[Korea] October 5, 2020

ESG Report Environmental issues shaping the future of business

Mirae Asset Daewoo Co., Ltd. Dae-ro Jeong [email protected]

Climate change poses diverse Failure to respond aggressively to climate change to weigh on business performance challenges to businesses  Climate change poses diverse challenges to businesses.  Severe weather events and stricter regulations pose operating risks, and regulatory and environmental issues are increasingly on the minds of stakeholders.  Failure to respond aggressively to these changes will inevitably weigh on business performance and cast doubt on business sustainability.

Need to mitigate the impact of Companies should seek to mitigate the impact of climate change on their business climate change activities  With climate change likely to affect all aspects of business operation, we believe companies need to approach it not just from the perspective of corporate social responsibility (CSR), but also in the context of everyday business.  They also need to have a clear understanding of the direct and indirect impacts of climate change on their balance sheets.  With this in mind, companies should seek to mitigate the impact of climate change on their business activities while also securing new business opportunities to support sustainable, long- term growth.

Growing calls to act on climate Businesses face growing calls to act on climate change change  Meanwhile, companies face growing calls from stakeholders to act on climate change, reflecting concerns about the risks that climate change poses to long-term business performance.  Against this backdrop, investors are increasingly looking to environmental, social, and governance (ESG) metrics to evaluate how actively companies are responding to climate change and developing countermeasures to safeguard business performance.

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. October 5, 2020 ESG Report

CONTENTS

Environmental issues shaping the future of business 3 Businesses face growing calls to act on climate change 3 Key issues related to global climate change 3

I. Climate change: A global challenge 4 1. Global impact of climate change 4 2. 2020 World Economic Forum: Climate change dominated discussions 6 3. Stranded asset risks are rising 7 4. Businesses face growing calls to act on climate change 8

II. Climate/environment-related disclosures 12 1. Climate-related financial disclosures 12 2. How companies can improve ESG ratings 15 3. Achieving sustainable growth through ESG 16

III. ESG investing: Probability of success 17 1. Fund inflows into ESG investments and performance 17 2. ESG is critical to enhancing investment returns 19 3. Status of domestic companies’ ESG ratings 20

ESG ratings by group 21 1. Samsung Group 22 2. Hyundai Motor Group 23 3. SK Group 24 4. LG Group 25 5. Lotte Group 26 6. Hanwha Group 27 7. GS Group 28 8. CJ Group 29 9. Doosan Group 30 10. HHI Group 31

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Environmental issues shaping the future of business

[Summary] How businesses respond to climate change will determine their future

Businesses face growing calls to act on climate change

Climate change poses diverse challenges to businesses. Severe weather events and stricter regulations pose operating risks, and regulatory and environmental issues are increasingly on the minds of stakeholders. Failure to respond aggressively to these changes will inevitably weigh on business performance and cast doubt on business sustainability.

With climate change likely to affect all aspects of business operation, we believe companies need to approach it not just from the perspective of corporate social responsibility (CSR), but also in the context of everyday business. They also need to have a clear understanding of the direct and indirect impacts of climate change on their balance sheets. With this in mind, companies should seek to mitigate the impact of climate change on their business activities while also securing new business opportunities to support sustainable, long-term growth.

Meanwhile, companies face growing calls from stakeholders to act on climate change, reflecting concerns about the risks that climate change poses to long-term business performance. Against this backdrop, investors are increasingly looking to environmental, social, and governance (ESG) metrics to evaluate how actively companies are responding to climate change and developing countermeasures to safeguard business performance.

Key issues related to global climate change

1. Emission trading system (ETS)

Korea’s ETS, which allows the trading of emission allowances, is currently in phase 2 (2018- 20) of its implementation road map. Phase 3 (2021-25) will likely broaden the scope of companies subject to the ETS and quota allocation. Accordingly, we expect the price of carbon credits to increase over the medium/long term, and reducing greenhouse gas (GHG) emissions should become increasingly important to business performance.

2. Carbon border tax

The EU is considering imposing a carbon border tax in 1H21. Under this plan, carbon emissions attributed to imported goods would be taxed in order to reduce emissions and protect the competitiveness of industries in the EU region. If a carbon border tax is imposed, it would have an inevitable impact (i.e., increased export costs) on Korea’s energy-intensive and export-dependent industries (e.g., cement, petrochemicals, steel, and semiconductors).

3. RE100 (100% renewable energy) initiative

RE100 is a global collaborative initiative of influential companies (e.g., Apple [AAPL US/CP: US$114.96] and Google) committed to 100% renewable power. The existing RE100 participants are likely to call on their vendors to also take part in the initiative. Accordingly, we expect Korean companies to face growing pressure to shift to renewable energy sources.

4. Stranded asset risks

Risks related to stranded assets—i.e., assets that have suffered unanticipated devaluations— are rising in the fossil fuel industry due to tighter regulations on GHG emissions. According to the Carbon Tracker Initiative, Korea’s potential stranded assets amount to US$106bn, the highest among the 34 countries analyzed. Companies with high exposure to stranded asset risks are likely to see rising funding costs and declining enterprise values.

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I. Climate change: A global challenge

1. Global impact of climate change

1) Korea: Flooding expected to increase by up to 50% by 2050 (vs. the current level)

During Korea’s 2020 rainy season, which lasted from Jun. 24 to Aug. 16 (the longest ever), nationwide precipitation amounted to 840mm—1.7 times higher than usual. The rainy season was prolonged due to atmospheric blocking events caused by unusually warm temperatures north of the Korean Peninsula. The Arctic jet stream was weakened by warm temperatures near the North Pole, allowing cold Arctic air to descend to the mid-latitude regions and preventing the North Pacific high-pressure system from pushing the rain front away from the peninsula. These shifts in atmospheric patterns caused by unusually high temperatures in the Arctic and Eastern Siberia are largely attributable to climate change.

The Ministry of Environment estimates that climate change will cause a continued rise in precipitation, leading to an increase in flooding volume of up to 50% by 2050 (vs. the current level). Accordingly, the return period (a probabilistic concept in hydrology used to estimate extreme flood frequency) for existing levees and dams could decline sharply from 100 years to four years. The Korean Peninsula is by no means immune to the impacts of climate change.

2) Worldwide: Simultaneous outbreaks of wildfires, droughts, floods, and typhoons

In the US, 100 large fires have burned more than 4.7mn acres (equivalent to one fifth of Korea’s territory) across California, Oregon, and Washington, with related economic losses estimated to have reached at least US$20bn. Strong winds and an extreme heat wave have aggravated the fires. Meanwhile, in Australia, wildfires from Sep. 2019 to Mar. 2020 destroyed roughly 14% of the nation's forested area and caused AU$110bn in economic damage.

Other natural disasters, including droughts, floods, and typhoons, are simultaneously affecting countries around the world. Climate change is blamed for the increased scale, frequency, and severity of such disasters. The global management consulting firm Kearney projects that climate change risks will threaten as much as 30% of global GDP in 2025.

Figure 1. Extreme climate events on the Korean peninsula Figure 2. California’s worst-ever wildfire in 2020 during 2019-20

Source: The Korea Economic Daily, Mirae Asset Daewoo Research Source: Yonhap News, Mirae Asset Daewoo Research

3) Infectious diseases (e.g., COVID-19)

In his 2014 book The Zero Marginal Cost Society, economist Jeremy Rifkin predicted that overconsumption and excessive waste of resources would lead to the collapse of ecosystems, forcing wild animals out of their natural habitats and increasing the risk of more frequent viral outbreaks. Indeed, following the global outbreak of COVID-19, many experts pointed to climate change and the destruction of ecosystems as the underlying cause of increased outbreak frequency/severity. The World Health Organization (WHO) warned years ago of unknown pathogens—dubbed “Disease X”—that could spark an international contagion.

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Many experts believe that warmer temperatures create more amenable conditions for diseases to spread. Although the exact cause of COVID-19 is still unknown, about 75% of recent viral outbreaks, including Ebola and SARS, have had a zoonotic origin. The effects of climate change have displaced virus-carrying wild animals, causing them to come into more frequent contact with humans and livestock. This has heightened the risk of animal viruses being transmitted to humans.

Moreover, higher temperatures are associated with an increase in outbreaks of water-borne diseases (e.g., cholera and typhoid fever) and mosquito-borne diseases (e.g., malaria, Zika virus, and dengue fever). New viruses, bacteria, and protozoa pose one of the biggest threats to human survival, especially given the rising number of mutations and hosts (which may enhance their ability to survive and reproduce).

According to the Global Virus Network (GVN), the spread of viruses is accelerating because of globalization (and the resulting rise in international travel) as well as climate change. In other words, climate change poses a direct threat to human health, and failure to stop it will lead to a series of unpredictable disease outbreaks that will spread rapidly across the world.

In summary, the COVID-19 pandemic is a reminder of how the environment strikes back against the aggressive exploitation of limited resources. Going forward, climate change is likely to cause an increasing number of devastating natural disasters and infectious disease outbreaks, which will likely jeopardize food and water security and threaten the global economy. Accordingly, it is more important than ever to recognize the need for long-term, fundamental actions to address climate change.

Figure 4. Impact of climate change on infectious disease Figure 3. Factors causing zoonotic diseases outbreaks

Ecosystem Destruction of wildlife habitats, more infectious disease vectors (mosquitos, etc.), and increased chance of virus mutations

Human Climate change Society Infectious Changes in temperature, diseases Environmental degradation amid precipitation, and air pollution; urbanization and globalization socioeconomic instability

Source: UN, Mirae Asset Daewoo Research Source: The Hankyoreh, Mirae Asset Daewoo Research

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2. 2020 World Economic Forum: Climate change dominated discussions

Risk profile changes

At the 2020 World Economic Forum, environmental issues (rather than economic concerns) dominated discussions about global risks, with climate change, in particular, being named the greatest global threat.

Financial issues/events have traditionally been viewed as the biggest source of corporate risk. Recently, however, non-financial challenges such as climate change have come into greater focus.

The World Economic Forum’s annual Global Risks Report assesses the major risks facing the global economy in terms of their likelihood and impact. In the 2020 report, environmental concerns—including climate action failure, natural disasters, biodiversity loss, and human- made environmental disasters—dominated the top five risks. Comparing the top 10 risks between this year and 2015, it is evident that social and environmental risks have become bigger concerns. The ongoing shift in global risk perception suggests that environmental sustainability has become a major concern for global leaders, and companies need to establish business strategies to minimize related disruptions.

Table 1. World Economic Forum’s top 10 global risks: 2020 vs. 2015 Top 10 risks by likelihood Top 10 risks by impact Ranking 2020 2015 2020 2015 1 Extreme weather Interstate conflict Climate action failure Water crises Weapons of mass 2 Climate action failure Extreme weather Infectious diseases destruction Failure of national Weapons of mass 3 Natural disasters Biodiversity loss governance destruction 4 Biodiversity loss State collapse or crisis Extreme weather Interstate conflict Human-made 5 Unemployment Water crises Climate action failure environmental disasters Information infrastructure 6 Data fraud or theft Natural disasters Energy price volatility breakdown Information infrastructure 7 Cyberattacks Climate action failure Natural disasters breakdown 8 Water crises Water crises Cyberattacks Fiscal crisis Global governance Global governance Human-made 9 Unemployment failure failure environmental disasters Biodiversity loss and 10 Asset bubbles Asset bubbles Infectious diseases ecosystem collapse Source: World Economic Forum, Mirae Asset Daewoo Research

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3. Stranded asset risks are rising

1) Mounting concerns over a fall in fossil fuel demand amid decarbonization

Recognizing that ongoing environmental challenges will persist long after the pandemic is over, major global firms are revising their business strategies accordingly—i.e., shifting from short-term risk mitigation to long-term responses. In particular, amid the move toward decarbonization, energy firms are taking concerns over a fall in global fossil fuel demand much more seriously than they have in the past.

According to a recent Financial Times report, more aggressive climate action by governments to restrict the rise in temperatures to 1.5°C above pre-industrial levels would cause one-third of the current value of big oil and gas companies, or US$900bn, to evaporate. In addition, major energy firms that previously played down stranded asset risks have started to admit that vast swaths of their oil, gas, and coal reserves may never be extracted/burnt. For example, energy firms such as Royal Dutch Shell (RDSA LN/CP: GBp933.10), British Petroleum (BP/ LN/CP: GBp214.40), Chevron (CVX US/CP: US$71.19), and Repsol (REP SM/CP: EUR5.52) have acknowledged that they will have to revise their business outlooks and reduce their assets.

2) BP declares an end to the petroleum era

BP, one of the world’s largest oil and gas companies, recently declared an end to the era of petroleum demand growth, saying that global consumption may never return to pre- pandemic levels. BP’s annual energy outlook states: “Demand for oil falls over the next 30 years. The scale and pace of this decline is driven by the increasing efficiency and electrification of road transportation.” This implies oil demand peaked in 2019—a stark departure from the firm’s forecast in 2019, when it predicted that oil demand would continue growing into the 2030s. The shift reflects BP’s belief that the worldwide resurgence of COVID- 19 will cause telework to expand and travel to decline, driving down global oil consumption.

Earlier this year, BP announced its ambition to become a net zero emissions company by 2025. By the end of the decade, the firm also aims to increase annual low-carbon investments 10-fold to around US$5bn and cut oil/gas output by 40%. In addition, in June, the firm signed a US$5bn deal to sell its global petrochemicals unit to Ineos, a UK chemicals producer.

Figure 5. Global daily average oil consumption by year Figure 6. BP: 2050 oil demand forecast by scenario

(mn bbl) (%) Business as usual Rapid Net zero 10,500 0 10,096 -10 9,989 10,000 9,841 9,656 -20 9,500 9,500

-40 9,000 -55

8,500 -60

8,000 -80 2015 2016 2017 2018 2019 -80

Source: BP, Mirae Asset Daewoo Research Source: BP, Mirae Asset Daewoo Research

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4. Businesses face growing calls to act on climate change

1) Norwegian sovereign fund excludes KEPCO from its investment universe

Globally, investment mandates are beginning to incorporate ESG considerations. For example, the bank that manages Norway’s oil fund, formally known as the Government Pension Fund Global (GPFG), asserts that “a good long-term return is considered dependent on sustainable development in economic, environmental, and social terms, as well as well- functioning, legitimate, and efficient markets.” Notably, the fund has integrated ethical exclusion and risk-based divestment criteria into its negative screening policy.

In Mar. 2017, GPFG targeted KEPCO (015760 KS/Hold/TP: W23,000/CP: W20,400) for exclusion after the Norwegian Parliament enacted standards barring sovereign funds from investing in thermal power generation and mining businesses with coal exposure of 30% or higher (based on generation or sales).

Even before targeting KEPCO, GPFG had already excluded Korea Line (005880 KS/CP: W16,900), Pan Ocean (028670 KS/Buy/TP: W5,100/CP: W3,420), POSCO (005490 KS/Buy/TP: W250,000/CP: W196,000), POSCO International (047050 KS/Buy/TP: W18,000/CP: W13,400), Poongsan (103140 KS/Buy/TP: W32,000/CP: W23,800), Hanwha Corp. (000880 KS/Buy/TP: W33,000/CP: W25,150), Hansae (105630 KS/CP: W18,000), Hansae Yes24 Holdings (016450 KS/CP: W5,570), and KT&G (033780/CP: W82,400), citing issues such as severe pollution, potential human rights violations, sales/use of thermal coal, and production of weapons/tobacco.

2) Financial institutions to continue to phase out coal investments/financing

In Dec. 2019, the Korean Teachers' Credit Union (KTCU), Korea’s Public Officials Benefit Association (POBA), and DB Insurance (005830 KS/Buy/TP: W65,000/CP: W45,200) announced that they would eliminate exposure to coal. Specifically, they vowed to phase out investments in and financing to coal-fired power plants and other businesses that can drive climate change. These institutions view such measures as the most practical and effective mechanism for supporting efforts to tackle climate change/fine particulate emissions and providing sustainable returns to customers, policyholders, and/or pensioners.

The three institutional investors also announced that they would: 1) ramp up sustainable investments to accelerate the transition to a low-carbon economy; and 2) closely cooperate with other financial institutions, both private and public, to encourage coal divestment and further investments in renewables. At present, there are five domestic institutions (four public and one private) actively participating in coal divestment efforts. We expect the move by the financial and capital markets to phase out coal to further accelerate going forward.

Figure 7. GPFG: ESG investment weightings Figure 8. AUM of five domestic financial institutions

(%) (Wtr) 40 40 36.6 36.2

30 30 20

10 20 16.7 13.4 0

10 8.5

Other Other Other

Human rights Human Remuneration

Anti-corruption 0

Climate Climate change

Children'srights Tax/transparency

Shareholder rights Shareholder Teacher's GEPS KTCU Korea POBA DB Insurance BOD effectiveness BOD

Pension Water resource mgmt resource Water Enviroment Social Governance 2018 2019

Source: GPFG, Mirae Asset Daewoo Research Source: Company/fund data, Mirae Asset Daewoo Research

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3) BlackRock emphasizes CSR

In step with growing calls for CSR, BlackRock (BLK US/CP: US$570.12) CEO Larry Fink stated in his annual letter to chief executives that his firm would make investment decisions with environmental sustainability as a core goal. He also emphasized that sustainability-integrated portfolios could provide better risk-adjusted returns to investors, leading to higher and more sustainable performance over the long run.

Accordingly, the company plans to strengthen sustainability integration into its active investment processes. In particular, the firm decided to pull out of thermal coal—a sector that is significantly carbon-intensive, becoming less economically viable, and highly exposed to regulations. Fink also said that, with the global energy transition accelerating, continued investment in coal was difficult to justify.

BlackRock is in the process of removing from its discretionary active investment portfolios public securities (both debt and equity) of companies that generate more than 25% of their revenue from thermal coal production. The firm also plans to closely scrutinize other businesses that are heavily reliant on thermal coal to see if they are effectively transitioning away from coal dependence. Moreover, the company’s alternative investment unit also announced that it would no longer make direct investments in companies that generate more than 25% of their revenue from thermal coal production.

Meanwhile, Fink said that BlackRock plans to aggressively oppose management teams and boards that are not making progress on sustainability and to press companies to disclose their sustainability plans.

Figure 9. BlackRock CEO Larry Fink emphasizes importance of CSR

Source: BlackRock, Mirae Asset Daewoo Research

Table 2. BlackRock: Sustainability as a new investment criterion

Question/issue Details 1. Why does Larry Fink send Fink aims to encourage companies to provide solid returns to investors over the long an annual letter to chief run by taking a forward-looking perspective. In his 2020 letter, he highlighted the executives? importance of sustainability/climate change in increasing investment returns 2. Why focus on sustainability Sustainability- and climate-integrated portfolios can provide better risk-adjusted returns and climate change? to investors. 3. What is sustainable Sustainable investing involves understanding and analyzing ESG factors and applying investing? them to decision-making processes. 4. How will sustainability be BlackRock makes sustainability integral to the way it manages risk, constructs portfolios, integrated? designs products, and engages with companies. Investment decisions are made by integrating sustainability into investment processes 5. Sustainability provides and conducting research on the potential environmental impact of climate risks and better risk-adjusted returns other factors. 6. ESG investing vs. traditional Sustainability-integrated portfolios can provide better risk-adjusted returns to investors. investing Source: BlackRock, Mirae Asset Daewoo Research

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4) Stakeholders demand better ESG practices

Climate change poses diverse challenges to businesses. Severe weather events and stricter regulations pose operating risks, and regulatory and environmental issues are increasingly on the minds of stakeholders. Failure to respond aggressively to these changes will inevitably weigh on business performance and cast doubt on business sustainability.

With climate change likely to affect all aspects of business operation, we believe companies need to approach it not just from the perspective of CSR, but also in the context of everyday business. They also need to have a clear understanding of the direct and indirect impacts of climate change on their balance sheets. With this in mind, companies should seek to mitigate the impact of climate change on their business activities while also securing new business opportunities to support sustainable, long-term growth.

Meanwhile, companies face growing calls from stakeholders to act on climate change, reflecting concerns about the risks that climate change poses to long-term business performance. Against this backdrop, investors are increasingly looking to ESG metrics to evaluate how actively companies are responding to climate change and developing countermeasures to safeguard business performance.

In Sep. 2018, as part of the PRI in Person conference and the Global Climate Action Summit, the Investor Agenda project was launched to help investors step up the actions that are needed to tackle climate change. Thus far, nearly 400 investors have joined the project. Through the Investor Agenda, investors can directly report actions they are taking across four key focus areas: investment, corporate engagement, investor disclosure, and policy advocacy. Notably, Climate Action 100+ is a five-year initiative led by investors to ensure that systemically important GHG-emitting countries and companies take actions to achieve the goals of the Paris Agreement. Under the initiative, investors are calling on companies to curb emissions, transition to clean energy, and improve governance.

ESG refers to a set of non-financial factors that investors consider (in addition to financial factors like revenue, operating profit, growth, and profitability) when evaluating companies and making investment decisions. ESG ratings are assigned based on assessments of performance across various environmental (climate change, emissions reductions, eco- friendly product development, etc.), social (human capital, industrial safety, subcontracting transactions, product/service safety, fair competition, etc.), and governance (shareholder rights, board composition/activities, auditing, dividend payout, etc.) issues.

As a key measure of a company’s sustainability and societal impact, ESG has already become an important standard for assessing companies in the US and Europe and is increasingly being embraced in other parts of the world, including Korea. We believe demand for ESG will rise further, especially as companies’ role in addressing societal issues comes into greater focus in the wake of the COVID-19 pandemic.

Table 3. Investor Agenda: Four recommendations Actions Make low-carbon investments Investment Phase out investments in coal Integrate climate change into portfolio analysis and decision-making Sign on to the Climate Action 100+ initiative Corporate engagement Support CDP’s disclosure request Investor disclosure Report in line with the TCFD’s recommendations Policy advocacy Calls for world governments to create policy frameworks to achieve the Paris Agreement’s goals Source: Investor Agenda, Mirae Asset Daewoo Research

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ESG investing favored by high-net-worth individuals and millennials

According to a Bank of America Merrill Lynch survey, 45% of wealth managers said that their clients wanted to add ESG assets to their portfolios. Furthermore, a US Trust Insights on Wealth and Worth survey found that 77% of millennials were interested in impact investing. In our view, harnessing the shifting perceptions among high-net-worth individuals and younger investors will prove essential to unlocking the potential of ESG investing.

ESG shareholder engagement on the rise

Growing interest in ESG has given rise to an increase in shareholder engagement/activism. In the US, ESG-related agenda items are increasingly influencing management decisions, with the proportion of environmental/social proposals rising steadily.

Shareholder activism has traditionally referred to the achievement of financial/organizational goals (i.e., increasing shareholder value) through aggressive means such as M&As, restructuring, and board member replacement. However, ESG shareholder activism seeks to bring about change through discourse and consensus-building with the interests of all stakeholders in mind.

With the introduction of a stewardship code in Korea, we expect shareholder engagement activities to increase. In particular, we expect the National Pension Service (NPS) to actively work to protect and promote the interests of Korean pensioners (present and future) by exercising voting rights at shareholders’ meetings, sending ESG-related letters, engaging in talks with management, submitting shareholder proposals, and requesting extraordinary shareholders’ meetings.

Figure 10. Survey on whether a company’s ESG track record is Figure 11. Youth climate rally a consideration in investment decisions

(%) 80

66% 65% 64% 60

46%

40 32% 34%

20

0 Millennials Gen X Baby boomers 69+ Male Female

Source: Legg Mason Global Investment Survey 2019, US Trust Source: Youth 4 Climate Action, Mirae Asset Daewoo Research

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II. Climate/environment-related disclosures

1. Climate-related financial disclosures

1) TCFD recommendations

Given the large-scale, long-term nature of climate-related risks, financial sector participants have recognized the need for information disclosures that help them 1) understand the impact of climate change on organizations and 2) make more informed financial decisions. Accordingly, G20 finance ministers and central bank governors asked the Financial Stability Board (FSB) to review how the financial sector can take climate-related issues into account.

As part of its review, the FSB identified the need for better information to support informed investment, lending, and insurance underwriting decisions and improve stakeholders’ understanding of carbon-related assets in the financial sector and the financial system’s exposure to climate-related risks. Accordingly, in Dec. 2015, the FSB established the Task Force on Climate-related Financial Disclosures (TCFD), which subsequently developed an easily accessible and internationally recognized framework for climate-related financial disclosure. The TCFD released its final recommendations and additional guidance in Jun. 2017.

The TCFD divides climate-related risks into two major categories: 1) risks related to the transition to a lower-carbon economy; and 2) risks related to the physical effects of climate change. Recommendations are structured around four thematic areas (representing core elements of organizational operations): governance, strategy, risk management, and metrics/targets. Organizations are asked to describe: 1) the board’s oversight of climate- related risks and opportunities and management’s role in assessing and managing them; 2) climate-related risks and opportunities they have identified over the short, medium, and long term; 3) the impact of climate-related risks and opportunities on their businesses, strategy, and financial planning; 4) their processes for assessing and managing climate-related risks; and 5) the metrics they use to assess climate-related risks and opportunities. Given that these recommendations were announced on behalf G20 finance ministers, we expect them to have far-reaching implications for organizations.

Table 4. TCFD recommendations and potential problems Area Recommendations Potential problems Describe the board’s oversight of climate-related • Ambiguity regarding the scope of the board’s risks and opportunities responsibility Governance Describe management’s role in assessing and • Lack of internal reporting systems related to managing climate-related risks and opportunities environmental issues Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. • Lack of measures to tackle climate change over the Describe the impact of climate-related risks and medium and long term Strategy opportunities on the organization’s businesses, • Lack of detailed strategies (e.g., scenario analysis and strategy, and financial planning financial modeling) applicable to climate change Describe the resilience of the organization’s strategy Describe the organization’s processes for identifying and assessing climate-related risks. • Short-term approach to risk management (as Describe the organization’s processes for opposed to medium/long-term and enterprise-wide Risk mgmt. managing climate-related risks approaches) Describe how processes for identifying, assessing, • Lack of a company-wide risk management system and managing climate-related risks are integrated into the organization’s overall risk management Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management • Lack of measures to review the Metrics and process plausibility/appropriateness of metrics targets Disclose scope 1, scope 2, and (if appropriate) • Lack of rewards/incentives for positive outcomes scope 3 GHG emissions and the related risks Describe the targets used by the organization Source: TCFD, WWF, Mirae Asset Daewoo Research

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2) Risks and opportunities

Given that different sectors, organizations, and geographic regions face different levels/types of exposure to climate-related risks, the existing climate-related information disclosure systems take various forms. There are growing calls for a more uniform standard to classify climate-related risks and opportunities. The TCFD divides climate-related risks into: 1) risks related to the transition to a lower-carbon economy (policy, legal, technology, and market risks); and 2) risks related to the physical effects of climate change, including event-driven acute risks and chronic risks caused by longer-term shifts in climate patterns.

Meanwhile, climate change presents not only risks but also opportunities. Efforts to mitigate and adapt to climate change can lead to enhanced resource efficiency and cost savings, adoption of low-emission energy sources, development of new products and services, access to new markets, and more resilient supply chains. In order to make more informed financial decisions, investors, lenders, and insurance underwriters need to understand how climate- related risks and opportunities are likely to affect an organization’s future financial position as reflected in its income statement, cash flow statement, and balance sheet. The TCFD has identified four major categories in which climate-related risks and opportunities may affect an organization’s current and future financial position.

Figure 12. Climate-related risks, opportunities, and financial impact

Policy/legal Resource efficiency Technology Energy Transition source Market Risks Opportunities Products/ Reputation services Markets Acute Physical Chronic Resilience Financial impact

Assets Revenues I/S B/S Liabilities Expenditures Capital

Source: TCFD, Mirae Asset Daewoo Research

Table 5. Climate-related risks, opportunities, and financial impact Income statement Transition and physical risks may affect demand for products and services. Organizations should consider the potential impact on revenues and Revenue identify potential opportunities for enhancing or developing new revenues. In particular, given the emergence and likely growth of carbon pricing as a mechanism to regulate emissions, it is important for affected industries to consider the potential impacts of such pricing on business revenues.

An organization’s response to climate-related risks and opportunities may depend, in part, on the organization’s cost structure. Lower-cost suppliers may be more resilient to changes in cost resulting from climate-related issues and more flexible in their ability to address such issues. By providing an indication of their cost structure and flexibility to adapt, organizations can better inform investors about their investment potential. It is also Expenditures helpful for investors to understand capital expenditure plans and the level of debt or equity needed to fund these plans. The resilience of such plans should be considered, bearing in mind organizations’ flexibility to shift capital and the willingness of capital markets to fund organizations exposed to significant levels of climate-related risks. Transparency of these plans may provide greater access to capital markets or improved financing terms.

Balance sheet Supply and demand changes from changes in policies, technology, and market dynamics related to climate change could affect the valuation of organizations’ assets and liabilities. Use of long-lived assets and, where relevant, reserves may be particularly affected by climate-related issues. It is Assets and important for organizations to provide an indication of the potential climate-related impact on their assets and liabilities, particularly long-lived liabilities assets. This should focus on existing and committed future activities and decisions requiring new investment, restructuring, write-downs, or impairment. Climate-related risks and opportunities may change the profile of an organization's debt and equity structure, either by increasing debt levels to Capital and compensate for reduced operating cash flows or for new capital expenditures or R&D. It may also affect the ability to raise new debt or refinance financing existing debt, or reduce the tenor of borrowing available to the organization. There could also be changes to capital and reserves from operating losses, asset write-downs, or the need to raise new equity to meet investment. Source: WWF, Mirae Asset Daewoo Research

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3) Climate-related information disclosures in Korea

Climate change is expected to have major financial implications for businesses. Thus, it is important that stakeholders (investors, etc.) have a clear understanding of climate-related financial impacts. To this end, we advise stakeholders to closely follow climate/environment- related information disclosed as required by law or via sustainability reports.

In Korea, laws/regulations stipulating climate/environment-related information disclosure include disclosure rules in the marketable securities market, rules on the issuance and disclosure of securities, the Environmental Technology and Industry Support Act, and the Framework Act on Low-Carbon Green Growth. However, these laws/regulations do not require full information disclosure, and the information is not easily accessible by general information users. As such, the climate-related information that is disclosed often does not live up to the expectations of stakeholders at home and aboard. Accordingly, some Korean firms publish Global Reporting Initiative (GRI)-compliant sustainability reports to disclose various climate/environment-related information.

Table 6. Laws/regulations stipulating disclosure of climate/environment-related information in Korea Detailed enforcement procedures for disclosure Rules on the issuance and Environmental Technology and Framework Act on Low-Carbon rules in the marketable disclosure of securities Industry Support Act Green Growth securities market Mandatory/voluntary Voluntary Mandatory Mandatory Mandatory A green company as prescribed A company filing an annual report and under the Environmental subject to supervision under the Technology and Industry Support Framework Act on Low-Carbon Green Act; Growth; Public agencies and companies A company subject to supervision Company Listed companies A company certified for green having a significant environmental under the Framework Act technology/green industry; impact, as designated by A green company as prescribed under Presidential Decree; the Environmental Technology and A company having a big Industry Support Act environmental impact Goals/action plans for environmental protection, natural GHG emissions and energy resources conservation, reduction in consumption; Green management pollutant emissions; GHG emissions, energy Disclosed items Green technology/industry information Development/use of goods/services consumption, etc. certifications; for environmental management; Designation as a green company Environmental management outcomes/achievements DART, Relevant agency websites and Disclosure Annual reports Environmental information stock information terminals, GHG Inventory and Research websites/systems (DART) disclosure system KRX Stock Notes Center Small number of disclosures Information is not easily accessible by general information users (voluntary disclosure); GHG emissions are not sufficient to Limitations (shareholders, bondholders, regulatory authorities, etc.); difficulty in Not applicable to privately held accurately assess risk levels assessing performance in value terms firms Source: Korea Law Information Center, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 14 October 5, 2020 ESG Report

2. How companies can improve ESG ratings

1) Public disclosure of ESG data

One of the best ways for companies to improve their ESG ratings is to disclose as much information as possible across all ESG components. In order to do so, companies first need to identify vulnerabilities via comprehensive self-evaluation. Importantly, companies should be willing to go public with their information even if it could have a negative impact on their ESG scores. The continuity and sustainability of such disclosures are also key.

Companies also need to regularly publish stand-alone sustainability reports, as information disclosed in regulatory filings does not provide sufficient insight into ESG conditions. Notably, firms that release sustainability reports appear to gain favor under most ESG evaluation frameworks.

2) ESG risk management and ISO certification

Another effective way to improve ESG ratings is to consider and review ESG factors at each stage of the enterprise risk management process. Adopting and becoming certified under ISO management system standards can help companies manage ESG risks and thus enhance their ESG ratings.

3) Boards need to play a bigger role

An integral part of improving ESG ratings is recognizing and managing ESG risks at the board level. Management teams can prevent involvement in significant ESG-related controversies or risks by implementing stringent monitoring systems, while company boards can mitigate ESG risks by instituting effective control systems.

Table 7. Major ISO management system standards Category ISO standard Notes ISO26000 Social responsibility ESG ISO31000 Risk management Environmental ISO14001 series Environmental management ISO45001 Occupational health and safety management ISO37001 Anti-bribery management Quality management (reflecting the needs and expectations of Social ISO9001 stakeholders) ISO27001 Information security management ISO37101 Sustainable development in communities Governance ISO19600 Compliance management system ISO/TC 322 Sustainable finance Finance ISO14030 Green bonds Source: KCGS, Mirae Asset Daewoo Research

Table 8. Board of directors’ roles in ESG management Category Details Identify risks and evaluate the risk identification potential of existing processes Risk recognition Increase the scope of risk identification, review risk identification procedures, and integrate ESG analysis into company-wide risk management processes Risk assessment Prioritize risks, enhance ESG-related capabilities, and discuss major ESG risks Take into account major ESG risks when establishing strategies, understand ESG risk response and Decision-making mitigation strategies, and establish management responsibilities regarding ESG risks Risk supervision Standardize board-level ESG risk supervision and promote collaboration between committees Information Disclosure of board’s role and major ESG risks disclosures Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 15 October 5, 2020 ESG Report

3. Achieving sustainable growth through ESG

1) Securing a competitive advantage

Eventually, the importance of social value is likely to match that of economic value in business management; as such, we believe that the ESG approach can provide a pathway to corporate sustainability. In our view, setting company-wide ESG goals could foster sustainable management practices and enhance competitiveness. Simply put, companies need to recognize that the creation of ESG value is critical to sustainable growth and enhanced competitiveness (revenue growth, market share gains).

The ESG approach can also help companies record profit growth and cost reductions. For example, business models that create social value are likely to be well received by environmentally/socially conscious consumers, helping companies enter new markets or expand their footing in existing markets. Investing in sustainable assets (e.g., the preemptive introduction of energy-efficient facilities ahead of regulatory changes) should also allow companies to enhance their operational efficiency.

A focus on ESG can lead to bottom-line improvement through: 1) a decrease in regulatory risks (e.g., fines); 2) operating cost-saving measures (e.g., recycling); and 3) lower cost of capital (thanks to the easing of information asymmetry amid enhanced transparency and communication).

2) New business opportunities

The ESG approach can also help companies identify new business opportunities. Indeed, we believe companies can identify a pressing social issue and create a market to address it. Notably, the market would expand in line with potential losses incurred by stakeholders stemming from the issue.

In addition, companies could revise existing business models that have the potential to undermine sustainable growth, leaving them better positioned to: 1) identify global market trends; 2) prepare for upcoming regulatory changes; and 3) develop new markets and make swift investment decisions. Simply put, aided by a thorough understanding of ESG, companies can nimbly transform their business portfolios and seize new opportunities.

Figure 13. ESG can help companies enhance corporate value

Revenue growth Create new business models by identifying stakeholder needs

Attract talent by establishing reputation for sustainability leadership; Talent acquisition Earnings productivity enhancement via employee morale improvement growth Investment/ asset optimization Improve long-term investment returns via sustainable capex

Regulatory cost Reduce regulatory risks (e.g., fines) and enjoy government support reductions by complying faithfully with related laws/regulations Cost

reduction Operating cost Cut costs by revising strategy in a way that reduces packaging and savings waste disposal expenses

Lower cost of Lower cost of capital via the easing of information asymmetry capital (enhanced transparency and communication)

Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 16 October 5, 2020 ESG Report

III. ESG investing: Probability of success

1. Fund inflows into ESG investments and performance

1) Global fund inflows into ESG investments

Interest in ESG investing has grown globally. As of 2018, ESG investment assets in five major markets (Europe, the US, Japan, Canada, and Australia/New Zealand) stood at approximately US$30tr, showing marked growth (CAGR of 15.1%) since 2012.

In Korea, ESG-related investment assets stood at approximately W27tr in 2018, driven primarily by the NPS (W26.7tr), along with the two other major public pension funds (the Teachers’ Pension and the Government Employees Pension Service). Since 2017, large asset managers have launched a number of public ESG funds; as of end-July 2020, the number of domestic ESG funds stood at 41, with combined net assets estimated at W461.8bn (+270% vs. end-July 2017). Of note, inflows into ESG funds have been growing steadily this year, despite increased market volatility stemming from COVID-19. Looking ahead, we expect ESG funds to gain further traction amid heightened interest in ESG issues arising from the pandemic.

Figure 14. ESG-related investment assets

(US$bn) Europe US (US$bn) Canada Australia/New Zealand 15,000 35,000 Japan Total

30,000 12,000 25,000

9,000 20,000

15,000 6,000

10,000 3,000 5,000

0 0 2012 2014 2016 2018

Source: GSIA, Mirae Asset Daewoo Research

Figure 15. Three major public pension funds’ ESG investment Figure 16. ESG fund market share by asset manager assets

(Wtr) (%) Index fund Active fund 30 NPS (L) 5 Midas 1,082 Teachers' Pension (L) 26.8 KB 645 GEPS (L) Samsung 307 25 NPS ESG % (R) 4 Shinhan BNPP 301 Teachers' Pension ESG % (R) Mirae Asset 301 20 GEPS ESG % (R) Samsung Active 251 VI 3 234 Hanwha 163 15 Woori 117 Eastspring 2 Woori Global 10 6.1 KOREIT 6.7 6.8 NH-Amundi 1 KTB 5 Kiwoom Kor. Invest. Value Avg: W24.3bn 0.1 0.1 0.2 0 0.1 0.1 0.1 0.1 0 0 0 200 400 600 800 1,000 1,200 2015 2016 2017 2018 (W100mn)

Source: Company data, Mirae Asset Daewoo Research Note: As of end-July 2020 Source: FnGuide, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 17 October 5, 2020 ESG Report

2) Global ESG investments Since Jan. 2016, the MSCI Europe ESG Leaders Index—which consists of European companies with high ESG ratings relative to their sector peers—has posted a gross return of 38.4% (as of Sep. 18, 2020), outperforming the benchmark MSCI Europe Index (+19.8%).

Figure 17. Performance comparison: MSCI Europe vs. MSCI Europe ESG Leaders

(%) 38.4 40 MSCI Europe MSCI Europe ESG Leaders

20 19.8

0

-20 1/16 1/17 1/18 1/19 1/20

Note: Based on returns since Jan. 4, 2016 Source: Bloomberg Figure 18. Returns by ESG rating

(%) AAA AA A BBB BB B CCC 12

8

4

0

-4 1 month 3 months YTD 1 year 3 years 5 years 10 years

Note: Based on 1,680 ETFs evaluated according to MSCI ESG ratings as of Sep. 10, 2020 Source: ETF.com, MSCI Figure 19. Quarterly inflows into sustainable funds

(US$bn) 80 Europe US Other 71.1

60

40

20

0 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Note: Sustainable funds refer to funds that use ESG criteria to evaluate investments or assess their societal impact; as of Jun. 2020 Source: Morningstar Direct, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 18 October 5, 2020 ESG Report

2. ESG is critical to enhancing investment returns

1) ESG: A new approach to valuing companies

To fully capture a company’s value, non-financial factors (e.g., social responsibility, corporate governance) must be considered alongside financial factors (e.g., revenue, operating profit).

Increasingly, financial performance alone is not sufficient to explain share performance; for many companies, share prices are also affected by ESG (non-financial) criteria. Therefore, investors need to not only consider ESG factors (to accurately value the companies they invest in) but also demand better ESG practices (to maximize their investment returns).

2) Risk mitigation

ESG strategies allow for the effective management of risks related to non-financial factors, supporting stability and profitability for investors.

ESG investing helps to limit risk exposure, as companies that score highly on ESG criteria tend to have limited downside risks to both earnings and share performances. They are also less likely to suffer sharp declines in share price (more than 50%) in the subsequent year.

Notably, portfolio diversification alone may not be sufficient to fend off systemic risks for major pension funds and large-scale asset managers that have seen marked AUM growth. For such funds, we believe the adoption of ESG strategies can better protect the returns of beneficiaries/clients.

Table 9. Examples of ESG risks Category Details Examples Physical Direct/indirect effects of climate change on the real economy Damage to facilities and factories due to heavy rainfall Supply chain Supply chain disruptions due to climate factors Accidents at suppliers Reputational Damage to a corporation’s reputation Issues caused by controlling shareholder’s abuses Sanctions and fines imposed due to a lack of compliance with new or Regulatory Issues arising from a failure to respond to regulatory changes revised regulations Litigation Direct or indirect litigation costs Disputes with residents over construction noise Transitional Challenges arising from the transition to a low-carbon economy Declining value of fossil fuel-related assets amid emissions regulations Human capital Risks related to human capital High turnover rate Source: KCGI, CERES (2019), Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 19 October 5, 2020 ESG Report

3. Status of domestic companies’ ESG ratings

1) Environmental component lags behind social and governance components

While listed domestic companies have gradually been improving their integrated ESG ratings, their environmental ratings appear to fall short of global average levels. Indeed, when the Korea Corporate Governance Service (KCGS) added climate change risks and the disclosure of environment-related performance to its evaluation framework (in keeping with global trends), most domestic firms saw their environmental ratings deteriorate.

Businesses have responded inadequately to the KCGS’s environmental criteria (relative to other components’ criteria), suggesting that they are less interested in environmental management than in social and governance performance. Indeed, businesses tend to give the KCGS more feedback on social and governance data compared to environmental data. (The KCGC seeks such feedback from businesses before finalizing its ratings.) More weight is generally given to governance, a common weakness among Korean firms.

Table 10. No. of businesses responding to KCGS ESG ratings Criteria 2016 2017 2018 2019 Environmental 68 98 100 116 Social 86 133 124 159 Governance 84 117 164 279 Source: KCGS, Mirae Asset Daewoo Research

Figure 20. KCGS ESG rating trends: Environmental ratings are relatively low

ESG, E Grade ESG, S Grade ESG, G Grade (%) B- and below B+ and above (%) B- and below B+ and above (%) B- and below B+ and above 100 100 100 18 20 21 27 27 25 23 25 28 29 28 31 29 33 80 80 38 80

60 60 60

82 40 40 80 75 40 79 77 75 73 72 71 72 73 69 71 62 67 20 20 20

0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Note: Based on ESG ratings of KOSPI-listed firms Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 20 October 5, 2020 ESG Report

ESG ratings by group

Importance of sustainability reporting

A sustainability report is a report published by a company or organization based on GRI guidelines, covering the economic, environmental, and social impact of organizational activities on stakeholders.

Sustainability reports can influence stakeholders’ decision-making on key issues. Accordingly, they should provide relevant, balanced, accurate, timely, and reliable information on corporate activities and performance. Our ESG evaluations cover listed companies affiliated with a top 10 domestic corporate group that have issued sustainability reports.

Table 11. Sustainability report publication status by group Hyundai Samsung SK LG Lotte Hanwha GS CJ Doosan HHI Motor Hanwha SEC Hyundai Motor SK Hynix LG Chem Lotte Chemical GS Holdings CJ CheilJedang Doosan Bobcat KSOE Solutions Samsung Hanwha Life Doosan Heavy Hyundai Mobis SK Telecom LG H&H Lotte Corp. GS Retail CJ ENM HHI Holdings BioLogics Insurance I&C Hanwha Hyundai Mipo Samsung C&T Kia SK Holdings LG Corp. Lotte Shopping GS E&C CJ Logistics Doosan Corp. Aerospace Dockyard Hyundai Electric Lotte Fine GS Home Doosan Samsung SDI Hyundai Glovis SK Innovation LG Electronics Hanwha Corp. CJ Corp. & Energy Chemical Shopping Infracore Systems Hyundai Samsung SDS Hyundai E&C SKC LG Uplus Lotte Chilsung Hanwha I&S GS Global Studio Dragon Oricom Construction Equipment Lotte Hanwha General Samsung Life Hyundai Steel SK Materials LG Display CJ CGV Confectionery Insurance Lotte Non-Life Samsung F&M Hyundai Rotem SK Networks LG Innotek CJ Freshway Insurance SEMCO Hyundai Wia SK Gas Silicon Works Lotte Foods CJ Seafood HMC SHI Investment SK D&D LG International Securities Hyundai BNG Samsung Card SK Discovery LG Hausys Steel Hotel Shilla Busan City Gas LG HelloVision Samsung SK Bioland GIIR Engineering Dreamus S1 Company Samsung SK Securities Securities Cheil Worldwide SKC Solmics Multicampus SM Core NanoEntek Note: Shaded boxes indicate publication of sustainability reports. Source: Company data, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 21 October 5, 2020 ESG Report

1. Samsung Group

Figure 21. Samsung Group: Corporate structure

Lee Jae-yong & affiliates

33.7%

Samsung C&T (028260 KS)

100% Samsung Welstory

43.4% 5.0% 19.3% 27.7% 6.2% 31.5% Samsung BioLogics Samsung Electronics 8.5% Samsung Life (005930 KS) (005930 KS) (032830 KS) 1.5% 50.0%

Samsung Bioepis 17.1%

22.6% Samsung SDS Cheil Worldwide 25.2% Samsung F&M 15.0.% (018260 KS) (030000 KS) (000810 KS) 17.1%

23.7% SEMCO SHI 16.0% Samsung Securities 29.4% (009150 KS) (010140 KS) (016360 KS)

7.0% 19.6% Samsung SDI 11.7% Samsung Engineering Samsung Card 71.9% (006400 KS) (028050 KS) (029780 KS)

15.2% 84.8% Hotel Shilla 5.1% Samsung Asset 100% Samsung Display (008770 KS) Management 7.3%

11.0% S1 5.3% (012750 KS)

Source: DART, Mirae Asset Daewoo Research

Table 12. Samsung Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F Integrated E S G Integrated E S G Integrated E S G Integrated E S G SEC B+ A A B B+ A B+ B+ B+ B+ A B B+ B+ B+ B Samsung B or C or C or B+ B+ B+ B+ B+ A B B+ A B+ B+ A B+ BioLogics lower lower lower Samsung C&T A A A+ A A A+ A A A+ A+ A+ A A A+ A A Samsung SDI B+ A A+ B A A A B+ A B+ A+ B+ A B+ A+ B+ Samsung SDS B+ B+ B+ B+ B+ B+ A B+ B+ B+ A B+ B+ B+ A B+ B+ or Samsung Life A A A A B+ A B+ B+ A A B+ B+ A A B+ lower B+ or Samsung F&M A A A+ A A A+ A+ A A+ A+ A A A+ A+ A lower SEMCO A+ A+ A+ A A A A+ A A A A+ A A A A+ A B or B or SHI B+ B+ B+ B+ A B B+ B+ A B+ B+ B+ B+ B+ lower lower B or B or B or B or B+ or C or C or Samsung Card B+ A B or lower B B+ B+ B B+ B+ lower lower lower lower lower lower lower B or Hotel Shilla B+ B+ B+ A B+ A A A A A A A A A A lower Samsung A A A+ B+ A A A+ A A A A+ A A A A+ A Engineering B or B or B or B or S1 B or lower C B or lower C B+ B B+ B+ B+ B B+ B+ lower lower lower lower Samsung B or B or B+ or B+ B+ A B or A B+ B A B B+ B A B Securities lower lower lower B or B or B or B or C or C or Cheil Worldwide B or lower B B or lower B+ B B+ B+ B B+ B+ lower lower lower s lower lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 22 October 5, 2020 ESG Report

2. Hyundai Motor Group

Figure 22. Hyundai Motor Group: Corporate structure

4.9%

2.6% 23.3% Hyundai Glovis Chung Eui-sun (086280 KS)

6.7% Chung Mong-koo

7.1% 0.7%

Hyundai Mobis 5.8% (012330 KS)

21.4% 17.3% 1.7%

Hyundai Motor 33.9% Kia Motors (005830 KS) (000270 KS)

43.4% 20.9% 25.3% 28.5% 6.9%

Hyundai Rotem Hyundai E&C Hyundai Wia Hyundai Autoever Hyundai Steel (064350 KS) (004020 KS) (011210 KS) (307950 KS) (010520 KS) 11.8% 38.6% 5.2% 13.4% 19.0% 41.1% 17.3%

Hyundai BNG Steel Hyundai Engineering (004560 KS)

17.1% 37.5% 59.7% 37.0% 27.5% 20.4% HMC Investment Fubon Hyundai Life Hyundai Commercial Hyundai Capital Hyundai Card Securities (001500 KS) 20.1% 24.5% 11.5% 4.9%

Source: DART, Mirae Asset Daewoo Research

Table 13. Hyundai Motor Group: ESG ratings of major listed affiliates

2017 2018 2019 2020F Integrated E S G Integrated E S G Integrated E S G Integrated E S G Hyundai Motor B+ B+ B+ B B+ A B+ B+ B+ A A B B+ A A B Hyundai Mobis B or lower A A B+ B+ A A B A A A+ B+ A A A+ B+ Kia B or lower B+ B+ A B or lower A A A B+ A A A B+ A A B Hyundai Glovis B+ B+ B+ B B+ B+ A B+ A A A B+ A A A A Hyundai E&C B or lower B+ B+ B+ A A A B+ A A A B+ A A A B+ B or B+ or Hyundai Steel B or lower B+ A B or lower B+ B+ A B+ A+ B+ B+ B+ A B+ lower lower Hyundai Rotem B+ B+ B+ B+ B+ B+ B+ B+ B+ B A B+ B+ B A B+ B or B or Hyundai Wia B or lower B+ B B+ B+ B+ B+ B A B+ B+ B A B+ lower lower HMC Investment B or B or B or B or C or C or B or lower A B or lower C B+ A B+ B+ A B+ Securities lower lower lower lower lower lower Hyundai BNG Steel B or lower B+ B+ C B or lower B+ B+ C B+ B+ A B B+ B+ A B Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 23 October 5, 2020 ESG Report

3. SK Group

Figure 23. SK Group: Corporate structure

Chey Tae-won Chey Chang-won & affiliates & affiliates

29.6% 45.1%

SK Materials 49.1% (036940 KQ) SK Holdings (034730 KS) SK Discovery SM Core (006120 KS) (007820 KQ) 26.6%

26.8% 33.4% 41.0% 39.1% 75% 51.0% 90.0% 100% 100% 44.5%

SK Telecom SK Innovation SKC SK Networks SK Biopharm SK SK Siltron SK E&S SK Forest SK E&S (017670 KS) (096770 KS) (011790 KS) (001740 KS) (326030 KS) Pharmteco

100% 100% 100% 64.2% 33.5% 65.4% 100% SK Rent-a-Car SK Energy SK Global Chemical SK Lubricants (068400 KS) SK Chemicals SK Gas SK Plasma (285130 KS) (018670 KS)

20.1% 51.4% 74.3% 100% 100% 98.7% 100% 55.0% 29.3%

SK Hynix Dreamus Company SK Life and Security 100% ADT SK D&D SK Broadband SK Telink SK Planet SK Infosec (000660 KS) (060570 KQ) Communications Holdings Caps (210980 KS)

Source: DART, Mirae Asset Daewoo Research

Table 14. SK Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G SK Hynix A A A A A B+ A+ B+ A B+ A+ B+ A B+ A+ B+ SK Telecom A A B+ A A+ A A A+ A B+ A A+ A B+ A A+ SK Holdings A+ A A+ A+ A+ A A+ A+ A A A A A A A A B or SK Innovation B+ A A A B+ A+ A A A A+ A A A A+ A lower SKC B+ A B+ B+ B+ B+ A B+ A B+ A A A B+ A A SK Materials B B B B+ B B B B+ SK Networks B+ B B+ B+ A B+ A+ B+ A+ B+ A+ A+ A+ B+ A+ A+ B or B or SK Gas B or lower B+ B+ B+ A B+ B+ B B+ A B+ B B+ A lower lower B or B or B or B or C or C or SK D&D B or lower B B or lower C B B B+ B B B+ lower lower lower lower lower lower B or C or C or SK Discovery B+ A B+ 0 0 0 B+ B+ B+ A B+ B+ A lower lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 24 October 5, 2020 ESG Report

4. LG Group

Figure 24. LG Group: Corporate structure

Koo Kwang-mo & affiliates

46.1%

LG Corp. (003550 KS)

33.3% 33.7% 33.1% 37.7% 35.0% 24.7% 50.0%

LG Chem LG Electronics Silicon Works LG Uplus GIIR LG International LG CNS (051910 KS) (066570 KS) (108320 KQ) (032640 KS) (035000 KS) (001120 KS)

50.0% 100% 51.0% 100% 33.5% 37.9% LG Display LG Hausys LG HelloVison HS Ad Pantos S&I (108670 KS) (034220 KS) (037560 KS)

100% 40.8% LG Sports 34.0% LG H&H LG Innotek (051900 KS) (011070 KS)

100% 33.4% LG Mgmt Development Robostar 50.0% LG MMA (090360 KQ)

Source: DART, Mirae Asset Daewoo Research

Table 15. LG Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G C or C or LG Chem A A A+ B+ A A A+ B+ B+ A+ B+ B A B+ lower lower LG H&H A A A+ B+ A A A+ B+ A A A+ B+ A A A+ B+ B or LG Corp. B+ B+ B+ B+ B+ A B+ B+ B A B+ B+ B A B+ lower LG Electronics B+ A A B B+ A A B B+ A A B B+ A A B LG Uplus B+ A B+ B+ B+ A B+ B+ B+ B+ A B+ B+ B+ A B+ LG Display A A A B+ A A A+ B+ B+ B+ A B B+ B+ A B LG Innotek A A A+ B+ A A A+ B+ B+ B+ A B+ B+ B+ A B+ C or C or Silicon Works ------B B+ B+ B B+ B+ lower lower C or C or LG International B+ B+ A B B+ B+ A B+ B+ A B+ B+ A B+ lower lower LG Hausys A A A+ B+ A A A+ B+ A A A B+ A A A B+ B or B or C or C or LG HelloVision B or lower B+ B+ B+ B+ A B+ B+ B+ B+ B+ B+ lower lower lower lower B or B or B or C or C or GIIR B or lower B+ B or lower B+ B B B+ B+ B B+ B+ lower lower lower lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 25 October 5, 2020 ESG Report

5. Lotte Group

Figure 25. Lotte Group: Corporate structure

Lotte Holdings Shin Dong-bin (Japan) & affiliates

100%

L investment 20.7% company

72.6% 2.3% 11.1% Lotte Corp. Hotel Lotte 19.1% [004990 KS]

38.2% 32.8% 42.0% 32.6%

Lotte Lotte Property Lotte Rental Lotte Capital Aluminium & Development

24.6% 41.4% 46.0% 65.0% 40.0% 48.4% 26.5% 36.4% 79.7% 54.4% 68.7%

Lotte Data Lotte Lotte Chemical Lotte Global Lotte Shopping Lotte Chilsung Lotte Food Daehong Lotte Trading Communication Confectionery Korea Seven Lotte GRS Logistics [023530 KS] [005300 KS] [002270 KS] Comm. [011170 KS] [286940 KS] [280360 KS] 93.9% Lotte Members 43.8% 31.1% 40.0% 61.0% 53.0% 86.4% 50.0% Lotte Fine Hyundai Lotte Himart Woori Home Lotte Lotte REIT Lotte Asset Lotte Station Lotte E&C Chemical Lotte AMC Chemical [071840 KS] Shopping Entertainment [330590 KS] Development Building 43.1% [004000 KS]

100% 60.5% 44.5%

Source: DART, Mirae Asset Daewoo Research

Table 16. Lotte Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G C or Lotte Chemical A A A+ B+ A B+ A+ A B+ B A+ B+ B A B+ lower Lotte Corp. B+ A A+ B 0 0 0 B+ B+ B A B+ B+ B A B+ Lotte Shopping B+ A A+ B A A A+ B+ A A A+ A A A A A Lotte Fine Chemical A A A+ A A A A+ B+ A B+ A+ A A B+ A+ A Lotte Chilsung B+ A B+ B B+ B+ A B B+ B+ A B B+ B+ A B Lotte Confectionery ------A A A B+ A A A B+ Lotte Non-Life B or B or C or C or A A A A A+ A B+ A B+ B+ A B+ Insurance lower lower lower lower Lotte Food B or lower A A+ C A B+ A+ B+ B+ B+ A B+ B+ B+ A B+ Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 26 October 5, 2020 ESG Report

6. Hanwha Group

Figure 26. Hanwha Group: Corporate structure

Kim Seung-yeon & Kim Dong-kwan & affiliates affiliates

26.1% 7.8% 100%

Hanwha Corp. 4.2% H-Solution (005930 KS)

18.1% 100% 34.0% 50.6% 37.2% 100% 100%

Hanwha Life Insurance 25.1% Hanwha Aerospace Hanwha 48.7% Hanwha Solutions Hanwha E&C Hanwha TechM Hanwha Energy (088350 KS) (012450 KS) Hotels & Resorts (009830 KS) 39.2% 100% Hanwha 100% 50.0% 36.1% Hanwha Hanwha Defense Yeochun NCC Asset Management General Chemical

50.0% 51.4% Hanwha General Insurance 100% Hanwha 100% Hanwha Q Cells & Hanwha Total (000370 KS) Power Systems Advanced Materials

100% Hanwha 100% Hanwha 100% 100% Hanwha Hanwha 100% Hanwha Galleria 63 City Precision Machinery Galleria Timeworld Solar Power

36.1% Hanwha 38.1% 100% 100% Hanwha Techwin Hanwha Compound Savings Bank 16.2%

Hanwha I&S 8.7% 49.0% Hanwha Systems 13.4% 100% Hanwha (003530 KS) (272210 KS) Global Asset

12.5%

Source: DART, Mirae Asset Daewoo Research

Table 17. Hanwha Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G B or B or C or C or Hanwha Solutions B or lower B+ C B+ A B+ B A B+ B A B+ lower lower lower lower Hanwha Life B or B+ or B+ A B+ B+ B+ B+ B+ B+ A B+ B+ B+ A B Insurance lower lower B or Hanwha Aerospace - - - - B+ A B B+ B+ B+ A B+ B+ B+ A lower Hanwha Corp. A A A+ A A B+ B+ A B+ B B+ A B+ B B+ A B or B or B or C or C or Hanwha I&S B+ B+ A B or lower B B A B B A B lower lower lower lower lower Hanwha General B or B or B or C or C or B+ A B or lower B+ B+ B+ A B+ B+ A B+ Insurance lower lower lower lower lower B or Hanwha Solutions B or lower B+ B B or lower B+ B+ C B+ B+ A B+ B+ B+ A B+ lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 27 October 5, 2020 ESG Report

7. GS Group

Figure 27. GS Group: Corporate structure

Huh Chang -soo & affiliates

54.4% 51.9% 25.6%

Samyang Tongsang GS Holdings GS E&C 61.2% Xi S&D (002170 KS) (078930 KS) (006360 KS) (317400 KS)

100% 65.8% 36.1% 70.0% 50.7% 87.9% 100%

GS Retail GS Home Shopping GS Global GS Energy GS EPS GS E&R GS Sports (007070 KS) (028150 KQ) (001250 KS)

Boryeong LNG 50.0% 50.0% 100% GS Power 100% 80.0% GS Windpower Terminal Fresh Serve 10 x 10 90.0% PLS 50.0% 70.0% Incheon Total 100% GS Caltex 100% 100% Yeongyang Energy GS Netvision GS Teleservice 93.1% Windpower Corp. 2 100% GS Entec Sangji Shipping 67.6% 100% 100% GS Pocheon Green Parnas Hotel PNS 40.0% 40.0% Energy 100% Donghae Int’l GS EcoMetal 80.3% 100% CVS Net Gumi Green 100% Energy GS Bio 100% 100% Yeongdeok 100% GS Networks GS Mbiz Windpower Corp. 50.0% 100% GS Park 24 51.0% GS Donghae InnoPolytech Electric Power 100% Epis 100% Samcheok Green Energy Park 62.6% Petsbe

Source: DART, Mirae Asset Daewoo Research

Table 18. GS Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G B or B or B or B or B or B or C or C or GS Holdings B+ B+ B B+ B+ B B+ B+ lower lower lower lower lower lower lower lower B or B or B or C or C or GS Retail B+ B+ B+ B+ B+ B A B B A B lower lower lower lower lower GS E&C A A A B+ B+ A B+ B+ A B+ A A A B+ A A GS Home C or C or ------B+ A A B+ A A Shopping lower lower B or B or B or B or B or B or C or C or GS Global B+ B+ B B+ B+ B B+ B+ lower lower lower lower lower lower lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 28 October 5, 2020 ESG Report

8. CJ Group

Figure 28. CJ Group: Corporate structure

Lee Jay- hyun & affiliates

47.1%

CJ Corp. (001040 KS)

96.0% 44.6% 47.1% 100% 40.1% 55.0% 39.0%

CJ ENM CJ CGV CJ CheilJedang CJ Freshway CJ Olive Young CJ Foodville (097950 KS) (051500 KQ) CJ Olive Networks (035760 KQ) (079160 KS)

60.9% CJ Don Don 95.1% 100% 70.0% Songlim Food 100% 90.5% Farm CJ Powercast CJ Telenix JS Pictures CJ 4DPLEX

46.5% CJ Seafood 100% F&D Infra 41.4% (011150 KS) 98.8% Art Service 52.2% Bosphorus SuperRace Investment 94.9% CJ Breeding 100% 70.0% 51.0% Artworks Korea MezzoMedia GTist

40.2% CJ Logistics 100% E&C Infra (000120 KS) 61.4% Studio Dragon 100% Hwa & Dam (253450 KQ) Pictures 100% 100% Korea CJ MD One Integrated 51.0% 100% Freight Terminal JK Film Culture Depot

90.0% 100% CJ Live City KPJ

Source: DART, Mirae Asset Daewoo Research

Table 19. CJ Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G CJ CheilJedang A A A B+ A A A+ B+ A A A+ A A A A+ A C or C or CJ ENM ------B B+ B+ B B+ B+ lower lower CJ Logistics B+ A B+ B+ B+ A B+ B+ B+ A B+ B+ B+ A B+ B+ B or B or CJ Corp. A A A A A+ A B+ B A+ B+ A B A+ A lower lower Studio C or C or C or C or ------B B+ B B+ Dragon lower lower lower lower B or B or B or CJ CGV B+ B+ B+ B+ A B+ B B+ A B+ B B+ A lower lower lower CJ Freshway ------A B A A A B A A B or B or B or B or B or C or C or C or C or C or CJ Seafood B B+ B B+ C B+ lower lower lower lower lower lower lower lower lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 29 October 5, 2020 ESG Report

9. Doosan Group

Figure 29. Doosan Group: Corporate structure

Park Jeong -won & affiliates

47.2%

47.1% 47.0% Doosan Corp. (000150 KS)

18.0% 18.1% 44.9% 62.3%

Doosan Solus Doosan Fuel Cell Doosan Heavy I&C Oricom 100% Doosan Robotics (336370 KS) (336260 KS) (034020 KS) (010470 KQ)

100% Doosan Mobility 100% 100% Doosan Mecatec Hancomm Innovation

Doosan 100% Logistics Solutions

100% 36.1% 21.1% 100% Doosan Bears 27.0% Doosan Infracore 30.6% Doosan E&C DBC Doosan Cuvex (042670 KS) 100% Doosan Mgmt Development 46.0% 51.0% 36.2%

Doosan Bobcat 96.8% (241560 KS) Neoplux

Source: DART, Mirae Asset Daewoo Research

Table 20. Doosan Group: ESG ratings of major listed affiliates 2017 2018 2019 2020F

Integrated E S G Integrated E S G Integrated E S G Integrated E S G Doosan B or B or B or B or B or B or C or C or A A B B A B B A Bobcat lower lower lower lower lower lower lower lower Doosan Heavy A A A B+ A A A+ A A A A+ A A A A+ A I&C Doosan Corp. A A A+ A A+ A+ A+ A A A A+ A A A A+ A Doosan A A+ A+ B+ A A+ A A A A A B+ A A A B+ Infracore C or C or Oricom ------B B B B B B lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 30 October 5, 2020 ESG Report

10. HHI Group

Figure 30. HHI Group: Corporate structure

Chung Mong -joon & affiliates

34.3%

HHI Holdings (267250 KS)

74.1% 33.1% 37.2% 31.0%

Hyundai Construction Hyundai Electric & 42.4% KSOE Hyundai Mipo Dockyard Hyundai Global 100% Hyundai Oilbank Equipment Energy Systems (009540 KS) (010620 KS) Service (267270 KS) (267260 KS) 100% 60.0% Hyundai Chemical Hyundai Core Wartsila-Hyundai 50.0% 100% Hyundai Heavy Motion Engine Industries

100% 80.5% Hyundai Samho 100% Hyundai Oil HHI Sports Heavy Industries Terminal

Hyundai HYMS 25% 100% HHI Green Energy 50.0% Hyundai Cosmo Petrochemical

HHI (China) 40.0% 66.5% Hyundai Energy 51.0% Investment Solutions Hyundai OCI

Changjuk Wind 43.0% 100% KOMAS Power 60.0% Hyundai and Shell Base Oil Taeback Guinemi 37.5% 35.0% Taebaek Wind Wind Power Power

Source: DART, Mirae Asset Daewoo Research

Table 21. HHI Group: ESG ratings of major listed affiliates

2017 2018 2019 2020F Integrated E S G Integrated E S G Integrated E S G Integrated E S G B or KSOE B+ A B+ B+ A B+ B+ A A A A A A B+ A lower HHI Holdings ------A B+ A+ B+ A B+ A+ B+ Hyundai Mipo B or B+ A B+ B+ B+ B+ B+ B+ B A B B+ B A B Dockyard lower Hyundai Electric & ------B+ B A B+ B+ B A B+ Energy Systems Hyundai Construction C or C or ------B+ B+ A B+ B+ A Equipment lower lower Source: KCGS, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 31 October 5, 2020 ESG Report

Appendix 1

Important disclosures and disclaimers Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. and/or its affiliates do not have any special interest in the subject company and do not own 1% or more of the subject company's shares outstanding.

Analyst certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director, or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and private client divisions. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein or of any translation into English from the Korean language. In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws, and accounting principles, and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Daewoo or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person, and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates, and their directors, officers, employees, and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views, and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates, and their directors, officers, employees, and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making, or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: Mirae Asset Daewoo is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Mirae Asset Daewoo. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All other jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Daewoo Research 32 October 5, 2020 ESG Report

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Mirae Asset Daewoo Research 33