Board of Directors and management committees that oversee and guide Hyundai's climate change strategies. The company sets goals for carbon neutrality by 2045, including integrating renewable energy into operations and enhancing efficiency in its manufacturing processes.

  • 2-3. 2.3 Establishment of a Circular Economy

  • Hyundai aims to foster a circular economy by creating systems that promote recycling and sustainable resource usage throughout its operations. This involves the development of mechanisms to handle waste effectively, ensuring that material cycles are closed, and minimizing waste generation at every stage of production. Through its environmental policies, Hyundai emphasizes the need for strategic planning in materials management, driving towards a zero-waste goal. Comparative assessments reveal progress in creating a responsible supply chain that supports circular economic principles.

  • 2-4. 2.4 Reduction of Environmental Impact

  • Hyundai has implemented various initiatives aimed at reducing its environmental footprint across the entire value chain. These initiatives include setting ambitious targets to lower emissions, enhancing energy efficiency protocols, and regular monitoring of environmental performance metrics. Investments in cleaner technologies and sustainable practices create a future-oriented operational strategy that significantly minimizes the environmental impact of Hyundai's manufacturing processes. Ongoing internal assessments and compliance with strict environmental standards contribute to continuous improvement in these areas.

  • 2-5. 2.5 Protection of Biodiversity

  • Hyundai is committed to protecting biodiversity through initiatives that acknowledge and manage ecological impacts arising from its business activities. The company adopts strategies that not only aim to minimize harm to ecosystems but also actively promote restoration and enhancement of natural habitats. This commitment to biodiversity is embedded in Hyundai's operational processes, ensuring biodiversity considerations are integrated into decision-making. Regular evaluations and collaborations with environmental organizations serve to bolster these efforts and improve performance in biodiversity conservation.

3. Social Responsibility

  • 3-1. Human Rights Management

  • Hyundai Motor Company actively supports international standards and guidelines related to human rights and labor. The company promotes human rights management across its global supply chain, collaborating with relevant departments to implement practical improvements. Annual due diligence is conducted to identify potential and actual human rights risks at business sites and among suppliers, followed by the implementation of appropriate mitigation measures. Hyundai aims to establish a corporate culture that protects and respects the human rights of all stakeholders, focusing on continuous improvement in its governance, training, policy commitment, due diligence, and remedy processes.

  • 3-2. Health, Safety, and Welfare of Employees

  • Hyundai prioritizes the health, safety, and welfare of its employees by maintaining a comprehensive safety management system. The company implements various safety measures and health programs to ensure a safe working environment. Employee welfare initiatives include customized benefits and support resources aimed at enhancing overall employee well-being. Furthermore, Hyundai deeply values the physical and psychological safety of its workforce, promoting a supportive workplace culture through ongoing training and awareness campaigns.

  • 3-3. Sustainable Supply Chain

  • Hyundai's commitment to sustainability extends to its supply chain by implementing eco-friendly practices and ethical sourcing of materials. The company conducts assessments to ensure suppliers meet ESG requirements, focusing on reducing environmental impact and promoting socially responsible practices. Hyundai collaborates with its suppliers to enhance sustainability efforts, ensuring compliance with international environmental standards and efficiency targets throughout the supply chain.

  • 3-4. Customer Experience Innovation

  • Hyundai focuses on enhancing customer experience through innovative solutions. The company invests in technology and service improvements to provide high-quality interactions at every touchpoint. Initiatives include the development of user-friendly interfaces, enhanced customer service training, and the implementation of feedback loops to continually refine service offerings based on customer insights.

  • 3-5. Creating Shared Value

  • Creating shared value is a core principle at Hyundai, where the company integrates social and environmental considerations into its business strategies. Hyundai aims to generate economic value while positively impacting communities and environments where it operates. By fostering collaboration with local communities and stakeholders, Hyundai drives initiatives that contribute not only to its success but also to societal progress.

4. Governance

  • 4-1. 4.1 Board-centered Management System

  • The governance aspect of Hyundai Motor Company’s ESG management focuses on establishing a robust corporate governance framework that enhances corporate value and enables sustainable growth. The Board of Directors (BOD) operates as the highest decision-making body, ensuring balanced growth through strict supervision of management activities. The BOD is comprised of 12 members, with a majority (seven) being independent directors, thereby ensuring independence as mandated by the Korean Commercial Act. The average tenure of all directors is 3.6 years, with independent directors' terms limited to a maximum of six years. Directors are appointed through a resolution from the general shareholder's meeting, ensuring a transparent appointment process. Diversity in the board is emphasized, including gender, nationality, and expertise, with independent directors bringing varied perspectives. The company actively works to maintain the independence of its directors by limiting concurrent positions outside the company and promoting a diversity policy in director appointments.

  • 4-2. 4.2 Shareholder-friendly Management

  • Hyundai Motor Company prioritizes the rights and interests of its shareholders by ensuring a transparent decision-making process in its governance. Regular shareholder meetings are held to involve shareholders in key corporate decisions, including director appointments and compensation policies. The company engages in proactive communication through corporate investor relations (IR) activities, helping investors stay informed about corporate performance and governance practices. For the fiscal year ending 2023, Hyundai reported a total of 274,169,670 shares issued, including ordinary and preferred stocks, adhering to governance principles that promote shareholder engagement and protection.

  • 4-3. 4.3 Ethics and Compliance Management

  • The ethical and compliance management framework at Hyundai is overseen by the Board, with a focus on upholding the rights of shareholders and promoting transparency. The company has established a rigorous compliance system designed to prevent legal risks and foster an ethical corporate culture. Board members participate in compliance training, and independent directors are specifically tasked with monitoring compliance efforts within the organization. This includes the regular evaluation of the company's adherence to legal standards and ethical practices, as well as the establishment of a compliance support system that encourages employees to report any unethical behavior.

  • 4-4. 4.4 Risk Management

  • Hyundai's risk management practices are designed to effectively address various potential risks that could impact the company’s operations and growth. In 2023, Hyundai established a dedicated Business Risk Management (BRM) unit reporting directly to the CEO, aimed at responding promptly to both internal and external risks related to supply chain, production, and sales. The company's governance framework facilitates ongoing assessments of risk management strategies, ensuring alignment with global best practices to enhance resilience against market fluctuations and regulatory changes.

Conclusion

  • Hyundai Motor Company demonstrates substantial progress in implementing ESG practices, showcasing its role as a leader in automotive sustainability. The report emphasizes the company's significant achievements in environmental management, such as its advancements toward carbon neutrality and biodiversity protection. Social responsibility efforts are equally highlighted, with a focus on human rights, employee welfare, and supply chain sustainability. Governance reforms underpin these efforts, aiming to uphold transparency and ethical standards. However, Hyundai faces challenges in maintaining momentum and ensuring comprehensive stakeholder engagement. Future prospects include enhancing renewable energy adoption and reinforcing ethical practices. Practically, these ESG initiatives not only advance Hyundai’s market position but also contribute to broader environmental and social outcomes, setting a benchmark for sustainability in the automotive industry. Continuous evaluation and adaptation will be essential for Hyundai to sustain and expand its ESG initiatives while navigating future challenges.

Glossary

  • Hyundai Motor Company [Company]: Hyundai Motor Company is a global automotive manufacturer that emphasizes sustainability and responsible corporate practices. It is committed to reducing its environmental footprint, advancing human rights within its operations, and ensuring robust governance structures. The company's initiatives reflect its dedication to meeting the expectations of stakeholders and contributing positively to society and the environment.

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