Climate Change Data

Environmental Metrics

ESG Focus Areas

• Customer satisfaction
• Employees
• Environment
• Local communities
• Suppliers

Environmental Achievements

• Achieved 108% of the annual GHG emissions goal (140,821tCO2eq) in 2019
• 97.22% waste recycling rate
• Reduction of GHG emissions in 2019 compared to the annual goal by 0.686 tco2-eq/ton
• Obtained the highest rating in energy efficiency for "The NEXEN univerCITY" building
• Built an eco-friendly plant in Czech Republic

Social Achievements

• Launched "NEXT LEVEL GO," the untact tire replacement visit service
• Opened the "N-Gel Daycare Center" at Magok campus
• Established "Angel With Us Co., Ltd.," a standard workplace for people with disabilities
• Conducted various social contribution activities at home and abroad
• No-strike operation for 28 consecutive years

Governance Achievements

• 100% Attendance rate of non-executive directors in 2019
• 100% Completion rate of ethics training (April 2020)
• Established the Ethical Management Office directly under the Global CEO

Climate Goals & Targets

Environmental Challenges

• Increased working capital requirements due to sales growth and debt increase from investments
• Exposure to exchange risks due to high export sales
• Potential liquidity risks
• Legal risks related to complex interests
• Health and safety risks in tire manufacturing
• CSR risks related to human rights, environmental pollution, and anti-corruption

Mitigation Strategies

• Establishing exchange risk structure, improving cash flow, and improving foreign credit rating
• Adhering to asset and liability reconciliation by currency, and carrying out exchange risk management
• Preparing for liquidity crunch through integrated liquidity management and stable financial structure
• Building a thorough review system to ensure compliance with laws and regulations
• Establishing a health and safety management system, preventive measures, safety schools, and joint labor-management safety inspections
• Strictly monitoring conduct to prevent human rights violations, environmental pollution, and corruption; establishing a reporting system

Supply Chain Management

Responsible Procurement

• Ethical management
• Sustainable natural rubber policy
• Conflict Minerals policy

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards: Core option

Certifications: ISO 14001, OHSAS 18001 (being replaced with ISO 45001)

Third-party Assurance: Korea Management Register (KMR)

UN Sustainable Development Goals

• Good Health and Well-being
• Quality Education
• Gender Equality
• Clean Water and Sanitation
• Affordable and Clean Energy
• Decent Work and Economic Growth
• Industry, Innovation and Infrastructure
• Reduced Inequalities
• Responsible Consumption and Production
• Climate Action

NEXEN TIRE executes a variety of activities to achieve the UN SDGs in line with nations worldwide to fulfill its social responsibility.

Sustainable Products & Innovation

• N Blue S tire
• N Blue Eco tire
• Green Hive tire
• Breather tire

Awards & Recognition

• 2020 iF DESIGN AWARD
• Global Customer Satisfaction Competency Index (10 consecutive years)
• Export Tower Award
• Korea’s Internet Communication Satisfaction Index
• Excellent Company for Job Creation
• Korea Social Communication Satisfaction Index
• National Quality Management Award
• Korea Top Company Award
• Presidential citation for labor-management cooperation
• Korea’s Most Respected CEO Award
• Korea Financial Innovation Company Award
• Award for Excellence in Occupational Health
• Accreditation of achieving 4 multiples of zero accident
• AEO (Authorized Economic Operator)
• Korea HRD Award
• Web Award Korea
• KSI (Korean Sustainability Index)
• Gold Tower Industrial Merit
• Korea Design Award
• Energy Conservation Promotion Contest
• Minister’s Award for Excellent tax payer

Environmental Metrics

ESG Focus Areas

• Corporate Social Responsibility

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards

Third-party Assurance: Korea Management Registrar Inc. (KMR)

Environmental Metrics

ESG Focus Areas

• Economic
• Environmental
• Social
• Governance

Environmental Achievements

• Reduced annual energy usage by 86,400 kWh compared to 2017 by adjusting heating pump pipe structures
• Reduced energy usage by 69% by expanding usage of energy-saving, high-efficiency facilities
• Harvested 3,600 MWh of solar power energy at the Changnyeong plant
• 100% implementation of environmental management systems (EMS)
• 100% implementation of environmental risk assessments (ERA)
• Reduced waste by approx. KRW 24.4 million
• Approx. 23,000 t reduction of GHG emissions compared to the previous year

Social Achievements

• Recognized for maintaining an excellent workplace with regards to health and safety activities for the 13th consecutive year (Yangsan plant)
• Recorded no labor strikes for the 29th consecutive year
• Operated the N'Dea System for internal proposals
• Operated the Change Agent system to collect feedback from employees
• Enacted supplier CSR policy (2020)
• Conducted regular quality and CSR evaluations for suppliers
• Operated the One-Company, One-Village Program and the Dream Start Child Matching Project, led Hope Sharing Club volunteer activities, and signed an MOU with the Korean Red Cross
• Operated cultural foundations such as the NEXEN Wolsuk Cultural Foundation, Wolsuk Busan Leading Scholarship Committee, and the KNN Cultural Foundation
• Sponsored sports competitions, including motorsports, soccer, hockey, and golf

Governance Achievements

• Achieved professionalism and diversity in Board of Directors
• Enhanced the independence and transparency of the Board of Directors through committees
• 100% of employees have completed ethics training
• Conducted internal auditing for ethical management twice in each sector throughout 2020
• Operated a reporting center to catch violations to our Code of Ethics
• Designated a CRO and Risk Management Department to systemically and internally manage financial and non-financial risks
• Established the NEXEN Steering Committee (NSC) to respond quickly to the COVID-19 pandemic
• Zero cases of serious corruption found as a result of two corruption audits in 2020

Climate Goals & Targets

Environmental Challenges

• Uncertainty across the globe
• Strengthening of environmental regulations
• Heightened international efforts to reduce GHG emissions
• Revisions to the Occupational Safety and Health Act
• Increased interest in the safety of employees
• Growing social interest in ethical management
• Strengthened regulations on chemical substances
• Revision of the Material Safety Data Sheet (MSDS)-related requirements in the Occupational Safety and Health Act
• Reinforcement of global chemical substance-related regulations
• Increased demands for carbon neutrality from major carmakers
• Extreme weather events causing massive economic losses
• COVID-19 pandemic

Mitigation Strategies

• Turning crises into opportunities
• Continuously manage and increase the percentage of eco-friendly products
• Expand the utilization of energy-saving, high-efficiency equipment and photovoltaic facilities
• Implement a safety management system in all workplaces and offer safety training
• Manage harmful substances used as raw materials
• Implement regular ethical training for employees and a reporting center
• Establish a Non-Executive Director Recommendation Committee
• Establish a communication channel for each stakeholder
• Manage the supply network through the establishment of sustainable purchasing policies and by conducting ESG-related evaluations of suppliers
• Appoint legal support to assess compliance with legal and regulatory standards
• Identify and evaluate climate-related risks and opportunities
• Conduct periodic facility inspections and risk investigations
• Establish short-, mid-, and long-term goals and response strategies
• Carry out energy saving activities to enter the carbon credit market
• Continuously manage and reduce the energy consumption of new facilities and plants
• Develop new products or services through R&D and innovation
• Establish a company-wide GHG inventory to manage emissions and allocate the target reduction amount
• Conduct an energy audit to identify opportunities for energy reduction
• Establish and improve an Energy Saving Action Plan
• Hold a carbon-neutral briefing session for employees
• Re-establish chemical substance management system
• Conduct R&D of sustainable material and energy- and fuel-efficient technologies
• Manage water consumption and wastewater pollution concentration
• Set specific waste reduction targets based on environmental impact assessments
• Conduct on-site inspections of waste processing companies
• Replace outdated facilities, introduce high-efficient equipment, and invest in new technologies
• Participate in programs that promote the conversion of renewable energy
• Implement RE100
• Install air conditioners appropriately in each zone
• Optimize the cure time to improve productivity and save energy
• Minimize heat radiation from curing equipment and steam pipelines
• Replace old steam traps
• Conduct periodic energy reduction activities
• Sign a “Green Premium” contract to certify the use of renewable energy
• Establish a company-wide safety management system
• Conduct regular risk assessments
• Implement a progressive penalty system for violations of safety regulations
• Operate an obesity clinic
• Provide customized stretching training for suppliers
• Manage health data through quarterly health counseling sessions
• Conduct work environment measurements
• Provide regular consultations with medical specialists and nurses
• Strengthen light replacement management
• Conduct legal work environment measurements
• Conduct preventive measures for all possible accidents
• Develop stretching exercises and operate exercise programs
• Invest in building a new conveyor
• Conduct blood donation campaigns
• Sign an MOU with the Korean Red Cross
• Conduct ESG evaluation of suppliers
• Expand the scope of ESG evaluation to tier 2 and 3 suppliers
• Implement purchasing policy to provide benefits to excellent suppliers
• Distribute the Supplier CSR Policy and ethical management pledges
• Regularly evaluate ESG risks of suppliers
• Operate a data protection team
• Establish a comprehensive management system
• Conduct various data protection activities
• Implement data protection measures
• Conduct data protection training
• Conduct regular data protection and personal information protection monitoring
• Conduct risk analysis for company-wide systems
• Implement improvement measures
• Operate an ethical management report center
• Provide annual ethics training
• Conduct regular inspections to ensure that there are no violations of the Anti-Corruption Act
• Conduct training to comply with various anti-corruption laws
• Operate a risk management department
• Establish a company-wide response plan
• Conduct simulations for each scenario and prepare countermeasures
• Improve profit and loss through budget and cost reductions
• Defer expenses
• Secure caps
• Establish a risk management system
• Prepare guidelines for risk distribution
• Consider ways to expand OE volumes
• Establish an action plan for each stage of emergency management
• Adjust the factory utilization rate
• Reduce costs
• Secure cash

Supply Chain Management

Supplier Audits: 91% of suppliers were evaluated for their ESG performance in 2020

Responsible Procurement

• Supplier CSR Policy
• Sustainable Natural Rubber Policy
• Conflict Minerals Policy
• Fair trade pledge

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons and floods

Transition Risks

• Increased CER purchasing fees due to strengthened GHG emission regulations
• Reduction of tire demand due to unmet eco-friendly demands of customers

Opportunities

• Maximizing sales by accessing new and rising markets
• Development of new products or services through R&D and innovation

Reporting Standards

Frameworks Used: GRI Standards: Core Option, SASB, TCFD, AA1000AS v3

Certifications: ISO 14001, ISO 45001, IATF 16949

Third-party Assurance: Korea Management Register (KMR)

UN Sustainable Development Goals

• Goal 3
• Goal 4
• Goal 5
• Goal 6
• Goal 7
• Goal 8
• Goal 9
• Goal 10
• Goal 12
• Goal 13

Various activities to achieve the UN SDGs

Sustainable Products & Innovation

• N'blue ECO
• N'blue S
• N'FERA sports
• N'blue HD
• Green Hive
• Breathre

Awards & Recognition

• 2020 Best Supplier of the Year by Stellantis
• 2020 GM Supplier Quality Excellence Award
• National Service Award
• Grand Prize in 'Korea Labor-Management Cooperation' in 2021
• Bronze rating in the 2021 ESG evaluation conducted by EcoVadis

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• 100% implementation rate of environmental management system (EMS)
• 100% transition to Green Premium purchase for designated plants
• 98.2% environmental training completion rate (domestic worksites)
• Approximately 100% waste tire recycle rate

Social Achievements

• Ranked No. 1 in global customer satisfaction index for 13 consecutive years
• Received the Grand Prize in Korea Labor-Management Cooperation Awards 2021
• Recorded zero labor strikes for 30 consecutive years
• Selected as “Excellent Company in Quality Competitiveness”

Governance Achievements

• Zero corruption cases identified
• Named “2020 Best Supplier of the Year” by Stellantis
• Acquired global information security certification TISAX in 2022
• Improved EcoVadis rating from Bronze (2021) to Silver (2022)

Climate Goals & Targets

Environmental Challenges

• Reduced automobile production due to semiconductor shortage
• Rapid rise in ocean freight due to global logistics disruption
• Increased prices of raw materials
• Anti-dumping tariff imposition by the US

Mitigation Strategies

• Establishing mid- to long-term response strategies for supply chain instability
• Increasing the percentage of overseas sales by securing local distribution bases
• Strengthening core competencies by business sector
• Implementing the second extension of the European plant

Supply Chain Management

Supplier Audits: 106 cases in 2021

Responsible Procurement

• Supplier ESG Management Policy
• Sustainable purchasing policy
• Sustainable natural rubber policy
• Conflict minerals policy
• Ethical management pledge

Climate-Related Risks & Opportunities

Physical Risks

• Typhoon and flood

Transition Risks

• Increased CER purchasing fees due to strengthened GHG emission regulations
• Decreased tire demand as customers’ eco-friendly demand is not met

Opportunities

• GHG emission amounts are allocated to all companies according to the GHG emissions trading scheme
• Increasing sales by accessing new and emerging markets
• Developing new pattern and services through R&D and innovation

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, UNGC, UN SDGs

Certifications: ISO 14001, ISO 45001, IATF 16949, TISAX

Third-party Assurance: Korea Management Registrar (KMR)

UN Sustainable Development Goals

• Goal 1
• Goal 3
• Goal 4
• Goal 5
• Goal 7
• Goal 8
• Goal 9
• Goal 10
• Goal 11
• Goal 12
• Goal 13
• Goal 17

Activities aligned with various UN SDGs as detailed in the report.

Sustainable Products & Innovation

• N’blue Eco
• N’blue 4 Season 2
• N’FERA Sport
• WINGUARD Sport 2
• ROADIAN HTX 2
• ROADIAN ATX
• N’FERA Supreme
• Conqueror
• PUREBACK
• nGRIP
• Roadian GTX-EV
• NF Sport-EV
• N’Blue 4Season 2
• N’FERA Sport
• N’FERA Sport EV
• NPRIZ S

Awards & Recognition

• EcoVadis Silver Medal
• Grand Prize at the Gyeongsangnam-do Quality Control Circle Contest
• National Service Awards
• GM Supplier Quality Excellence Award
• Excellent Company in Quality Competitiveness
• Presidential Silver Medal at the National Quality Control Circle Contest
• Korea Labor-Management Cooperation Awards
• Trade, Industry, and Energy Minister’s Award at the Korea Brand Awards
• National Service Awards

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Developed tires where 52% of the material is comprised of eco-friendly raw materials
• Achieved a RE100 fulfillment rate of 5.86%
• Obtained international certifications for LCA assessments for three products
• Reduced dust emissions by 32%

Social Achievements

• Implemented human rights impact assessments
• Won the grand prize at the ‘33rd Labor-Management Cooperation Award’
• Recorded zero strikes for 31 consecutive years
• Employs 77 people with disabilities
• Operates in-house childcare centers

Governance Achievements

• Established a Sustainability Management Committee
• Acquired TISAX information security certification
• Maintained zero corruption cases

Climate Goals & Targets

Environmental Challenges

• Uncertain business circumstances
• Stricter environmental regulations
• Increased demands for carbon neutrality from automotive companies
• Strengthened responsibility due to stakeholders’ increased interest in human rights management
• Potential ESG risks in the supply chain

Mitigation Strategies

• Expanding supply to global automobile manufacturers
• Improving productivity and strengthening quality competitiveness
• Developing next-generation tires
• Establishing carbon emission reduction targets and implementing them proactively
• Actively reviewing the application of renewable energy to achieve RE100
• Implementing human rights impact assessments to identify and improve human rights risks
• Strengthening the company’s internal safety and health system
• Creating a sustainable and long-term partnership with suppliers
• Conducting ESG assessments for tier 1 raw material suppliers

Supply Chain Management

Supplier Audits: 77 cases/year

Responsible Procurement

• Sustainable purchase policy
• Sustainable natural rubber policy
• Conflict minerals policy
• Ethical management pledge

Climate-Related Risks & Opportunities

Physical Risks

• Losses from plant shutdowns due to typhoons and floods

Transition Risks

• Increase in CER purchasing fees
• Cost of investment in transitioning to low-carbon operation system
• Decreased demand for tires

Opportunities

• Developing new products and services through R&D and innovation
• Accessing new and emerging markets

Reporting Standards

Frameworks Used: GRI Standards 2021, SASB, TCFD

Certifications: ISO 14001, ISO 45001, IATF 16949, TISAX

Third-party Assurance: Korea Management Certification Agency (KMR)

UN Sustainable Development Goals

• Goal 7
• Goal 13

The report details how various initiatives contribute to these goals.

Sustainable Products & Innovation

• Eco Tech concept tire
• Tires designed exclusively for OE supply targeting EV

Awards & Recognition

• Silver medal at Ecovadis for two consecutive years
• Grand Prize at the 33rd Korea Labor Cooperation Award
• National Service Awards
• GCSI (Global Customer Satisfaction Index) No. 1 for 14 consecutive years