About This Report KT is Korea's comprehensive communications operator which is leading the fourth industrial revolution by releasing the world's first 5G service and innovative intelligent network. By publishing our 13th integrated report, which unveils the achievements of our CSR activities done at the economic, social, and environmental levels, we desire to share the direction of KT's sustainability management with the stakeholders. Reporting Period The period of this report covers from January 1 to December 31, 2017, and key material issues include progress made in the first half of 2018. To demonstrate trends in time series analysis, quantitive data of the Report include performance of the previous 3 financial years. Reporting Period This report covers sustainability management performances of total 516 sites including the headquarters and branches. Reporting and Assurance Standards This report was written in accordance with the Global Reporting Initiative's Standards guideline as the comprehensive option. The report also applied to the International <IR> Framework of the International Integrated Reporting Committee (IIRC) and the financial performance was in line with K-IFRS. To determine the material issues, a materiality assessment was conducted and the material issues selected were described and explained in 4 sections in detail. To ensure the reliability and quality of the information presented in this report, the contents were subject to assurance by an independent third-party whose assurance statement was attached in this report. Please contact us for additional information or send inquiries about this report. KT Sustainability Management Unit, 178, Sejong-daero, Jongno-gu, Seoul, Korea Tel 82-31-727-0114 E-mail [email protected] Homepage www.kt.com Contents Overview 02 Message from the Chairman, Board of Directors 03 Message from the CEO 04 5G. Connected PyeonChang 2018 12 Company Overview 14 Sustainability 16 Materiality Create 22 Securing 5G Global Leadership the Future 25 Promoting the Five Platforms Value 30 Innovating Technology Competency for Future and R&D GiGA 36 Transparent Management Prosperity 44 Shared Growth Management GiGA 56 Customer First Management Planet 63 Environmental Management GiGA 70 Talent Management People 75 Human Rights Appendix 79 Major Financial Indicators 80 Other Performances 84 Stakeholder Engagement 86 Integrated Value Creation 88 KT Business Model Cover Story 90 Third Party's Assurance Statement 'PEOPLE. TECHNOLOGY.' represents KT's commitment 92 GHG Verification Statement to enriching human life by utilizing human-centered 93 GRI Standards Index technology that is closely related to our daily life. Korea's 98 Major Awards ICT leader, KT has created a child's smile that symbolizes a Memberships better future to be materialized with 5G. 99 Global Sustainability Partnerships Message from the Chairman, Board of Directors Message from the CEO "KT will take the initiative in realizing 'Better People, "KT creates technologies that care about people. Better Society, and Better Life' through sustainability management." People. Technology. KT " 2017 was a year when KT took a step forward in sustainability As the chairman of the board of directors, I had an opportunity to The world is paying close attention to who will be the next leader in the 5G technology, we will nurture the ecosystem of related industries, in management and implementation of the UN Sustainable Development experience KT's leading and innovative technology when I visited the 5G the 5G competition, which is thought to shape the future of the fourth which SMEs and venture enterprises can grow together in the era of the Goals (SDGs). In full support of the SDGs for a better planet, we commit center to support the successful hosting of the 2018 Pyeongchang Winter industrial revolution. Over the past three years, KT has focused on fourth industrial revolution. to implementing them through the provision of GiGA infrastructure and Olympic Games. securing 5G source technology along with more than 100 technology When it comes to technology convergence, people often focus on that innovative technologies & services. patents, and as a result, accumulated know-how on 5G network KT's innovative activities and impressive achievements in economic, technology and technology meet. KT's technology, however, always operation. Finally, in February 2018, KT drew the global attention by As a representative Korean corporation, KT understands the importance environmental, and social aspects have earned very high scores in the concerns people and meets people. Technology that concerns people successfully showcasing 'the world's first ever 5G pilot service' at the of ICT companies' impact on the society and environment, and thus internationally recognized Dow Jones Sustainability Index (DJSI), which pays attention to problems around us and grows together with us as 2018 PyeongChang Winter Olympics, proving Korea's ICT power as well endeavors to realize corporate social values. 'IT Supporters,' the first pro assesses corporate sustainability, solidifying our status as a global leader it tries to find solutions. This is also our philosophy of sustainability as KT's 5G global leadership. bono activity in Korea, conducted the successful project to bridge the in the telecommunications industry. With our eco-friendly management management: KT actively participates in the implementation of the United wide digital divide in rural and remote areas, including Daeseong-dong policies, we have been chosen for CDP's Carbon Management Honors KT is now slated to launch the world's first commercial 5G service in Nations' SDGs to address the problems facing humanity. Village near the DMZ, Uiyaji Village in Pyeongchang, and Maheshkhali Club for five consecutive years, and included as a 'Hall of Fame' in the March 2019. It is no exaggeration to say that 5G will define the future of Based on our unwavering faith in people and technology, we promise Island, Bangladesh. The project cited as a successful example of closing first among Korean telecommunications companies, and selected as the fourth industry, because it is not a simple communication network, to remain a trusted company to our customers. We look forward to your the digital gap in the 2017 report of Working Group on Education drafted Carbon Management Sector Honors for eight successive years, being but rather an intelligent network and integration platform that combines continued attention and support. by the Broadband Commission. Also, we work hard at improving the recognized as a leading company in practicing green management. 'solutions,' such as artificial intelligence (AI), augmented reality (AR), quality of human life by utilizing our core competencies such as GiGA virtual reality (VR), and blockchain—all of which are fundamental Thank you. This year's board of directors voted for sustainability management infrastructure and ICT technology. technology of the fourth industrial revolution, with 'services' such plans, taking note of the importance of addressing global social issues as connected cars and drones. Since the beginning of 2017, KT has and improving the quality of life of people by utilizing KT's innovative strived to transform itself into a platform business operator. To this technology. We will continue to go forward towards sustainability end, we have focused on nurturing the five core platforms we selected: by listening carefully to diverse opinions from our shareholders and media, smart energy, value empowerment, financial transaction, and stakeholders. disaster·safety·security. 2018 will be the year when the fourth industrial revolution becomes These efforts will not just secure KT's future growth engine, but also more visible by virtue of the development of technologies such as AI contribute to enhancing the competitiveness of the industrial ecosystem and blockchains along with 5G technology. KT's board of directors will where a diversity of companies belong, including automobile companies do our best to ensure that KT, as a leader in sustainability management, planning to provide autonomous driving services; financial companies contributes more to technological development for a better future of and security or gaming startups preparing to adopt blockchain. Through humankind. Jong-Goo Kim Chang-Gyu Hwang Chairman, Board of Directors CEO 2 3 KT Integrated Report 2018 5G. Connected PyeongChang 2018 5G. Connected PyeongChang 2018 PyeongChang 2018 Sustainability Partner KT The 23rd Winter Olympics was successfully held in Pyeongchang County, Gangwon Province from February 9 to 25, 2018. The multi-sport event was aimed at letting the world know the The Olympic Games represent the single most significant excellence of South Korea, targeting the Cultural Olympics, Environmental Olympics, Peace sports event in the world that has enormous social and Olympics, Economic Olympics, and ICT Olympics. KT, selected as an official telecom partner and environmental impact not only on the host cities but one of the first sustainability partners for the Games, contributed to the successful hosting of the also on all nations and people around the world. That is Pyeongchang Winter Olympic and Paralympic Games. why, in 1995, the International Olympic Committee (IOC) officially introduced the concept of sustainability into the Olympic Games. Aiming to ensure sustainability during the staging of the Olympic Games, the IOC created the Sport and Environment Commission and signed an agreement with the