[발표자료집] [ SessionⅠ] Aligning climate actions of economic actors with Paris Agreement (1.5℃)
Presentation ll The Evaluation of the Efforts of Korean Corporations to Address Climate and Energy Issues : Focusing on the Electric Equipment and Transportation Sector Sun-Jin Yun (Professor, Seoul National University) The Evaluation of the Efforts of Korean Corporations to Address Climate and Energy Issues: Focusing on the Electric Equipment and Transportation Sectors
YUN, Sun-Jin Professor of Environmental and Energy Policy Graduate School of Environmental Studies Seoul National University
Contents
1. Introduction 2. Research Method 3. Assessment1 - Targets & Performance 4. Assessment2 - Information disclosure 5. Assessment3 - Comprehensive comparison 6. Conclusion & Implication
2 Introduction
3 Introduction
Business & Global Climate Change
• Global climate change with extreme weather disasters like intense storms, floods and droughts is becoming realized, imposing real costs on companies and the communities they help support.
• Climate change threatens facilities and operations, supply and distribution chains, and access to electricity and water. It can also prevent employees from coming to work and customers from buying products or services.
• Leading companies recognize climate change as both a risk and an opportunity.
• A growing number of companies are taking steps to strengthen their resilience to climate impacts, reduce their greenhouse gas emissions, produce innovative low.carbon technologies, and support policies enabling a smooth transition to a low.carbon economy. 4 Center for climate and energy solutions Introduction Leading companies for Global Climate Action
• Google, a global technology leader, carbon neutral since 2007 and sourcing 100% renewable electricity in 2017
• Tata Motors, the India’s largest automobile manufacturer, setting the goal of using 100% renewable energy across all its own operations by the year 2030. Sourcing around 16.25% of its electricity from renewable sources in 2017
• Swiss post, operating in the communication, logistics, retail financial and passenger transport markets, sourcing 100% of its electricity from renewable, “nature made basic” certified energies. Its entire fleet of electric vehicles powered by green electricity produced
• Apple, using 100% of the electricity from renewable sources in 2018 and investing in renewable energy projects to address upstream emissions
5 Introduction Research Background
▪ Korean companies are making efforts to publish their own Corporate Social Responsibility (CSR) reports or to disclose their carbon emissions information to the Carbon Disclosure Project (CDP).
▪ There is a need to assess the level of corporate goals and information disclosure at the NGO level.
6 Research Method
Targets of the Study
• Investigated companies:
Electrical and transportation equipment companies that issue Corporate Social Responsibility (CSR) reports and belong to the ‘Korea 200’, to which the CDP sent its annual information request in 2017. Electrical/Electronics/Telecom Industries: 16 Transportation/Logistics/Automobile Industries: 17
▪ Scope of investigation:
Open-access information in the CSR reports (33) of each
company and 2017 CDP report 7 Research Method
List of investigated companies
Sector Company Name ISU PETASYS Samsung Electronics (Samsung Elec.) KT Samsung Electro.Mechanics (SEM) LG Display Samsung SDI Electrical LG Electronics (LG Elec.) SK Innovation (16) LG Innotek SK Hynix LG Uplus SK Siltron LS C&S SK Telecom (SKT) LSIS STEMCO
Asiana Airlines (Asiana) Hyundai Heavy Industries (HHI) CJ Logistics KIA Motors DSME KORAIL GM Korea Korean Air (KAL) Transportation Hankook Tire KUMHO TIRE (17) Hyundai Glovis LG International.Corp. Hyundai Mobis Samsung Heavy Industries (SHI) Hyundai Mipo Dockyard (HMD) STX Offshore & Shipbuliding (STX) Hyundai Motor 8 Evaluation Indicators
GHG reduction target & performance (11) Information disclosure (10)
1.1. Time spans of targets 2.1. Credibility of disclosed formation and data
1.1.1. Long.term vision 2.1.1. Scope 1&2 GHG (CO2) 1.1.2. Target years 2.1.1.1. Absolute and Intensity 1.2. Range of targets 2.1.1.2. Time.series data 1.2.1. Geographical boundary 2.1.2. Scope 1&2 energy consumption data 1.2.2. Perspective of full.scope management 2.1.2.1. Absolute and Intensity 1.3. Climate targets 2.1.2.2. Time.series data 1.3.1. Target GHGs 2.1.3. Amount of renewable energy use 1.3.2. Emissions reduction target by criteria 2.1.4. Data boundary 1.3.3. Energy efficiency target 2.1.5. Measurement & disclosure of 1.3.4. Renewable energy target full-scope emissions 2.1.6. Third-party evaluation 1.4. Annual GHG reduction rate 2.2. Credibility of target setting 1.5. Status of achievement 2.2.1. Comparison of targets and results 1.6. Comparison btw performance and actions 2.2.2. Grounds of target setting 9 ※ Bold=key indicator Assessment Result 1 Targets & Performance
10 The Concept of Scope
Defining three Scopes: To help delineate direct and indirect emission sources, improve transparency, and provide utility for different types of organizations, climate policies, and business goals.
Scope 1 Scope 2 Scope 3 Avoided Emission Direct GHG emissions Electricity indirect GHG Other indirect GHG emissions Occurred outside of a product’s • From combustion in boilers, emissions • Consequence of the life cycle or value chain, but as a furnaces, vehicles, etc. • From the generation of activities of the company result of the use of that product • From chemical production in purchased electricity • Extraction and production of • Low-temperature detergents, process equipment consumed by the company purchases materials, fuel-saving tires, energy- transportation of purchased efficient ball-bearings, fuels, use of sold products teleconferencing services and services 11 Source: GHG Protocol Targets & Performance Long-term vision
Example of LG Display . Long-term vision: only 12 out of 33 companies set mid or long-term target. 6 companies have long-term target over 2040, these are all in the electrical equipment sector.
. Examples of major companies:
Companies establish environmental strategies and directions: KT ‘Carbon Impact 2020’, LG Uplus ‘Green 2020 environmental vision’ etc.
Samsung Electronics: Set goals by 2020 in 2008. Preparing to set up Science Based Target (SBT) for plan after 2020
LG Electronics: Set goals by 2020 in 2008 and planning mid- to long-term goals within 2018 12 Targets & Performance Target Years
Short-Term Mid-Term Long-Term
Target year Missing or unclear ~ 2020 2021 ~ 2029 2030 ~ 2039 2040 ~ 2049 2050 ~
Number of 10 11 3 3 4 2 companies Company SK Innovation Samsung Electronics KORAIL Samsung SDI KT SK Hynix Name ISU PETASYS LG Electronics Hyundai Mobis Hyundai Glovis LG Uplus SK Telecom Samsung SHI LG Innotek CJ Logistics Hankook Tire LG Display Hyundai HHI LSIS Samsung Electro- Hyundai HMD LS Cable & System Mechanics DSME SK Siltron STX O&S STEMCO Asiana Airlines Hyundai Motor KUMHO TIRE Kia Motors All the companies in LG International – Korean Air Electrical equipment sector Corp GM Korea
13 ※ The time period follows the Mid-term and Long-term period of the Master Plan for National Energy Targets & Performance Perspective of full-scope management
Example of KT . 20 companies have at least one target (scope 1 and 2). 9 of those are making efforts in Scope 3 (Hankook Tire, Hyundai Motor, KORAIL, Hyundai Glovis, LG Electronics, Samsung Electro-Mechanics, Samsung Electronics, KT, SK Telecom).
. Companies are mainly focusing on qualitative efforts rather than setting scope 3 emission targets.
. Companies are making efforts to reduce GHG Emissions by operating RES or enhancing energy efficiency of products.
. The highest score: KT, SK Telecom, 14 Samsung Electronics, LG Electronics Targets & Performance Emissions reduction target by criteria (Scope 1,2)
Absolute . Companies in the electrical equipment sector 6 & Intensity High generally received high scores. Targets Samsung SEM, Samsung SDI, LG Elec., SKT, SK Hynix, SK Siltron . Most of the companies stated only one of the targets in terms of absolute, intensity and BAU. Absolute 9 Targets LG Display, LG Uplus, LG Innotek, LSIS, KT, STEMCO, . With the exception of those without targets, KORAIL, KAL, Hyundai Mobis the reduction targets were set by 5 companies Intensity 3 ‘from the BAU level’ and 12 companies ‘from Targets Samsung Elec., Hankook Tire, Hyundai Motor the base year’. . LG Electronics has an intensity target per BAU 3 Targets revenue in KRW to reduce 40% by 2020 and Kia Motors, GM Korea, Hyundai Glovis total amount by 150K tons(10.3%) compared to Low 2008. No 12 Targets KUMHO Tire, SHI, STX, DSME, CJ Logistics, LG Intl., Asiana, . Samsung Electro Mechanics aims to reduce 7% HMD, HHI, ISU PETASYS, SK Innovation per revenue in KRW by 2050 compared to 2014, Number of Companies a total reduction of 57% by 2040. 15 1-3-4 Renewable energy target
Quantitative targets Specific indices such for Scope 1,2 as contribution to • Samsung Electronics renewable use Scope 3 emission including green reduction via Overseas target: 100 renewable power certificates, renewable energy in USA, Europe and China by 2020 etc. use Domestic target: 20% renewable energy by 2030
▪ KORAIL
Planning to build 3MW solar power Samsung Electronics Samsung SDI generation facility.
SK Telecom KORAIL 16 1-4 Annual GHG reduction rate of Scope 1&2 absolute target
GHG reduction
rate ≧ 1.5% 9 LG Display, KT, LG Innotek, LG Uplus, Samsung Electro-Mechanics, Samsung SDI, SK Hynix, SK Telecom, STEMCO
1.5 > rate ≧ 0.75% 2 LG Electronics, LSIS
0.75% > rate 4
SK Siltron, Hyundai Mobis, KORAIL, Korean Air 17 1-6 Comparison between targets and performance
Example of Samsung Electronics
. Only 4 companies stated comparison between targets and performance.
18 Assessment Result 2 Information Disclosure
19 Disclosure of scope 1&2 GHG emission data
1 company SK Siltron
5 companies 10 companies 10 companies 7 companies LG Innotek H.H.I Hyundai Motor ISU PETASYS LG Uplus Hyundai Mipo Korean Air KT LS C&S Hyundai Glovis CJ Logistics LG Electronics Trans Elec LSIS Asiana Airlines KUMHO TIRE LG Display Samsung Electronics LG International 17 Hyundai Mobis SK Innovation 16 Samsung SEM KORAIL KIA Motors Samsung SDI S.H.I Hankook Tire SK Hynix STX SK Telecom GM Korea STEMCO DSME
Both absolute and intensity data Only absolute data 20 Only intensity data H.H.I : Hyundai Heavy Industries, SHI : Samsung Heavy Industries Disclosure of Scope 1&2 energy consumption data
1 company SK Siltron
5 companies 10 companies 11 companies 6 companies LG Innotek Asiana Airlines CJ Logitics ISU PETASYS LG Uplus DSME Hankook Tire KT LS C&S GM Korea Hyundai Mobis LG Electronics Trans Elec LSIS H.H.I Hyundai Motor LG Display Samsung Electronics Hyundai Mipo 17 Korean Air SK Innovation 16 Samsung SEM Hyundai Glovis KUMHO TIRE Samsung SDI KIA Motors SK Hynix KORAIL SK Telecom LG International STEMCO S.H.I STX
Both absolute and intensity data
Only absolute data 21 Only intensity data H.H.I : Hyundai Heavy Industries, SHI : Samsung Heavy Industries 2-1-3 Renewable Energy Use
LG Electronics All the Samsung Electronics quantitative KT data for KORAIL renewable Kumho Tire use Hyundai Motors disclosed GM
Some of the Hyundai Heavy Industries quantitative Samsung SDI data for SK Telecom renewable LG Uplus use LG Innotek disclosed Information disclosure about amount of renewable energy use by KORAIL 22 2-1-5. Measurement & disclosure of full-scope emissions
Disclose emissions data
Scope 1, 2 and All of Scope 1, 2 part of Scope 3 Scope 1, 2 and and 3 with each as well as for part of Scope 3 15 category for “avoided Scope 3 emissions”
KORAIL Samsung SEM LG Uplus Other 27 KT LSIS companies SK Telecom 23 Assessment Result 3 Comprehensive Comparison
24 Performance Level in terms of Evaluation Indicators by Sector
Electrical Equipment Companies Transportation Equipment Companies
1. Annual GHG reduction rate 2. Emissions & Energy 1. Target covers all GHGs data disclosed 2. Third-party evaluation Excellent 2. Data boundary clearly described
1. Perspective of full-scope management Poor 1. Target covers all GHGs 1. Unit of emissions reduction target 1. Long-term vision 1. Annual GHG reduction rate 1. Energy efficiency target 1. Comparison between target and performance 1. Renewable energy target 2. Amount of renewable energy use disclosed 2. Comparison of targets and results 2. Grounds of target setting
Excellent: More than 50% Companies with ‘Full’ score 25 Poor: More than 50% Companies with ‘0’ score Ranking of investigated companies
Overall Targets & Information Overall Targets & Information Elec. sector scores Performance disclosure Trans. sector scores Performance disclosure (100) (50) (50) (100) (50) (50) 1 SK Telecom 84.4 43.8 40.6 1 KORAIL 61.8 19.8 42.0 2 KT 78.4 32.6 45.8 2 Hyundai Mobis 53.0 16.1 36.8 Samsung Hankook Tire 52.3 16.9 35.4 3 Electro-Mechanics 77.2 29.9 47.2 3 4 SK Hynix 75.8 36.2 39.6 4 Hyundai Motors 50.4 12.2 38.2 5 Samsung SDI 70.2 27.9 42.4 5 Hyundai Glovis 49.3 16.7 32.6 6 Samsung 6 Korean Air 47.4 12.0 35.4 Electrons 68.2 24.5 43.8 GM Korea 47.2 10.4 36.8 7 LG Display 65.5 28.6 36.8 7 KIA Motors 42.7 11.5 31.3 8 LG Electrons 63.4 22.4 41.0 8 Average 8.0 31.0 9 LG Uplus 59.5 24.5 35.1 39.0 Average 58.2 21.9 36.3 ※ Only the companies above average 26 Ranking of investigated companies
90 Total score 84 78 77 76 80 70 68 70 Industry 66 63 60 62 average 60 58 53 52 50 49 50 47 47 Industry 43 average 40 39 30
20
10
0
Targets & Performance Information Disclosure 27 ※ Only the companies above average Comparison of average scores for 7 Key Indicators Electrical/Electronics/Telecom Industries
Group1 Group2 Group 1 : Top 5 companies ( >70 points) 1-1-1.Long-term vision 12 SK Telecom 10 1-3-2. Emissions KT 2-1-6. Third-party 8 reduction target by Samsung Electro-Mechanics evaluation 6 criteria SK Hynix 4 Samsung SDI 2 2-1-5. 0 Group 2 : Next top 4 companies 1-3-3. Energy- Measurement & (70 > score >average 58.2) saving target disclosure of … Samsung Electronics 1-4. Annual GHG LG Display 1-3-4. Renewable reduction rate of energy target LG Electronics absolute target LG Uplus 28 Comparison of average scores for 7 Key Indicators Transportation/Logistics/Automobile Industries
Group1 Group2
1-1-1.Long-term Group 1 : Top 4 companies vision ( >50 points) 12 10 1-3-2. Emissions 2-1-6. Third-party KORAIL 8 reduction target by evaluation Hyundai Mobis 6 criteria Hankook Tire 4 Hyundai Motors 2 0 2-1-5. Group 2 : Next top 4 companies Measurement & 1-3-3. Energy- (50> score > 40) disclosure of full- saving target scope emissions Hyundai Glovis Korean Air 1-4. Annual GHG 1-3-4. Renewable GM Korea reduction rate of energy target absolute target KIA Motors
29 Comparison of average scores for 7 Key Indicators Between the Electrical/Electronics/Telecom Industries (9) and the Transportation/Logistics/Automobile Industries (8) Electrical Equipment companies (9) Transportation Equipment companies (8)
1-1-1.Long-term vision 12 10 1-3-2. Emissions reduction 2-1-6. Third-party evaluation 8 target by criteria 6 4 2 0 2-1-5. Measurement & disclosure of full-scope 1-3-3. Energy-saving target emissions
1-4. Annual GHG reduction 1-3-4. Renewable energy target rate of absolute target 30 Comparison with Japan
Electrical/Electronics/Telecom Industries Transportation/Logistics/Automobile Industries
Korea Japan Korea Japan Overall Average 58 49 Overall Average 39 47
Highest 84 82 Highest 62 88
Lowest 29 15 Lowest 20 2
Targets & Performance Targets & Performance 22 19 8 19 Average Average
Information Disclosure Information Disclosure 36 29 39 28 Average Average
Evaluated companies 16 47 Evaluated companies 17 25 31 Comparison of average scores for 7 Key Indicators Between Korea and Japan (Electrical/Electronics/Telecom Industries)
Korea Japan 1-1-1.Long-term vision 12 10 1-3-2. Emissions reduction target 2-1-6. Third-party evaluation 8 by criteria 6 4 2 0 2-1-5. Measurement & disclosure 1-3-3. Energy-saving target of full-scope emissions
1-4. Annual GHG reduction rate of 1-3-4. Renewable energy target absolute target 32 Comparison of average scores for 7 Key Indicators Between Korea and Japan (Transportation/Logistics/Automobile Industries)
Korea Japan
1-1-1.Long-term vision 12 10 1-3-2. Emissions reduction target 2-1-6. Third-party evaluation 8 by criteria 6 4 2 0 2-1-5. Measurement & disclosure 1-3-3. Energy-saving target of full-scope emissions
1-4. Annual GHG reduction rate of 1-3-4. Renewable energy target absolute target 33 Greenhouse Gas Emission
Million Absolute Greenhouse Gas Emission (tCO₂eq) # = Revenue Rank 9 Top 7 companies Samsung Electronics # 1 8
7
6 LG Display # 8 5
4 KT # 9 Hyundai Heavy # 12 SK Hynix # 7 3 Industries
2 KORAIL # 25 Hyundai Motors # 2 1 2011 2012 2013 2014 2015 2016 2017 34 Greenhouse Gas Emission
Intensity of Greenhouse Gas Emission (tCO₂eq/won) Intensity of Greenhouse Gas Emission (tCO₂eq/won) ※ Only Companies (15) whose intensities have decreased from 2011 to 2017 ※ Only Companies (16) whose intensities have increased from 2011 to 2017 80 Hankook Tire KIA Motors Hyundai Motor DSME Kumho Tire Hyundai Mobis 18 Samsung Heavy Industries GM Korea KORAIL Korean Air LG Electronics Samsung SEM STX offshore&Shipbuliding CJ Korea Express 70 Asiana Air Hyundai Glovis SK Hynix LG Display Samsung SDI STEMCO 16 Hyundai Mipo Dockyard Hyundai Heavy Industries KT LG Uplus LG Innotek Isu Petasys SK Innovation 60 14 Samsung Electronics LS C&S SK Telecom LSIS STX 50 12 LSIS STEMCO 10 40 KORAIL
8 30 6 20 4 SK Hynix 10 2
0 0 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 35 Relationship b/w Scores & Carbon Intensity Change
Score vs. the change in carbon emission intensity from 2011 to 2017
4 y = -0.0207x + 1.1402 R² = 0.2193 . The score and the change is 3 top group in Elec. sector slightly related to each other top group in Trans. sector
2 . The higher the score, the more
the reduction of greenhouse gas 1 emission intensity 0 10 20 30 40 50 60 70 80 90 . In a long term perspective, the exact targeting and information The change The in carbon emission -1 disclosure could be a key factor to reduce carbon emission -2 The score 36 Relationship b/w Scores & Revenue Change
The change in companies’ revenue from 2011 to 2017 vs. the score
top group in Elec. sector 90 y = 12.031x + 46.822 R² = 0.1474 top group in Trans. sector 80 . The change and the score are 70 slightly related to each other 60 50 . The bigger the change, the more 40 the score 30 20 . In a long term perspective, the 10 growth potential could be related 0 to the will to reduce carbon -1 -0.5 0 0.5 1 1.5 2 emission The change in the revenue 37 Correlation between Foreign Investor Ratio and Score
100 90
80 70 y = 0.9247x - 13.552 R² = 0.4023 60 50 40 30
Foreign Investor Ratio Investor Foreign 20 10 0 0 10 20 30 40 50 60 70 80 90 Score
Elec. sector Trans. sector 38 Conclusion & Implication
39 Conclusion & Implication
• Only 12 of 33 companies set mid- and long-term vision. Samsung Electronics is preparing to set the target considering SBT, but no one has SBT initiatives yet. • The companies with mid- to long-term goals tend to get high total scores. • Almost all companies disclose their GHG emission data but only a few of companies reduced GHG emissions. In general, companies are poor at setting energy-saving targets and renewable energy targets. • There are several companies using renewable energy, but Samsung Electronics and SK Telecom are the only two companies setting quantitative targets. • 50% of investigated companies have increased their emissions by 2017
compared to 2011, which contrasts with the global companies that already 40 achieved the carbon-neutral goal. Conclusion & Implication
▪ The electrical equipment companies are doing better than the transportation companies especially in ‘the targets and performance’ category. This is partly because of global market pressure.
▪ All investigated companies were certified for their GHG data by the third parties. This is because Korean government has been implementing ‘GHG and Energy Target Management Scheme’ from 2010 and ‘GHG emission trading system’ from 2015. The result implies the importance of government’s policy.
▪ Performance of public enterprises such as KT and Korail are noteworthy, implying that government’s policy signal and leading role are important.
▪ Companies with designated staffs, which have relatively bigger economic capacity, showed better performance. 41 Conclusion & Implication
▪ Compared with Japan, Korean electrical equipment sector received a slightly higher score, but Korean transportation sector received significantly lower scores in ‘the target and performance’ category.
▪ Average scores are positively related with the foreign investors, implying that investors who might be interested in climate change could influence companies’ climate action. The evaluation scores are slightly related to the change in intensities of carbon emission and companies’ revenue, implying that climate actions of those companies contribute to their economic performance improvement.
▪ International efforts including the Paris Agreement and UN’ SDGs influence
companies climate actions. 42
Thank You