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THE ROAD TO SUSTAINABILITY HYUNDAI MOTOR COMPANY 2005 Sustainability Report Table of Contents Before You Read 2 Letter from Chairman & CEO In line with our corporate transparent management objectives, the Hyundai Motor Company (hereinafter, HMC) 4 Letter from Vice Chairman & CEO sustainability report is published annually to communicate HMC’s sustainability initiatives as a responsible global corporate citizen to interested parties and associated stakeholders. Based on HMC’s intentions, 6 Hyundai Motor Company Profile activities and performance related to the sustainability aspects affecting our stakeholders and the company, Corporate Philosophy 8 HMC strives to support stakeholders in making sound decisions regarding their involvement with HMC. 10 Interview of President The 2005 sustainability report is written in line with the 2002 Global Reporting Initiative’s (GRI) sustainability Management reporting guidelines. All information presented this year is reported in accordance with the principles of good reporting practice (i.e. relevance, reliability and comparability), however, readers may recognize some 13 Environment Management limitations as there exists a lack of generally accepted reporting standards. As a result, readers, may not be Ethics Management 14 able to accurately compare HMC’s performance to that of other companies without further data, analysis and 16 Global Management interpretation. 32 Quality Management 34 Brand Management The scope of this year’s report is expanded towards a more extensive global coverage of domestic and overseas operations. Detailed information pertaining to the domestic operations, namely HMC Headquarters, domestic manufacturing plants (the Ulsan, Asan and Jeonju plants), the Namyang R&D center and domestic Environmentally Friendly Product service centers including quantitative and qualitative data sets from overseas manufacturing plants (the Turkey 39 Environmentally Friendly Vehicles plant-HAOS, India plant-HMI, and the China plant-BHMC) are presented throughout the report. 42 Fuel Economy & Emissions Qualitative information on the environmental and social aspects of overseas R&D facilities located in the U.S., 48 Recycling Japan and Europe, overseas dealerships and the Alabama manufacturing plant (HMMA) completed in 2005 is also referred to in the report. Cleaner Production The report includes HMC’s sustainability activities from January 1st, 2004 until June 30th, 2005. 53 Energy / Greenhouse Gas Performance related data in the report are retrieved from data sets gathered from the period encompassing 54 Raw Materials / Waste January 1st, 2004 to December 31st, 2004, HMC’s fiscal year. For the collection of environmental and social 56 VOCs / Air Emissions / Wastewater Discharge data sets, HMC utilized AUTOWAY, a corporate intranet database system used for data collection and classification. In addition, HMC developed the 2005 HMC Sustainability Reporting Guidelines in February 59 Environmental Audits / Environmental Expenditure 2005 to standardize internal data collection and reporting procedures. For the purpose of the report, HMC has adhered to the sustainability reporting guidelines indicated above. Contents from the report are based on Communication with Stakeholders input from stakeholders as well as from HMC’s business performance. The report was written by an internal 61 Customer team of the HMC Environmental Management Strategy Planning Team, Corporate Planning Office of it’s 70 Employee Headquarters. The information presented follows HMC’s internal reporting guidelines and is based on official HMC documents. Contents are reviewed by managers and employees of related departments and approved 76 Supplier by the executive upper management before finalization and publishing. 80 Social Contribution As this is our third sustainability report, it focuses extensively on intents, business processes and structure, and performance, however, future reports will focus more heavily on performance analysis. 86 GRI Index 88 Internal Process Ensuring the Reliability of the Report 89 Independent Assurance Letter from Chairman & CEO 2 3 Hyundai Motor Company / 2005 Sustainability Report As a responsible corporate citizen, the sustainability management initiatives of HMC include efforts to protect and sustain the current and future environment and to enhance the overall welfare of human life. We have achieved lasting economic success by maintaining continued growth in profits and by providing employment security thus becoming one of the leading economic engines driving the Republic of Korea’s development and rise to prosperity. Perhaps the most visible proof of our success can be seen in the fulfillment of our social responsibilities. We have established an Ethics Charter and have come full circle in realizing the social and ecological responsibilities of our transparent management initiatives. This goes beyond monetary donations to communities in need. We are also giving back to society through proactive efforts and our joint involvement with stakeholders and employees to resolve social issues. As we are aware of the social ramifications of our vehicles and activities, ensuring sustainable mobility through the provision of environmentally compatible vehicles remains the cornerstone of our corporate social responsibility. Despite the depressed economic state of the domestic market, vehicle exports increased 11.4 percent year-on- year to 1.13 million units through our active expansion into new foreign markets. Since HMC’s first vehicle export in 1976, it has taken an astonishingly short 28 years to surpass the 10 million cumulative total export mark, a new record in the automotive industry. We have enhanced profitability and growth potential by improving product quality and by raising overall brand image. Such achievements have enabled us to be a significant contributor to the advancement of the Korean automobile industry. The environmental ramifications of the automobile are of paramount importance when considering the future of the automobile. In these changing economic times, HMC’s foremost sustainability issue revolves around the dual issues of developing an automobile which is both profitable and environmentally sustainable. Today, achieving sustainability incorporates the balancing of economic, social and environment issues not only for HMC, but for the rest of the automotive industry. From this perspective, we have established effective policies and strategies to actively tackle the environmental issues confronting us. At the same time, we are drawing on the input of stakeholders in the overall management practice that we at HMC undertake. Finally, HMC will not compromise the quality of the environment bequeathed to future generations merely for the sake of increasing current consumption. The foundation for the future is linked inextricably to the sustainable efforts of present stakeholders. As Korea’s most visible and best known multinational, we aim to perform future oriented sustainability management practice that takes intergenerational equality into consideration; we look to build upon existing trust-based relationships with stakeholders as a model automotive company; and we strive to become a global company that sets world class standards to be followed. Through our continuing efforts, we request your continuous participation and suggestions regarding our everyday activities. October 2005 Mong-koo Chung Chairman & CEO Letter from Vice Chairman & CEO 4 5 Hyundai Motor Company / 2005 Sustainability Report cleaner forms of energy take center stage, HMC has concentrated its efforts on the development of sustainable fuel technologies and on efforts to commercialize environmentally compatible vehicles based on Hybrid Electric Vehicle technology and Fuel Cell Electric Vehicle technology which promise to help reduce CO2 emissions. If environment management, a practice which fulfills social responsibility through cleaner production and environmentally friendly vehicles is action-oriented, then the implementation of ethics management initiatives, which promotes ethical awareness and conduct among our employees provides a moral foundation to overcome the difficulties in implementing sustainability management particularly when confronting a harsh business environment or a dilemma in the course of decision making. Since the implementation of its Ethics Charter in 2001, HMC has established a broad set of ethical policies and organizations; ethics management practice guidelines, ethics charter for the procurement office, employee ethics guidelines, ethics committee, cyber audit office and compliance program for fair trade. One of our key goals is to provide a balance between economic growth, social responsibility and environmental stewardship for the future. As a responsible corporate citizen that has always been at the forefront of environmental protection and national economic growth, HMC is actively involved in various philanthropic programs that contribute to social welfare. HMC's programs are designed to promote education, academic research, the arts, sports, international exchanges, and environmental protection. In addition, we actively support and encourage our employees to volunteer in the assistance of natural disaster victims and the socially disadvantaged. Recognizing that long-term support is as important as one-time donations or volunteer work, we are changing our volunteer programs so that they can provide more As the undisputed leader of the domestic automotive industry and

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