NO.1 TECHNOLOGY IN YOUR MIND
Global Power Plant Solution Provider
KEPCO KPS Sustainability Report 2017-2018 About This Report Contents
About This Report INTRODUCTION Sustainability Management Mission Statement 04 This report is the seventh sustainability report of the KEPCO Plant Service CEO Message 06 & Engineering Co., Ltd. (hereinafter referred to as “KEPCO KPS”). KEPCO Introduction of KEPCO KPS 08 KPS publishes a sustainability report on a biennial basis, with the aim of Business Overview 10 describing our performance in terms of economy, environment and social Sustainability Highlight 14 responsibilities. We would also like to facilitate good understanding of our sustainability management efforts for our stakeholders.
Reporting Principles SOCIAL VALUE Social Value Creation with KEPCO KPS 18 This report has been prepared in accordance with the Core option of the CREATION Social Value Creation Cases 20 Global Reporting Initiative’s (GRI) Sustainability Reporting Standards and reflects the ISO 26000 and the ten principles of the UN Global Compact (UNGC). The financial information included in this report has been MATERIAL ISSUES Sustainable Growth 24 prepared in accordance with the Korean International Financial Reporting Standards (K-IFRS), and financial performance is reported based on Strengthening the Competitiveness of Core Businesses 26 consolidated financial statements. Securing Engines for Future Growth 30
Reporting Period and Scope Responsible Management 34 Ethical Management 36 The reporting period is from January 1, 2017 to December 31, 2018. In terms of quantitative performance, data from the past three years have Strengthening Shared Growth 38 been provided in this report to show yearly trends, while data from the Strategic Social Contribution Activities 42 first half of 2019 have been included for certain qualitative performance. Eco-friendly Management 46 This report covers economic, social, and environmental activities and performances of KEPCO KPS headquarters, its 59 business sites in Korea Environmental Management Activities 48 and 14 overseas sites and offices. Responding to Climate Change 50
Assurance Integrity Management 52 Talent-centered Management 54 The financial information included in this report has been audited by an independent auditing company. In order to ensure objectivity, fairness and Safety-first Management 58 reliability, the contents of this report have been verified by an independent certification body, Korea Management Registrar, a third party organization with no ties to KEPCO KPS. SUSTAINABILITY Sustainability Management Strategies 62 MANAGEMENT Management Performance 64 Inquiries Governance 66 This report is published in Korean and English, both available on the Risk Management 68 KEPCO KPS website as well as the websites of GRI and UNGC. We listen to the voices of our stakeholders via our website, email, and various other Information Protection 70 channels. Stakeholder Engagement 72 Materiality Analysis 74
Website www.kps.co.kr
Address (58326) KEPCO KPS, 211 Munhwa-ro, Naju-si, Jeollanam-do, APPENDIX Quantitative Performance Data 77 Republic of Korea Human Right Management 85 Tel +82-61-345-0114 GRI Standards Index 86 Fax +82-61-345-0115 Independent Assurance Statement 88 E-mail [email protected] UN Global Compact Principles 90 Awards and Associations 91 Glossary 92 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 04 / 05 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Economy: Sustainable Growth
We pledge to enhance the company’s profitability by discovering new growth engines and corporate value by establishing a sound financial structure. Sustainability Management We pledge to lead the development of maintenance engineering technologies through continued technological innovations. We pledge to improve management efficiency and secure competitive edge through constant and self-initiated Mission Statement management innovations.
All employees of KEPCO KPS hereby pledge to Society: Integrity Management fulfill the company’s social responsibilities as a We pledge to enhance transparency in our conduct of business through stringent work processes and disclosure in accordance with ethical management principles. global solution provider for power plants, We pledge to fulfill our corporate social responsibilities by actively implementing compassionate management. We pledge to strengthen our partnership with all stakeholders to promote mutual values. contribute to the sustainable growth of society, nation and mankind Environment: Eco-friendliness by implementing sustainability management that We pledge to apply environmentally-conscious technologies to make our maintenance services eco-friendly. values all stakeholders We pledge to contribute to solving future energy issues by developing renewable energy technologies. We pledge to preserve the environment by addressing climate change issues in cooperation with KEPCO-affiliated with respect to economy, environment, society companies. and human race, and People: People-oriented achieve continued growth toward becoming a global top-tier service provider for power plants. We pledge to foster globally competent talents with creative and professional minds. We pledge to enhance the quality of life for employees by establishing a mutually beneficial labor-management culture and promoting employee welfare. We pledge to implement human rights management by preventing accidents, improving employee health as well as the treatment of social minorities, and complying with various anti-discrimination principles. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 06 / 07 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
CEO Message
Dear valued customers, KEPCO KPS employees, partners and Overseas, our nuclear power plant maintenance project in We are becoming a public enterprise trusted by Korean other stakeholders, I would like to take this opportunity to the United Arab Emirates (UAE), the first contract in Korea people by actively engaging in activities generating not only convey my sincere gratitude for your continued support and to export its nuclear power plant, is being executed in a economic but social values. interest in KEPCO KPS. stable manner, while our thermal power plant O&M business in India, Pakistan, Jordan and other parts of the world are In 2018, we accomplished meaningful social achievements Since its foundation in 1984, KEPCO KPS has played a yielding successful results. We partner with domestic small- through a wide range of social value generation activities pivotal role in securing the safety of the power industry and and medium-sized enterprises (SMEs) for overseas projects in economic, social, and environmental areas. These enhancing the reliability of power generation facilities. By to facilitate their entry into the global market and create jobs. achievements included being selected as a sector leader enabling a stable power supply across the country through by DJSI (Dow Jones Sustainability Indices) Korea for ten professional maintenance services for Korea’s core thermal, Following the expansion of energy conversion and eco- consecutive years, winning the Korea Financial Management nuclear and hydro power generation facilities, as well as friendly power generation, we are trying to gain the upper Grand Prix for four consecutive years, maintaining our status transmission and substation facilities, we have contributed to hand in the nuclear decommissioning business by developing as a certified family-friendly workplace for three consecutive national economic development and enhanced the quality of the necessary technologies, cooperating with advanced years, and becoming certified as a public sector leader in people’s lives. companies, and fostering talent. Furthermore, we are human resource development. investing our efforts in developing a profit-sharing business In the aftermath of the recent global economic downturn, model to promote the renewable energy industry. In particular, we are engaged in efforts to actively participate the power industry is continuing to experience low in government policies to generate social values. We have growth. Uncertainties in the market are also increasing Meanwhile, as it becomes more difficult to construct new established a transparent response scheme based on our due to paradigm shifts in the energy industry, such as power plants, the importance of improving the performance anti-bribery management system in order to ensure that energy conversion and digital transformation. Despite such of aging power generation facilities and environmental transparent and ethical management takes root. Also, we difficulties in our internal and external business environment, facilities is being emphasized. In this regard, we are focusing actively take part in creating quality jobs by transitioning our sales have continuously grown since reaching KRW 1 on developing the business of improving the performance of contingent workers to permanent employees and expanding trillion in 2012. In 2018, our sales and operating income aging thermal power plants as our next-generation business the hiring of local labor force. Furthermore, we play a leading reached KRW 1.2425 trillion and KRW 191.5 billion, by utilizing our competencies in facility diagnostics, while role in creating a sound industrial ecosystem built on sharing respectively. contributing to generating customer values as an effect of and co-existence to achieve shared growth with our SME substituting power plant construction. partner companies. Pursuant to Vision 2025, our mid-to long-term corporate strategies, we will strengthen our efforts to achieve Finally, we will strengthen our existing businesses by Going forward, we will achieve a balance in our economic sustainable economic development by focusing on our reinforcing the competitiveness of our core business. Based and social performances so that we may fulfill our social strategic goals of reinforcing the competitiveness of our core on the fundamental principle that companies do not exist responsibilities and roles as a major public enterprise, in businesses and finding new engines for future growth. without customers, we will carry out various business addition to disclosing our activities in a transparent manner activities focused on creating customer values. By providing so as to accomplish further achievements and outcomes. meticulous services to client companies regarding their power We ask for your continued support in building a bright With the aim of becoming a power plant solution provider of global standing, we are strengthening our generation facility needs, we will improve the efficiency of sustainable future for KEPCO KPS. economic sustainability based on our mid-to long-term vision named Vision 2025, while solidifying our their facilities and enhance performance reliability. Thank you. position as a much-trusted public institution through a range of activities to generate social values. October 2019 CEO Kim Bum-Nyun KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 08 / 09 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Taking a Leap toward Becoming a Global “Solution Provider” Organizational Status Introduction of for Power Plants Headquartered in Naju, Jeollanam-do, KEPCO KPS operates four divisions and 16 departments in For the past 35 years, KEPCO KPS has grown into a leading company in the field of power plant its headquarters, in addition to 59 offices in Korea and 14 oversea sites. KEPCO KPS facility maintenance through relentless efforts in technological advancement and fostering talents. Its technological expertise has also been widely recognized in overseas markets. President Executive Auditor Location of Date of Foundation CEO Capital No. of Employees Primary Authority Headquarters Renovation & Future Creation Dept. Quality & Management Dept. Audit & Inspection Dept.
Ministry of Trade, 211 Munhwa-ro, Naju-si, KRW 9 billion Emergency & Safety Management Dept. April 1, 1984 Kim Bum-Nyun 5,975 Industry and Energy Jeollanam-do, (As of July 31, 2019) (MOTIE) Republic of Korea
Business Management Div. Power Generation Business Div. Nuclear Power Business Div. New Business Development Div. Shareholder Composition Sales* Overseas Sales Corporate Planning Dept. Power Generation Business Nuclear Power Business Dept. New Business Development (Unit: %) (Unit: KRW 100 million) (Unit: KRW 100 million) Dept. Dept. General Affairs Department Overseas Power Generation Overseas Nuclear Power New & Renewable Energy Business Dept. Business Dept. Business Dept. Investors 12,368 12,425 1,443 Human Resources 12,231 1,288 and Foreign 1,067 Innovation Department Electric Power Business Dept. KEPCO Investors 51.0 Coexistence & Cooperation 38.3 Dept. Employee National Information & Communication Ownership Pension Security Dept. 0.2 Service 10.5 2016 2017 2018 2016 2017 2018 (As of December 31, 2018) Thermal Power Nuclear Power Pumped Storage Power Transmission & Substation Special Sites Overseas Sites/Offices * On K-IFRS consolidated basis 23 Sites 20 Sites 6 Sites 10 Sites 14 Sites Seoul, Seoincheon, Boryeong, Kori 1/2/3, Hanbit 1/2/3, Hanwool 1/2/3, Wolseong 1/2/3, Seoul TS Offices, Daejeon Human Resources BNPP Trial Operation, Major Businesses (Business Areas) Ulsan, Samcheonpo, Taean, Saewool 1, Cheongpyeong, Muju, Samnangjin, Yangyang, TS Offices, Busan TS Development Center, Plant Jharsuguda, Ambatovy, ATPS, Dangjin, Yeongheung, Cheongsong, Sancheong, Yecheon Offices, Daegu TS Offices, Business Service Center, Al-manakher, Bhavnagar, KEPCO KPS is a professional public enterprise that provides comprehensive services regarding Hadong, Incheon, Pyeongtaek, Gwangju TS Offices, Nuclear Power Technology Tigre, BNPP, Chanderiya, diagnostics and performance improvement of power plant facilities, power generation facilities at Honam, Busan, Jeju, Gunsan, Wonju TS Offices Service Center, IPP Business Daharki, Meghnaghat, India Yeosu, Namjeju, Samcheok, Center, Technology Solution Office, South Africa Office, home and abroad, renewable EPC, industrial facilities, and transmission & substation facilities. We Shin-boryeong, Donghae, Center, Hwaseong, Anyang, UAE Office also operate the Plant Business Service Center for maintenance and repair of core components Ilsan, Andong, Bundang Pocheon, Dongtan, Paju of power generation facilities, the Nuclear Power Technology Service Center, and the Technology 59 domestic and 14 overseas business sites Solution Center for the development of core technologies. At the same time, we carry out renewable energy projects involving solar and wind power. Subsidiary and Contributing Companies KEPCO KPS has one subsidiary and three contributing companies as follows. 2018 Sales Category Major Clients Description (Ratio, %) •Routine maintenance and construction, planned preventive maintenance and construction, renovation and Thermal Power KRW 426,391 million Shareholding test drive maintenance of thermal power facilities in Korea Category Company Name Business Description Plant Project (34.3%) Ratio (%) •Repair of high temperature components of gas turbines, etc. •General management and operation of businesses in the KEPCO, KHNP, •outine maintenance and construction, planned preventive maintenance and construction, renovation and Nuclear/Hydro KEPCO KPS Philippines public power KRW 490,255 million test drive maintenance of nuclear/hydro power facilities in Korea Subsidiary 99.99 Power Plant Philipines Corp. •New business development and marketing in the companies in Korea, (39.4%) •Implementation of advanced practical technologies for nuclear power plant maintenance, as well as Projects Philippines etc. development and commercialization of independent technologies, etc. •Acquisition of licenses for source technologies regarding Power KRW 82,947 million •Maintenance of power transmission lines and live wires, HVDC facility inspection and maintenance, general Contributing KEPCO Uhde coal gasification Transmission and 2.40 (6.7%) supervision of electrical work, etc. Company Inc. •Promotion of and participation in domestic/global Substation Projects projects utilizing coal gasification technology Korea District •Maintenance of power generation facilities in Korea owned by entities other than KEPCO •Songdo Environmental Resource Center incineration Heating Corp., KRW 98,588 million External Projects •Renewable energy projects, etc. Contributing Incheon New residual heat (3MW) power generation project private power (7.9%) 29.00 •Research and technology-related services, etc. Company Power Co., Ltd. •Business diversification through renewable energy companies, etc. industry (incineration residual heat), etc.
Power companies in KRW 146,238 million •Operation/Maintenance of power generation facilities overseas •Businesses pertaining to construction, management, and Overseas Projects Contributing Smart Power operation of SMART nuclear reactors Korea and overseas (11.7%) •KEPCO KPS PHILIPPINES CORP 4.35 Company Co., Ltd. •Investment in companies constructing SMART nuclear reactors with technologies developed in Korea KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 10 / 11 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Business Overview Major Business Portfolio
KEPCO KPS ensures stable supply of electric power, the “main artery” of national economy, and provides maintenance and repair services for power generation facilities which play a core part in key industries. As of 2019, we operate 59 offices Power Plant Maintenance in Korea and 14 overseas, based on which we are We maximize customer satisfaction by providing on-site maintenance growing into a global “solution provider” for power (routine and planned preventive maintenance) of thermal, nuclear and plants by providing total solutions for various types hydro power plant facilities, as well as comprehensive solutions for of power generation facilities. We strive for stable power generation facilities with advanced engineering technologies. power supply by operating offices nationwide to With technical expertise accumulated over decades and highly-skilled prevent breakdown and ensure swift repair of maintenance personnel, we provide high-quality maintenance services power transmission equipment. for power plants.
Thermal Power Nuclear Power Hydro Power Plant Plant Plant
•(Test drive maintenance) Maintenance management prior to commercial operation •(Routine maintenance) Inspection of normally-functioning facilities - Predictive maintenance, preventive maintenance, corrective maintenance, etc. •(Planned preventive maintenance) Disassembly, inspection and test maintenance of facilities during outage •(Modification and maintenance) Extension, improvement and restoration of facilities
Power Transmission and Substation Facility Maintenance We operate business sites across the country to prevent outages and swiftly restore power transmission facilities which constitute the national power grid, and make every effort to provide a stable power supply. We provide total maintenance services for transmission sites and substations, including maintenance of transmission lines and live wires, HVDC transformer maintenance, performance diagnostics as well as construction and safety diagnostics of transmission lines.
•Maintenance of power transmission lines and live wires, performance diagnostics •HVDC transformer maintenance •Construction and safety diagnostics of transmission lines KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 12 / 13 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Future Business Portfolio
Securing future growth engines is an important task that guarantees the sustainability of a company. KEPCO KPS explores and discovers new sources of power that will drive its future growth. Based on business models relating to renewable energy including wind and solar power generation, we are building our future business portfolio that is centered on total services for power generation facilities in overseas markets Overseas Nuclear Power Business and performance improvement for power generation facilities. Overseas nuclear power business is an energy business with great potential for growth. Based on the successful completion of the nuclear power plant project in Barakah, the United Arab Emirates (UAE), KEPCO KPS is advancing its capacity in global nuclear power plant maintenance business. In June 2019, Team Korea, a consortium formed by KEPCO KPS and Korea Hydro and Nuclear Power Co. (KHNP), signed Renewable Energy a long-term maintenance service agreement (LTMSA) with Based on a solid business structure built around the UAE for maintenance of the Barakah nuclear power plant, renewable energy such as solar, wind power and promoting our name in the global market. ESS, as well as outstanding technological expertise accumulated over decades, KEPCO KPS is engaged •Trial operation and routine maintenance not only in EPC and O&M but also power generation •Nuclear fuel loading services businesses. We invest in the future of humanity by expanding our profit-centered EPC services for renewable energy, developing investment businesses, and strengthening R&D in renewable energy. Overseas Thermal Power Business Upon setting the expansion of overseas businesses as a major •Solar power EPC and O&M strategic goal toward securing the drive for our future growth, •Development of equity investment projects we are strengthening large-capacity thermal O&M (operations and maintenance) businesses. In 2018, we secured a footing Decommissioning of Nuclear Power Plants for expanding overseas businesses by, for instance, winning a KRW 130 billion contract in Pakistan. Centering on securing major technologies for the safe decommissioning and restoration of nuclear power plants, including decontamination and decommissioning waste management technologies, we are expanding •OH and full O&M (including supply of materials) Performance Improvement our decommissioning business areas. To this end, we have established •Performance improvement business, technical services Our ROMM/Retrofit business improves the efficiency and the Mid-to Long-term Roadmap for the Nuclear Decommissioning output, as well as extends the longevity of, core and major Business, undertaking research projects on nuclear reactor equipment in aging power plants through replacement or decommissioning technologies which are its core technologies. We improvement. We secure the technological capacity for this also play a leading role in securing decommissioning technologies by new growth engine business that can dramatically increase signing MOUs with foreign companies for overseas training on system the performance of equipment while maintaining power decontamination and nuclear reactor decommissioning engineering, generation facilities by simply replacing core parts. and for securing waste management technologies.
•Diagnostics of equipment longevity and performance •System decontamination and nuclear reactor decommissioning •Improvement of equipment efficiency and output engineering •Waste container production and processing KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 14 / 15 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Sustainability Highlight
1. Economic Performance 2. Social Performance
Records KRW 1.2 Trillion in Sales and Awarded at the Korea Financial Selected as a Leading Company by Certified as an Excellent Korea Service KRW 191.5 Billion in Operating Income Management Grand Prix for 4 DJSI Korea for 10 Consecutive Years Quality Enterprise Consecutive Years Even amid low growth of the global power generation market, At the “Dow Jones Sustainability Indices (DJSI) International Since being certified as an Excellent Korea Service Quality Enterprise KEPCO KPS achieved notable economic performance by At the 18th Korea Financial Management Grand Prix 2017 Conference and Certification Ceremony 2018,” KEPCO KPS was by the Korean Agency for Technology and Standards under the recording KRW 1.2425 trillion in sales and KRW 191.5 billion in hosted by the New Industry Management Academy, KEPCO KPS selected as a sector leader in the commercial service and supply Ministry of Trade, Industry and Energy in 2006, KEPCO KPS was operating income in 2018. By making our existing businesses achieved the Best Public Enterprise Financial Structure Award industry for the tenth consecutive years. re-certified in 2017 for maintaining excellent quality standards and more competitive and securing new engines of growth for the for four consecutive years. The award was given not only in ensuring customer satisfaction. By establishing and implementing future, we will spare no effort to achieve KRW 2.1 trillion in sales recognition of our contribution to the development of national mid-to long-term service quality strategies based on post- by 2025 in accordance with our mid-to long-term strategic economy and societies through sound corporate activities and certification management and re-certification inspections, as well management plan “Vision 2025.” quantitative performance in terms of stability, profitability and as establishing and practicing seven major principles of customer activity, but as a result of comprehensive satisfaction services, we were able to receive high marks in service evaluation of our management quality strategy. In particular, we pursue “generation of customer principles and capabilities, values through highest service quality” as our quality as well as social management vision, and set “technical contribution efforts. expertise” and “customer-orientedness” as our core competency.
Selected as an Excellent Quality Selected as the No. 1 Company in Receives the ISO 37001 Certification Certified as the Best Human Resource Competitiveness Enterprise for 19 Power Generation Facility Maintenance for the First Time in Korea Development Institution in the Public Consecutive Years Service Sector at KS-QEI for 7 Sector Consecutive Years In 2019, KEPCO KPS became the first company in Korea to At the 43rd National Quality Management Convention receive the ISO 37001 certification, an international standard for At the “Best Human Resource Development (HRD) Institutions in 2017, KEPCO KPS became the first public enterprise to be At the KS-QEI Certification Ceremony 2018 hosted by the anti-bribery management systems and fair competition, which the Public Sector 2018” co-hosted by the Ministry of Education selected as an excellent quality competitiveness enterprise Korean Standards Association (KSA), KEPCO KPS became the are important issues throughout the world. The certification has and the Ministry of Personnel Management, and organized for 19 consecutive years. The award was given by the Korean first public enterprise to be selected as the No. 1 company in the provided an opportunity for KEPCO KPS to further solidify its by the Korea Research Institute for Vocational Education and Agency for Technology and Standards under the Ministry of power generation facility maintenance service sector for seven corporate image as a leading company in ethical and integrity Training, KEPCO KPS was certified as a Best HRD Institution. Trade, Industry and Energy, in recognition of our outstanding consecutive years. KS-QEI is a quality measurement model management. In particular, our ability-and performance-centered talent achievements in innovating quality management. jointly developed by KSA and the Korean Society of Quality management system, as well as human resource development Management (KSQM) by reflecting customer satisfaction levels system tailored to each individual’s competence level and linked and characteristics of products and services. The award was to our in-house certification given in recognition of our efforts to generate customer values and secure customer system, played a pivotal role in trust using our unrivaled technical being selected as a expertise and capacity. Best HRD Institution. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 16 / 17 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX Social Value Creation
Social Value Creation with KEPCO KPS 18
Cases of Social Value Creation 20
Social Value Creation with Cases of Social KEPCO KPS Value Creation KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 18 / 19 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Social Value Creation with KEPCO KPS A Socially Responsible Global Top-tier Comprehensive Service Provider for Power Plants KEPCO KPS KEPCO KPS
Social Value Creation with KEPCO KPS VISION Social Value Under the vision of becoming a global solution provider for power plants, KEPCO KPS fulfills its social responsibilities as a public enterprise. To that end, we 2025 Creation have established a strategic roadmap for creating social values, and manage the status of its implementation. Strategies
Strategies and Roadmap for Social Value Creation Activities Performance
Strategies to Create Social Values Established job creation strategies in alignment with management strategies Job Creation
Sustainability Transitioned contingent workers to permanent employees through fair •Established the Job Creation Roadmap Contribute to the humankind through social value creation activities that align with our business Management Vision processes and in compliance with relevant standards •Transitioned 246 directly-hired contingent workers (2018) Promoted the 3M strategy for creating jobs in the private sector in line with KEPCO KPS’ business •Created 165 more jobs compared to 2017 Sustainability Strengthen Activities to Fulfill Social Responsibilities Achieve Balance between Publicness and Efficiency Management Developed and expanded the “cooperation-reinforcement-sharing” job creation model Strategies •Enhance the competitiveness of core businesses (Pursue innovation in •Generate people-centered values of coexistence and cooperation (Linked to Mid-to customer-centered services) •Strengthen the ethical management system Long-term Strategies •Expand future growth engines (Establish an eco-friendly business portfolio) •Carry out activities in line with national policies (e.g., job creation) Introduced a random lottery system in selecting employee promotion for Vision 2025) •Establish a management system that pioneer changes in the industry Equal evaluation committee members to prevent improper solicitations in •Hosted the Corruption Elimination Conference Opportunities and personnel affairs (Participated by 52 business sites) Social Integration Strengthened efforts at the company level to eliminate corrupt practices in •Operated the Recruitment Evaluation Committee recruitment •Selected as a leading company with active hiring of high school graduates in 2018 Granted preferential treatment to candidates hired as part of socially- (Minister of Education, Target 20%, Performance 35.5%) equitable recruitment Materialize an exemplary public enterprise model trusted by the Korean public, as a public enterprise specializing in the maintenance of national power generation and electric power facilities
Enabled file search and took encryption measures using a personal •Established and operated PDCA-based safety assessment system Safety and information search solution Environment •Acquired occupational safety and health management system certification in 54 business sites Social Value Creation Roadmap Introduced two-factor authentication for accessing the information system •Improved the Frequency Severity Index by 25% compared to 2016 Internalize Social Value Creation Strategies Introduced a mobile office system and established cyber security Strengthen Social Value Creation Activities infrastructure •Zero personal information leakage Establish a Sustainability Management that Align with Our Business Implementation System Internalize Social Value 2022-2023 Strengthen a publicly- Creation Strategies •Provided support to the energy-poor during winter time 2020-2021 Expanded the energy-poor support project “Warmth Dream” in winter season Preemptively carry out based business model Coexistence, → Replaced and donated boilers in total 2018-2019 210 565 government policies Cooperation and Expanded living environment improvement project for children from low- (KRW 230 million) income families Regional •Improved living environment for children from low-income families •Become aware of salient social issues and •Solve social issues in business Development •Consistently reflect social value creation Designated closing days for in-house cafeteria (headquarters) to help → 156 cases in 2017, KRW 371 million / 174 cases in 2018, demands •Establish a business portfolio with a strategies on overall business management promote local commercial areas KRW million Major Goals •Take a leading role in implementing stronger emphasis on public interest 405 •Increase the awareness of social values government policies aimed at creating •Provide innovative services centered on Installed sunshades (fixed parasols) near Lake Park •Installed cooling centers in Naju-si among KEPCO KPS employees 50 social values customer values Increased the number of Yellow Carpets installed to create a safe •Installed the Yellow Carpet in 6 elementary schools in Yeonggwang-gun environment for children in 2017 → Expanded to 19 elementary schools nationwide in 2018 •Strengthen activities for job creation in •Develop a system for managing and measuring consideration of the characteristics of businesses performance, such as performance in social value •Advance the performance measurement and •Eradicate corrupt practices in recruitment and Implementation creation evaluation system for social value creation strengthen ethical management Newly launched the ethics keeper project Tasks •Diversify business models with a stronger •Operate programs to raise employee awareness Ethical •Expand support projects for the socially •0 violations of the Improper Solicitation and Graft Act emphasis on public interest such as expanding of social values Management vulnerable group of the local community and Established a self-diagnosis system to reinforce compliance with the •Enhanced fairness and transparency of work by utilizing outside eco-friendly renewable business projects increase budget for co-existence and cooperation Improper Solicitation and Graft Act experts including ethics keepers Held regular meetings of citizen integrity auditors and collected opinions •Set the institutional foundation for initiating human rights management KEPCO KPS Social Value Index Established human rights management implementation plans to promote → Installed and began operating the Gapjil Reporting and Support Performance human rights Center Job Creation for Recruitment of Eradication of Serious Indicators Shared Growth Grade Integrity Assessment Grade Young Adults Local Talents Disasters Introduced and implemented the drunk driving self-reporting system •Created a culture of rooting out drunk driving KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 20 / 21 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
KEPCO KPS Social Value CASE
Creating quality jobs is a task required by our times. In 2018, KEPCO KPS transitioned 246 temporary workers into permanent Job Creation employees. Maintenance, in particular, is an area where temporary-to-permanent transition is actively being discussed given the structure of the domestic power plant maintenance industry. Transitioning Temporary Workers In connection with the “outsourcing of risk”, the progress of the “labor-management-expert consultative body”, and government to Permanent Employees policies, we spare no effort to establish a sound labor-management relationship. In 2019, we established plans to transition an additional 398 temporary workers to permanent employees. Going forward, we will continue to create quality jobs through temporary-to-permanent transitions, while playing a leading role in building a society where everyone can live shoulder-to-shoulder with one another.
Hiring more youth breathes energy into the company and maintains a balance between generations within organizations. In 2018, we Equal Opportunities and hired 281 youth and 171 high school graduates (35.5% of all new hires). Social Integration In order to promote the hiring of high school graduates, we have added stipulations that limit applications from candidates with high educational qualifications. At the same time, we have added professional certifications in relevant areas as a qualification requirement Expanding Recruitment of Youth in order to promote hiring centered on competencies more than any other qualifications. and High School Graduates In April 2019, we were selected as a leading company with active hiring of high school graduates, and received the Commendation for Contribution to Vocational Education. Based on these efforts, we will maintain our recruitment policies of hiring more youth and high school graduates, with a view to achieving social integration by providing equal opportunities.
In order to ensure that the lives and safety of our employees, as well as the employees of our partners are protected, we are Safety and Environment Camera th Earphones/ reinforcing on-site safety management by proactively applying innovative technologies of the 4 Industrial Revolution, such as the Microphone Internet of Things (IoT). To protect employees working on transmission and substation project sites from accidents, we have developed Strengthening On-site Safety Live wire and distributed IoT-based helmets and control software which place on-site workers under real-time safety management and Management through 4th Industrial sensor Transmitter/ supervision. Furthermore, we prevent serious accidents on our work sites by providing effective safety education using VR technology Revolution Technologies Battery/Antenna to develop industrial accident prevention contents mainly consisting of actual cases of on-site accidents. Going forward, we will place Wearable Device Attachable to Live Wire Alarm the highest priority on securing on-site safety management budget and actively invest in safety-related R&D, with a view to ensuring Safety Helmets and Integrated Attachable to Remote Control System Safety Helmets the on-site safety of our employees.
We continuously invest in various efforts to co-exist with local communities. Coexistence, Cooperation Through our “Warmth Dream” project, a program designed to deliver warmth to our local residents by utilizing the characteristics of and Regional Development our business, we replaced boilers and inspected electric facilities in 565 homes of socially vulnerable people in 2018, helping them Strengthening Efforts toward spend a warm winter. Mutual Growth with Local We have also developed a system to invigorate local commercial areas and help small business owners in our local communities. By Communities closing our in-house cafeteria on certain designated days, our employees are encouraged to eat out at local restaurants. Through this program, we generate a direct effect equivalent to roughly KRW 50 million per year. We will continue to develop various systems to co-exist and grow together with small enterprise and small business owners in our local communities, while carrying out a wide range of activities to enhance the welfare of local residents.
Ethical Management KEPCO KPS is in the process of establishing a system-based ethical management structure. In this regard, we have created new job functions and appointed 17 “Ethics Keepers” assigned to our business sites across the country. Based on these new personnel, we have Hiring More Personnel Dedicated expanded our ethical management organization to overcome ethical blind spots, while the newly-assigned Ethics Keepers have actively to Ethical Management been engaged in diagnosing and improving the status of our ethical management. At the same time, we have acquired the ISO 37001 certification (anti-bribery management system) for the first time in Korea as a public enterprise. Through consistent management and
Acquisition of the ISO 37001 supervision efforts, we will internalize ethical management and establish a system-based ethical management structure. Certification for Anti-bribery Management System KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 22 / 23 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX Material Issues
Sustainable Growth 24
Responsible Management 34
Eco-friendly Management 46
Integrity Management 52
Responsible Management Eco-friendly Management
Sustainable Growth Integrity Management KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 24 / 25 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
01 Sustainable Growth
Sales
KRW1.2Trillion Importance of Sustainable Growth Our Effort for Sustainable Growth
Operating Income In recent years, low growth has been continuing in In order to achieve innovative growth, KEPCO KPS is the global power industry, while competition has been reinforcing its efforts in technological development, KRW Billion 190 intensifying in the domestic power plant maintenance while laying the foundation for sustainable growth Work toward securing market since opening the market for the entry of the by implementing a variety of strategic management next-generation private sector. Paradigms of the plant maintenance activities. With our internal organization dedicated to th technologies in industry are also shifting as we go through the 4 future business development at the center, we are accordance with the Industrial Revolution, while companies face the need securing the momentum for growth in renewable KPS 2025 Mid-to Long- to secure their own unique competitiveness through energy, performance improvement and overseas term Plans digital transformation as an important means of markets, while strengthening the competitiveness of (81 technologies survival. our core businesses by managing existing projects in 7 areas) more efficiently.
No. 1 Company for 7 Consecutive Years Strategic Directions
Power Generation Facility Reinforcing the Competitiveness of Core Businesses Securing Engines for Future Growth Maintenance Service Sector, Korea Standard-Quality •Reinforce leadership in the maintenance market •Reorganize the organizational structure to strengthen Excellence Index (KS-QEI) 2018 •ecure core technologies to strengthen the future growth businesses competitiveness of existing businesses (Aim to secure •Enhance technological competitiveness and foster 81 technologies in 7 fields) talents •Innovate customer-centered services •Expand eco-friendly renewable businesses and diversify •Develop emergency recovery service system the business model •Strengthen KEPCO KPS’ role as a core partner in power plant performance improvement and nuclear decommissioning businesses KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 26 / 27 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Building a Comprehensive Database of Technical Information and Other Knowledge Strengthening the In line with the government’s energy conversion policies such as the 8th Electricity Demand Infrastructures rd Competitiveness of and Supply Plan and the 3 Basic Energy Plan, the domestic maintenance market is expected Our experience in maintenance accumulated over the past 35 years is an asset and competitive to undergo a slight decline. Despite such difficulties, KEPCO KPS will reinforce its leadership in edge unique to KEPCO KPS. Since 2016, we have been building and managing a comprehensive Core Businesses the market using its competitive advantage, while working relentlessly to enhance customer platform of maintenance materials and technical information. This wealth of information enables satisfaction by innovating customer-centered services. us not only to proactively respond to machinery failures through predictive diagnostics and diagnostics evaluation based on maintenance materials and records, but also offer optimal Reinforcing Leadership in the Maintenance Market maintenance technologies attuned to the needs of our client companies. KEPCO KPS provides on-site routine and planned preventive maintenance, as well as high-quality total maintenance and engineering technique services, thanks to highly-skilled maintenance ● Comprehensive Technical Information Database System personnel and extensive maintenance data accumulated through decades of experience in the domestic maintenance market for thermal, nuclear, hydro power generation facilities and Platform Square Standard Information
transmission & substation facilities. Comprehensive database of maintenance materials and Operation of a standard procedure Automation of measurement technical information for maintenance cases history for major facilities Developing Power Plant Maintenance Infrastructures Standard Maintenance Measurement •Develop a standard procedure for •Perform analysis-based management Technical report managing machinery failures and of measurement history for turbines, Timely Performance of Planned Preventive KEPCO KPS is developing maintenance service infrastructures to provide high-quality services. Our information cases techniques important maintenance information generators, boilers, etc. Maintenance & Construction Work and Plant Business Service Center is equipped with state-of-the-art facilities for rehabilitation maintenance Technical information Business information Integrated search Reduction of Construction Duration of high gas turbines, steam turbines and generators. Our Nuclear Power Technology Service Center Comprehensive management of Establishment of technical document 106 Days is in charge of the engineering of core facilities in nuclear power plants, in addition to laying the domestic and global technical managements and search system (As of 2018) information •Strengthen smart search functions groundwork to export our technological expertise in nuclear maintenance to overseas markets. Previous Informatization System •Share overseas technical information for document classification and and materials on technical activities knowledge capitalization Strengthening System-centered Maintenance Activities Company EP SAP LDM KMS We are reinforcing system-based maintenance activities in line with customer demands and in preparation for changes in the energy market environment. In the nuclear power industry, we ensure the quality of our maintenance services by acquiring certifications for legal safety BEST Practice standards and technical requirements in accordance with the Korea Electric Power Industry Code (KEPIC). In the general industry, we apply the latest technical standards and operate an ISO-based Securing Core Technologies to Strengthen the Competitiveness of Existing Businesses quality management system across the company. We also strive to reach our organizational goals In accordance with the KPS 2025 Mid-to Long-term Technology Development Plan, we are working toward by applying a process approach method that incorporates the Plan-Do-Check-Act (PDCA) cycle securing 81 technologies in seven areas, including maintenance reliability enhancement. We intend to secure core and risk-based thinking. technologies that will further strengthen our existing businesses, such as maintenance support, maintenance advancement and robot automation. Establishing a Power Generation Facility Diagnostics Process By systematizing facility diagnostics techniques, we are establishing optimal infrastructures Improving the Power Generation Facility Diagnostics Process Using State-of-the-Art Robots Acquired ISO 9001 (Quality Management th System) Certification for reinforcing preventive maintenance activities. In particular, we have established our unique By utilizing robot cameras and other 4 Industrial Revolution state-of-the-art equipment in internal inspections of maintenance management process by optimizing power plant maintenance work. Furthermore, generators, we have enabled inspections to take place not only on designated days but throughout the year, while 1 we deliver near-perfect maintenance quality in maintenance projects by continuously performing reducing inspection costs and duration. Under the previous internal inspection process, there was no way to verify self-diagnostics and revising procedures. Through these efforts, we have developed 370 new the soundness of certain parts without dislodging them. We were able to improve this process through a robotic maintenance processes and made 540 revisions. quantitative test, after which the technology was applied in the Pyeongtaek 2-complex B-level planned preventive ● Maintenance Process maintenance work. The power generation facility management process based on this technology will be further gradually developed.
Preparation Pre-maintenance During Maintenance Post-maintenance Feedback Developing 3D Printing-based Power Generation Equipment Parts 2 •Prepare maintenance •Prepare maintenance plans •Comply with maintenance procedures •Post-job critique (PJC) •Reflect maintenance performance Currently, we are in the process of concretizing the business of domestically manufacturing power generation equipment procedures •Pre-job briefing (PJB) •Prevent inflow of foreign substances •Identify matters of •Revise maintenance procedures •Train experienced technicians •Prevent human errors improvement and establish •Database maintenance records parts in high demand by using 3D printing. As a result, we expect to solve issues regarding the discontinuation of certain 1. Non-destructive testing measures parts or difficulties in procuring them, while securing technical competitiveness in relevant areas. We also contribute to of the soundness of Tubular Steel Pole increasing national competitiveness by participating in a government project, organized by the Ministry of Trade, Industry (using robots) and Energy, aimed at domestic production of parts used in natural gas combined cycle plants. 2. 3D printing-based part Systematizing the Management of Core Maintenance Personnel and Technologies development Development and Revision of Maintenance (crump shell) KEPCO KPS assigns the right people to the right job tasks by securing core experts in the May ~ December 2018 1st Stage 2019 ~ 2020 2nd Stage 2021 ~ 3rd Stage Processes (Procedures) diagnostics and evaluation of major facilities such as turbines, generators and boilers. In 2018, Established the basis for 3D Make prototypes and perform Manufacture parts and expand 910 Cases we trained 28 internal experts professionally certified to perform condition monitoring and printing-based production reliability tests supply business (Development: 370 cases, Revision: 540 cases) diagnostics of machines (ISO 18436). At the same time, we reinforce our leadership in the •Developed and complemented •Manufacture two types of high- •Manufacture/Supply discontinued maintenance market by introducing state-of-the-art predictive maintenance techniques, including reverse engineering and optimal pressure gas turbine parts or difficult-to-procure parts thermography, oil analysis, and motor diagnostics. In 2018, we procured 17 new predictive process maintenance facilities, including vibration meters, through investment in equipment. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 28 / 29 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Innovating Customer-centered Services Delivering Reliable and Responsible Maintenance Service We carry out a variety of activities to go beyond satisfying our customers’ needs and deliver the By securing the safety of power generation facilities through responsible maintenance, we will highest-quality customer service. We develop technologies that enable us to maximize customer enhance public acceptance of power generation facilities and establish a culture of safety- satisfaction by ensuring thorough quality management and innovating customer-centered first maintenance. In order to train nuclear safety experts, build/operate a maintenance quality services, and make every effort to reinforce our customer satisfaction activities by opening our monitoring system, and establish maintenance work procedures, we have been operating the OH ears to the voices of customers. Review Team and have held campaigns. 1 Establishing the Basis for Customer-centered Service Delivering High-quality Maintenance Service through Proactive Preventive Activities Customer Satisfaction Index (CSI) We have established and published the Customer Charter, as well as the Core Service Standards We differentiate ourselves from our competitors in the private sector by minimizing machinery (Unit: Points) and the Customer Service Standards, which we share among our employees. We also carry out failure/suspension and delivering high-quality maintenance service. We improve maintenance various activities to firmly establish and improve a culture of customer satisfaction, not only quality through failure prevention activities based on the Plan-Do-Check-Action (PDCA) cycle. As throughout the duration of electrical maintenance but after service delivery. Our customer 2 3 a result, we recorded 972 cases of maintenance improvement by proactive identification. 95.7 satisfaction index has continuously climbed for five consecutive years. 93.6 94.2 1. Maintenance quality monitoring system 2. OH pre-training 3. OH safety culture campaign ● Failure Prevention Management Process Service Innovation By setting customer-centered service innovation as a major strategic task, we undertake various Plan Do Check Action activities to innovate our customer service. We hold customer workshops and operate a customer ● 2018 Performance Regarding Prevention of Select machinery for Identify and diagnose Inspect facility Recommend improvement advisory board in order to strengthen communication with our customers, while training CS Major Equipment Failures primary management areas of improvement conditions measures to client companies Masters to enhance our employees’ competence in customer service. •Select high frequency •Apply improvement •Manage records of •Register on maintenance DB 2016 2017 2018 TM measures on major facility issues after maintenance 1 Hadong #7: Prevented a major accident by prior •Analyze issues of each facilities •Reflect (Standardize) •Share best practice cases in identification of cracks in high-pressure turbine machinery •Carry out expert facility procedures maintenance service at company ● Customer Service Innovation Activities casing diagnostics level and grant rewards 2 Samcheonpo #5: Prevented unexpected reactor •Maximizes customer service improvement by working together with customers to interruption by prior identification of minor Customer improve customer service leakage in boiler tube Workshop •Improves customer relationship by forming an amicable, cooperative relationship Developing an Emergency Recovery Service System 3 Taean #3: Prevented a major accident by prior with customers identification of overheating of isolated-phase bus The core of power generation facility maintenance service lies in delivering rapid rehabilitation •Promotes customer value-oriented activities by strengthening the CS competence of 4 Gunsan #1: Prevented a power failure by fixing service. KEPCO KPS enhances customer reliability by providing emergency rehabilitation service CS Master leaders in each worksite discharge pressure fall of condensate pump enabled by emergency rehabilitation systems by region and facility. In 2018, there was no stop- Training •Expands CS culture and strengthens face-to-face customer service by fostering CS through external air sealing fail caused by errors attributable to KEPCO KPS. At the same time, we enhanced our clients' experts 5 Hadong #6: Improved facility reliability by changing natural frequency to fix high-frequency facility operation rates by achieving 100% zero-defect maintenance. In 2018, we received an •Helps customers to better understand KEPCO KPS through open management Customer bearing cap vibrations emergency rehabilitation service request regarding a crack in the low-pressure turbine blade at •Identifies areas of improvement and voice of the customer (VOC) to improve our CS Advisory Board Pocheon: Prevented runback by improving gas the first Chuncheon plant. By reducing the rehabilitation duration by 30 days compared to the activities 6 Customer Service (CS) Training for Employees turbine control logic manufacturer, we were able to make KRW 600 million worth of cost savings in a single project. •Engages in company-wide CS activities reflecting customer needs CS Quick-Win •Targets upward-leveling of CS level and promotes sharing of successful experiences Tasks •Strengthens overall satisfaction through activities to improve face-to-face customer Equipment Concerned Issues Measures Performance service •Contributed to minimizing •Fracture of last-stage blade (LSB) in Chuncheon #1 •Replaced all low- cost (by KRW 600 million) and low-pressure turbine of the same Low Pressure Turbine pressure turbine LSBs duration (by 30 days) compared model to manufacturer Strengthening Quality Competitiveness •Corrected of bent axis •Solved recurring bending of Yeongheung #6 •High vibration and suspension caused by surface treatment pump axis Improving maintenance quality and strengthening quality competitiveness is an important Circulating Water Pump by bending in pump axis (peening) and heat •Minimized maintenance cost (by management issue having a direct impact on customer satisfaction. KEPCO KPS always fulfills treatment KRW 50 million) our responsibility to ensure the quality of our services, and we are highly regarded by external •Identification of LSB tie wire •Recovered tie wire •Solved an issue notified by Honam #1 detachment in low-pressure turbine detachment in low- manufacturer as unrepairable institutions for our quality competitiveness. Low Pressure Turbine (Tie wire: Steel wire for fixing/ pressure turbine and using KEPCO KPS’ own technical maintaining distance between LSBs examined for any cracks expertise •Adjusted eccentricity •High-frequency vibrations and power •Enhanced facility operation rate Yeocheon NCC Gas (10 days) failure due to misdesign (eccentricity) by analyzing causes and taking Turbine #3 - 120 days to manufacture 1. Exemplary quality competitiveness of gearbox axis and couplings measures by an expert group new part company selected by MOTIE for 19 •Lower tube leakage due to impact consecutive years (November 2017) •Exchanged 2 damaged •Prevented leakage in adjacent Samcheonpo #5 Boiler damage caused by carbide falls inside stub tubes tubes 2. No. 1 in KS-QEI for 7 consecutive boiler years (September 2018) 3. Gold Prize at Korea Convention Quality Control Circles (Awarded for 2 consecutive years) 1 2 3 Future Plans Going forward, we will provide services of the highest quality in the industry with our competitive Measures following maintenance of circulating water pump in Yeongheung #6 advantage and service innovation, based on which we will contribute to the development of the national economy as well as human society. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 30 / 31 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Strengthening Global Businesses Securing Engines for Based on the future growth business scheme we have established in connection with our mid- Future Growth to long-term management strategies, we have set concrete targets to reach KRW 2.1 trillion in Strategies to Expand Overseas Businesses sales by 2025 and increase the ratio of our new growth businesses to 32.4%. To that end, we will By setting overseas business expansion as our core strategic target to secure future growth concentrate our core competencies on developing energy conversion business models and other engines, we are expanding our business areas in the field of O&M (operation & maintenance) for New Growth Business Revenue Ratio future growth businesses, in addition to expanding overseas businesses. large-scale thermal power plants and nuclear power generation. Our overseas sales in 2018 were (Unit: %) KRW 144.3 billion, 11.6% of total sales.
32.4 Strengthening Future Growth Businesses Strengthening Thermal Power Plant Business in Overseas Markets Overseas Thermal Power Plant Business Sales Reorganizing the Organizational Structure to Strengthen Future Growth Businesses In the field of O&M for large-scale thermal power plants, we are strengthening our 19.6 We have reorganized our organizational structure to strengthen future growth businesses by (Unit: KRW 100 million) competitiveness in the global market by applying the hub and spoke model, whereby we carry 16.5 17.8 newly establishing the New Business Division and the Future Business Department. We have out sales activities in the spokes (nearby areas) centering on our hub office. At the same time, 960 incorporated new business areas such as renewable energy and performance improvement into 890 we will achieve qualitative growth by undertaking inspection and analysis on a quarterly basis for the New Business Division, while establishing the New Management Control Tower directly under 770 cost analysis and material management efficiency enhancement to improve business profitability. the CEO. In addition, we have set up the Technology Solution Center, a single R&D organization In 2018, we launched a large-scale thermal plant O&M project worth KRW 132.1 billion in Pakistan, 2016 2017 2018 2025 that will oversee technology planning, technical advisory work and research/development at the setting the foundation for further business expansion in the field. (Estimation) company level, with the aim of strengthening our R&D planning and execution system.
● Overseas Thermal Plant Business Implementation System ● Diversification of Core Competency-based Expanding Businesses in the Renewable Energy Field
Businesses (Major Facilities in Domestic Plants) We have set solar power, wind power and fuel cell as our three major areas of renewable energy, 2016 2017 2018 Goal Strengthening the Competitiveness of Thermal Power Plant Projects and established a mid-to long-term roadmap to gain an upper hand in respective markets. In
Repair and Maintenance of Gas Turbines the field of solar power generation, we are in the process of developing a large-scale investment Increase sales and improve Set the foundation to win Strengthen project execution Strategic project to build a floating power plant through strategic cooperation. In wind power generation, performance by reinforcing more projects by expanding abilities by collaborating with We are securing new engines for growth by gaining Tasks the upper hand in the repair and maintenance we are building the foundation to expand related businesses by participating in the development core businesses strategic businesses client companies market for gas turbines manufactured by the of Namjeong Wind Power Plant in Yeongdeok, a 60MW facility worth KRW 150 billion. globally renowned Mitsubishi Hitachi Power •Increase efforts to improve Systems (MHPS). We have acquired a repair and •Execute integrated trial profitability •Strengthen cooperation maintenance certification for high-temperature Strengthening Business Models in ROMM/Retrofit* operation in a perfect •Generate customer values with and secure trust from parts, in addition to carrying out joint projects for Implementation manner In an effort to promote the ROMM/Retrofit business, we have established long-term strategies by exceeding warranty EPCs and power companies performance improvement field services. Tasks •Develop business models of and a step-by-step implementation system, in addition to building a consortium with MHPS, GE conditions •Foster talent and strengthen technical cooperation with •Tap into large-scale thermal internal competencies Repair and Maintenance of Steam Turbines and other global companies in the field to strengthen our cooperation network. More recently, SMEs power O&M business In the face of an increase in the number of aging we have been carrying out activities to convert the currently people-based maintenance business power plants and the need for steam turbine into a technology-intensive engineering business. To that end, we have opened 18 outsourced Headquarters Overseas sales organizations performance improvement, we are building a training courses on ROMM/Retrofit, based on which we have trained 36 experts. Overseas business Organizations (Overseas power businesses (KEPCO KPS Philippines Corp., bridgehead in the early steam turbine maintenance sites 10 sites in 7 countries* market. Through strategic cooperation activities and MSCs) UAE Office, India Office) and consortia with global OEM companies, we are ● Activities to Strengthen Our Competencies in Retrofit securing opportunities to tap into related markets. * India, Philippines, Pakistan, Bangladesh, Jordan, Uruguay, Madagascar
Robot Diagnostics of Generators Establishing a •Established measures to cooperate with OEM companies – MHPS, IHI, MELCO Through robot diagnostics of generators, we Business Basis •Developed standard work procedures (2 cases) Sales by overseas nuclear plant businesses Advancing Our Competencies for Overseas Nuclear Power Plant Maintenance Business facilitate stable operation of plant facilities and •Held performance improvement technology seminar (July 2018) – Participated in (Unit: KRW 100 million) Through the successful completion of the nuclear power plant project in Barakah, the United Arab improve predictive diagnostics technology. In Strengthening by 55 persons from 7 companies including POSCO Emirates (UAE), we are advancing our our competencies in the overseas maintenance business. To 2018, we jointly won the contract for a robot Sales •Planned and carried out intensive sales visits to IPP companies – POSCO, LG Chem, 483 that end, in June 2019, we formed a consortium named Team Korea with Korea Hydro and Nuclear diagnostics project for Pyeongtaek #2 Combined Seoul Housing and Communities, etc. Power Co. (KHNP), winning a long-term maintenance service agreement (LTMSA) with the UAE Cycle Power Unit (3 generators). Developing New •Developed an interpretation report of control algorithm description (TBN Control 398 Technologies System) for maintenance of the Barakah nuclear power plant, followed by a long-term maintenance service 297 contract (LTMSC) in September between KEPCO KPS and KHNP. Through this project, we will further * ROMM (Rehabilitation, Operation, Maintenance & Management): Improvement and rehabilitation of aging power plants strengthen our competitiveness in winning overseas nuclear power plant maintenance projects and * Retrofit: Efficiency enhancement and lifespan extension of aging power plants by renovating and improving core promote our name in the global market by achieving zero-accident, zero-defect maintenance. facilities such as turbin
● BNPP Long-term Maintenance Project Overview Expanding the Nuclear Decommissioning Business 2016 2017 2018
Based on a Mid-to Long-term Roadmap for Nuclear Decommissioning, we are securing Nuclear Power Plant Project Name Ordering Party Service Period domestically-developed original technologies and undertaking research projects for safe Concerne Long-term Maintenance Korea Hydro and Nuclear Maintenance personnel decommissioning and rehabilitation of nuclear power plants. We have succeeded in domestic June 23, 2019 ~ Service Contract (LTMSC) Power (KHNP) (Original support and maintenance BNPP #1 to #4 June 22, 2024 for UAE Nuclear Power Employer: Nawah [UAE service (regular and development of technologies relating to reactors and reactor internals, in addition to achieving (5 years) Plant Maintenance nuclear operator]) preventive maintenance) the current technology readiness level of 6 out of 9. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 32 / 33 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strengthening R&D Capacity Future Growth Businesses: Major Performance and Future Directions
Strategic Directions for R&D Internal and External Environment Major Performance Future Directions With the aim of promoting our core businesses by strengthening our R&D capacity and continuously creating the drive for future growth, we carry out systematic R&D activities based on an organizational structure consisting of the Technology Solution Center, the Plant Business Service Center, and the Nuclear Power Technology Service Center. We have drawn 15 Overseas Thermal Power Plant Business
research tasks regarding business-friendly core technologies including nuclear decommissioning, While demands are increasing in developing countries, •Won a large-scale (660MW) thermal O&M project in •Diversify overseas business models performance improvement and renewable energy. Furthermore, we have undertaken six research competition with China is becoming more intense. Projects, Pakistan (KRW 132.1 billion) that are profitable when paired projects on topics including AI, big data, and 3D printing, by increasing our investment in mainly O&M and EPC, have become large in scale and •Performed turn-key of large-scale (coal, heavy oil, with equity investment complex, making it essential for companies to establish a combined) overseas power plant as the first Korean •Secure cost competitiveness th convergence technology development in preparation for the 4 Industrial Revolution. cooperation system. public enterprise and won a related project (turn-key of through localization and 1,600MW combined cycle thermal power plant in Jijel, strengthen risk management Algeria) worth KRW 5.1 billion capacity ● Development of AURoRA (Advanced ● R&D System •Contributed to loss prevention by minimizing delay (KRW •stablish cooperation networks with 31.5 billion) KEPCO Group and construction Underwater Robot for Reactor Assessment) companies Promoting core businesses by strengthening R&D capacity and Vision continuously creating growth engines Maintenance duration Overseas Nuclear Power Plant Business Reduction by hours Recover drive for the growth Develop market-centered Secure engines for future 43 of core businesses R&D growth (48hours → 5 hours) Given the large scale and long duration of projects, nuclear •Achieved trial operation maintenance and •Secure track records by winning Targets Provide R&D support Generate business seeds Secure business power plant business is a strategic business area promoted construction process rate (aiming for 100%) for the LTMSC in UAE timely construction of nuclear power plant units in •Strengthen project-winning attuned to technology through technology competitiveness in by the government. Following financial difficulties faced by Reduction of radiation exposure to workers nuclear power providers (in the U.S. and Japan) in recent UAE activities in major countries with demand development preparation for new markets years, more export opportunities are opening up to KEPCO KEPCO and KHN 8.6mSv KPS. •Secure customer trust by (9.6mSv → 1mSv) strengthening overseas nuclear Strategies Convergence Mid-Entry R&BD Demand-Driven Collaboration business competency
Eco-friendly Renewable Energy Business R&D in Renewable Energy Following eco-friendly energy conversion policies in Korea •Signed a contract for route inspection of 2MW floating •Train project planning and Energy storage system (ESS) is a part of the solar power generation system which promotes the and abroad, relevant markets are gradually expanding solar power plant in Daedong (September 2018-August development professionals and use of renewable energy by capturing and storing electric energy for use at a later time when and government support is also increasing in Korea. 2019) secure competencies Uncertainties exist at the same time, such as land limitations •Won a technical service contract for solar power project •Diversity businesses including power is needed. We are building a foundation for commercialization of ESS by securing core and public dissent. In this regard, we are transitioning from feasibility test (Jeonnam Development Corporation, large-scale offshore wind power, technologies (PMS, BMS) related to solar power ESS and standard layout planning technologies. procurement of major parts from outside sources and KRW 110 million) floating solar power, etc. installation/construction-oriented projects to development/ •Signed a KPS-INTOPS joint project development •Develop joint projects in We have also launched a project to develop a large-scale solar battery array diagnostics investment-based projects. agreement for onshore wind power plant (58.8MW) cooperation with local residents system using drones, in addition to focusing our resources on R&D in renewable energy, such in Namjeong, Yeongdeok and governments as developing a system that enables identification of defects in large-scale solar power plant facilities using video footage acquired from thermal cameras mounted on drones. Power Plant Performance Improvement
Strengthening Core Competencies by Promoting Convergence of Innovative Out of all power generation facilities in Korea, facilities •Construction to improve performance of GS Power •Target aging small-capacity private with 25 or more years of use (designed lifespan: 30 years) Bucheon ST (KRW 4 billion) facilities Technologies generate 31% of power (KRW 2 trillion market), which is •Performed dismantling/installation work in LNG •Strengthen strategic partnerships Based on 4th Industrial Revolution technologies, we are strengthening our core competencies by what highlights the thermal/industrial facility performance combined cycle power plant for POSCO Gwangyang with domestic and overseas improvement market as the high value-added business (KRW 3.5 billion) manufacturers promoting the convergence of innovative technologies. In response to testing devices of non- of the future. The core in gaining the upper hand in this •Performed generator rewinding in standard thermal •Pursue manufacturing and destructive reactor vessels aging and dependence on technology increasing, we have launched a business lies in securing engineering design experts. A power plants (Taean, Dangjin) (KRW 8.01 billion) installation of major parts used in notable business aspect is that a client company selecting •Performed generator stator rewinding in Hanwha Total small-and medium-sized power project to develop a world-class non-destructive reactor vessel testing device. At the same time, participants in performance improvement tends to favor the and Boryeong combined cycle power plants generation facilities we are stabilizing the reactor assessment program based on AURoRA (Advanced Underwater ordering party’s manufacturer. (KRW 2.27 billion) Robot for Reactor Assessment) and ultrasonic PA inspection system. We have reduced the duration of maintenance and workers’ exposure to radiation at a groundbreaking level through Nuclear Decommissioning Business automatic cleaning of reactor stud holes and development of inspection robots. Beginning with advanced countries, the nuclear •Secured decontamination and activation machinery •Continue technical development decommissioning market is gradually growing. dismantling verification facilities and equipment efforts, including nuclear waste Future Plans Decommissioning technologies are possessed by a small •Conducted domestic and overseas training for treatment We will work relentlessly to secure future growth engines using our core competencies. By number of countries with nuclear power plants (U.S., developing core talent in decommissioning •Secure experts through overseas Germany, Japan, etc.) who have gained the technical upper •Established cooperation networks with KEPCO Group decommissioning participation bolstering our competencies in securing future growth businesses and expanding global hand. KEPCO KPS is the only enterprise to have competency and construction companies training businesses, we will work toward our 2025 Mid-to Long-term Management Goals, while in nuclear power plant maintenance, and has secured •Reactor Dismantling and Cutting continuously strengthening our core competencies through R&D. technology in certain areas (decontamination, dismantling) Demonstration of decommissioning.
Robot Inspection of Reactor Vessel Head Penetration KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 34 / 35 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
02 Responsible Management
0 Cases
No. of violations of the Importance of Responsible Management Our Efforts for Responsible Management Improper Solicitation and Graft Act The social duties and roles of public enterprises, such In order to firmly establish transparent ethical (As of 2018) as generating social values through their businesses management, we adopted an ISO 37001-certified and strengthening their public nature, are becoming anti-bribery management system for the first time increasingly important. In an effort to respond to the as a public enterprise. Through this measure, we will demands of the government and the general public, concentrate our competencies in becoming a public many public enterprises are laying the groundwork for enterprise trusted by the Korean people. Furthermore, responsible management by establishing mid-to long- we will spare no effort in generating social values term visions and roadmaps for creating social values. through shared growth and social contribution activities In particular, areas closely related to local communities, mainly with stakeholders who work closely with the First time such as shared growth and social contribution local communities in which we carry out our businesses. as a public activities, require systematic management. enterprise KRW21.1Billion Strategic Directions ISO 37001-certified Financial support for for Anti-bribery partner companies Realizing Transparent Strengthening Shared Strengthening Social (As of 2018) Management System Ethical Management Growth Activities Contribution Activities
•Implement ethical management •Operate financial support programs •Strengthen coexistence and activities based on our roadmap (KRW 21.1 billion as of 2018) cooperation activities with local •Maintain “zero” violation of • Support partners in securing original communities Improper Solicitation and Graft Act technologies, including intellectual •Strengthen social contribution (as of 2018) properties activities in connection with our •Revise ethical norms and policies •Bolster fair trade and improve the business to eliminate risk of corruption contract system •Operate an internal control system •Expand support to social economy enterprises (KRW 5.687 billion as of 2018) KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 36 / 37 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Various Systems to Help Settle Ethical Management Ethical Management By setting “Clean KPS” as our ethical management vision, we undertake various activities to We have various systems in place to ensure that a culture of integrity firmly takes root at KEPCO grow into a leading ethical company. Currently, we are in the process of advancing our ethical KPS. Our ethical risk prevention efforts include operating a reporting center to encourage management system, a part of which has been acquiring the ISO 37001 certification for our anti- whistleblowing and reporting, as well as strengthening the anti-solicitation system and running bribery management system. At the same time, we are actively engaged in activities to prevent the Red Whistle program which publishes casebooks on the Improper Solicitation and Graft Act. corruption and establish a culture of integrity, one of which is identifying ethical risks in advance through our ethical risk prevention system. ● Ethical Risk Prevention System
● Ethical Management Implementation System Category Description Reporting and Support Center for Reporting and support center for eliminating power harassment within the company and toward the private sector Vision Realizing “Clean KPS” through Transparent Ethical Management Cases of Power Harassment Convened on a continuous basis to respond to relevant laws, regulations and government policies (3 times) Ethical Management Committee 2016~2018 Introduction Phase 2019~2021 Settlement Phase 2022~ Advancement Phase - Efficient operation by revising the Code of Conduct, reporting the status of reports regarding outside lectures, etc.
Roadmap •Established systemic infrastructures •Standardize the ethical management system •Manualizing Experience and Knowledge in Ethical Secures fairness in the work process by collecting the opinions of citizen integrity auditors through regular meetings, etc. •Improved anti-corruption systems and •Solidify the anti-corruption cooperation Management Citizen Integrity Auditors - Revised regulations on contract management following recommendations that the citizen integrity auditor system be improved strengthened integrity policies governance •Establishing a Global Ethical Management System (Performed a special audit participated by auditors)
Strengthening preventive anti-corruption Establishing a culture of integrity and Anti-solicitation System Published a casebook on Improper Solicitation and Graft Act (December 2017) Advancing the ethical management system activities strengthening the awareness of integrity Red Whistle Promoted reporting of corrupt practices by guaranteeing the anonymity of reporters (December 2017) •Carrying out participatory activities to establish a Strategic Tasks •Strengthening basic ethical systems •Actively implementing the Code of Conduct for Public culture of integrity Whistleblowing, reporting of unfairness, shinmungo (petition system), reporting of grievances regarding partner companies, Cyber Ethics •Strengthening organizations in charge of ethical Officials Reporting Center •Play a leading role in implementing human rights management affairs •Strengthening anti-corruption and ethics policies Center, etc. (operated on a year-round basis) management
Strengthening Preventive Anti-corruption Activities Code Compliance Consensus In order to prevent the risks of corruption, we are involved in various activities focused on the •(Code of Ethics) KEPCO KPS Ethics Charter •(Organization in charge) Corporate Planning Dept./ •Customized integrity and ethics training prevention of corruption. Notably, we conduct integrity and ethics training for high-ranking Implementation •(Practice Guidelines) Code of Conduct for Audit & Inspection Dept. •Anti-corruption and Integrity Day System Employees, Code of Conduct for Partners •Code of Conduct manager/Anti-solicitation manager •Special inspection during corruption-prone times of officials targeting KEPCO KPS’ executives and division heads. By offering integrity education and (3C) •(Regulations) Regulations of the Ethical •Ethical Management Committee/Citizen integrity the year training to various target groups, as opposed to the formerly-conducted unilateral ethical training Management Committee and the Executive Officer auditors •Ethics and integrity campaigns applied to all employees, we have enhanced the efficiency of integrity training for our employees. Job Integrity Agreement •3S (Ethical safety)/Ethics keepers in business sites •Ethics and integrity training
● Performance in Ethical Management Training Realizing Clean KPS through Transparent Ethical Management No. of violations of Improper Target Description Solicitation and Graft Executives and Ethical Risk Prevention System Integrity and ethics training for high-ranking officials (79 executives and division heads) Division Heads 0 Cases In order to prevent ethical risks, we operate a multi-faceted ethical management system. Through (As of 2018) the Ethical Management Committee, we respond actively to changes in ethics-related laws, Special lecture on integrity and Lifecycle training Integrity Talks Cyber Integrity Academy sessions regulations, and government policies. In July 2018, we established human resource management Employees ethical management by executive Corruption Risk Indicators (654 employees) (54 times) (7,147 times) auditor (28 times) 95 and reward/punishment regulations for punishing and imposing sanctions on corrupt practices in recruitment, as well as the Recruitment Management Guidelines setting forth concrete recruitment Training for managers in Client company training for corruption/ (Increase of 2.8 times compared to 34 in 2017), Specific Job Training for integrity trainers (As of 2018) procedures, enabling us to respond actively to corruption risks in recruitment. In May of the same corruption-prone areas public interest reporting Categories (5 trainers) year, we undertook an entire revision of the Employee Code of Conduct to establish administrative (55 contract managers) (384 people from client companies) measures against employees benefitting from relationships involving private interest. * Performance in 2018 ● Revision of Ethical Norms and Policies for Eliminating Corruption Risks Internal Reporting and Operation of Internal Check System HR Management & Reward/ Recruitment Management Norms Code of Conduct for Employees Unfairness Reporting Center Punishment Regulations Guidelines To make our ethical management sustainable, we have established a mid-term roadmap and (Unit: Cases) operate an internal check system. In 2018, we strengthened our auditor training system and Newly established regulations on Undertook an entire revision of the punishment and sanctions against Code of Conduct for Employees, Established detailed recruitment No. of Reports activities to enhance the professionalism of our auditing organization. In particular, we carry out Description 45 45 corrupt practices in recruitment including reporting of relationships procedures (July 2018) No. of Cases Handled wide range of auditing activities different from traditional auditing methods, in order to ensure (July 2018) involving private interest (May 2018) the sustainability of our ethical management.
ISO Certification for Anti-bribery Management System 20 20 Future Plans ISO 37001 refers to the anti-bribery management system standard published by the International 15 15 With a view to realizing “Clean KPS” through transparent ethical management, we are working to Organization for Standardization (ISO), setting forth the requirements to establish, implement, establish an ethical management system and prevent violations in this area. Going forward, we will maintain and improve an anti-bribery management system in an organization. Since acquiring Acquisition of the ISO 37001 establish a globally-competitive ethical management system by internalizing a culture of integrity the ISO 37001 certification for the first time in Korea in April 2017, corruption risk indicators have Certification for Anti-bribery among our employees and manualize our experiences and knowledge of ethical management. Management System increased by 2.8 times from 34 in 2017 to 95 in 2018. 2016 2017 2018 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 38 / 39 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Strengthening Management Competencies of Partner Companies Strengthening Shared For companies to achieve sustainable growth, one of the primary tasks is to participate in We make diverse efforts in assisting our partners introducing systematic management schemes. Growth Activities activities for attaining shared growth with their partner companies. KEPCO KPS also recognizes In particular, we support their competence-building in safety and health management and quality shared growth as a core management area and engages in various efforts to this end. Under the management, with the aim of securing reliability in each management area and increasing their vision of becoming a “Company Leading Shared Growth with SMEs,” we have established five corporate value in the mid-and long-term. The customer satisfaction survey conducted in 2018 major strategies and concrete tasks in order to strengthen our mutual growth system and spread demonstrated that customer satisfaction had increased due to stronger performance in safety a culture of shared growth. and quality management (94.2 points in 2017 to 95.7 points in 2018).
Task Project Name Performance
Vision Becoming a Company Leading Shared Growth with SMEs Support for safety and health management system 14 companies, Support for Safety and certifications (KOSHA, K-OHSMS, etc.) KRW 42 million Health Management 11 business sites Door-to-door safety and health service Strengthen job competency including Honam Develop new projects that Strengthen management Promote financial support Promote performance- Strategies of partner company align with needs of SMEs skills of partner companies programs for SMEs sharing programs for SMEs Support for quality management system certification 16 companies, employees Support for Quality (ISO 9001) KRW 48 million Management 106 companies, Quality management training for partner companies 108 participants •Provide incentives for technical •Support acquisition of •Expand technical cooperation qualifications •Support SMEs in tapping into certification for safety and •Expand advance payments with SMEs Strategic •Support talent development new markets health management system •Promote shared growth loans Financial Support Programs •Open intellectual property rights Tasks •Expand educational mileage •Support protection of core •Support acquisition of •Promote public purchasing loans •Develop maintenance In order to solve the short-term liquidity issue faced by many SMEs, we offer a variety of financial •Provide basic training on technologies for SMEs certification for quality •Promote cooperation loans techniques with SMEs support programs which include increasing the advance payment ratio as well as supporting low- maintenance facilities management system interest loans for partners and loan support for SMEs with whom we have business transactions. Through these measures, we support long-term survival of our partners and SMEs, in addition to establishing a relationship of mutual growth built on reliability. Strengthening the Competitiveness of Partners Performance in Financial Support Programs Expand Advance Payments KPS-IBK Cooperation Loan Public Purchasing/Partner Loan Strengthening the Job Competencies of Partner Company Employees No. of Cases No. of Companies As a leader in the power plant maintenance market, KEPCO KPS intends to create a sound Amount (KRW 100 million) 210.9 Amount (KRW 100 million) ecosystem in the maintenance industry. To that end, we support our partners in training their 83.4 143.4 75.5 core maintenance personnel, helping them set the foundation for their corporate survival and 38.3%↑ 115 60.3 56 61.5 22.8%↑ strengthen their competitiveness, which in the long term will benefit both parties by creating 85.1 47 52.0 70 synergy through cooperation. First introduced in 2017, the basic power plant maintenance training 37 140.7%↑ 28 27.0%↑ is now offered in 18 machinery and electric companies, while “educational mileage” granted to 69 100.0% ↑ 21.6 employees of outstanding partners has also expanded from 127 people in 2017 to 198 in 2018. 12 Other efforts include providing cyber training and incentives to acquire technical qualifications. 5 140.0%↑ 2016 2017 2018 2017 2018 2017 2018 2017 2018 Performance in Shared Growth Activities Developing New Shared Growth Programs There is a growing need to develop new shared growth programs that reflect the changes in Promoting Performance-sharing internal and external business environments. In this regard, we have undertaken self-assessments We make diverse efforts to promote technical and business cooperation with our partner and collected opinions of our partners to develop new shared growth programs. In order to help companies. Through the disclosure of intellectual property, we support our companies in securing our partners tap into new markets, we have engaged in product purchasing, consortia, and other original technology and aim to strengthen the technical competency of the maintenance industry Good Good Average overseas market support programs, supporting KRW 1.99 billion for 15 partners, in addition to holding as a whole by creating new business models, undertaking joint R&D projects, and promoting purchasing consulting sessions and project briefings. To protect the core technologies of our partners, technology transfers. In 2018, we made our best efforts to fulfill our social responsibilities as a we have developed technology escrow programs and offered technology protection training to leading company in power plant maintenance by undertaking technology transfer projects and their employees. Furthermore, we provide management consulting to help our partners achieve sharing performance, disclosing intellectual property data, and participating in joint R&D with SMEs. management innovation, participate in the Industry Innovation Movement, and make various other 2016 2017 2018 efforts to help protect core technologies of SMEs and support their management innovation. BEST Practice
Intellectual Category Description and Performance
Property Intellectual Property •Purpose : Creation of new businesses and jobs by private use and enhancement of technical competency of SMEs •Process : Private use allowed without additional procedures or KEPCO KPS’ authorization for use of intellectual property Disclosure Disclosure •Beneficiaries : All SMEs in need of KEPCO KPS’ intellectual property for business purposes
Major Performance •First 72 disclosed in 2015 → 0 in 2016 → Total 89 in 2017 (36 new IPs) → Total 112 in 2018 (32 new IPs) KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 40 / 41 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Establishing Order in Fair Trade Expanding Support for Social Economy Enterprises
Creating an Environment for Fair Competition Forming a Consensus for Fair Trade Improving the Management System for Systematic Support We have formulated and implemented major strategies and tasks in order to establish fair trade in Social economy enterprises began to surface in the 2000s as an alternative for solving the •Expand the scope of prior disclosure of private the power plant facility maintenance industry. In doing so, we recognize that building a consensus social issue of polarization. Now, they play an increasingly important role as a member of the contracts among internal and external stakeholders for establishing a culture of fair trade is a matter of local economy but the lack of systematic support and management is hindering their longevity. - Limit to goods in 2017 → Expand to highest priority. In this regard, we have included the subject of fair trade in our ethical education Against this backdrop, we have gradually increased our support for and purchasing from social construction and services in 2018 •Strengthen internal evaluation criteria regarding programs offered to our employees on a regular basis in order to build an awareness of fair trade, economy enterprises to contribute to the development of local communities and achieve shared private contract ratio in order to reduce private while establishing a cooperation system with our partner companies by signing shared growth growth. As a result, we recorded KRW 5.69 billion of purchasing from social economy enterprises contracts and fair trade agreements, as well as providing anti-corruption and whistleblowing training to in 2018 alone. Additional efforts to provide systematic support include establishing a separate - Deduct points for 50% or more in 2017 their employees. Since becoming the first public enterprise to acquire the ISO 37001 certification organization dedicated to social economy enterprise support, improving the performance review → 30% of more in 2018 for our anti-bribery management system in 2017, we have been improving fair trade-related system, and developing various support programs. Enhancing Transparency in Contract-related systems, such as taking measures to comply with the Improper Solicitation and Graft Act, opening Decision-making grievance-handling channels for clients, and operating the Reporting and Support Center for cases of Power Harassment. Purchasing from Social Economy Enterprises Category 2017 2018 •Expand electronic disclosure of private contracts •Contract Team, General Affairs - KRW 5 million or more in 2017 (Unit: KRW million) •Social Value Team, General Affairs Strengthening Fair Trade and Improving the Contract System Establishment of New Department: 3 personnel Department: 5 personnel → KRW 3 million or more in 2018 •Performed both contract and social We have been improving our systems, so as to provide equal opportunities and establish a culture Organization •Dedicated to social value affairs •Expand the disclosure of purchasing contract 5,687 value affairs information of fair competition among our SME partners. Such efforts include strengthening trust-based •Computerized system - Expand scope of disclosure to all employees Improvement of Performance •Manual performance management partnerships with partner companies by ensuring transparency in the decision-making process •Evaluated purchasing and adherence to •Improve preliminary price calculation methods for Review System •Evaluated only purchasing performance in contract management, while encouraging their fulfillment of social responsibilities by adding a 3,356 69.5% reporting due date determining estimation costs of constructions and 2,531 ↑ services new criteria regarding social value assessment in contract qualification evaluation. Development of Support •Held purchasing conferences •No separate support programs •Priority purchasing in case of events/ - Decision by final approver in 2017 → Decision by 32.6% Programs meetings ↑ final approver omitted in 2018 Securing Fairness in Payment In an effort to expand the win-win payment system, we have benchmarked institutions with Generating Social Values that Align with Public notable performance in their win-win payment systems, increased the number of financial 2016 2017 2018 Expectations institutions with whom we have win-win payment agreements, and held briefings and prepared Cooperation and Exchange with Social Economy Enterprises manuals to encourage the participation of our partners. As a result of these efforts, we were Together with 11 institutions in Naju Innovation City, KEPCO KPS has signed the “Social Value •Priority to companies with outstanding performance Agreement” with Jeollanam-do, aimed at engaging in priority purchasing of products and services in startups, export and job creation at qualification able to increase win-win payments from a mere KRW 150 million in 2017 to KRW 20.53 billion in evaluation 2018. At the same time, we reflect the legitimacy and timeliness of payments to our partners by of social economy enterprises in the province and developing joint projects. By signing this - Extend startup business phase from 5 years to 7 implementing various tasks such as accepting requests for increase in unit price due to justifiable Agreement, KEPCO KPS and other local public enterprises have pledged to establish a cooperative years system to provide support for social economy enterprises and create synergy. - Additional points to companies with outstanding reasons (e.g., price hike, increase in minimum wage), observing payment dates, making all performance in export and recruitment in payments in cash, and supporting liquidity by early settlement of holiday payments. These tasks Cooperation between the KEPCO Group and local communities is also expanding. In November reputation evaluation (maximum 3.2 points) aimed at expanding a culture of fair trade, in addition to actively handling the grievances of our 2018, KEPCO, KEPCO KPS and eleven other subsidiaries of the KEPCO Group hosted a joint •New evaluation criteria for accountability and partner companies, have enabled us to record “zero” grievance regarding contract matters. Agricultural and Livestock Expo in Gwanghwamun Plaza, Seoul, supporting social economy reliability in qualification evaluation enterprises tap into agricultural and livestock markets, and encouraging public interest as a - Deduction standards for violating minimum wage standards, etc. stepping stone for their sustainable growth. We also hosted a Purchasing Conference to support ● Win-win Payment Process social economy enterprises develop new market opportunities. Participated in by 16 companies in five regions, the Conference provided an opportunity for social economy enterprises to tap into Opening Ceremony of the AgriPro Expo Conglomerates the public purchasing market. We plan to continue hosting similar events in 2019 to help social 1st Tier Partners 2nd Tier Partners 3rd Tier Partners (Public Institutions) economy enterprises find market opportunities and increase sales. •Monitoring of payments •Financial cost •Return interest •Financial cost •Application to all •Reduction by Future Plans •Incentives •Reduction by 23 payments 14 to 43% •Tax credits to 73% As a leading company and public enterprise in the power plant maintenance industry, we will •Reflection in shared •Tax credits growth evaluation strengthen our activities to achieve shared growth with our partner companies. We will create values of coexistence and cooperation by strengthening the competitiveness of our partners Win-win payment Win-win Win-win and establishing a culture of fair trade, while contributing to the growth of local economies by (External medium) payment payment expanding our support toward social economy enterprises. Furthermore, we will spare no effort in * Win-win Payment System working more closely with local governments and public enterprises, with the goal of discovering A payment system exclusively for SMEs whereby a company makes payments to SMEs on the same new social value-creating business models. dates as cash payment due dates, guarantees collection of payments, and allows SMEs to cash in their accounts receivables at a fee applied to large companies and public enterprises
(Source: http://www.winwinpay.or.kr/ABOUT/summery.php) KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 42 / 43 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Invigorating the Local Economy Strategic Social In order to achieve sustainable development, companies must communicate with their local We have designated every last Wednesday of each month as “Lunch for Our Community” Day, as Contribution communities and make an effort to generate social values. Based on the recognition that part of effort to invigorate the local economy. On this day, the cafeteria in our headquarters closes, the development of local communities has a positive impact on our businesses and forms a encouraging employees of KEPCO KPS and other occupant companies in the building to have Activities virtuous cycle with our own corporate growth, we focus on social contribution activities in close lunch in restaurants in nearby areas as a way of promoting consumption in local communities. connection with local communities. Furthermore, we consider job creation an important part Furthermore, we encourage the consumption of local agricultural products for mutual growth with of fulfilling our social responsibilities as a public enterprise, and are actively engaged in social local communities. In the cafeterias of our headquarters and the Human Resource Development contribution projects using our core competencies. Center, local products are used as food ingredients which are beneficial both for our employees and local farms, as employees can enjoy fresh local foods and local farms can make a stable profit. In 2018, we purchased KRW 200 million of local agricultural products, double the amount Vision KEPCO KPS Growing with Local Communities compared to 2017.
Strategic Environmental Improvement Safety Promotion for Invigoration of Directions in Local Communities Local Residents Local Economy Strengthening Social Contribution Activities in Connection with Our Businesses
•Children’s pedestrian safety and •“Lunch for Our Community” project •“Warmth Dream” volunteering for living environmental improvement to invigorate local commercial areas Pro Bono Activities winter season project •MOUs with Ministry of Agriculture Projects •Environmental improvement in the We are actively engaged in pro bono activities, whereby our employees donate their talent by •Wandering monitoring device and Forestry, and local Lake Park to enhance convenience donation to prevent missing governments to create a virtuous utilizing the company’s professional techniques. for local residents incidents of dementia patients cycle of good food ingredients
Pro Bono Activities Category Description Performance (No. of cases) •Inspection and replacement of electric facilities in the homes of seniors living alone or Growing Together and Cooperating with Local Communities Amount (KRW million) one-parent households (year-round in all business sites) 15.4% •Removal of snares near power transmission lines and nests from steel towers (Gwangju 16.3% Electric Safety ↑ 584 Transmission & Substation Sites, etc.) Improving the Living Environment in Local Communities ↑ 506 •Safety awareness-raising and accident prevention through electric safety education for Sector Leader in 2018/19 DJSI Korea One of our efforts to achieve shared growth with our local communities is the “Warmth Dream” 435 1,248 children (headquarters) project, which is a living environment improvement service where we utilize our professional 1,047 1,083 •Repair of aging farming tools and staircase railings in local villages (Seoul Transmission For 10 Consecutive years maintenance techniques to inspect and repair insulation facilities and boilers for senior & Substation Sites, etc., year-round) citizens living alone. In 2018, we inspected and replaced boilers and electric equipment in 565 Machinery •Home repair and painting for improving the living environment of low-income families Equipment (Gori 1, etc., year-round) Social Contribution Evaluation Score socially vulnerable households, earning us a high score in the satisfaction survey taken by the •Inspection and replacement of boilers in socially vulnerable households, and repair of beneficiaries. Our Warmth Dream project was also introduced on a TV program named “Shining 83 Points pumps in farmhouses damaged by flood (Dangjin, etc., year-round) (Higher than DJSI Asia-Pacific average of 79 points) LIVE” by Gwangju MBC which was well-received by local communities. 2016 2017 2018 At the same time, we are actively engaged in social contribution activities for promoting convenience for local residents. Through our environmental improvement activities in Baemesan Dream Home Project Financial Support in Social Contribution and the Lake Park, we installed sunshades and cleaned up the trails inside the Park. Baemesan, The “Dream Home” project is one of our most representative social contribution programs, (Unit: KRW million) in particular, is a resting place for the residents of Naju Innovation City, which makes our projects improving the living environment and children’s facilities using our professional maintenance very important in adding convenience facilities and improving the environment. techniques, such as electric, machinery and welding techniques, for children from low-income 1,105 families in local communities.
850 Promoting Everyday Safety for Local Residents KRW 255 KEPCO KPS spares no effort in creating safe environments for children who are our future Category Description million ↑ generation. In association with ChildFund Korea, we have been carrying out the “Yellow Carpet” 30% ↑ project to secure pedestrian safety for children. In 2017 and 2018, we installed the Yellow •Purpose: Improving the living environment and children’s facilities for children from 2017 2018 low-income families in local communities Carpet in seven sites near six elementary schools in Jeonnam Province, and 23 sites near 19 Overview •Activities in local areas near 59 KEPCO KPS’ business sites nationwide using the elementary schools nationwide, respectively. We are also actively engaged in the “Yellow Card” company’s maintenance techniques (electric, machinery, welding, etc.) (in partnership Promotion of Social Contribution Activities project to prevent traffic accidents involving children. Between 2017 and 2018, we distributed with ChildFund Korea) (Unit: Cases) approximately 8,700 Yellow Cards and attached them to children’s bags, as a measure to prevent Category 2016 2017 2018 traffic accidents by improving driver visibility. Environmental Improvement 181 Performance 165 156 174 At the same time, we have distributed 136 wandering monitoring devices to the Jeonnam Projects (No. of Cases) Provincial Police Agency and other public institutions, as part of our wandering monitoring device Disbursed Amount (KRW million) 343 371 405 donation project to prevent missing incidents of dementia patients. Through these efforts, we Commendation of the Governor of Chungnam Province awarded for KEPCO KPS’ Contribution to Promoting 154 27 Cases ↑ expect to contribute to preventing the ever-increasing number of missing incidents of dementia Children’s Rights and Welfare(’17.12) Stakeholder •Held meetings with ChildFund Korea (4 sessions, year-round) for stable project support 18% ↑ patients and solving this salient issue in the Jeonnam region. Feedback •Strengthened feedback by performing satisfaction survey on the Dream Home project 2017 2018 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 44 / 45 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
BEST Practice KEPCO KPS Hanmaeum Volunteer Group Founded in 2005, Hanmaeum (meaning “One Heart”) Volunteer Group is the organization at the center of our social contribution activities. As a public enterprise fulfilling its social responsibilities, Training Solar Power Startup Entrepreneurs KEPCO KPS has been undertaking a variety of local community and pro bono activities under the In December 2018, we signed a Memorandum of Understanding (MOU) for Fostering Solar Power Startup Entrepreneurship with Korea slogan “A Sharing Love, A Unified World.” As of 2018, there are 59 corps under the Hanmaeum Southern Power Co., Ltd. to implement a joint project for training young startup entrepreneurs in the field of renewable energy. With the goal of Volunteer Group across the country. responding to ever-increasing demands in renewable energy and realizing social values through job creation, we expect to create 12 jobs in the solar power industry by 2020.
● Major Activities of Hanmaeum Volunteer Group ● Project Implementation: Fostering Entrepreneurship through Collaboration with Korea Southern Power 2017 2018 Year-round Activities KEPCO KPS Korea Southern Power Undergraduate Students
Regional Volunteering, Dream Home Project, Fun Donation Campaign •Provide solar power-related on-the- •Select program participants (students) job training (OJT) •Conduct and support basic •Complete entrepreneurship training Sponsored goods for sisterhood villages January Distributed free meals to local welfare institutions •Grant start-up scholarship (12 persons) entrepreneurship training •Operate and maintain renewable •Provide entrepreneur job training •Provide entrepreneurship OJT and energy facilities Distributed tteokguk (sliced rice cake soup) (as required), etc. O&M facilities Provided electricity safety education for February for people from socially vulnerable groups and kindergarteners in Naju and Gwangju delivered Hanmaeum donations Carried out environmental clean-up activities for Volunteered by inspecting and repairing power March mutual growth with and improvement of local facilities in homes of people with disabilities ● Fostering Entrepreneurship: Fostering Young Entrepreneurs through Systematic Training Programs communities
Inspected and improved aging power facilities for Carried out blood donation activities April socially vulnerable homes Stage 1 Stage 2 Stage 3 Stage 4 Trainee Selection Startup Basics Startup OJT Startup Support Sponsored children from socially vulnerable Supported local party for village elders May homes and supported parties for village elders •Sophomore/Junior students •Startup money support •Practical training and field visit •Power plant O&M service in Busan (For students who have Sponsored families of patriots and veterans, Gave out Taegeukgi (Korean national flag) to local •48 hours during school holiday training gave out Taegeukgi (Korean national flag) to local •KEPCO KPS-Korea Southern completed the program) residents and instructed flag hoisting rules June (4 hours/day, 3 weeks) •Training duration: 1 year residents, and instructed flag hoisting rules Power MOU •Legal service support, etc Inspected and replaced electric products in the Volunteered by installing the “Yellow Carpet” July homes of senior citizens living alone in preparation for severe hot weather Public Activities Relating to the Transmission and Substation Business Volunteered by improving living environment for Carried out blood donation activities and donated local children (roof improvements) August nutritional meals for local senior citizens We contribute to ensuring the safety of Korean people and fulfill our social responsibilities by immediately reporting on the National Safety Reporting Application any hazardous factors with possible influence on public safety that may be found in the course of performing maintenance Volunteered by sharing gifts with socially Shared songpyeon (Korean rice cake eaten at work and other major business duties. In particular, we respond actively to public safety by working closely with local governments and vulnerable homes in celebration of Chuseok September Chusok) with socially vulnerable homes and (Korean Thanksgiving) delivered Hanmaeum donations communities in handling various hazardous factors that we come across in our transmission and substation business which is carried out on a
Carried out environmental purification activities to nationwide scale. Volunteered by installing the “Yellow Carpet” protect local ecosystems October
Held a kimjang (kimchi-making) event and Donated briquettes and daily necessities to the donated winter items in preparation for the winter homes of senior citizens living alone November season •Efforts to generate social values in the course of performing KEPCO KPS’ major business projects Background Carried out Warmth Dream (inspection and •Rising public interest resulting from an increase in the number of disasters damaging people’s lives and assets Delivered “Dream Home 2017” donation funds improvement of heating facilities) activities and and donated goods by Santa Expedition December donated goods by Santa Expedition •Identified in real time business sites at risk of accidents during power transmission line inspections (Government Safety Shinmungo application) Improvement (Identified 259 risk factors including forest fire, road damage, soil loss, flooding, and rockslide) Future Plans Measures •Held 24 meetings with local residents and governments and shared information on business sites at risk of accidents Through our social contribution activities, we achieve mutual growth and cooperation with local •Performed 415 public maintenance activities including special transmission facility inspection for inter-Korean summit (50 national events, communities, while pursuing social values. On the one hand, we will focus on solving the social 44 collaborations with public offices, 35 support for local firms, 96 public convenience activities, 190 meteorological disaster responses) issues that we can, such as improving the local community environment and everyday safety.
At the same time, we will continuously explore new activities in connection to our business •Contribution to public safety by making reports of hazardous factors via Safety Shinmungo Application Major characteristics, so that we can fulfill our social responsibilities as a public enterprise. Through (Target: 60, No. of actual reports: 259) Performance these efforts, we will contribute to the development of local communities and enhancement of •Active collaboration with local residents and governments to identify and solve public safety issues (24 meetings held) the quality of people’s lives. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 46 / 47 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
03 Sustainable Growth
Importance of Eco-friendly Management Our Efforts to Establish Eco-friendly Management
0 Cases Since the Paris Agreement took effect in 2016, By establishing an eco-friendly management system, environmental regulations in the international KEPCO KPS answers to the demands of its internal Number of Harmful community have gradually been strengthened. and external stakeholders to implement eco-friendly Substance Leakage Global investment firms have begun to consider the management. While strengthening eco-friendly Accidents sustainable impact of the companies running the management activities through our primary-purpose (As of 2018) projects they invest in. Domestically, public institutions businesses such as developing maintenance technology are working laboriously to strengthen eco-friendly and implementing renewable energy projects, we Reduction by 23.5% policies. They are defining the idea of environmental are minimizing any negative environmental impact preservation in line with the characteristics of their that may result from our management activities by Greenhouse work, taking a preventive approach and developing enhancing the efficiency of our facilities and reducing Gas Emissions various programs to prevent environmental damage. waste generated from our corporate buildings. (As of 2018) Grand Prize in Strategic Directions Architecture Eco-friendly Management Activities Response to Climate Change Grand Prize at Korea Ecological Architecture and • Strengthening eco-friendly management based on •Greenhouse gas emission reduction activities Environment Award ISO 14001 certification for environmental management •Expanding strategic renewable energy projects based on system engineering technologies •Strengthening environmental management activities on business sites - Waste/Harmful substance management - Air and soil pollutant management - Water usage management KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 48 / 49 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Environmental Strategic Directions Waste Harmful Substance Management An environmental management system is not only a global demand but a major pillar of the (Unit: ton) Harmful substances inevitably used and generated in the course of our management activities Management Korean government’s policy. KEPCO KPS seeks to achieve sustainable development that takes our are recorded in our management register based on material safety data sheet (MSDS),* and future generations and the environment into consideration. To this end, we carry out systematic 24.9 24.7 are strictly managed in a transparent manner under the control of our environmental manager Activities activities based on our environmental management system, while practicing environmental 21.4 and in accordance with relevant procedures. Pursuant to the Chemical Control Act, all workers management in our business activities by encouraging employee participation and changes in receive safety training on harmful chemical substances, while employees in charge of handling perception. and managing chemical substances are required to undergo safety training, enabling them to take appropriate measures in case of emergency situations. We provide MSDS regarding harmful Strengthening the Environmental Management System chemical substances used on work sites so that our workers are given hazard information in In forming our eco-friendly business portfolio, we actively reflect the government’s major policies, 2016 2017 2018 advance, in addition to offering systematic training to enable them to perform their work safely.
including reduction of greenhouse gas emissions, expansion of renewable energy, and reduction * Material Safety Data Sheet (MSDS): A document that contains information on names of chemical substances or of energy consumption. Also in order to strengthen our environmental management system, we products containing chemical substances, physiochemical properties, harmfulness/hazardousness, emergency guidelines in case of fire/explosion, environmental impact, etc. manage our business sites in an eco-friendly manner through energy/resource optimization. Recycling (Unit: ton)
Environmental Operation of a global eco-friendly management system by strengthening activities Air and Soil Pollutant Management 37.3 36.9 Policy to improve the environment 32.1 In an effort to carry out air pollution prevention activities in a systematic manner, we have Strengthen environment protection activities through primary-purpose businesses such as assigned personnel in each business site to exclusively perform air pollution management duties. Strategic maintenance technique development and renewable energy projects In case of government announcements regarding fine dust reduction measures, we implement an Directions Operate businesses in an eco-friendly manner by reducing company facilities and waste, etc. “alternate no-driving day” system and minimize work involving harmful substances. At the Plant Service Center (type 4 air quality control business site), we make sure that discharged pollutants Compliance with Goals Eco-friendly management Energy/Resource optimization do not exceed the effluent standards by attaching discharge measurement equipment. We also environmental laws 2016 2017 2018 operate filter dust collectors and absorption equipment, in addition to performing atmospheric •Develop eco-friendly •Comply with environmental environment measurements in accordance with the Clean Air Conservation Act. management techniques •Minimize discharge of waste standards and procedures Targets •Maintain operation of •Minimize resource/energy •Ensure thorough ● Air Pollutant Emissions environmental management consumption management of harmful (Unit: kg) system substances harmful chemical substance leakage Category 2016 2017 2018 0 Cases Dust 245.0 23.0 60.2 ISO 14001 Certified for Environmental Management System NOx 43.0 0 0 KEPCO KPS, ISO 14001-certified for its environmental management system which continuously improves the company’s environmental performance, undertakes system-based environmental •Air pollutant emission confined to Plant Service Center which possesses its own plant(s) management activities at the company level. In 2018, we revised our environmental management •No soil pollutants emitted manual and waste management procedures, as part of our efforts to establish and operate the optimal environmental management system. Water Consumption Water Usage Management (Unit: ton) Since we use the water supply service, there is no water supplier that is affected by our water ● ISO 14001 Certification Acquisition Process usage, and all wastewater discharged from our business sites are either treated/discharged in 28,071 28,632 our own wastewater treatment facilities or outsourced to professional companies for treatment. Establish general Acquire ISO 26,930 Develop procedures Develop manual directions certification The quality of water discharged after the treatment of wastewater is systematically measured Environmental management system (ISO 14001) certification and managed by a professional water quality monitoring company in the first and second half •Environmental •Apply for certification •Operational scope •Develop environmental of each year, so that it does not exceed 80% of the legal effluent standards. We make sure procedures •Screening and inspection •Operational procedures manual •Review/Approval •Acquire certification that no ozone-depleting substances such as CFCs are used and we fully comply with the Basel Convention. No violations of environmental laws occurred during the reporting period. 2016 2017 2018 Strengthening Environment Management Activities on Business Sites Future Plans waste per employee compared * A sum of data from the headquarters We will continue our efforts to solidify our environmental management system by establishing an to previous year Waste Management eco-friendly business portfolio and undertaking strict management of our business sites. We will 3.6 kg Reduced Even though we have no facilities of our own, we fulfill our environmental responsibilities in the also carry out various educational and awareness-raising activities so that a culture that values (56.5kg in 2017 → 52.9kg in 2018) value chain by instilling in our employees the idea that “our clients’ facilities are our facilities.” In environmental protection is deeply internalized by our employees. this regard, we have established a system focused on handling waste generated on maintenance work sites, while strictly treating by-products discharged from power plants according to environmental guidelines. At the same time, we carry out various environment protection activities, such as scrap paper and toner recycling as well as waste sorting and collection, linking them with our corporate culture. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 50 / 51 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Expanding Renewable Energy Projects Response to Climate Since the government-led National Greenhouse Gas Reduction Roadmap in 2030 was established In 2018, the government-led National Greenhouse Gas Reduction Roadmap 2030 was Change in 2018, companies are facing stronger demands to disclose information regarding their established and publicly announced. In order to achieve the GHG reduction target of 37% against obligations to reduce greenhouse gas (GHG) emissions. In response, we systematically manage the BAU* baseline by 2030, the importance of developing and mass-distributing innovative data regarding fuel consumption by all corporate vehicles and energy consumption in corporate renewable energy technologies is being highlighted. Against this backdrop, KEPCO KPS, as a buildings by recording them on the National Greenhouse Gas Inventory and Research Center. leading company creating eco-friendly energy, is using its outstanding maintenance technology We also make continuous efforts to reduce GHGs by building an eco-friendly renewable energy and knowhow accumulated over decades in developing and supplying renewable energy resource business portfolio. systems. In particular, we provide O&M service for renewable energy facilities, such as solar, wind, and small hydro power facilities, and energy storage system (ESS) projects, utilizing our technical Reduction Activities of Greenhouse Gas Emissions expertise in engineering.
By setting GHG reduction targets for our corporate vehicles and buildings, we take continuous * BAU (Business as Usual): Level of greenhouse gas emissions that would result if no measures are taken to reduce measures to manage and reach those targets, such as expanding the use of electric vehicles future emissions and eco-friendly infrastructures, and strengthening environmental standards regarding newly- constructed corporate buildings. As a result of these efforts, we reduced GHG emissions by 23.5% against our baseline, a reduction ratio adding a remarkable 20.7% to the 2017 ratio (2.8%). Our GHG emissions are on the rise because the number of corporate vehicles has increased due to an expansion of business areas. However, we continuously reduce our energy consumption by practicing energy reduction and efficiency improvement activities in our corporate buildings. Energy reduction and other efforts in the Human Resource Development Center were recognized as highly efficient eco-friendly measures, leading us to win the Grand Prize at the Korea Ecological Architecture and Environment Award 2018 in the Architecture Section.
● Energy Consumption (Buildings) (Unit: TJ)
Category 2016 2017 2018 Electricity 52.1 45.5 72.8 Focusing on strategies for three major renewable energy projects, we are creating an eco- Steam 0.0 0.0 1.3 friendly business model in the renewable energy area. In the field of wind power generation, we Kerosene 0.1 0.1 0.1 have signed a joint project development agreement for Namjeong Wind Power Plant (58.8MW) in Yeongdeok. In the field of floating solar power, we secured idle water surface on reservoirs LNG 0.3 0.4 0.8 (Gunnae, Bojeon, Doonjeon) located in Jindo-gun in 2018 for large-scale floating solar power •Data scope: Pertains only to corporate buildings owned by KEPCO KPS (headquarters, Busan, Daegu, and Gwangju project development. In addition, we won our first technical service contract (August 2018 – July transmission and substation facilities, Plant Business Service Center) 2020; KRW 110 million) for a solar power project feasibility study, building the basis for further ● Energy Consumption (Vehicles) business expansion. (Unit: TJ)
Category 2016 2017 2018 ● Improving the Implementation System for Renewable Energy Construction Projects Gasoline 2.6 2.2 1.7 Diesel 44.0 32.7 29.1 Before Improvement After Improvement
● Greenhouse Gas Emission •Lack of project participation standards to determine (Unit: tCO2eq) whether to participate in tenders •Established project participation standards according •Lack of management procedures in each field of to contract targets, scope, and conditions Category 2016 2017 2018 construction •Developed checklists and procedures for each field •Lack of experts to design and review renewable •Secured experts and provided professional training Scope 1 3,296 2,470 2,204 energy projects Scope 2 2,699 2,360 3,617 •Contract targets Construction and O&M projects of at least 1MW ordered by local governments or public institutions •Procedure development Standardization of risk management checklists, procedures by field, and contracts ● Greenhouse Gas and Energy Reduction Programs
Category Description of Performance Future Plans •Installed 3 electric car charging stations for expanding electric vehicle infrastructures By expanding our eco-friendly business portfolio, KEPCO KPS will respond to climate change issues Vehicles •Secured 3 additional eco-friendly electric vehicles and promote generation of social values in environmental areas. We will continue to participate in •Replaced lightings in corporate buildings to LED lighting (50 lightings on the 13th floor of headquarters) the global environmental conservation movement by investing heavily in GHG reduction activities Buildings •Increased energy efficiency standards in newly constructed buildings (Previously grade 1 to grade 1++) •Installed energy storage facilities in newly constructed buildings (3 business sites including headquarters) in response to various environmental issues that may arise in our management activities. •Designated air environment managers in each business site (2 persons per business site) Air Environment •Implemented alternate-day no-driving policy and reduced work involving harmful substances in the case of government announcements to take fine dust reduction measures KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 52 / 53 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
04 Integrity Management
Certified for 3 consecutive years Importance of human-centered Our efforts to firmly establish human- Certified as a family- management centered management friendly workplace (2017 ~ 2019) Work and life balance is a new approach to life, Based on people-first management that places the gradually spreading as a lifestyle trend in Korea. highest priority on our employees, we spare no effort Also government policies aimed at enhancing the in ensuring that our employees are happy at KEPCO quality of life for office workers and the general KPS. Our activities in this regard include establishing public is expanding at large. Strengthening corporate an employee-friendly corporate culture, hiring talented sustainability by securing talented people is an people, and training core talent. In 2018, we continued essential, high-priority task for companies. In this our efforts to promote a culture of safety among regard, many companies and public enterprises are employees with a view to establishing safety-first points 77 making a wide range of efforts to secure talented management that respects human life. people and investing in human resource development. Employee Satisfaction Survey (Average of top 100 companies in Korea recorded at 68 points as of 2018) Participated in by Strategic Directions 539 employees Talent-centered Management Activities Safety-first Management On-site training for preventing 4 major •Establish a fair recruitment process based on job •Strengthen safety accident prevention activities accidents competency •Establish a field-oriented safety management system •Advance the talent fostering system to develop core •Expand employee health promotion programs (As of 2018) talent •Strengthen safety activities in local communities •Strengthen competency building for employees on three major future growth businesses •Create an employee-friendly corporate culture KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 54 / 55 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Fostering Core Talent Talent-centered KEPCO KPS is generating social values by creating sustainable jobs. We seek to strengthen our Management core competencies by fostering talent and building competence in power generation technology, Advancing the Talent Development System while improving employee satisfaction by establishing a corporate culture that makes KEPCO KPS In connection with the foundation of our Human Resource Development Center in 2017, we have a good workplace. been making various efforts to establish talent development infrastructures. First of all, we have established a mid- to long-term education and training plan in alignment with our business policies Recruiting Outstanding Talent and strategies, and try to create a culture of learning by providing educational programs attuned to each employee’s competency level. Furthermore, we operate a self-initiated learning system Recruiting Talents Based on Job Competency for different individual needs, including cyber learning, language training, sponsored training of GLOBALLY ADVANCED CUSTOMER-CENTERED EXPERT Since 2015, we have been hiring core talent by introducing a recruitment system based on undergraduate (graduate) students, and professional certification acquisition. In recognition of the National Competency Standards (NCS). We hire people for their competencies based on these efforts, we were certified as a Best Human Resource Development Institution in the Public clear evaluation criteria that reflect the qualifications (knowledge, technical expertise, attitude) Sector by the Ministry of Education and the Ministry of Personnel Management in 2018. •Secure competitiveness that will enable us to emerge as a global top player through continuous required to perform their job duties on industrial work sites. By applying competency-centered innovation quantitative recruitment methods, we select people who meet our core values of customer Strengthening Competency-building for Three Major Future Growth Businesses •Satisfy the needs of our customers by thinking satisfaction, innovation, emphasis on technology, talent development and global expansion. With the goal of securing market advantage in the field of future growth business, we have from their perspectives •Secure the highest level of expertise in the plant expanded professional outsourced training in each business field. As three major business areas, we service field through relentless learning and Establishing a Fair Recruitment System have selected new strategic energy, ROMM/Retrofit, and nuclear decommissioning. At our in-house technical training We have adopted a blind recruitment system to ensure that a fair recruiting firmly takes root training facilities, we have also opened a basic training course on future growth business, while at KEPCO KPS. Since introducing this system, we have continuously made improvements and developing new courses and core talent development measures to advance our overseas business. established a recruitment process whereby candidates undergo the same recruitment process and are evaluated without discrimination or limits based on their education level or age. By using ● Education centered on Future Growth Businesses a lottery system to determine interview order, performing blind interviews and using various other measures, we hire people based only on their competencies by excluding all prejudicial factors. 2016 2017 2018 Business Area No. of No. of No. of No. of No. of No. of Achieving Social Values by Practicing Socially Equitable Hiring Programs Trainees Programs Trainees Programs Trainees We pursue socially equitable hiring by granting additional points to patriots and veterans, Eco-friendly 9 42 22 48 32 63 persons with disabilities, and low-income individuals in our new employee recruitment process. Energy In 2017 and 2018, we hired 284 and 482 new talents, and transferred 246 contingent workers ROMM/Retrofit 8 47 14 27 18 36 to permanent employees. We also expanded our Industry Professional Practice (IPP) program, offering four-month field training to 23 students from local universities. Other efforts include Nuclear 2 57 1 6 4 23 adding stipulations that allow high school graduates to apply by limiting the application of Decommissioning candidates with high educational backgrounds, as a result of which we hired 171 high school Total 19 146 37 81 54 122 graduates (35.5%), a number in excess of the government target (20% of new hires). Based on these efforts, we were awarded the Commendation for Contribution to Vocational Education 2018 (a leading company with active hiring of high school graduates) in April 2019. Human Resource Development Center * Industry Professional Practice (IPP): Long-term work study system linked with industries At our Human Resource Development Center, we offer a variety of educational programs to develop core talent and enable them to immediately adapt to field work. We provide education Operating a Reasonable Contingent Worker System and Improving their Treatment and training programs covering both theory and practice, including leadership courses, basic In order to operate a non-discriminatory compensation system and improve our welfare system, courses, business courses, professional courses and engineering courses. By developing our own we have established a competence- and performance-centered career path and compensation curriculum and introducing new technologies from overseas, we continuously develop experience- system for high school graduates, in addition to continuously increasing the wage growth rate based field training programs and educational materials. In 2018, we procured 31 additional state- of contingent workers in comparison to permanent employees. We have also signed no-cost of-the-art facilities for practical training and reorganized educational systems at our in-house welfare agreements and are expanding their scope of application to cover contingent workers. training facilities. A total of 4,764 trainees completed educational courses and practical training Furthermore, we are promoting their welfare by supporting competence-building and stable work KEPCO KPS Leadership Center using facilities with the capacity of operating 125 courses and 257 practice sessions. for employees of our partner companies. In 2018, we signed a no-cost welfare agreement and extended its coverage to all contingent workers, and provided “education mileage” (book vouchers) to 193 employees of outstanding partner companies through which we supported 2,688 books. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 56 / 57 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Developing Experts in the Field of Nuclear Energy Creating an Employee-friendly Corporate Culture By training maintenance personnel required for nuclear energy development, we are fostering core talent who will be the foundation for driving our new businesses. Based on a curriculum Realizing Work-life Balance by Building a “Homepany” aiming for perfect maintenance of nuclear power plant facilities and development of maintenance In order to increase the happiness index and work efficiency of our employees, we try to build a facilities, we are equipped with maintenance training complex, mechanical engineering workshop “homepany” (home + company) and expand family-friendly management. At the same time, we complex, welding complex, and other practice facilities, offering various professional maintenance are making various efforts to build the basis on which employees can find a balance between courses on nuclear reactor dismantling and assembly, nuclear fuel exchange, and steam their work and home life by diversifying the forms of employment and improving the employee generators. In recent years, we have been offering educational programs on machinery, electricity leave system. We have also expanded non-financial benefits such as extending group insurance and instrumentation to field maintenance personnel in the United Arab Emirates (UAE). In 2018, coverage to employees’ spouses, while designating every Wednesday as “Happy Family Day” and 47 educational courses and 75 sessions of practical training were completed by 709 trainees. offering life design programs for employees with 10 or more years of service.
In-house Qualification System Certified as a Family-friendly Workplace Our in-house qualification system (approved as a “corporate qualification system” by the Ministry Employee Satisfaction Survey Results For three consecutive years (2017-2019), we have been certified as a family-friendly workplace of Employment and Labor in 2000) evaluates our employees’ technical maintenance skills and 77 Points by the Ministry of Gender Equality and Family. As part of our family-friendly programs, we gives differential treatment according to the level of qualifications. We assess each employee’s (Average of top 100 Korean companies: invited family members of our employees to visit us for a company tour and held four visits 68 points; As of 2018) maintenance skills based on training programs at the Human Resource Development Center and to local historical sites in 2018. As a result of expanding childcare support, 21 male employees field experiences, with the aim of enhancing their overall technical skills. Going forward, we will are currently on parental leave, which is a 31% increase compared to previous years. We also continue to play a leading role in the field of maintenance engineering by offering outsourced increased the number of children admitted to the Day Care Center at our headquarters to 60 by training programs by professional institutions and universities both at home and abroad. In 2018, extending its facilities. we improved the manager qualification assessment methods, thereby strengthening the reliability of our in-house qualification system, while supporting competency development for our most Smart Office highly-skilled employees. The “Level III Community” was participated in by 191 employees in 2018, We support our employees in finding a balance between work and life by introducing the flex- where the participants shared their maintenance skills and knowhow through technical exchange, time work hour system, while diversifying forms of work by enhancing work efficiency through while the newly-established “Level IV Technology and Humanities Integrated Course” was held a smart work system. In 2018, the number of employees using the flex-time work hour system twice and completed by 41 employees. increased to 1,949 and the satisfaction score rose to 3.32 points. Furthermore, we have adopted a mobile office system, enabling employees to carry out their work on mobile devices, in addition ● In-house Qualification System to establishing a company-exclusive video conferencing system to enhance access convenience. Finally, we have made continuous efforts to reduce the practice of overtime, ways of working and corporate culture. Supervisor Special Engineer Pre-Supervisor Supervisor Video Conferencing System JQC (98) = Specialist Pre-Supervisor / LvⅣ ● Enhancing Work Efficiency by Diversifying Forms of Employment 12~20 years (Unit: Persons) Qualified to carry out job duties Special Engineer / LvⅢ Lv =3 Ⅲ+Ⅱs 8~10 years 10~12 years Category 2016 2017 2018 PQC (39) Qualified to be in charge of Part-time Employment System - - 9 certain job duties Flex Time Work 735 967 987 PQC (37) Engineer General Engineer
Engineering Level Engineer / LvⅡ = Generalist Flexible Work Alternative Work Qualified to be an expert - 700 867 Practical 4~7 years General Engineer / 4 LvⅡs Hour System Schedule SPC (4) Engineer 8~10 years Core Time Work 11 46 86 Qualified to be a supervisor Product Engineer LvⅠ 1~3 years Total 746 1,713 1,949 Lv Ⅰ Lv Ⅱ Lv Ⅲ Lv Ⅳ * Some data regarding part-time and alternative work schedule have been excluded depending on when each system Job Scope was adopted
Generating Social Values in Connection with Human Resource Development Future Plans We provide educational infrastructures to local residents by opening up the Human Resource Development Center and carry out a variety of activities to support lifelong education by We will continue to reinforce our job-centered management basis, creating quality jobs in the operating an open campus for local residents. In 2018, we offered the Open Campus Bitgaram public sector, and sharing the social values of mutual growth and cooperation. Furthermore, Credit Course (2nd and 3rd completion) participated in by 110 students from ten universities we will establish a corporate culture that makes our company a good workplace in which our including Chonnam National University. The Industry Professional Practice (IPP) Internship employees are happy to work for. Finally, we will grow into a global “solution provider” for power Program was participated in by 23 students from Dongshin University and Mokpo National plants by fostering talented individuals who will strengthen our core competencies. University for four months. We also supported the local community by renting out the Human Resource Development Center for the annual concert of Dado Lake Choir, and ran a three-day Basic Course on Power Generation Facility Maintenance (Machinery/Electricity) for Mutual Growth with SMEs, which was participated in by 33 employees of our partner companies. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 58 / 59 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Advancing the Industrial Accident Prevention System Safety-first With the goal of recording “zero” fatal accidents, KEPCO KPS practices safety-first management Placing the highest priority on the safety of our workers and the Korean public, we continue Management by being thoroughly prepared for any safety accidents and injuries that may arise in the course of to advance our industrial accident prevention system. In 54 business sites, we have received our business management. In order to create a safe work environment in which our employees professional certifications for the occupational safety and health management system, while can feel safe and secure, we have systematized our industrial safety and health scheme and 21 sites have been certified as zero-accident workplaces. In particular, we have established a undertaken special field-centered management activities. safety level evaluation system based on the PDCA cycle, which we will use as a stepping stone to internalize a culture of safety throughout the company. Strengthening Prevention-oriented Safety Management System Upon setting four major areas of occupational accident management (entanglement in machines, falls from heights, electrocutions, suffocations), we are systematically tackling each issue. For Plan Do Check Action
any fatal accident that has taken place, we analyze prevention cases in the same industry and •Increase employee •Undertake self- undertake intensive prevention activities. We also establish a culture of safety among our awareness of safety assessment by each Establish safety level •Make efforts to improve and health, disaster business site evaluation system employees. By having a professional institution evaluate the level of safety culture within the safety culture prevention and response - Take improvement company, we carry out various activities to internalize a culture of safety across the company. •Develop measurable •Implement laws and measures ISO 45001 Certification for Occupational Safety and indices guidelines regarding •Reflect safety level of Evaluation Index Health Management System work environment and each business site on 94.0 health management headquarter evaluation ● Roadmap for Establishing a Culture of Safety among Employees
Frequency Severity Indicator (FSI*) System Development Settlement of Safety Culture Optimization of Safety Culture Employee Health Promotion Programs Psychological Support Group (2016) (2017) (2018) KEPCO KPS runs various participatory programs aimed at promoting employee health. First of 0.61 Held 8 Counseling, all, we offer workplace counseling service and the “Emotional Safety Healing Camp” program, 0.52 • Developed safety culture evaluation • Strengthened the effectiveness of • Secured eligibility through professional 0.40 system managing internal management indices institution Participated by 80 Employees providing in-depth support for promoting the mental health of our employees. In order to • Identified improvement areas and • Received feedback on safety culture • Played a leading role in settling down a (As of 2018) prevent post-traumatic stress of employees who have experienced industrial accidents, we took measures on a company-wide index improvement plan culture of safety in the power industry level operate the “Psychological Support Group” and offer psychological treatment to employees of Eligible for PTSD Treatment after partner companies who have experienced industrial accidents. Furthermore, we take measures 2016 2017 2018 Industrial Accident to improve work environments by undertaking work environment monitoring and providing Supported Employees education on material safety data sheets (MSDS), while making every effort to promote employee * Frequency Severity Indicator (FSI): Safety performance Strengthening the Field Safety Management System 10 management index using both frequency and severity of (As of 2018) health and prevent occupational diseases by offering special medical exams to employees at risk As part of our field-centered accident prevention activities, we have developed a customized occupational accidents of exposure to harmful substances. (Formula = Frequency rate x Severity rate^(1/2)) safety management guideline for workers participating in transmission and substation facility maintenance work, and revised our safety manual and procedures. In addition, we are ● Safety Promotion Activities for Local Residents ● Equipment for Securing the Safety of Field continuously investing in the latest protective equipment such as safety equipment facilities to Yellow Carpet Workers ensure employee safety. In 2018, we supplied 121 camera recording device attached to safety Business Area Description of Activities helmets and 261 live wire alarms to field workers. Co-hosted the “Korea-Japan Suicide Prevention Forum 2018” and contributed to promoting Suicide Prevention Camera mental health with local residents Earphones/ Operating Model Safety Sites Response to Microphone Supported heat wave response activities by installing 50 large sunshades in Naju-si Live wire We operate model safety business sites to perform on-site safety diagnostics and identify areas Heat Wave sensor requiring improvement to ensure the safety of our employees. Such matters are shared across the Improvement of Promoted “Pesticide Container Safety Keepers” activities in 30 households near Naju to Transmitter/ Battery/Antenna company and reflected on accident prevention activities. In 2018, we invited internal and external Living Environment establish sound agricultural societies Electric Shock Provided “Electricity Safety Education for Children” once a month as talent donation in Naju-si Wearable device attachable to safety Live wire alarm experts to perform special on-site safety diagnostics on 13 occasions, in addition to providing Prevention kindergartens helmets and integrated remote attachable to safety field workers with customized on-site training for preventing entanglement in machines, falls control system helmets Provided traffic safety education and distributed Yellow Cards* to 3,500 elementary school Traffic Safety from heights, electrocutions, suffocations, and other on-site accidents. students in Naju-si to secure traffic safety at night time Installed the “Yellow Carpet” on crosswalks near 7 elementary schools in Naju-si to ensure traffic Safety Facilities Strengthening Disaster and Safety Management safety for children field-oriented training for the prevention of 4 major fatal accidents In order to strengthen disaster and safety management, we have revised our disaster response Promotion of Carried out public promotions of disaster training and response, including Safe Korea, manual and procedures. In 2018, we carried out 82 sessions of emergency drills in association Disaster Prevention earthquake drills, forest fire prevention, etc. Held sessions 15 with other institutions. Internally, we have provided support for disaster expert training programs, (As of 2018) * Yellow Card: Neon reflective card attached to bags as an indication of safety in order to prevent traffic accidents from which 91 trainees have become disaster experts. In addition, we hold campaigns to inform field employees the public on disaster-prone times of the years and vulnerability factors to strengthen disaster response and prevention. Future Plans Participated in by 539 Placing the highest priority on the safety and lives of our employees, KEPCO KPS will continue (As of 2018) Installed the “Yellow Carpet” on crosswalks to create a our efforts toward worksite-centered safety management and further advance our occupational safe traffic environment for children in school zones safety and health system and enhance the level of safety culture throughout the company. We will spare no effort to offset any safety-related issues that may arise in local communities through our management activities. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 60 / 61 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX Sustainability Management
Sustainability Management Strategies 62
Management Performance 64
Governance 66
Risk Management 68
Information Protection 70
Stakeholder Engagement 72
Materiality Analysis 74
Risk Management
Governance
Information Protection
Management Performance
Stakeholder Engagement
Sustainability Management Materiality Analysis Strategies KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 62 / 63 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Strategic Directions Sustainability Management Key Performance Indicators Sustainability KEPCO KPS will fulfill its social responsibilities as a public enterprise and implement stakeholder- We have established key performance indicators (KPIs) linked to our mid-to long-term Management centered sustainability management in economic, environmental and social aspects. Furthermore, sustainability management strategies and operate a systematic organizational performance we will faithfully play our roles as a global corporate citizen contributing to the sustainable management system. In particular, we try to enhance efficiency by setting annual targets and Strategies development of not only our local communities and country, but of the world. examining achievement rate/feedback.
Sustainability Management Strategies Key Performance Targets We will strengthen our corporate sustainability in pursuing our management vision of becoming Category Unit Indicators a global “solution provider” for power plants. In creating economic values, we have established 2019 2020 2021 KRW concrete tasks to complete by 2025 which include reaching KRW 2.1 trillion in sales, expanding Sales 14,254 14,663 15,496 100 million new growth projects until they account for 32.4% of our business, and obtaining seven major KRW Productivity per person 2.21 2.26 2.29 technologies to secure the core competitiveness of our future businesses. In the area of social 100 million values, we have established mid-to long-term strategies to increase our social value indices based In conformity In conformity R&D investment ratio Sustainable % 2.63 with government with government on mutual growth level, integrity evaluation, job creation for youth, recruitment of local talent, (against sales) Growth recommendations recommendations and fatal accidents. Fail-stop caused by errors attributable to No. of cases 0 0 0 KEPCO KPS Vision Global “Solution Provider” for Power Plants Satisfaction level of 90 points 90 points 90 points Points foreign customers or higher or higher or higher Business 32.4% of sales core points on Shared growth grade Class Satisfactory Satisfactory Excellent Goals KRW 2.1 7 100 from new growth Responsible Annual time spent on (by 2025) billion in sales technologies social index businesses Management social contribution Hours 18.5 18.8 19.1 activities (per person) Establish a Generate public- Enhance Number of supervisors Strategic Secure future growth management system centered values of Persons 105 110 115 competitiveness of trained Directions engines at the forefront of co-existence and core businesses Youth employment ratio change cooperation % 3 3 3 (against total quota) •Expand technical People- 76points 76points 76points •Boost the Employee satisfaction Points •Strengthen leadership development for oriented or higher or higher or higher competitiveness of •Lead social values in the maintenance innovative growth Management Integrity evaluation by Strategic overseas businesses •Strengthen safety and market •Strengthen Anti-corruption and Class 1 1 1 Tasks •Diversify energy security management •Innovate customer- executive abilities in Civil Rights Commission conversion business system centered services implementing change Number of fatal models No. of cases 0 0 0 management accidents Reduction of energy % 28 30 32 consumption Sustainability Management Organization Reduction of total Eco-friendly greenhouse gas % 28 30 32 We have established and operate an organization to implement sustainability management Management emissions that reflects the CEO’s commitment in this area. Sustainability management-related affairs are Amount of green In conformity In conformity undertaken by the Strategic Planning Team under the Corporate Planning Department, while product purchasing % 80 with government with government (items concerned) recommendations recommendations concrete tasks and key performance indicators (KPIs) are set and managed by each organization implementing them. With the Sustainability Management Committee playing the central role, we collect feedback from internal and external sources and reflect them in our management policies. Selected as a Leading Company by DJSI Korea for 10 Consecutive Years For ten consecutive years, KEPCO KPS was selected as a sector leader in the “commercial service and supply industry” by Dow Jones Sustainability Indices (DJSI), being recognized ● Sustainability Management Organization for our performance in sustainability management. Notably, our sustainability management implementation system in connection with Vision 2025 has been recognized as a globally Policies Planning Execution DJSI Certificate competitive system. We will do our best to play our role as a global leader in sustainability Organization in charge of management fulfilling economic, environmental and social responsibilities. Sustainability management- Organization implementing sustainability management related Committees (BOD, Ethical sustainability management CEO (Business Management Team Management Committee, Customer (All departments, divisions under Corporate Planning UN Global Compact Advisory Board, etc.) and business sites) Department) KEPCO KPS is committed to fulfilling our corporate social responsibilities, as well as the ten principles of the UN Global Compact (UNGC) in four areas – i.e., human rights, labor, environment, Establish sustainability Implement and manage Highest Collect feedback from internal and management implementation sustainability management and anti-corruption – onto which we signed in September 2007. In particular, we have Decision- external sources, and reflect them in system; Publish/Disclose tasks pertaining to each internalized the ten principles of the UNGC in our sustainability management strategies and making management policies reports; Set/Manage KPIs organizational unit policies. Every year, we submit our Communication on Progress (COP) in the form of reports to Endorsement of the UN Global Compact the UNGC, thereby re-confirming our endorsement of the ten principles. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 64 / 65 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
We have established and execute a reasonable budget operational plan considering both stability Establishing Sales Increase Plans Based on Future Growth Businesses Proportion of New Growth Business Management and profitability. At the same time, we are continuously enhancing our financial stability by With the aim of accomplishing our vision of becoming a “global power plant solution provider”, (Unit: %) Performance managing our performance in alignment with government policies such as normalization of public we have been focusing our business competencies in thermal and nuclear power generation, enterprises. As a result of our efforts in this area, we have reduced the debt ratio by 2.4%p and 32.4 transmission and substation business, and renewable energy. Going beyond our success in core increased the current ratio by 9.2%p. business areas, we will promote businesses to drive our future growth. We have reorganized our organizations with the aim of developing future growth business models, in addition to Generating Economic Values 19.6 strengthening our cooperation networks with external partners for business diversification in eco- 16.5 17.8 Despite various difficulties in domestic and global business environments in 2018, we achieved friendly, renewable energy areas such as wind, solar, and bio power. The scope of our new growth KRW 1.2425 trillion in sales, KRW 191.5 billion in operating profit, and KRW 161.3 billion in businesses has been continuously growing, accounting for 19.6% of total sales in 2018. net profit. However, not stopping at being complacent with our economic performance, we have established new financial goals in association with “Vision 2025”, our mid-to long-term Distribution of Economic Values management strategies. In consideration of the financial goals by 2025 based on scenario 2016 2017 2018 2025 Despite the rapidly-changing global economic environment and a slowly-growing electric power analyses of financial indices and management environment, we have established a new goal to (Predicted) market we recorded KRW 1.2424 trillion in sales and KRW 191.5 billion in operating profit, on a achieve KRW 2.1 trillion in sales by 2025, to which end we will expand the ratio of new growth consolidated basis in 2018. In comparison to 2017, our operating income increased by 16.7% and businesses to 32.4% by focusing on high value-added businesses such as renewable energy and net profit by 18.6%. In particular, the dividend yield was 5.2%, a 300% increase compared to Retrofit, as well as overseas projects. 2016. We are not only focused on generating economic values but distributing economic values to our stakeholders. Major Financial Performance
● Consolidated Financial Statement ● Major Distribution Performance (Unit: KRW 100 million) Interest Expense Labor Cost Tax Social Contribution Fund Category 2016 2017 2018 Assets 10,925 12,000 12,809 In 2018, labor cost was KRW 517.6 billion Corporation tax according to accounting In 2018, we executed KRW 1.105 billion KEPCO KPS is a zero-debt and total cost excluding KRW 41.8 billion standards stated in consolidated income Debt 3,027 2,948 2,968 on social contribution activities, a company since 2001. of dual retirement pension is statement was KRW 49.1 billion in 2018, KRW 255 million year-on-year increase. Capital 7,898 9,051 9,841 KRW 475.8 billion. a 25.4% year-on-year increase.
* Debt ratio: 30.2% (zero debt management)
● Sales and Cost of Sales (Unit: KRW 100 million) ● Consolidated Income Statement (Unit: KRW 100 million) Category 2016 2017 2018 Category 2016 2017 2018 Sales 12,131 12,368 12,425 Sales 12,231 12,368 12,425 Cost of Sales 10,304 9,860 9,736 Operating Profit 1,058 1,641 1,915 Net Profit 883 1,360 1,613 ● Wage and Welfare (Unit: KRW 100 million) * Operating profit rate: 15.4% Category 2016 2017 2018 Wage and Welfare 5,474 5,407 5,176 ● Performance by Business Area (Sales)* (Unit: KRW 100 million)
Category 2016 2017 2018 ● Corporate Tax (Unit: KRW 100 million) Thermal Power 4,885 4,765 4,263 Nuclear/Hydro Power 4,685 4,723 4,902 Category 2016 2017 2018 Transmission and Substation 736 809 829 Corporate Tax 246 392 492 External 857 780 985 Overseas 1,107 1,309 1,462 ● Social Contribution Fund (Unit: KRW 100 million) Total 12,271 12,389 12,444 Category 2016 2017 2018 * Based on consolidated K-IFRS financial statement Social Contribution Fund 1,577 850 1,105 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 66 / 67 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
KEPCO KPS places the Board of Directors (BOD) at the center of its management affairs so that ● BOD Participation Rate (Unit: %) Election of BOD Members Governance shareholders, the executive management, and corporate organizations such as audit institutions We elect BOD members in accordance with the Act on the Management of Public Institutions Category can appropriately exercise their rights and provide checks and balances against each other. By 2016 2017 2018 and the procedures regarding the election of BOD members set forth in our Articles of Participation rate appointing executive directors in a transparent and professional manner, we undertake responsible 82.1 73.6 77.6 Association. Candidates for CEO are first selected by open recruitment or recommendation, in BOD meetings management activities with directors who are highly experienced in their respective fields. then recommended by the Executive Recommendation Committee consisting of non-executive Participation rate directors (including outside directors) and civilian committee members, followed by the of non-executive 64.3 70.6 78.9 Vision Implement responsible management and achieve social values by strengthening the roles of the BOD directors deliberation and resolution of the Public Institution Operation Committee and the resolution of the General Shareholders’ Meeting (GSM), until the final candidate is appointed by the Strategies Establish a BOD operation system Promote the operation of BOD Strengthen the roles of non-executive directors President by the request of the Minister of Trade, Industry and Energy. The CEO serves a three- ● Number of Management Proposals •Hold BOD meetings on a regular basis and ensure •Establish and actively implement a proposal year term. Internal directors serve a two-year term and are appointed by the President by the •Establish BOD operational processes systematic management management system by Non-executive Directors and Implementation Tasks resolution of the GSM. Non-executive (Outside) directors are recommended by the Executive •Systematize BOD-related infrastructures •Provide major management information, such as •Support deliberation by holding BOD issue briefings, Implemented Proposals salient issues, in a timely manner etc. (Unit: Cases) Recommendation Committee, followed by the deliberation and resolution of the Public Institution Category 2016 2017 2018 Operation Committee and the resolution of the General Shareholders’ Meeting (GSM), then BOD Composition Number of appointed by the Minister of Economy and Finance to serve a two-year term. In order to secure As of April 2019, the Board of Directors (BOD) is composed of nine directors, including four management diversity and representativeness of BOD members, we have diversified institutions for candidate proposals made recommendation, requesting the Ministry of Personnel Management and the Ministry of Gender executive directors and five non-executive directors (including outside directors). The CEO/ by non-executive 13/13 10/10 11/11 Equality and Family for recommendations of candidates. Furthermore, we have strengthened the President of KEPCO KPS also holds the position of the Chair of the BOD in order to ensure directors / Number responsible management. In appointing BOD members, we place no restrictions on gender, of implemented independence of the Executive Recommendation Committee by precluding the participation of nationality, or age. Currently, there are eight male members and one female member. Executive proposals executive officers, in addition to including candidate evaluation criteria regarding the candidates’ directors establish and execute the headquarters’ goals, policies , and business plans within the level of understanding and experience in power or energy business in the Committee regulations. management targets and directions of the company, and report the status of such work to the BOD at least once every quarter. ● BOD Operational Process Operation of BOD If important issues arise relating to sustainability management, the Corporate Planning D-30 Survey demands regarding BOD agenda ● Structure of the BOD Department manage such issues through the BOD or separate business reporting to the executive (As of April 2019) directors. When necessary, issues are brought before the BOD for discussion by prior notification Give prior notice of BOD meeting Board of Directors D-21 schedule and agenda of the schedule and agenda. Major issues discussed by the BOD in 2018 include revising the rules BOD Secretariat of employment, creating the Mutual Growth Fund for Farming and Fishing Villages and the Mutual D-9 Register agenda Growth Fund for SMEs, and revising the regulations of the Job Integrity Agreement.
Non-executive Directors/Outside Directors(5) Executive Directors(4) Execute management policies Secure expertise Supervise and keep management in check D-7 Notify BOD members of meeting Evaluation and Compensation of BOD Members Operate the Executive Recommendation Committee Enhance transparency Operate the outside director system The BOD notifies and deliberates with the Executive Recommendation Committee regarding a D-6 ~ D-1 Hold prior briefing of BOD agenda draft contract that sets forth concrete management goals to be achieved during the President’s term as well as incentives, the results of which are notified to the Minister of Trade, Industry Strengthening the Roles of the BOD D-day Convene BOD meeting and Energy. Executive directors sign a performance contract with the President which includes We make various efforts to vitalize the BOD. First of all, we have increased the participation material issues that need to be addressed during the given year, the performance of which is rate of non-executive directors by implementing a prior notification system whereby BOD evaluated and reflected in determining their compensation. Non-executive directors may be members are notified of the Board’s agenda and schedule in advance. Next, we have promoted ● BOD Feedback System provided with activity expenses and allowance, the standards of which are set by the President. communication with non-executive directors to expand their participation in the company’s In 2018, compensation for executive directors of KEPCO KPS was 1.92 times higher than the management activities. In addition, we have actively implemented management proposals made Establishment of annual operational plans average wage of all employees. The wage cap of the President, executive directors and auditors by non-executive directors, so as to facilitate their voluntary and active participation. •Set operational directions and is determined by the resolution of the General Shareholders’ Meeting, while the compensation 1 implementation tasks of the Board based standards and payment methods are determined by the resolution of the BOD. ● Members of the BOD on analyses of previous year’s performance and changes in business environment Position Name Date of Birth Gender Educational Background Major Career Experiences Term Conflict of Interest Prevention Process Execution and monitoring President/CEO Kim Bum-nyun 1958.05 Male Ph.D. in Mechanical Engineering, Chungnam National University (Former) CEO of Gwangyang Green Energy Co., Ltd. 2021.05.24 •BOD participation rate In accordance with the regulations of the Board and the Articles of Association, any director who Executive Director Park Jung-soo 1958.11 Male B.A. in Trade, Chosun University (Former) Head of Business Development Division, KEPCO KPS 2020.08.23 2 •Ratio of statements made by non- has a special interest in a specific agenda is precluded from participating in the resolution of the Executive Director Bong Seok-geun 1958.01 Male MSc in Mechanics, Yonsei Graduate School of Engineering (Former) Head of Technology Solution Center, KEPCO KPS 2020.08.23 executive directors (Former) Head of Nuclear Power Technology Service Center, said agenda, and such director is not counted as an incumbent director. Non-executive directors Executive Director Kang Dong-hoon 1959.04 Male MSc in Electrical Engineering, Jeonbuk National University 2020.08.23 •Implementation of management proposals KEPCO KPS (Director) (including outside directors) are notified in advance of the agenda and date of BOD meetings, and B.A. in Department of Landscape Architecture., Mokpo National (Current) Director of Conference for Citizens’ Life and Outside Director Bae Il-jin 1964.11 Male 2020.05.15 provided with relevant materials for reviewing the agenda in a timely manner through various University Environment Performance evaluation Ph.D. and MSc in Finance, B.A. in School of Business, Yonsei (Current) Professor of Business Management, Chungnam 3 channels such as the director-exclusive company website. Outside Director Choi Soo-mi 1970.11 Female 2021.04.01 •Evaluate annual performance University. National University B.S. in Electrical Communication, Chosun College of Science and (Current) Senior Managing Director, Cheong Woon Outside Director Kim Ki-hyun 1960.11 Male 2021.09.25 Technology Development Co., Ltd. Feedback Roles of Governance Organizations MSc in Electrical Engineering, Hanyang University; B.S. in Outside Director Kim Woo-kyom 1953.09 Male (Former) Vice President, KEPCO 2021.09.25 4 •Draw improvement tasks and apply next The executive management of KEPCO KPS oversees various aspects of management by operating Electrical Engineering, Yeungnam University year’s plans Ph.D. and MBA in Management, Jeonbuk National University; (Former) Dean, Department of Taxation and Distribution, several Committees, and holding consultations on a regular basis with stakeholders in these Outside Director Shin Young-joo 1957.12 Male 2021.09.25 B.A. in Management, Jeonju University Sohae College areas. In addition, the BOD convenes regularly to deliberate company policies having economic, environmental, and social impacts, and reviews the risks and opportunities of major agenda items. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 68 / 69 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Through systematic risk management, we identify potential risk factors in advance and prevent Capital Budget Deliberation Committee Department Budget Management Team, Corporate Risk Management risk situations in order to ensure flawless business operations. To this end, we continuously add in Charge Planning Department We operate the Capital Budget Deliberation Committee for efficient allocation of resources and risk management infrastructures to strengthen our financial soundness. We also implement maximum effect of capital investment through prior review and deliberation regarding capital proactive risk management through self-inspections and our internal control system. Subjects of •Annual capital budget Deliberation •Capital budget exceeding a certain amount budget. In 2018, we reviewed four agenda items, including changes in extending daycare facilities that has not yet been allocated at the headquarters (draft) and budget planning for 2019 (draft). Risk Management System By analyzing the current market environment, we respond immediately to fast-changing risk ● Activities of the Capital Budget Deliberation Internal Control System situations. According to the analysis outcome of each market environment, we set different Committee We operate an internal control system based on the visions and strategies of audits performed in strategies, risk management targets and core risk indicators, thereby making our risk management a fair and principled manner. To this end, we have established a mid-term roadmap and efficiently scheme more systematic. In particular, we use various IT systems, including the Enterprise Risk No. Agenda carry out a range of auditing activities by enhancing the expertise of our auditing body. Management (ERM), the Enterprise Information System (EIS), the Enterprise Resource Planning (Draft) Changes in plans to extend daycare 1 (ERP), and the Internal Accounting system (ICAN), to ensure that we sense and respond to risks facilities at headquarters more accurately and promptly. (Draft) Plans to purchase additional land for Audit Vision Fair audits based on basic principles 2 Nuclear Power Center (Draft) Plans to establish attached facilities to Goal Enhance soundness and stability of financial structure through proactive risk management and strengthen the basis for future growth 2018 2019 2020 3 Wolsong Hanmaeul (meaning ‘one town’ in Korean corporate building) •Strengthened the •Establish advanced Overcome slowdown of sales growth Stabilize cash flow in response to Maintain foreign exchange risk •Strengthened expertise Environment Minimize losses in investment business independence of auditors auditing infrastructures and respond to sustained increase prospects for slowdown of increase management system in preparation for 4 (Draft) capital budget plans for 2019 Mid-term of auditors Analyses through rational decision-making •Established an internal •Advance risk-based of fixed cost in cash inflow expansion of overseas business Roadmap •Expanded the use of control monitoring auditing system external experts system •Establish a defense Manage financial risks by predicting •Solidified the basis of Monitor financial risks at all times Operate risk management system in Respond to future financial risks by •Established an IT-based system for recklessness- Strategies risks and establishing response considering core risk factors response to perceived financial risks operating risk management system internal control measures auditing system related risks
Risk Management Sales risk Investment risk Liquidity risk Foreign currency risk Targets Major Strengthened the Expanded internal Establish a culture of anti- Strategies expertise of auditors control activities corruption and integrity Core Risk Sales, cost of sales New business investment risk Liquidity ratio, trade receivables Exchange fluctuations risk, VaR Indicators
Systems and Business Risk Deliberation Committee Capital Budget Deliberation Committee Foreign Exchange Risk Committee Expanding Internal Control Activities Regulations Budget operation guidelines Capital operations and accounts guidelines Foreign Exchange Risk guidelines We carry out a range of activities to train expert auditors in our company. First of all, we run a study group for certified internal auditor (CIA) certification, encouraging relevant personnel Management Enterprise Risk Management (ERM) Enterprise Information System (EIS) Enterprise Resource Planning (ERP) Internal Accounting system (ICAN) to become professionally certified. We also consistently offer professional training on auditor System responsibilities, background knowledge, as well as integrity and ethics. Based on the professional auditors we have secured, we enhance the expertise of our auditing body and carry out
Department PRM Team, Business Planning Business Risk Management prevention and improvement activities through post-audit management measures. in Charge Department Business Risk Deliberation Committee Items •Direct and indirect investment businesses ● Training for auditors ● Enhancing the Expertise of the Auditing Body for (equity investment, M&A, etc.) For effective allocation of available resources and review of business-related risks, we operate the Deliberation •Domestic and overseas O&M business of Business Risk Deliberation Committee. In 2018, we reviewed 14 agenda items and continuously •Established a pool system to support auditors KRW 50 billion or more → 223 people including professionally certified auditors and personnel capable of performing audits •Execution of MOUs, MOAs, etc., and expanded the activities of the Committee, helping to eliminate business uncertainties and secure Hours of individual training Use of internal participate in audits when necessary contingent liabilities, etc. a stable profit structure. experts 76 Hours •Internal legal experts participate in audits of anti-corruption management consulting, and working-level (Recommendation by the Board of staff in certain departments play the roles of auditors Audit and Inspection: 40 hours) ● Major Business Risks and Performance in 2018 Human resource •Expanded human resource base by signing audit affairs agreements with GKL and KEPCO KDN exchange with •Shared audit-related cases and perform cross-audits with 10 institutions including KEPCO, KOSPO, and Major Performance other institutions KEPCO KDN Category Risks Reviewed (Risk Reduction) •Halla Cement waste heat power generation business Total KRW 43 billion Use of external •Operated the 3rd Integrity Ombudsman group (consisting of legal, administrative, and energy experts) Domestic - Withdrawal upon review of acquisition conditions regarding request for investment in the business developer’s derivative products KRW 3 billion - Provided advice on consulting audits and proposals on anti-bribery/ethical management through experts Business regular meetings held on quarterly basis - Deletion of clause regarding repayment of principal and interest by the ordering party by proxy in the case of failure to meet conditions Business KRW 40 billion (3) such as power generation amount •Established a new exclusion/evasion clause to strengthen the independence of auditors, and developed Overseas •Pakistan LEPCL O&M project - Addition of indemnification clause in the contract regarding arbitrary cancellation by ordering party [Maximum indemnity: 35% of annual Total 4.5 billion/year Revision of audit a computerized system Business contract amount (approx.. KRW 12.9 billion)] regulations •Stipulated the grounds for operating the “Audit Advisory Committee” in order to collect a wide range of professional opinions Strategic cooperation with Non-business (11) •An exclusive joint development agreement (JDA) with IHI regarding boiler section of POSCO Gwangyang performance improvement project boiler manufacturer KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 70 / 71 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
At the advent of the Industry 4.0 era, businesses and public enterprises are coming up with Managing Risks of Personal Information Leakage On Personal Information Protection Evaluation Information their own measures against personal information leaks. KEPCO KPS recognizes risks relating to We prevent potential personal information leakage and related risks through system-based by the Ministry of Interior and Safety Protection personal information protection and cyber security accidents as a major management issue, and personal information protection activities. We have introduced a solution that manages all has established an information security system accordingly. At the same time, we spare no effort personal information files handled via our employees’ computers by automatically encrypting to enhance the security safety of our ICT infrastructures. 90.94 Points them. In addition, we have developed and adopted a system that stores and continuously (Average of public enterprises: 80.65 points) manages access information (account, date and time, access IP, work performed, etc.) when Establishing an Information Security Management System an employee accesses the internal personal information processing system. Furthermore, we Number of cases which destroyed personal Through system-based information security management activities, we have achieved “zero” proactively manage potential personal information leaks by immediately destroying personal information due to expire retention period cyber infringement accidents and personal information leaks. Going forward, we will continue information after the legal retention period expires. (5 years) to recognize customer information protection activities as an important management issue, and Cases carry out relevant activities in a consistent manner through a concrete implementation system 3,802 Forming a Consensus on Personal Information Protection (Personal information of 3,802 daily workers) and strategic activities based on performance indicators. among Employees Along with system-based personal information management activities, we are undertaking a range of activities to form a consensus on personal information protection among our employees. Targets Achieve management goals by having “zero” cyber security infringement accident Case of cyber security incidents and personal Through the “Personal Information Clean Day” campaign led by headquarters, we have distributed information leakage promotional leaflets and destroyed personal information considered to be excessive. Furthermore, Strengthen information Enhance security safety of Internalize a culture of personal Strategy certain business sites have made and distributed stickers and stamps to remind employees of 0 Cases security management system ICT infrastructures information and security (As of 2018) their commitment to protect personal information, as part of our efforts to build a consensus for information security. •Improve the effectiveness •Achieve smart work security •Improve personal On Information Security Evaluation by the of information security infrastructure information management National Intelligence Service Implementation management •Strengthen security system system Internalizing a Culture of Information Security •Increase manpower and for accessing enterprise •Create a culture of practicing Internalizing a culture that emphasizes information security is extremely important for all 83.32 Points improve work competencies portal information security (Average of public enterprises: 79.79 points) employees to practice relevant activities in their daily routines and to develop an ability to Information Security Status Cyber infringements and Personal information respond promptly to security accidents. In this regard, we have printed and distributed to our Performance Evaluation by the National personal information leakage management evaluation by the Indicators employees information security guide books which include rules to abide by on a daily basis, FAQ Intelligence Service accidents Ministry of Interior and Safety on security programs, and standards regarding information security violations. Furthermore, we thoroughly prepare employees who respond to security accidents through simulation training. Establishing and Revising Standards Regarding Information Security Work
Certificate of Registration We encourage information security managers to comply with security guidelines by presenting INFORMATION SECURITY MANAGEMENT SYSTEM - ISO/IEC 27001:2013 ● Activities to Internalize a Culture of Information Security among Employees
This is to certify that: KEPCO Plant Service&Engineering Co., Ltd 211, Munhwa-ro Naju-si accurate standards by which information security is to be handled. We have also concretized the Jeollanam-do 58326 Republic of Korea standards by which to determine what constitute information security violations and established Category Description of Activities Performance
Holds Certificate No: IS 685358
and operates an Information Security Management System which complies with the requirements of ISO/IEC 27001:2013 for the following scope: measures for risks of differing levels. Furthermore, we have established security management Production •Includes daily information security regulations The information security management system in overall functions implemented at HQ and its power generating total service including maintenance of thermo-electric, nuclear, hydro power generating plants and transmission & substation systems, and power plant performance diagnosis, life evaluation, Retrofit / ROMM and renewable energy business. Statement of Applicability, Version 1.0. standards for our information systems and new standards for managing business continuity, and for users to abide by distribution of •Includes FAQ on security programs, standards
For and on behalf of BSI: thereby providing accurate guidelines to information security managers. Chris Cheung, Head of Compliance & Risk - Asia Pacific guide books regarding information security violations, etc. Original Registration Date: 2017-12-26 Effective Date: 2017-12-26 Latest Revision Date: 2017-12-26 Expiry Date: 2020-12-25 •Practice of information Page: 1 of 2 Enhancing the Safety of Infrastructure Security •Participants: 210 in slogan competition, 20 in security on a daily basis This certificate was issued electronically and remains the property of BSI and is bound by the conditions of contract. An electronic certificate can be authenticated online. Printed copies can be validated at www.bsigroup.com/ClientDirectory or telephone +82 2 777 4123. Slogan poster competition; Rewards: 5 winners per by employees Information and Contact: BSI, Kitemark Court, Davy Avenue, Knowlhill, Milton Keynes MK5 8PP. Tel: + 44 345 080 9000 BSI Assurance UK Limited, registered in England under number 7805321 at 389 Chiswick High Road, London W4 4AL, UK. A Member of the BSI Group of Companies. We are strengthening the security management systems in each of our business sites by advancing and poster category •Development of the Acquisition of the ISO 27001 security infrastructures, in addition to proactively managing and preventing potential cyber competition •Winning slogans and posters used as PC ability to respond certification for information infringement accidents by taking swift responses such as installing detection and defense solutions background images promptly to security security management system accidents against WebShell attacks, operating Internet management systems, and managing firewalls. Winner of Information Security Slogan and Poster •Simulation training: 9 times; Opening rate: Simulation Competition 6.5%; Report rate: 82.8% (satisfactory training training outcome) Professional Training Completed by ● Establishing Security Infrastructures Information Security Managers Strengthening the •Enterprise portal (EP) 2-factor authentication: ID/PWD + OTP (Unit: Hours) authentication security •Enterprise portal (EP) authentication stages: 4 stages on internal work network, system for accessing information systems 3 stages on external Internet network 26.3
Advancing the virtual •Dualization of VPN tools per private network (VPN) •Strengthening of conditions for authorization/authentication per person person 7.5 6 Establishing security •Introduction of mobile-exclusive networks and security tools (FW/data link, etc.) infrastructures in mobile •Introduction of security solutions for mobile office enterprise applications offices (MDM/VPN, etc.) 2016 2017 2018 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 72 / 73 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
In an effort to strengthen our management activities based on stakeholder participation, KEPCO We define stakeholders as employees, labor unions, the government, the National Assembly, customers, partner companies, relevant institutions, the Stakeholder KPS listens closely to the opinions of various stakeholders both directly and indirectly involved in Korean public, and local communities. We then categorize them into three types–i.e., participation-type, cooperation-type, and co-existence-type–and Engagement our work, and reflects them in our management activities. operate communication channels attuned to the needs and characteristics of each group.
Stakeholder Communication Channels
Participation-type Cooperation-type Co-existence-type
Employees and Labor Unions Government, National Assembly, Customers, Partner Companies and Relevant Institutions Korean Public and Local Communities
•Meetings on employee communication strategies (monthly) •Media outlets •CEO’s Message at morning meetings Major •BOD (8 times in 2018) •Civil Participation Innovation Corps (2 times in 2018) •Innovation Proposal Day participated by employees (quarterly-basis) Communication •Customer Center (External customer satisfaction survey 95.7 points) •Idea contest (3 times in 2017-2018) •Labor-management conferences and labor-management meetings at Channels and •Integrity Conference (integrity policy briefings hosted by headquarters) •Bitgaram credit course (participated in by 110 undergraduate business sites (232 times in 2018) Performance •Working-level meetings with relevant institutions (sharing innovation cases with 4 students in 2018) •Labor-management joint task force team (e.g., establishing mid-to long- electricity institutions in Naju Innovation City) term labor-management strategies, etc.)
•Vision and value-sharing •Cooperation regarding government •Fulfillment of public roles •Improvement of corporate culture •Co-existence and shared growth Core Needs policies •Provision of convenience to general public •Improvement of work environment and building of trust between labor •Business cooperation •Invigoration of the local economy and management •Provision of highest-quality service
Reflecting Stakeholder Opinions on Management Activities
Selection and Implementation of Innovation Tasks through Public Idea Contests Communicating through Civil Participation Innovation Corps We hold public idea contests among our stakeholders to draw innovation tasks. In the three idea contests we held between 2017 and 2018, a total of 102 Each year, we share our innovation plans and collect opinions through the Civil Participation Innovation Corps, consisting of citizens, experts and relevant innovative ideas were submitted, 12 of which were selected and concretized as innovation tasks in 2018. institutions. In 2018, we held two meetings of the Civil Participation Innovation Corps, enabling us to actively reflect the voices of Naju-si and local communities on our management activities.
Public Idea Contest Winner Innovation Tasks in 2018 ➊ Introduction of each institution and briefing of innovation plans One-day experience of KEPCO KPS’ safe maintenance culture Experiencing nuclear safety culture with the Korean public with local residents ➋ Review of draft innovation plan by the Civil Participation Innovation Corps •Established the KEPCO KPS Innovation 1st Meeting Identification and resolving of safety-threatening factors at transmission wire •Need to strengthen the competence of and co-exist with private businesses Plan 2018 upon review of the Civil One-day experience of KEPCO KPS’ safe maintenance culture with local (July 2018) through the active support of public enterprises residents inspections Participation Innovation Corps •Need to develop joint tasks among relevant institutions for the development of local communities Innovation Tasks
1 2 Civil Participation Innovation Corps Identification and resolving of safety-threatening factors Meeting Experiencing nuclear safety culture with public at transmission wire inspections ➊ Review of the implementation status of the innovation plan •Established a cooperation structure with Invite and select local residents for participation in nuclear safety culture Identify safety-threatening factors to local communities in the •Need for innovation activities to create new jobs in the Industry 4.0 field Naju-si for local communities nd experience program for the purpose of enhancing public reliability course of transmission wire inspections 2 Meeting •Need for cooperation between electric power institutions and Naju-si for local - Strengthened information-sharing in nuclear safety (Safety-threatening factors: Forest fire, soil loss, road damage, etc.) (December communities regarding areas and regions in need of 2018) ➋ Review of the “electric facility improvement project for socially vulnerable volunteering activities households”, a joint task among relevant institutions - ’Included joint task with Naju-si in the Program Details •Need to decide whether the project is a volunteer or a fund-raising activity innovation plan 2019
•Safety-threatening factors are identified in real time through inspections of •Local residents receive nuclear safety education and experience safety transmission wires connected nationwide, reported via safety shinmungo, campaigns and shared with the general public •Local residents experience pre-job briefings and post-job evaluation meetings •Regional meetings are held every quarter at each business site so that inspection results can be shared with local residents and governments KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 74 / 75 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
KEPCO KPS has conducted a materiality analysis in order to identify the issues requiring intensive Evaluation of Major Issues Materiality Analysis management and to report relevant performance in detail in the sustainability report. The We have evaluated major issues based on social concern and business impact upon review of materiality analysis was conducted in accordance with the principles regarding the determination sustainability management experts and executive management. of reporting contents provided in the Global Reporting Initiatives (GRI) Standards, a global standard of sustainability management reports, so as to ensure stakeholder inclusiveness, Step 3. Selection of Material Issues (Materiality Analysis Matrix) sustainability context, importance, and completeness. We have selected 11 material issues to be dealt in detail in this report by setting the boundaries based on social concern and business impact. Step 1. Creation of an Issue Pool
Social Concern Business Impact Selection and Implementation of Innovation Tasks through Public Idea Contests Tier 1 (Material Topics) The impact of each issue on the activities of We hold public idea contests among our stakeholders to draw innovation tasks. In the three idea external stakeholders and their decision-making, 3 contests we held between 2017 and 2018, a total of 102 innovative ideas were submitted, 12 of and the level of interest in each issue by external 5 1 which were selected and concretized as innovation tasks in 2018. stakeholders 4 7 2 Business Impact 8 10 9 Analysis of International Standards Media Research and Benchmarking Stakeholder Survey Priorities based on CSR strategies, media analyses, 6 industrial issues, etc. for understanding the 11 •We analyzed GRI Standards, ISO26000, UNGC, •We analyzed 1,621 articles relating to KEPCO •In order to gather the opinions of internal relevance between management strategies and DJSI, SDGs, and other global standards and KPS’ sustainability management published and external stakeholders having significant CSR issues, and impact on business initiatives relating to sustainability management. between January 1, 2017 and December 31, influence on KEPCO KPS’ businesses, we 2018. conducted a stakeholder survey in the •We benchmarked sustainability management second half of 2019. From the perspectives reports of advanced companies in the same of each stakeholder, we drew sustainability industry and sustainability management. management issues that need to be prioritized in management. Social Concern
Area Issue Pool Reporting Boundary No Category Material Issue Partner Local Shareholders Reporting Content Internal Customers •Generation of economic performance (e.g., increase in •Securing of future growth engines (e.g., Companies Communities & Investors •Pursue expansion of overseas businesses sales, winning of new projects, etc.) developing new projects, securing technical Economy •Securing of transparency and soundness in BOD 1 Society Employee safety and health ● ● #Safety-first management •Strengthening of ethical management and anti-corruption competitiveness, etc.) operation Ethical management and anti- #Establishment of a culture of activities •Strengthening of proactive risk management 2 Society ● ● ● corruption (fair trade) activities ethical management #Business Overview Generation of economic •Water risk management (e.g., water consumption/ 3 Economy ● ● #Strengthening of competitiveness •Implementation of environmental preservation performance •Adoption of eco-friendly power generation technologies quality management, etc.) in core businesses activities in local communities (e.g., preservation •Strengthening of pollutant management (e.g., water •Response to climate change (e.g., GHG reduction Environment of ecosystems and protection of biodiversity) Fostering of maintenance quality, air quality, hazardous substances, etc.) management and implementation of targets) •Materialize resource circulation power plants (e.g., 4 Society technicians and strengthening of ● ● ● #Talent-centered management •Compliance with environmental regulations •Establishment of a globally-competitive waste recycling, water reuse, etc.) competencies environmental and safety management system 5 Economy Securing of future growth engines ● ● #Business Overview Implementation of strategic social #Implementation of strategic social 6 Society ● ● ● •Strengthening of shared growth with partner companies •Implementation of strategic social contribution contribution activities contribution activities (e.g., support for entry into overseas markets, etc.) •Minimization of damage in local communities activities Strengthening of information 7 Society ● ● ● #Information security •Strengthening of CSR evaluation and management in caused by business operations •Strengthening of quality competitiveness for security management supply chain •Establishment of a customer safety management customer satisfaction Open employment and recruitment •Reinforcement of information security management system •Handling of complaints from local residents 8 Society ● #Talent-centered management •Creation of an employee-friendly corporate culture •Strengthening of compliance management near power plants and encouragement of based on job competencies Society (e.g., maternity protection, work-life balance, etc.) •Open employment and recruitment based on job communication Establishment of a management 9 Society ● #Safety-first management •Strengthening of safety and health activities in business competencies •Establishment of a win-win labor-management system for customer safety sites •Fostering of maintenance technicians and relationship Strengthening of shared growth (e.g., establishing disaster safety system, spreading a strengthening of competencies •Establishment of a fair and transparent 10 Society ● ● #Strengthening of shared growth with partner companies culture of safety and health, etc.) •Guarantee of basic labor rights (e.g., freedom of performance evaluation system •Respect for diversity and provision of equal opportunities association, prohibition of forced labor, etc.) •Strengthening of human rights due diligence in #Environmental management (e.g., employment of persons with disabilities, etc.) business sites (including partner companies) 11 Environment Response to climate change ● ● activities #Response to climate change KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 76 / 77 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Appendix Quantitative Performance Data
Economic Performance Quantitative Performance Data 77
Human Right Management 85 Financial Statement GRI Standards Index 86
Independent Assurance Statement 88 Integrated Income Statement (Unit: KRW) UN Global Compact Principles 90 Category 35th 34th Awards and Associations 91 Sales 1,239,603,810,472 1,232,112,742,180 Glossary 92 Cost of sales 972,096,386,425 982,875,986,997 Gross profit 267,507,424,047 249,236,755,183 Selling and administrative expenses 76,852,527,986 86,068,317,462 Operating profit 190,654,896,061 163,168,437,721 Non-operating income 23,585,090,661 16,800,163,055 Non-operating expenses 4,830,260,986 5,736,940,552 Corporate tax revenue (cost ) net income before tax 209,409,725,736 174,231,660,224 Income tax expenses 48,618,231,055 38,749,974,616 Net profit 160,791,494,681 135,481,685,608
※ As of December 31, 2018 in 35th term / As of December 31, 2017 in 34th term
Financial Statement (Unit: KRW)
Category 35th 34th Current assets 628,724,985,030 623,933,935,425 Non-current assets 646,640,073,362 571,151,698,981 Total assets 1,275,365,058,392 1,195,085,634,406 Current liabilities 270,096,844,579 278,562,249,103 Non-current liabilities 26,331,172,805 16,126,697,825 Total debt 296,428,017,384 294,688,946,928 Capital 9,000,000,000 9,000,000,000 Retained earnings 970,317,520,394 891,396,687,478 Total capital 978,937,041,008 900,396,687,478 Total debt and capital 1,275,365,058,392 1,195,085,634,406
※ As of December 31, 2018 in 35th term / As of December 31, 2017 in 34th term KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 78 / 79 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Quantitative Performance Data
Economic Performance Social and Environmental Performance
Consolidated Financial Statement Employee Status
Category Unit 2016 2017 2018 Consolidated Integrated Income Statement (Unit: KRW) Total Employees (Permanent) Persons 5499 5698 5966 By region (Permanent Domestic Persons 5301 5517 5776 Category 35th 34th employees) Overseas Persons 198 181 190 Sales 1,242,452,044,205 1,236,779,010,362 Male Persons 5288 5471 5682 By gender (Permanent Cost of sales 973,616,765,413 985,956,356,607 Female Persons 211 227 284 employees) Gross profit 268,835,278,792 250,822,653,755 Female Ratio % 3.8 3.98 4.76 Under 40 Persons 2051 2121 2235 Selling and administrative expenses 77,316,188,992 86,769,403,437 By age (Permanent 40s Persons 1667 1675 1726 Operating profit 191,519,089,800 164,053,250,318 employees) 50s and older Persons 1781 1902 2005 Non-operating income 23,865,489,761 16,898,419,034 Total Persons 5 5 5 Non-operating expenses 4,884,985,983 5,827,725,115 Executives Male Persons 5 5 5 Corporate tax revenue (cost) net income before tax 210,500,518,295 175,180,452,878 Female Persons 0 0 0 Total Persons 99 100 95 Income tax expenses 49,169,540,805 39,221,685,727 Level 1 Male Persons 99 100 95 Net profit 161,330,977,490 135,958,767,151 Female Persons 0 0 0 Total Persons ※ As of December 31, 2018 in 35th term / As of December 31, 2017 in 34th term 240 249 249 Level 2 Male Persons 240 249 247 Female Persons 0 0 2 Total Persons 552 562 569 Consolidated Financial Statement (Unit: KRW) Level 3 Male Persons 536 543 550 By position (Permanent Female Persons 16 19 19 Category 35th 34th employees) Total Persons 4053 4080 4039 Current assets 636,128,991,073 630,416,635,761 Level 4 Male Persons 3883 3898 3846 Non-current assets 644,792,383,784 569,581,168,965 Female Persons 170 182 193 Total assets 1,280,921,374,857 1,199,997,804,726 Total Persons 189 204 199 Professional service Male Persons 187 201 197 Current liabilities 270,359,215,883 278,796,795,626 positions Female Persons 2 3 2 Non-current liabilities 26,426,344,929 16,126,697,825 Total Persons 291 468 Special service Total debt 296,785,560,812 294,923,493,451 Male Persons 268 414 positions Capital 9,000,000,000 9,000,000,000 Female Persons 23 54 Retained earnings 976,218,318,829 896,758,027,041 Total Persons 63 207 342 Wage peak quota Male Persons 63 207 328 Total capital 984,135,814,045 905,074,311,275 Female Persons 0 0 14 Total debt and capital 1,280,921,374,857 1,199,997,804,726 Total Persons 5494 5698 5966 Permanent Male Persons ※ As of December 31, 2018 in 35th term / As of December 31, 2017 in 34th term 5283 5471 5677 Female Persons 211 227 284 Total Persons 567 539 225 Employment status Temporary Male Persons 497 468 193 Female Persons 70 71 32 Total Persons 9 9 9 Non-fixed-term Male Persons 5 5 5 contract Female Persons 4 4 4 Total Persons 210 284 482 Hiring and turnover New hires Male Persons 199 259 417 rate of new employees Female Persons 11 25 65 Turnover rate (resignation rate) % 0.87 1.61 2.18
* Excluding foreign-national employees and personnel seconded to/from overseas offices ** No. of voluntary resignations (early retirement, voluntary dismissal)/No. of total employees KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 80 / 81 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Quantitative Performance Data
Social and Environment Performance Return-to-work Rate after Parental Leave
Category Unit 2016 2017 2018 Social and Environmental Performance and Targets Male Persons 1230 1243 1307 Employees eligible for parental leave Female Persons 41 45 52 Target Year Category Note Male Persons 6 16 21 2019 2020 2021 Employees using parental leave Female Persons 21 27 22 Youth employment (job creation) 3% 3% 3% 3% or more of total quota Male % 0.5 1.3 1.6 Recruitment of local talent To maintain 30% or 21% 24% 27% Parental leave usage rate Social KPI (socially equitable recruitment) higher from 2022 Female % 51.2 60.0 42.3 Professional volunteering ratio (Social contribution)* 25% 27% 29% Male % 100.0 100.0 95.2 Return-to-work rate after parental leave Industrial accident rate (safety management)* 0.01 0.01 0.01 Female % 100.0 88.9 100.0 Reduction of energy consumption* 28% 30% 32% Rate of work retention for 12 months or longer after returning Male % 100.0 93.8 90.5 Reduction of greenhouse gas emissions* 28% 30% 32% from parental leave Female % 100.0 88.9 100.0 Environmental KPI In compliance In compliance 80% of product types Green product purchasing with government with government with green products recommendations recommendations
* Selected as material issues after materiality analysis Number/Ratio of union members among employees*
Defined Benefit (DB) Retirement Pension 4,686 persons / 100%
Category Unit 2016 2017 2018 * Level 4, level 5 (Gap, Eul), and level 6 workers (excluding workers relating to human resource management, labor relations, audit, secretaries, drivers of executives, and transmission and Plan assets KRW 100 million 2,788 3,090 3,348 substation detachment heads) of KEPCO KPS excluding workers under the Trade Union and Labor Relations Adjustment Act
Supplier Cost Industrial accident rate
Category Unit 2016 2017 2018 Category Unit 2016 2017 2018 Purchasing of SME products KRW 100 million 3,179 3,206 3,108 Industry at large 0.49 0.48 0.48 Converted number of injuries or deaths Construction 0.84 0.84 0.84 per 100 workers Number of customer personal information infringements and complaints due to confirmed loss of customer information KPS 0.02 0.01 0.02
2016 2017 2018 0 0 0 Lost-Time Injuries Frequency Rate (LTIFR) Response toEmerging Risks Category Unit 2016 2017 2018 Employee 0.18 0.34 0.58 KEPCO KPS responds proactively to long-term risks it considers important in its business areas. n/million hours worked Partner Employee 0.48 0.30 0.77
1) Strengthening of on-site safety management for employees 2) Diversifying the business portfolio based on renewable energy businesses
As the outsourcing of risk has emerged as an important social issue in recent Paradigms in the energy industry are shifting and the importance of renewable energy industry is well years, the issue of employee safety has also come to be considered a salient observed worldwide. In order to achieve the target of reducing greenhouse gas emissions by 37% against Occupational Illness Frequency Rate (OIFR) topic in business management. Accordingly, safety-related government the BAU* by 2030, in accordance with the National Greenhouse Gas Emmission Reduction Roadmap regulations are being strengthened to comply with such regulations to prevent 2030 driven by the government, the importance of developing and mass-distributing innovative safety accidents is an important factor directly related to a company’s reputation technologies in renewable energy is being emphasized. Against this backdrop, we recognize renewable Category Unit 2016 2017 2018 and its ability to acquire businesses. In response to such issues, KEPCO KPS has energy as a significant part of our strategy for expansion into new business areas, selecting three major secured and applied a range of safety tools for on-site use by our field workers. areas in renewable energy and designing new business models around them. In 2018, we expanded our Employee n/million hours worked 0 0 0 In particular, we have developed an IoT-based control software attachable businesses centering on solar and wind power, in addition to establishing the basis for commercializing the to safety helmets, actively preventing accidents that may be experienced by energy storage system (ESS) by securing core technologies (PMS, BMS) for solar power ESS and drawing employees participating in transmission and substation projects. standardized techniques.
* BAU (Business as Usual): Total amount of greenhouse gas emissions that would result if no new actions are taken to reduce greenhouse gas emissions KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 82 / 83 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Quantitative Performance Data
Management Performance Index and Compensation ESG Evaluation of Partner Companies We adopt a differential wage payment system according to management performance evaluation outcomes. Differential incentives are paid based on We evaluate our partner companies that perform routine maintenance and subcontracted construction on a yearly basis on their overall construction performance evaluation using six different grades from S grade to E grade, encouraging executives to actively participate in management activities and performance including construction management and technical competency. In addition to basic construction performance evaluation, we have added achieve outcomes. labor management criteria to assess how their employees are treated in the workplace. Through these efforts, we strive to develop systematic measures to 1. Executive Compensation facilitate sound human resource management at our partner companies.
Persons Persons Evaluation Category Evaluation Standard Standard Score Scope Category S A B C D~E Scope Category S A B C D~E Concerned Concerned Payment of appropriate wage 10 Overall Relative 30 24 18 12 - Overall Relative 25 20 15 10 - performance Absolute 30 24 18 12 - performance Absolute 25 20 15 10 - Overdue wage 5 Business Relative 15 12 9 6 - Business Relative 12.5 10 7.5 5 - Power generation 5 Executive Labor relations management Annual turnover rate President management Absolute 15 12 9 6 - management Absolute 12.5 10 7.5 5 - directors Transmission and substation 5 Major Relative 15 12 9 6 - Major Relative 12.5 10 7.5 5 - Evaluation of ESG relating to Power generation 5 businesses Absolute 15 12 9 6 - businesses Absolute 12.5 10 7.5 5 - Labor input rate Total 120 ~ 0 Total 100 ~ 0 generation of social values Transmission and substation 10 Power generation 10 2. Management Evaluation Index Inadequate safety management Safety, maintenance defects and Transmission and substation 5 CEO Evaluation Index quality management Maintenance defects 5 Quality management status 5 Performance Target by Year Evaluation Index Measurement Method Performance Target 2018 2019 2020 Performance Target 1: Perform responsible maintenance that places the highest priority on on-site safety Selecting Outstanding Partner Companies Performance Index A: Machinery breakdown duration and Perform zero-defect We select outstanding partner companies in the order of highest points earned within the top 20% of partner companies with a total score of 80 points Achieve “zero” sudden failure and air delay number of air delay days (Set targets) maintenance 0%,100% 0%,100% 0%,100% Strengthen activities to prevent Expand and advance breakdown or higher. Weak partner companies, on the other hand, are those with a total score under 70 points. Partner companies with two or more safety accidents Performance Index B: Non-measurement (Achieve stage- Strengthen breakdown Establish the basis for preventing breakdown of transmission prevention system for Minimize breakdown of transmission equipment by-stage targets) prevention activities breakdown of heavy equipment facilities using IoT transmission facilities requiring recovery period of at least four days (or one safety accident involving death) in a given year, and those that have violated the Code of Conduct for Develop and implement Develop and introduce safety Promote advancement of a Performance Index C: Non-measurement (Achieve stage- Establish a culture of safety on Partner Companies are excluded from being selected as an outstanding partner company. Benefits are granted to outstanding companies and penalties are safety culture diagnostics and culture empathy index, and globally-competitive safety Advance on-site safety management system by-stage targets) worksites improvement programs spread relevant contents culture imposed to weak companies on a differential basis. Performance Target 2: Secure competencies to prepare for sustainable growth in the future Participate in EPC of renewable Expand sales in overseas/ Train professionals to perform Develop nuclear energy power generation Outstanding Partner Companies in 2018 Performance Index A: Non-measurement (Achieve stage- renewable/global projects and O&M in renewable energy, decommissioning technology, projects, execute performance Achieve performance from related businesses by-stage targets) secure the basis for nuclear EPC, offshore wind power, and establish demonstration facilities, improvement constructions, and decommissioning business participate in such projects and make project preparations secure competencies Business Field No. of Companies Company Name Performance Index B: Number of registered patent and 3.179 case per person 1.798 case per person 2.331 case per person 3.179 case per person Saeduk Electrics, Co., Ltd., NS Company Co., Ltd., Ah Jeon E&C Co., Ltd., Secure core maintenance technical capabilities intellectual property registrations Thermal power 4 Performance Index 3: Play a leading role in realizing social values Hap Dong Electric Industrial, Co., Ltd. Performance Index A: Non-measurement (Achieve stage- Establish a corporate culture of Internally strengthen anti- Strengthen anti-corruption Secure competitiveness in ethical Lead innovations in ethical management by-stage targets) integrity and fairness corruption management system governance management of global standard Nuclear power 1 Samshin Co., Ltd.
Division Head Performance Evaluation Index Effective Period Preferential Treatment Division Head Management Targets Category Corporate Management Evaluation Index Head of Management Support Division Head of Power Business Division Performance Head of Nuclear Business Division One year from the date of designation •Additional points for reputation in eligibility evaluation (Limited to constructions ordered by businesses with Performance Index Index Performance Index (March 29, 2019 – March 28, 2020) applicable performance in 2018) Management strategy and leadership Degree of faithful execution of strategies Degree of faithful execution of strategies Degree of faithful execution of strategies •Exemption of contract deposit in subcontracted constructions ordered by the company Degree of efforts in innovation and change Degree of efforts in innovation and change Degree of efforts in innovation and change Innovation and communication •Additional points for reputation evaluation when re-registering as a partner company management management management Non- Organization, HR, and financial management Degree of efforts in business management - - measurement Compensation, welfare, and labor-management relations Degree of faithful implementation of government Index - - policies (60 points/40 Realization of social values Employee Anti-corruption Policies points) Power facility maintenance - Performance in maintenance facility maintenance Performance in maintenance facility maintenance Transmission facility maintenance - Overseas power generation and transmission - Expansion of related businesses and strengthening of Prohibition of Malfeasance - Performance in facility/overseas businesses Performance in overseas power businesses technical capacity Performance in hiring unemployed youth KEPCO KPS prohibits its employees from engaging in any one of the following acts of malfeasance by exercising their authority of position or exerting de Obligation to hire persons with disabilities facto influence derived from their status or position: Realization of social values Purchasing from social enterprises and - - cooperatives Purchasing of products produced by persons with disabilities 1. An employee in charge of licensing imposing a disadvantage to an applicant, or delaying or rejecting the said application with intent to place a third party in an Measurement Labor productivity Labor productivity Labor productivity advantageous or a disadvantageous position Work efficiency Index Capital productivity Capital productivity Capital productivity 2. Making a wrongful order or demand upon an employee to engage in an act irrelevant to or out of scope of his/her job duties; (40 points/60 points) Organization, HR, and financial management Total asset turnover rate Total asset turnover rate Total asset turnover rate 3. Shifting the company's obligation or responsibility upon an employee involved in the company's contracts for sale of goods, services, construction, etc., or causing - Performance in planned preventive maintenance Performance in planned preventive maintenance wrongful delay in his/her work; Power facility maintenance - Reduction in fail-stop Reduction in fail-stop 4. Wrongfully shifting the company's work, or the cost or labor force related thereto, upon a subsidiary, etc.; or Expansion of related businesses and strengthening of - Performance in securing core technology Performance in securing core technology 5. Wrongfully limiting the rights or authority of duty-related workers or employees, subsidiaries, etc., or making wrongful demands to engage in an act that is beyond their technical capacity obligations. - Safety accident management rate Safety accident management rate Separately managed index Integrity index Integrity index Integrity index KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 84 / 85 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Code of Conduct for Partner Companies* Human Right Management
Chapter 1 General Provisions Article 7 (Restriction of Illegal Conduct Using Information Relating to Job Human Rights Management Strategy Duties) Employees of Partner Companies shall not leak internal information of KEPCO Article 1 (Scope of Application) This Code of Conduct (hereinafter “Code”) sets forth KPS or use such information to engage in profit-seeking activities such as stock investment. the standards of conduct for companies to prevent corruption and create a transparent Human Rights Achieving social values through human rights protection corporate culture, and applies to KEPCO KPS Co., Ltd. (hereinafter “KEPCO KPS” or the Chapter 4 Social Standards Management Targets “Company”), its partner companies and their employees, agents, and subcontractors (hereinafter “Partner Companies”). Article 8 (Entertainment Expense Limit) Entertainment may be provided within the limit of KRW 30,000 per person when inevitable in the course of performing one’s duties, in Adoption (2018-2019) Settlement (2020-2021) Advancement (2022 onward) Chapter 2 Fair Job Performance which case provision of cash shall not be permitted. Roadmap Establishment of a human rights Settlement of the human rights Advancement and improvement of the Article 9 (Establishment of a Sound Culture Regarding Congratulatory and Condolatory management system management system human rights management system Article 2 (Attitude toward Job Performance) Partner Companies shall faithfully Events) Money and other valuables regarding congratulatory and condolatory events of comply with the standards set forth herein, and encourage their employees, agents, and KEPCO KPS employees shall not exceed the limit set forth in the Improper Solicitation and subcontractors to do the same. Graft Act. Article 10 (Limitation of Golf and Speculative Entertainment Activities) Employees of Article 3 (Submission of Integrity Pledge Documents) Companies that wish to be •Established a human rights management Partner Companies shall not engage in golf or speculative entertainment activities (gambling, registered as a Partner Company of KEPCO KPS under its “Operational Guidelines Regarding system etc.) with employees of KEPCO KPS. •Categorize human rights violations and Partner Companies” shall, under all circumstances, submit the “Pledge of Compliance with •Declared human rights management •Hold enterprise-led human rights impact the Code of Conduct for Partner Companies of KEPCO KPS” (Annex No. 1). Article 11 (Limitation of Employment of Former KEPCO KPS Employees at Partner introduce preventive measures Companies, Etc.) •Conducted enterprise-led human rights assessments on a regular basis Article 3-2 (Reporting of Relationships of Personal Interest, etc.) Implementation Tasks •Improve the human rights impact ① Partner Companies shall not employ any retired executives, or level-2 or higher-ranking impact assessments •Implement human rights management and ① An employee of KEPCO KPS and any stakeholder whose job duties fall under any one assessment checklist in consideration employees of KEPCO KPS in the nuclear field, for a period of three (3) years following •Implemented and disclosed human rights link feedback of the following subparagraphs shall report the same in writing (including via electronic of KEPCO KPS’ characteristics document; hereinafter the same) to the head of division in charge of the Code in the date of resignation (or in the case of public officials obliged under the Public Service management accordance with Annex No. 2; Provided, however, that this shall not apply if the duty Ethics Act to register their property, the date on which they were exempt from such •Provided relief procedures concerned is one of simple civil petition services designated by the Company on the obligation of property registration); Provided, however, that such shall not be the grounds that fair job performance may be unaffected by such relationship: case when the said person has received the authorization of the Public Service Ethics 1. Where a duty-related party is a relative within the fourth degree of relationship Committee in the relevant jurisdiction. (relative under Article 767 of the Civil Act) of an employee of KEPCO KPS; ② A Partner Company that has employed any retired executives, or level-2 or higher- Plan Do Check Act 2. Where a duty-related party is a legal person or organization in which an employee of ranking employees of KEPCO KPS in the nuclear field after the period set forth Conduct human rights impact KEPCO KPS has worked within the past two years; in Paragraph (1) shall notify KEPCO KPS of the same within one (1) month of the Establish a human rights Reflect evaluation results on plans employment date. PDCA Process assessment and evaluate human 3. Where a duty-related party is a legal person or organization in which an employee of management implementation plan Execute the implementation plan to be made at the beginning of Article 12 (Prohibition of Illegal Labor) Employees of Partner Companies shall not be rights management and relief KEPCO KPS or his/her family member (family member under Article 779 of the Civil at the beginning of the year the new year Act; hereinafter the same) is employed as an employee or an outside director; provided with labor in violation of domestic or international laws. procedures 4. Where an employee of KEPCO KPS or his/her family member is an agent of the duty- Article 13 (Environmental Protection) Employees of Partner Companies shall comply related party, provides consultation, advice, etc. to the duty-related party, or is with the laws and international standards related to environmental protection. affiliated with a legal person or organization that performs such agency, consultation, advice, etc.; or Chapter 5 Measures in Case of Violations, Etc. 5. Where an employee of KEPCO KPS or his/her family member is a legal person Human Rights Impact Assessment or organization that owns stocks, shares, capital, etc. of the ratio set forth in the Article 14 (Reporting of Violations) Partner Companies shall provide education to their KEPCO KPS identifies and assesses actual and potential risks in our corporate activities that may have an impact on human rights. following subparagraphs (hereinafter “special interest business operator”): employees regarding this Code in order to create a transparent corporate culture, and A. Where 30% or more of the total issued stocks of a business operator are owned report any violations they find in the course of performing their contracts to the Code of Enterprise-led human rights is an evaluation conducted across all corporate activities, in the aspects of human rights management systems, by the employee him/herself or his/her family member; Conduct violation reporting website of the Anti-corruption and Civil Rights Commission employment, labor rights, occupational safety, supply networks, local residents, and other comprehensive areas. B. Where 30% or more of the total contributed shares of a business operator are (www.acrc.go.kr) or the sinmungo(e-petition board) on the KEPCO KPS website impact assessment owned by the employee him/herself or his/her family member; or (www.kps.co.kr). C. Where 50% or more of the total capital of a business operator is owned by the Human rights impact assessment is an evaluation conducted by an enterprise on its specific businesses, aimed at identifying and analyzing employee him/herself or his/her family member. Article 15 (Measures in Case of Violations) 6. Where the duty-related person has had monetary transactions of KRW 3 million or ① KEPCO KPS may apply any one or more of the following items pursuant to its internal of major businesses potential negative impact of its businesses on human rights to prevent or minimize them. more with an employee of KEPCO KPS; regulations upon any Partner Company that has violated Chapter 3 “Ethical Standards” 7. Where the duty-related person has worked in the same department for five years or Articles 8 and 9 under Chapter 4 “Social Standards” of this Code: with a retired employee of KEPCO KPS prior to his/her retirement; 1. Revocation of the status as a registered Partner Company or suspension of effect 8. Where the duty-related person is deemed unfit for fair job performance due to pursuant to Article 19.3 of the Operational Guidelines Regarding Partner Companies; Stage Description continuous relationship with an employee of KEPCO KPS such as personal ties 2. Cancellation or termination of contract upon deliberation of the Contract Deliberation through school, hometown, religion, work, or colleagueship, etc.; or Committee; Establish plans to conduct human rights assessment 9. Where the duty-related person is deemed unfit for fair job performance due to 3. Reduction of points for violation of the Code of Conduct under the “reputation Stage 1 continuous relationship with an employee of KEPCO KPS since performing job duties evaluation” item in eligibility evaluation pursuant to Article 100 (Determination of Establish human rights assessment plans including purpose, principles, evaluator, and budget such as decision-making or execution relating to licensing, contracts, policies or business Successful Bidder in Competitive Tender) of the Contract Management Regulations; or projects within the past two years, from which KEPCO KPS has directly benefitted. 4. Restriction on eligibility for participation in tender for persons who have provided Prepare a human rights assessment checklist ② In the case where a duty-related person or any person who has personal interests money and other valuables pursuant to Article 10 (Restriction on Eligibility for Stage 2 Prepare a human rights assessment checklist based on the human rights management guidelines and checklist indicators provided by the relating to job performance by an employee of KEPCO KPS falls under any one of the Participation in Tender for Improper Business Persons) of the Contract Management following subparagraphs, he/she may request measures such as re-allocation of job Regulations. National Human Rights Commission duties, etc., in writing in accordance with Annex 3, to the Code of Conduct manager. ② KEPCO KPS may apply the following sanctions against any Partner Company that has violated Article 11.1 of this Code pursuant to its internal regulations upon deliberation of Submit evaluation materials to Human Rights Management Committee Chapter 3 Ethical Standards the Partner Company Deliberation Committee: Stage 3 Department in charge of human rights management submits materials required for evaluating human rights assessment checklist to the Human 1. Revocation of the status as a registered Partner Company or suspension of effect Rights Management Committee pursuant to Article 19.3 of the Operational Guidelines Regarding Partner Companies; or Article 4 (Restriction of Provision of Money and Other Valuables, Entertainment, 2. Reduction of points for violation of the Code of Conduct under the “reputation Etc.) Employees of Partner Companies shall not provide any money and other valuables evaluation” item in eligibility evaluation pursuant to Article 53 (Determination of Conduct evaluation or entertainment of any kind to employees of KEPCO KPS. Stage 4 Successful Bidder in Competitive Tender) of the Contract Management Regulations. Article 5 (Prohibition of Improper Mediation or Solicitation) Employees of Partner Human Rights Management Committee conducts evaluation on the materials submitted using the checklist Companies shall not engage in improper mediation or solicitation that may hinder fair job performance by employees of KEPCO KPS. * Revised on May 24, 2018 (8th revision) Report and disclose to executive management Article 6 (Prohibition of Fair Trade Violations) Employees of Partner Companies shall Stage 5 Department in charge of human rights management reports the evaluation results to executive management, and discloses the same on not engage in bid rigging or illegal subcontracting with third parties. company website, by media, etc. KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 86 / 87 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
GRI Standards Index
Universal Standards (GRI 100) Topic Specific Standards
TOPIC No. Standard Item Pages Note Economic Standards (GRI 200) 102-1 Name of organization 1, 94 TOPIC No. Standard Item Pages Note 102-2 Activities, brands, products, and services 8, 10-13 Economic 201-1 Direct economic value generated and distributed 63-65 102-3 Location of headquarters 8 performance 201-2 Financial implications and other risks and opportunities due to climate change 51 102-4 Location of operations 8-9 Indirect economic 203-1 Infrastructure investments and services supported 45 102-5 Ownership and legal form 8-9 impacts
102-6 Markets served 8-9, 10-13 205-1 Operations assessed for risks related to corruption 83 Anti-corruption Organizational profile 102-7 Scale of organization 8-9, 10-13, 77-79 205-2 Communication and training about anti-corruption policies and procedures 36-37, 84 102-8 Information on employees and other workers 79
102-9 Supply chain 8-9, 10-13
102-10 Significant changes to organization and supply chain - No significant change Environment Standards (GRI 300)
102-11 Precautionary principle or approach 83-84 TOPIC No. Standard Item Pages Note 102-12 External initiatives 64 302-1 Energy consumption within the organization 50 101-13 Membership of associations 91 Energy 302-2 Energy consumption outside of the organization 50 Strategy 102-14 Statement from senior decision-maker 6-7 302-4 Reduction of energy consumption 48, 50 Additional Appendix 102-16 Values, principles, standards, and norms of behavior - Water 303-3 Water recycled and reused 49 Ethics and integrity planned Operational sites owned, leased, managed in, or adjacent to, protected areas 102-17 Mechanisms for advice and concerns about ethics 36-37 Biodiversity 304-1 44 and areas of high biodiversity value outside protected areas 102-18 Governance structure 66-67 305-1 Direct (Scope 1) GHG emissions 50 102-22 Composition of the highest governance body and its committees 66 Emissions 305-2 Indirect (Scope 2) GHG emissions 50 Governance 102-23 Chair of the highest governance body 66 305-5 Reduction of GHG emissions 63 102-24 Nominating and selecting the highest governance body 66-67
102-30 Effectiveness of risk management processes 68-69
102-40 List of stakeholder groups 73 Social Standards (GRI 400) 102-41 Collective bargaining agreements 81 Stakeholder 102-42 Identifying and selecting stakeholders 72-73 TOPIC No. Standard Item Pages Note engagement 401-1 New employee hires and employee turnover 79 102-43 Approach to stakeholder engagement 72-74 Employment 401-3 Parental leave 80 102-44 Key topics and concerns raised 75 Operational health Types of injury and rates of injury, occupational diseases, lost days, and 102-45 Entities included in the consolidated financial statements - 403-2 63 and safety absenteeism, and number of work-related fatalities 102-46 Defining report content and topic boundaries 74-75 Training and 404-1 Average hours of training per year per employee 69 102-47 List of material topics 75 education
Reporting practice 102-48 Restatements of information - No Restatements Diversity and equal 405-1 Diversity of governance bodies and employees 67 opportunity 102-49 Changes in reporting 2 GRI Standards Human rights 102-50 Reporting period 2 412-2 Employee training on human rights policies or procedures 36-37 assessment 102-51 Date of most recent report - Operations with local community engagement, impact assessments, and Local communities 413-1 42-45 102-52 Reporting cycle 2 development programs Management 102-53 Contact point for questions regarding the report 2 Customer health performance 416-1 Assessment of health and safety impacts of product and service categories 59 and safety 102-54 Claims of reporting in accordance with the GRI Standards 2
Customer-centered 102-55 GRI content index 86-87 management activities 102-56 External assurance 88-89 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 88 / 89 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
Independent Assurance Statement
To the Readers of KEPCO KPS 2017 - 2018 Sustainability Report : Our conclusion Based on the results we have obtained from material reviews and interviews, we had several discussions with KEPCO KPS on the revision of the Report. We Foreword reviewed the Report’s final version in order to confirm that our recommendations for improvement and our revisions have been reflected. When reviewing Korea Management Registrar Inc. (hereinafter “KMR”) has been requested by of KEPCO Plant Service & Engineering Co., Ltd. (Hereby referred to as the results of the assurance, the assurance team could not find any inappropriate contents in the Report to the compliance with the principles stipulated “KEPCO KPS”) to verify the contents of its Social Responsibility Management Report 2019 (Hereby referred to as “the Report”). KEPCO KPS is responsible below. Nothing has come to our attention that causes us to believe that the data included in the verification scope are not presented appropriately. for the collection and presentation of information included in the Report. KMR’s responsibility is to carry out assurance engagement on specific data and information in the assurance scope stipulated below. Inclusivity Inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability. - KEPCO KPS is developing and maintaining stakeholder communication channels in various forms and levels in order to make a Scope and standard commitment to be responsible for the stakeholders. The assurance team could not find any critical stakeholder KEPCO KPS left out KEPCO KPS describes its efforts and achievements of the corporate social responsibility activities in the Report. KMR performed a type2, moderate level during this procedure. of assurance using AA1000AS (2008) and SRV1000 from KMR Global Sustainability Committee as assurance standards. KMR’s assurance team(hereinafter “the team”) evaluated the adherence to Principles of Inclusivity, Materiality and Responsiveness, and the reliability of the selected GRI Standards indices as Materiality Materiality is determining the relevance and significance of an issue to an organization and its stakeholders. A material issue is an below, where professional judgment of the team was exercised as materiality criteria. issue that will influence the decisions, actions, and performance of an organization or its stakeholders. - KEPCO KPS is determining the materiality of issues found out through stakeholder communication channels through its own The team checked whether the Report has been prepared in accordance with the ‘Core Option’ of GRI Standards which covers the followings. materiality evaluation process, and the assurance team could not find any critical issues left out in this process. •GRI Standards Reporting Principles •Universal Standards Responsiveness Responsiveness is an organization’s response to stakeholder issues that affect its sustainability performance and is realized through •opic Specific Standards decisions, actions, and performance, as well as communication with stakeholders. - Management approach of Topic Specific Standards - The assurance team could not find any evidence that KEPCO KPS’s counter measures to critical stakeholder issues were inappropriately - Economic Performance: 201-1, 201-2 recorded in the Report. - Indirect Economic Impacts: 203-1 - Anti-Corruption: 205-1, 205-2 We could not find any evidence the Report was not prepared in accordance with the ‘Core Option’ of GRI standards. - Energy: 302-1, 302-2, 302-4 - Water: 303-3 Recommendation for improvement - Biodiversity: 304-1 We hope the Report is actively used as a communication tool with stakeholders and we recommend the following for continuous improvements. - Emissions: 305-1, 305-2, 305-5 •KEPCO KPS has made tremendous effort to incorporate sustainable management into its corporate culture. The company is advised to provide the - Employment: 401-1, 401-3 background of sustainability programs and implementation methods in addition to their performance and results in order to better communicate with - Occupational Health and Safety: 403-2 stakeholders. - Training and Education: 404-1 - Diversity and Equal Opportunity: 405-1 - Human Rights Assessment: 412-2 Our independence - Local Communities: 413-1 With the exception of providing third party assurance services, KMR is not involved in any other KEPCO KPS’s business operations that are aimed at making - Customer Health and Safety: 416-1 profit in order to avoid any conflicts of interest and to maintain independence.
This Report excludes data sand information of joint corporate, contractor etc. which is outside of the organization, i.e. KEPCO KPS, among report boundaries.
Our approach In order to verify the contents of the Report within an agreed scope of assurance in accordance with the assurance standard, the team has carried out an assurance engagement as follows: •Reviewed overall report •Reviewed materiality test process and methodology •Reviewed sustainability management strategies and targets October 25, 2019 •Reviewed stakeholder engagement activities •Interviewed people in charge of preparing the Report CEO
000-129 KEPCO KPS Sustainability Report 2017-2018 INTRODUCTION 90 / 91 SOCIAL VALUE CREATION MATERIAL ISSUES SUSTAINABILITY MANAGEMENT APPENDIX
UN Global Compact Principles Awards and Memberships
UNGC UN Sustainable Development Goals Major Awards Since signing the UN Global Compact, an international initiative based The UN 2030 Agenda for Sustainable Development contains 17 on corporate commitments to fulfill social responsibilities, KEPCO Sustainable Development Goals (SDGs) and 169 targets to guide the Category Institutions Category Institutions Grand Prize in the Public Enterprise Sector at the Korea Ethics Sector Leader in “Commercial Service and Supply Industry” by DJSI KPS has upheld its ten principles in four areas of human rights, labor, international community in order to overcome various issues between 2016.02. 2017.10. Management Award Korea (9 Consecutive Years) environment, and anti-corruption. We submit a Communication on 2016 and 2030. The SDGs call upon governments, businesses and 1st Place in Power Generation Facility Maintenance Service Sector by 2017.11. Excellent Quality Competitiveness Enterprise (19 Consecutive Years) 2016.09. 2017 Process (COP) on our actions each year, and plan to continue relevant institutions to work together in resolving universal issues relating to Korea Standard-Quality Excellence Index (KS-QEI) (5 consecutive years) 2017.12. Leader in Disaster Safety Management in 2017 activities in support of the UNGC principles. poverty, diseases, education, women and children; environmental Korea Financial Management Grand Prix, Best Public Enterprise 2016.10. 2017.12. Grand Prize at the 1 Korea Social Contribution Award Financial Structure Award (3 Consecutive Years) issues including climate change and water; as well as economic and 2016 Certified as a Best Human Resource Development Institution in the Sector Leader in “Commercial Service and Supply Industry” by DJSI 2018.09. 2016.10. Public Sector in 2018 social issues such as technology, living, employment and consumption. Korea (8 Consecutive Years) No. 1 in Korea Standard-Quality Excellence Index (KS-QEI) 2018.09. By developing various tasks to achieve the SDGs, we are striving to 2016.11. Excellent Quality Competitiveness Enterprise (18 Consecutive Years) (7 Consecutive Years) generate economic values as a company, and contribute to sustainable 2016.12. Grand Prize at “Korea’s Best Workplace” Gold Award at the International Convention on Quality Control 2018.10. and equitable development of the international community. 2016.12. Grade 1 in Public Enterprise Integrity Evaluation 2018 Circles (ICQCC) ISO 37001 Certified for Anti-bribery Management System Sector Leader in “Commercial Service and Supply Industry” by DJSI 2017.04. 2018.10. (First Time in Korea) Korea (10 Consecutive Years) 2017.07. Certified as a Korea Service Quality Enterprise Grand Prize at the 1 Korea Ecological Architecture and Environment st 2018.12. Award, Architecture Section 2017 1 Place in Power Generation Facility Maintenance Service Sector by 2017.09. Korea Standard-Quality Excellence Index (KS-QEI) (Human Resource Development Center) (6 consecutive years) Certified for occupational safety and health management system Korea Financial Management Grand Prix, Best Public Enterprise 2019 2019.05. 2017.10. (ISO 45001) and quality management system (ISO 9001) Financial Structure Award (4 Consecutive Years)
Memberships and Associations Category Principles Pages SDGs KEPCO KPS’ Activities Pages •Kimjang(Kimchi-making), lunch Businesses should support and respect the Year Name of Society/Association Purpose of Membership delivery, meal service/distribution, and 1 protection of internationally proclaimed human 85p An institution that performs designated inspection of new electric power technologies, as well as research and manage standard other social contribution activities in 1984 Korea Electric Association rights; and. technologies in accordance with the Electricity Enterprises Act 1 No Poverty local communities 42p-45p Human Rights 1984 Korea Atomic Industrial Forum Acquisition of information relating to nuclear power and promotion of cooperation with relevant institutions •Support of living expenses and daily Make sure that they are not complicit in human 1996 Korea Cogeneration Association Promotion of new projects and businesses through exchange of information regarding cogeneration facilities 2 85p necessities for elderly living alone and rights abuses. Contribution to the implementation of the government’s integrated energy policies, such as energy saving and environmental low-income individuals 2004 Korea District Heating and Cooling Association preservation policies •Briquette delivery, blood donation Businesses should uphold the freedom of 2005 Korea New and Renewable Energy Association Exchange information on the needs of the intellectual property market and latest trends 3 Good Health campaigns, national anti-dementia 3 association and the effective recognition of the 81p, 85p 42p-45p BEST Forum (Business Ethics and Sustainability Expansion of ethical management and settlement of corporate culture by studying best practice cases regarding ethical and Well-being walking competitions, sponsorship 2006 right to collective bargaining; management for Top performance) management activities 2008 Korea Power plant Maintenance Association Research of measures to strengthen the competitiveness of power plant maintenance industry The elimination of all forms of forced and Export of Korean-style nuclear power plants, analysis of overseas nuclear markets, and cooperation/information exchange in the 4 81p, 85p •Expansion of product purchasing from 2011 Korea Nuclear Association for International Cooperation compulsory labour; 5 Gender Equality nuclear industry women’s enterprises and Women 79p-81p Korea Nuclear Equipment Advancement Association Information exchange and participating in training regarding new technologies related to nuclear equipment Labor •Open recruitment with no 2012 Empowerment discrimination based on gender 2013 Korea Engineering Asset Management Association Cooperation for technical/academic development and contribution to national policy-making 5 The effective abolition of child labour; and 81p, 85p 2015 Korea Temporary Equipment Association Contribution to the temporary equipment industry by securing security and economy of temporary construction Contribution to the electric railway by fostering highly-skilled technicians and performing regular inspections/diagnostics of electric 2015 Korea Railway Electrification Technical Association 7 Affordable and •Stabilization of power supply to socially railway facilities 19p The elimination of discrimination in respect of Clean Energy vulnerable households 2015 Public Organization Audit Forum Sharing of government policy directions and support for organizations to achieve their management goals 6 54p employment and occupation. 2016 Korea Smart Grid Association Development and implementation of smart grid-related projects 2016 Korea Society of Supply Chain Management Provision of advice and information-sharing regarding supply chain management (SCM) of overseas projects •Expansion of job creation in the private Businesses should support a precautionary 8 Decent Work 2016 Conference of KNQA Winners Information-sharing and benchmarking of quality management innovation activities 7 46p-51p sector approach to environmental challenges; and Economic 19p Promotion of exchange and labor-management cooperation among enterprises (institutions) in Jeollanam-do region and •Open recruitment and hiring based on 2016 Jeonnam Employers Federation Development contribution to local economy job competencies Contribution to the development of quality management in Korea by developing, distributing and applying education and 2017 Korean Society of Quality Management Undertake initiatives to promote greater technologies relating to quality management Environment 8 46p-51p environmental responsibility; and Promotion of the development of the development of mechanical engineering and machinery technology, and contribution to •Expansion of renewable energy Korean Society of Mechanical Engineers (Energy and Climate Action 2017 industrial development in accordance with the provisions of the Act on the Establishment and Operation of Public Utilities in order 13 50p-51p Power Engineering Division) businesses to contribute to the interests of society in general Encourage the development and diffusion of 9 46p-51p Facilitation of the development of the ESS industry in Korea through consortia, R&D, BM development, and standards of private 2017 Korea ESS Industry Development Association environmentally friendly technologies sectors projects •Signing ceremony for Baeme Improvement of wind energy policies, information sharing and PR activities, and external affairs projects with the aim of facilitating 2018 Korea Wind Energy Industry Association cooperation and information exchange in the wind energy industry Anti- Businesses should work against corruption in all 15 Life on Land mountain Forest Care Agreement and 42p 10 36p-37p corruption its forms, including extortion and bribery. environmental clean-up activities 2019 Korea Institute of Nuclear Industry Promotion Participation in workshops and seminars, and PR activities to promote the nuclear industry Establishment of the basis for win-win growth in the Korean water power industry (Korea Hydro & Nuclear Power) and promotion 2019 Korea Water Power Industry Association of a water power industry ecosystem KEPCO KPS Sustainability Report 2017-2018 92
Glossary
Terms Definitions
Work processes or organizational structure by which stakeholder interests are coordinated and corporate decisions are made; More Governance specifically, the system responsible for corporate competitiveness, strategies, performance, capital budget, operations, and various other areas
Differences in individual traits, such as age, religion, gender, and race, recognized as an important factor in ensuring respect for human Diversity rights and enhancing corporate productivity, giving rise to the need for human resource management in respect of diversity both in and outside of Korea
Initiative A new plan to solve specific problems or achieve goals; e.g., CDR, SDGs in the field of CSR
Scope 1 GHG emissions from sources such as plants and business sites that are owned or controlled by an organization Greenhouse gas emissions GHG emissions that result from the generation of purchased or acquired electricity, heating, cooling, and steam consumed by an Scope 2 organization
Efforts to solve such issues as environmental pollution, resource depletion, and neglect of the socially vulnerable, by forming a balance Sustainability among economy, society and environment
Compliance Control and supervision in advance or on a regular basis for all employees to comply with various legal tools
Organizations or individuals providing products and services used in a company’s supply chain, having both direct and indirect relations Partner company with the company; May include agents, contractors, manufacturers, subcontractors, wholesalers, etc.
BAU (Business as Usual) Total amount of expected greenhouse gas emissions if no artificial measures are taken to reduce them
EIS A system that manages all information needed to inspect activities of all businesses and each department, and to help the CEO, (Executive Information System) executives, or managers in strategic and competitive decision-making
EPC (Engineering, Procurement, A type of turn key method by which a contractor is responsible for the purchasing of engineering resources and construction Construction ;)
ERM A new risk management method to minimize a company’s loss through integrated management of concrete and intangible (Enterprise Risk Management) management risks
CSR Wide-ranging social responsibilities of a company other than economic and legal responsibilities; A business model that considers (Corporate Social Responsibility) various needs of its stakeholders
A global project supporting companies worldwide to analyze and evaluate their climate change management system and emissions, CDP with CDP Commissions worldwide to select companies with outstanding performance in response to climate change and sharing the (Carbon Disclosure Project) list globally
International standards developed by the international organization Global Reporting Initiatives (GRI) to be applied by businesses GRI Standards worldwide
UN SDGs 17 goals and 169 targets adopted at the UN General Assembly for the sustainable development of mankind, calling upon the internal (Sustainable Development Goals) community to work together on common goals relating to eliminating poverty and famine, etc. This report is printed on FSC™ (Forest Stewardship Council) Certified paper with soy ink.