NON-FINANCIAL STATEMENT SECTION 1. HUMAN CAPITAL MD&A 2016 2017 2018 1.1 Total Employment Total Number of Employees persons 4,399 4,516 4,948 Total Number of Overseas Employees persons 73 49 44 Special Employment and Minorities(*) persons 190 182 193 1.2 Recruitment and Total Number of New Employees persons 734 466 595 Turnover Total Number of Turnover Employees persons 359 284 183 1.3 Maternity and Number of Employees on Maternity Leave persons 185 142 178 Parental Leave Number of Employees on Parental Leave persons 42 35 39 1.4 Human Capital Training Expense per Employee(**) KRW million 2.03 1.91 2.10 Improvement Number of Training Courses Participants Annually(***) persons 17,303 16,201 21,575 Rate of Employees’ Performance Evaluations % 98 99 99 1.5 Employee Employee Engagement % 90 88 85 Engagement 1.6 Labor Practices Labor Union Membership Rate % 87.3 88.7 90.0 1.7 Health, Safety Number of Occupational Accidents persons 1 1 1 and Well- Being (*) Number of employees with disabilities and veterans (**) Training expenses per employee = training performance including corporate training expense and training expense of each department. (***) According to SK Telecom’s in-house training courses excluding external training courses SECTION 2. SOCIAL CAPITAL MD&A 2016 2017 2018 2.1 Access to Service LTE Subscribers Rate % 71.2 75.7 80.3 Total Rate of Reduction for Disadvantaged Groups KRW million 190,413 197,890 267,720 Participation in Education to Resolve the ICT persons 758 588 2,427 Informational Divide Support for Underserved Areas (Remote Mountain- sites 3,195 6,737 2,705 ous Areas) 2.2 Network Quality and Wireless Network Capacity wireless lines in thousands 39,620 45,210 40,910 Risk Management Annual Data Traffic Processed(*) TB 1,208,543 1,527,634 1,862,177 Number of Large-scale Network Failure Cases(**) cases 0 0 1 2.3 R&D Investment R&D Expenditure(***) KRW billion 640.9 638.0 635.5 R&D Personnel person 1,248 1,376 1,594 2.4 Customer Satisfaction NCSI (Korea Productivity Center) points 76 77 77 and Customer Safety Indicators Rate of Micropayment VOC % 0.014 0.009 0.00084 2.5 Privacy Protection Customer Information Leakages cases 0 0 0 Rate of Assessments Conducted Among Total % 100 100 100 Stores(****) 2.6 Electromagnetic Fields Number of intensity measurements taken at wire- cases 23,535 38,782 33,964 less stations Rate of wireless stations at level of the electro- % 99.9 99.9 99.9 magnetic field rating system NON-FINANCIAL MD&A (MANAGEMENT DISCUSSION & ANALYSIS) SECTION 2. SOCIAL CAPITAL Reporting Standards and Principles The purpose of Non-financial Management Discussion & Analysis (MD&A) to present management’s analysis opinion MD&A 2016 2017 2018 on the key management performances from non-financial aspects such as human capital, social capital, and environ - 2.7 Mutual Growth with Partners No. of Company Participants in Mutual Growth companies 376 278 216 mental capital for the reporting period from January 1 2018 to December 31, 2018. The following international reporting Cooperation standards and principles apply to the non-financial MD&A: 2.8 Assessment of the Total Number of Newly Registered Partner Companies companies 725 615 505 1 International Integrated Reporting Council <IR> Framework - The International Integrated Reporting Council <IR> Supply Chain’s Sustainability Rate of Advance Assessments % 100 100 100 framework requires concise reporting on the organization’s strategy, governance, and how the performance and future Total Number of Registered Suppliers companies 1,881 1,444 1,357 prospects are connected to the short-, mid-, and long-term value creation of an organization under the economic, social Assessment Rate of Suppliers % 92 93 98 and environmental contexts. Please refer to pp.26-27 for the Business Model required to implement the Integrated 2.9 Community Investment(*****) Support for Start-ups (number of teams) No. of teams 55 38 17 Reporting Principles of the International Integrated Reporting Council and pp.44-45 for materiality assessment to de- Donations collected on Give U KRW million 202 300 350 termine important topics depending on the impact on value creation. Number of Volunteer opportunities registered on With U opportunities 77,024 24,332 53,583 2.10 Participation in Public Policies Direct Political Donations(******) KRW million 0 0 0 2 Global Reporting Initiatives (GRI) Sustainability Reporting Standards - The GRI provides information on the topics (*) Including mobile phone (2G/3G/4G) services and excluding Wibro and WiFi services and disclosures of reporting from economic, social and environmental perspectives so that stakeholders can discern (**) According to the number of large-scale network failure cases submitted to the Ministry of Science and ICT: Companies are subject to report more than 1 failure of a the organization’s performance. It defines the subject according to the correlation of each topics from the impact on switchboard, or more than 10 failures at base stations within the same city/district/area, or failures of a similar scale to the government stakeholders and from economic, social and environmental perspectives. Please refer to pp.44-45 for the results of the (***) R&D costs are the combined total of net R&D expenses (network and marketing infrastructure, new growth business), R&D investment (equity investment in AI business/ devices), investment in growth business (CAPEX, OPEX) and expenses for R&D organizations Materiality Assessment conducted in accordance with the GRI requirements. (****) Refer to p.108 for yearly inspection status (*****) Reported annual data, not cumulative, starting in 2017 3 Accountability AA1000 - The AA1000 series identifies and prioritizes sustainability issues in r elation to the orga- (******) Direct political contributions: Contributions to and support lobbyist groups/ lobbyists, political campaigns and election funds, political parties/ political groups/ politi- nization and defines its framework and principles. The information in this report is verified by third party according to cians, trade associations or tax-exempt groups the Assurance Standard (AA1000AS). Please refer to pp.159-161 for the result of the third-party assurance performed by an independent institute. SECTION 3. NATURAL CAPITAL References MD&A 2016 2017 2018 1 UNGC COP (UN Global Compact Communication on Progress) 3.1 3.1 GHG Emissions Total Emissions tCO2e 828,073 875,401 934,664 - A guideline for reporting the compliance status to the Ten Principles of the UNGC by its members Intensity tCO2e/KRW billion 67.05 70.21 79.78 3.2 3.2 Energy Consumption Total Energy Consumption TJ 17,012 17,983 19,204 2 ISO26000 Energy Intensity TJ/KRW billion 1.4 1.4 1.64 - An international social responsibility standard of the responsible management system presented in November 3.3 3.3 Water Consumption Volume of Water Consumption m3 712,910 713,744 707,296 2010 by the ISO (International Standard Institution). Intensity m3/KRW billion 57.72 57.25 60.37 3 CDSB Reporting Framework Total Waste ton 1,691 1,562 1,736 3.4 3.4 Waste and Recycling - Standard for carbon disclosure put forth by the Climate Disclosure Standard Board (CDSB) in September 2010 Waste Discharge Intensity ton/KRW billion 0.137 0.125 0.148 4 SASB(Sustainability Accounting Standard Board) Recycling Rate % 35 40 35 - Telecommunication Standards Core issues and key performance indicators in the telecommunications industry 3.5 3.5 Resources Rate of New Subscriptions % 87.0 87.6 88.1 released in April 2014 by the U.S. SASB Rate of T membership Mobile % 98 99 99 Card Issuance to New Customers Scope of Data Device Retrieval Rate % 3.1 1.8 0.4 (*) 3.6 3.6 Environmental Total Environmental Costs KRW million 754 702 1,717 The non-financial information presented in this non-financial MD&A is limited to the data of SK Telecom, which does not Costs and Annual Cost of Purchasing GHG Emissions KRW million 1,316 1,833 0 include subsidiaries and supply chains unless otherwise specified. This coincides with the scope of separate revenues Investments Credits of SK Telecom, which is the controlling company under K-IFRS. Environment data such as energy, greenhouse gases, Green Procurement Cost KRW million 45,150 36,706 3,377 waste, and drinking water is calculated based on 34 domestic business sites* of SK Telecom (including network infra- structure and data centers). Over 99% of SK Telecom’s revenues are generated in Korea, and thus the data coverage included meets 99% or more of the revenue. * 33 business sites (T Tower, Namsan, Guro, Jangan, research buildings at Seoul National University, SK Knights Gymnasium, FMI, Bundang, Boramae, Incheon, Suyu, Seongsu, Buam in Busan, Busan Data Center, Bonri, Taepyeong and Sincheon in Daegu, Usan and Songjeon in Gwangju, Jeonju, Jeju, Dunsan and Busa in Daejeon, Cheongju, Wonju, a base station, repeater #1, repeater #2, Central Station, the Marketing Team, Jung-dong in Daegu, Myungryun) and one call center (Service Top & Service Ace) SECTION 1: HUMAN CAPITAL TOTAL NUMBER OF OF PERSONS EMPLOYED 1.2 Recruitment and Turnover 1.3 Maternity and Parental Leave The number of new employees by age and gender as well as the SK Telecom actively implements policies to ease employees’ bur- 1.1 Total Employment 2016 2017 2018 number of turnover employees is calculated based on the number dens of childbirth and childcare and support them in this aspect. Total employment is one of the key indicators that shows a Total Number of Employees persons 4,399 4,516 4,948 of permanent and temporary workers (contract-based) who have a The company set up systems to reduce employees’ workloads and company’s job creation such as employment types, genders Employment Permanent persons 4,242 4,403 4,841 direct employment contract with SK Telecom.