2014-2015 Hyundai Engineering Sustainability Report About This Report
About this Report This report is Hyundai Engineering’s fourth sustainability report that includes the company’s performance in the economic, social, and environmental responsibilities. While maintaining the framework of the previ- ous report, the key issues reflecting the construction industry trends and stakeholder opinions are reported in depth through case studies. In particular, it contains the company’s activities and performances of sustainability strategy and action plans.
Reporting Scope and Boundary The reporting covers the Seoul Head Office and domestic and overseas project sites, and it is separately noted if the scope or boundary of the data of overseas subsidiaries and projects sites is different. The eco- nomic data may be different from that of the previous report due to the merger and changes in measuring standard. Some environmental data have been confined to those of some domestic and overseas project sites. There may be some differences from the figures contained in previous reports as a result of correc- tions or revisions made after year-end closure.
Reporting Period The report covers the company’s management performance for the two years from 1 January 2014 to 31 December 2015. For quantitative performance, track records of the past three years have been disclosed for readers to identify the changing trends. Information associated with 2016 is also reported for some key agenda or significant activities and performances.
Reporting Preparation and Verification Criteria Hyundai Engineering prepared this report in accordance with the Core Option provided under the GRI G4 Guidelines reflecting the GRI supplementary indicators given in the construction and real estate section, ISO 26000, the UNGC 10 Principles and UN SDGs. Financial information in this report was prepared through the accounting audit of PwC, an independent auditing agency. Non-financials were verified by Deloitte Anjin LLC, an independent assurance agency, and the statement of verification is available on p.70~71.
Cover Story
‘Steering On Values’ is Hyundai Engineering’s slogan that embraces its will to drive its sustain- ability management based on the values that are significant to its key stakeholders. The graphics of the cover describes Hyundai Engineering’s commitment to lead a better future infinitely. Contents
Intro
Highlights & History 4 CEO Message 6
Sustainability Overview
About Hyundai Engineering 10 Hyundai Engineering’s Vision 12 Strategies for Sustainability Management 14 Governance 16 Ethics Management 18 Sophistication of Risk Management 21
Sustainability Issues
Value Creating Future Growth Engines 27 Management Strengthening Quality Management 31 Expansion of Customer Satisfaction Management 33 HSE Upgrading the HSE Management System 35 Management Spread of Environmental Management 36 Enhancement of Safety and Health Management 40 Talent Strengthening Global Talent Competency 43 Management Spread of the Talent-oriented Corporate Culture 45 Win-Win Implementation of Shared Growth 49 Management Fair Trades by Establishing a Fair Trade Order 52 Sharing Strategic Implementation of Social Contribution 55 Management Expansion of Global Social Contribution 58
Sustainability Review
Economic Performance 62 Social Performance 63 Environmental Performance 66 Stakeholder Engagement and Materiality Testing 68 The 3rd Party Assurance Statement 70 GRI G4 Index 72 Key Awards & Membership in Associations 76 2014 - 2015 Hyundai Engineering Sustainability Report
Highlights
HSE Management
•Established the GHG inventory system in 2015 •Achieved 15 million man-hours of zero accidents in the Ustyurt Gas Chemical Complex (UGCC) in Uzbekistan
Value Management Talent Management •Ranked 7th in 2016 Appraisal of Execution Capacity/ Credit Rating of AA- •Acquired the Family-friendly Corporation Cer- •Ranked 21st in ‘The 2016 Top 225 International De- tification from the Ministry of Gender Equality sign Firms’ by the Engineering News-Record (ENR) and Family •Became the only major domestic construction company to be nominated as one of the ‘Top 100 Companies with Best Performance in Job Creation of 2015’
History
1970s~80s 1990s 2000s
“Technological Independence and Do- “Growth into Total Engineering Company” “System Establishment and Management mestic and Overseas Market Expansion” Advancement” 1974 •Founded (Feb. 11) 1994 •Selected as the ‘Most Excellent Company’ 2000 •Acquired the Iran South Pars Phase 1980 •Merged with Halla Engineering and won the ‘Best CEO Award’ (KMA) 1 and 2 Project (design and engineering 1985 •Executed the first overseas consulting 1994 •Received ISO 9001 (Quality Management of world’s largest gas plant) project among Korean private companies System) certification 2001 •Received the New Environmental (5th and 6th power projects in Nepal, 1996 •Won the Prime Minister’s Award at the 2nd technology Certificate for the HANT etc.) Environmental Technology Award (HAF (Hyudai Advanced Nutrients Treatment) 1988 •Merged with the Engineering Center of Process Technology) process for the first time in Korea Hyundai Heavy Industries Co., Ltd. •Received ISO 14001 (Environmental 2008 •Won the grand prize in construction engi- Management System) certification neering in Korea Technological Innovation 1998 •Developed the first Sludge Composter in Management Award Korea, named Hyundai Sludge Composter 2009 •Received OHSAS 18001 (Safety and Health (HSC) Management System) certification •Opened the e-procurement system
4 Sharing Management
•Honored in the Shared Growth Sector of the ‘2nd Porter Prize for Excellence in CSV’ •Opened the Welding Training Center in Turk- menistan
Ethics Management Win-Win Management •Conducted the first company-wide ethics diagno- sis and tailored ethics training •Rated ‘Excellent’ in the 2015 Win-Win •Initiated the establishment of the Compliance Index System in 2016 •Held the regular Partner CEOs Seminars
2010s 2015s 2016s
“Continuous Challenge based on a 40-year-long “Steps Towards Becoming A Sustainable “Aim for the World’s Best Company” Success” Company” 2010 •Ranked first in the Korean Sustainability Index (KSI) 2015 •Ranked first in order acquisitions 2016 •Ranked 21st in The Top 225 2011 •Acquired the certification of Korea Electric Power abroad (USD 5.76 billion/according International Design Firms by the Industry Code (KEPIC) to the International Contractors Engineering News-Record (ENR) of 2012 •Won the grand prize at the U.S. Spotlight Awards Association of Korea) the U.S. with the HEC Sustainability Report •Ranked Industry No.1 in the ‘Best •Ranked 7th in the Appraisal of 2013 •Won the presidential commendation of the govern- Companies to Work for’ Execution Capacity (The Ministry of ment decoration for the merit of job creation •Won the second Porter for Excellence Land, Infrastructure and Transport) 2014 •Acquired the Corporate Credit Rating of AA- in CSV •Launched an integrated company (merged with •Joined the Korean Association for Hyundai AMCO) Supporting UN SDGs
5 2014 - 2015 Hyundai Engineering Sustainability Report
CEO Message
July 2016
CEO & President of Hyundai Engineering Kim, Wee Chul
6 Dear distinguished stakeholders, I would like to extend my gratitude to you for your continued interest in and support for Hyundai Engineering. Hyundai Engineering is making strides as a global engineering company by creating excellent performance both socially and economically driven by its unique corporate culture and differ- entiated management strategies since its foundation. Under the strategy of creating new economic values by fulfilling corporate social responsibil- ity, we have been making all-out efforts to establish a system for sustainability management based on the motto, ‘Steering on Values’, since 2014. We are promoting our sustainability management strategy in five core aspects for the val- ues that our key stakeholders consider important. In addition, we are striving to enhance the internalization of sustainability management through such organizations as the Steering Committee and Value Facilitators.
Hyundai Engineering will provide better values to customers by strengthening its inherent competitiveness and securing future growth engines, and create a sustainable future through differ- entiated growth strategies.
Accordingly, Hyundai Engineering achieved excellent outcomes in each core area of sus- tainability management: the green certification for carbon reducing manufacturing technol- ogy, one of the Top 100 Excellent Companies with Best Performance in Job Creation, Fami- ly-friendly Certified Corporation, and the Shared Growth Sector of the ‘2nd Porter Prize for Excellence in CSV’, in 2015. Furthermore, we are making more vigorous efforts to become both a flexible and strong company befitting the global standard by redefining and sharing our unique corporate culture through the establishment of the “New Corporate Culture”. By doing so, Hyundai Engineering set the three aims, ‘Pioneer, Professional and Humanist’ as cultural forces to continue sustainable future growth, and strives to create a future-ori- ented corporate culture. Hyundai Engineering will provide better values to customers by strengthening its inherent competitiveness and securing growth engines for the future. The company will also make ef- forts to establish differentiated growth strategies and bring out a sustainable future growth. Despite the difficult business environment due to the continuous domestic and international economic downturn, every employee at Hyundai Engineering, including myself, will consider it an opportunity. We will ensure that Hyundai Engineering becomes a company that creates and shares sustainable future values along with stakeholders based on the fundamentals of a company, the corporate culture and management strategies. I sincerely ask for your continuous interest and encouragement, and hope that you will join us on a journey towards Hyundai Engineering’s bright future. Sincerely,
7 01
SUSTAINABILITY OVERVIEW About Hyundai Engineering 10 Hyundai Engineering’s Vision 12 Strategies for Sustainability Management 14 Governance 16 Ethics Management 18 Sophistication of Risk Management 21
01 SUSTAINABILITY OVERVIEW 2014 - 2015 Hyundai Engineering Sustainability Report
About Hyundai Engineering
A Global Engineering Company that Creates the Future with the Best Technology Since its foundation in 1974, Hyundai Engineering has provided top-notch engineering services with world- class competitiveness in various areas including process plants, power & energy plants, commercial and res- idential building works, infrastructure & environment, and asset management. The company has performed creative businesses by expanding its entry into new and renewable energy sectors in water, the environment, nuclear power, wind power, solar power and tidal power, thereby enhancing the quality of people’s lives and contributing to the growth of the national economy. Hyundai Engineering provides optimized technologies and solutions catered to customer needs in the Middle East, Europe, Africa, Latin America and Central Asia, as well as North America. As of June 2016, the company is running business at 172 project sites (including the designing business) in 28 countries by operating 18 subsidiaries and 23 branches.
About Hyundai Engineering (As of the end of 2015)
Company name Hyundai Engineering Co., Ltd.
Date of foundation February 11 1974
Address 75 Yulgok-ro, Jongno-gu, Seoul, Korea
KRW 6,412 billion (Liabilities: KRW 3,727 billion, Total assets Equity: KRW 2,685 billion)
Volume or orders received KRW 10,016 billion
Sales KRW 7,349 billion
Number of employees 5,832
Process Plant, Power & Energy Plant, Building Works, Business portfolio Infrastructure & Environment, Asset Management
Business Portfolio
Process Power & Building Plant Energy Plant Works
Oil & Gas Combined Cycle Power Plant Apartment, Officetel Chemical & Fertilizer Coal-Fired Power Plant Complex building, Industrial facility Petrochemical Cogeneration Power Plant R&D Center Refinery Nuclear Power Plant Culture/Education/Sports facility Offshore Facilities Power Transmission/ Hotel, Office, Sales facility, LNG Facilities Substation & Distribution Public facility/Army installation, Steel & Nonferrous Metals Geothermal Power Plant Medical facility Diesel Power Plant
•GMS Northern Power •Ethane Cracker, PE, PP Project Major Transmission Project in Laos in Turkmenistan •Kia Motors Project in Mexico Projects •Bacman 3 (35MW) •Kandym Field Gas Processing •Hillstate Gwanggyo in Korea (2015) Geothermal Plant Project in Plant Project in Uzbekistan the Philippines
Sales* (2015) KRW 2,375 billion KRW 918 billion KRW 2,938 billion
10 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Countries with Project Entry Infrastructure & Asset Hyundai Engineering is expanding its overseas market through Environment Management localization and exploration of new markets.
Harbor Facility Management Roads & Bridges Property Management Process Plant Complex Development Consulting for Lease Greece, Nigeria, Algeria, Tunisia, Saudi Arabia, United Arab Emirates, Hydro Power & Water Resource Consultancy for P&S Oman, Iran, Iraq, Yemen, Kuwait, Qatar, Uzbekistan, Kazakhstan, Turk- Development (Purchasing & Selling) menistan, Taiwan, Bangladesh, Vietnam, India, China, Thailand, Pakistan, Water Supply & Sewerage System Global Asset Management Korea, Mexico and Venezuela Renewable Energy Environmental Facilities Power & Energy Plant Bulgaria, Romania, Libya, Madagascar, Algeria, Kenya, Saudi Arabia, Iraq, Kuwait, Nepal, Malaysia, Mongolia, Bangladesh, Vietnam, Indonesia, Thailand, Philippines, Korea, Nicaragua, Uruguay and Chile
Building Works •Highway Line No. 30 Sang- Germany, Russia, Slovakia, Czech, Libya, Dubai, Turkey, Turkmenistan, Asset management for ju-Yeongdeok Construction • Vietnam, India, China, Cambodia, Korea, Australia, U.S., Mexico, Brazil Woori W Tower in Korea Work (Section 11) Project and Belgium •Asset management for •Rajamandala Hydroelectrical the KT office building in Infrastructure and the Environment Power Plant Project in Korea China, Thailand, Equatorial Guinea, Oman, Azerbaijan, Turkmenistan, Indonesia Nepal, Sri Lanka, Singapore, Indonesia, Cambodia, Pakistan, Korea, Fiji and Colombia
Asset Management KRW 549 billion KRW 561 billion Germany, Russia, Slovakia, Czech, India, China, Korea and the U.S.
*Others: KRW 8 billion 11 2014 - 2015 Hyundai Engineering Sustainability Report
Hyundai Engineering’s Vision
Hyundai Motor Group’s Vision & Mission
Management Philosophy
We realize the dream of mankind by creating a new future through ingenious thinking and continuously challenging new frontiers.
Unlimited Sense of Responsibility Realization of Possibilities Respect for Mankind
Our vision of unlimited responsibility We offer value, better products and for the safety and happiness of the We always move forward to the next better services for people, and make customer is realized in our quality man- goal after each success, and create a the lives of our customers more af- agement, which leads to the creation better future with a challenging spirit. fluent. of unlimited value for our society.
Vision
Under Hyundai Motor Group’s vision of “Together for a better future,” an embodiment of our belief and commitment, we provide satisfaction to our customers, and think beyond the external growth of the corporation to share our success with a variety of stakeholders. Together for a better future
Core Values
Customer Challenge Collaboration People Globality
Understanding Pursuing the customer needs top quality Mutual respect Fair treatment Legal com- Sharing Synergy pliance
Satisfying Commitment Internal Capacity Capacity customers Driving Global Creativity Trust building execution Passion force External citizenship Global Diversity compe- Shared tency Strengthening Growth customer re- lationships
We promote a customer We refuse to be compla- We create synergy through We believe the future of We respect the diversity of -driven corporate culture cent, embracing every op- a sense of ‘togetherness’ our organization lies in the cultures and customs, as- by providing the best qual- portunity for greater chal- that is fostered by mutual hearts and capabilities of pire to be the world’s best ity and impeccable service lenge, and are confident in communication and coop- individual members, and at what we do, and strive with all values centered on achieving our goals with eration within the compa- will help them develop their to become a respected glo- our customers. unwavering passion and in- ny and with our business potential by creating a co- bal corporate citizen. genious thinking. partners as well. rporate culture based on respect for their talent.
12 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Hyundai Engineering’s Vision 2020
Mission At Hyundai Engineering, with an unmatched combination of knowledge, skill, experience and technology we provide engineering, procurement, construction and maintenance services, and we simultaneously practice the core elements of our management by reinforcing ethics, creating value, cultivating talents, growing together and simply sharing to improve the quality of life for the people in the communities where we operate, in Korea and around the world.
Vision GLOBAL PREMIER ENGINEERING PARTNER
Global Premier Engineering Partner A global performing We believe in providing From business planning We improve the leader to the highest best quality and cutting to operation & main- communities where we standards edge technology tenance, we provide work and live to ensure complete services for a a sustainable future for project’s cycle generations to come
Long-Term Strategy Global Market Development Strengthening Businesses
•Strategic seizing of new markets •Risk management for preemptive •Use of the Group’s domestic & responses overseas network •Strengthening management competency for the successful execution of projects
Long-term Strategy
Business Diversification Enhanced Management System
•Initiating future-growth engine •Creating a corporate culture based on the projects and securing balanced business core values of the Group portfolios •Intensifying talent & organizational •Maximizing internal synergies and competencies of global standards creating synergies within the Group •Establishing and strengthening the sustainability management system
Goal
Appraisal of ENR Ranking Orders Revenue Execution Capacity (Int’l Design Firms)
KRW 16 trillion KRW 11 trillion 7 th 15 th
13 2014 - 2015 Hyundai Engineering Sustainability Report
Strategies for Sustainability Management
System for Sustainability Management Hyundai Engineering has established and operates an efficient sustainability management system. To this end, the company identifies areas of interest for each stakeholder by selecting core factors for sustainability manage- ment for each of them. The company has selected strategic tasks as medium and long-term tasks in five core areas and in the aspect of ethics management.
Mission
At Hyundai Engineering, with an unmatched combination of knowledge, skill, experience and technology we provide engineering, procurement, construction and maintenance services, and we simultaneously practice the core elements of our management by making ethics a cornerstone, creating value, cultivating talents, growing together and simply sharing to improve the quality of life for the people in the communities where we operate, in Korea and around the world.
Sustainability Management Charter
We are committed to becoming a prosocial company by performing systematic economic, social and environmental activities focusing on our stakeholder values
Core Factors Value Management HSE Management Talent Management
•Strengthening quality management, •Enhancing safety & health •Conducting activities to secure top and generating stable profits through management and strengthening talents to reinforce business the initiation of prospective business environmental management by competencies projects focusing on HSE management •Supporting the management of •Continuously raising the corporate •Guaranteeing the wellbeing of various training programs and Stakeholder value by intensifying the competency employees and workers through the career development of employees for Requirements of eco-friendly technologies safe management and operation of strengthening their competency •Enhancing corporate competitiveness sites •Expanding efforts to promote the by intensifying internal and external •Engaging in resolving global respect for employees’ diversity by customer satisfaction management environmental issues through establishing a system for human rights activities for climate change response management
•Reinforcing on-site quality management •Strengthening the HSE management •Securing top talents continuously Strategic Tasks of •Intensifying eco-friendly technological system •Strengthening the development of 2014~2016 competencies core talents
•Establishing the quality evaluation system •Completing the setup of the GHG •Developing and applying an evaluation •Conducting the on-site quality evalua- inventory system for top foreign talents tion (162 sites) and special inspection •Establishing management regulations •Acquiring the certification for an (24 times) and operating them for the Head excellent family-friendly company Activities of •Implementing quality training for Office and domestic sites •Diagnosing the corporate culture 2014~2016 employees appointed to domestic and •Completing the development of online and managing a task force for a new overseas sites (81 times) training for HSE corporate culture •Achieving eco-friendly technology •Distributing HSE training materials •Devising a competency model for certifications (5 cases) and on sites and producing them in four major job functions technological development (2 cases) languages •Establishing the setup of an HRD system
•Establishing a management system for •Reducing risks by strengthening •Preventing social issues on human Future customer satisfaction on-site safety and health management rights in Hyundai Engineering and Directions •Strengthening corporate competitiveness by •Raising responsiveness to climate partners by establishing a system for raising the satisfaction of internal customers change human rights management
•Implementing activities to strengthen •Sophisticating the on-site safety and •Establishing and monitoring strategies Strategic internal/external customer satisfaction health management system for human rights management Tasks of 2017~ •Strengthening the execution of strate- gies to respond to climate change
14 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Governance for Sustainability Management Hyundai Engineering shared this sustainability management system with the managers in charge, team leaders and officers of each division. It also plans to share the future sustainability management system, strategic tasks and action plans with its key external stakeholders (customers, partners, peer businesses, local communities, etc.) as well as its internal stakeholders.
Operational Status
Name of organizations Key agenda Frequency
Steering Committee Semiannual inspection of strategic tasks progress and feedback Semiannually Information sharing concerning items promoted and required for Value Facilitator Quarterly collaboration among organizations
Strategic Tasks for Sustainability Management In order to implement systematic strategies for sustainability management, Hyundai Engineering established core values for each stakeholder and devised and continued to initiate 10 strategic tasks. The company selected seven strategic tasks for 2017 and onwards, and plans to set action plans for each strategic task and systemi- cally implement them.
Win-Win Management Sharing Management Ethics Management
•Expanding activities to support excellent •Strengthening social contribution activities with a •Establishing a system for sustainability partners, and exploring and developing overseas focus on global sites management partners •Initiating community-based social contribution •Spreading training for ethics management and •Pursuing win-win management by operating activities by resolving social issues in a region taking the initiative to facilitate it programs to support shared growth where a site is located •Taking the initiative to sophisticate the system for •Strengthening activities to support the setup of •Conducting social contribution activities by ethics management encompassing internal and partners’ sustainability management systems dynamically utilizing business competency external stakeholders in business operations
•Exploring partners and strengthening support •Expanding global social contribution •Settling the Sustainability Management for them Committee •Facilitating win-win cooperation for shared •Sophisticating the ethics management system growth
•Training for partners’ overseas entry •Establishing the New Hope School •Launching the code of conduct within the code •Activities to support excellent partners (No. 3 and No. 4) of ethics (increasing opportunities to take part in •Engaging in medical volunteering aligned with •Diagnosing ethics management and bidding, etc.) each site implementing the pledge •Expanding the overseas vendor pool •Managing the track records of overseas sites •Training on ethics management: over 24 times •Supporting training for partners •Supporting activities in overseas sites •Conducting ethics management communication •Signing contracts for the contribution of (giving mileage points, inspecting appropriate 17 times a year (posters, letters, newsletters, etc.) investment sources for shared growth and technologies) training •Initiating financial support programs
•Preventing potential CSR risks through the •Enhancing the social awareness of Hyundai •Strengthening the system for ethics management current status check of partners Engineering by strengthening global site-oriented to intensify activities to prevent the corruption social contribution activities and irregularities of internal and external stakeholders in business operations
•Strengthening partners’ competency for •Strengthening global CSV (Creating Shared Value) •Expanding the scope of the operation of ethics sustainability management activities management and sophisticating the monitoring system
15 2014 - 2015 Hyundai Engineering Sustainability Report
Governance
Shareholder Status The total number of shares (common shares) issued by Hyundai Engineering stood at 7,595,341 as of the end of June 2016. The largest shareholder is Hyundai Engineering and Construction, which holds 38.6% of the total number of issued and outstanding shares.
Others 10.4%
Hyundai Engineering Co., Ltd. 4.3%
Jung, Mong Koo 4.7% Hyundai Engineering & Construction 38.6%
Hyundai MOBIS 9.3%
Kia Motors Corporation 9.3%
Hyundai Glovis 11.7% Jung, Eui Sun 11.7%
1) As of the end of June 2016 2) Changes in the equity ratio of the largest shareholder due to the merger in April 2014 (Hyundai E&C’s equity ratio: 72.6% → 38.6%)
Composition and Operation of the Board
Board Composition Hyundai Engineering’s board of directors consists of three internal executive directors, including the represent- ative director, and one non-executive director as of the end of June 2016. The representative director serves as the chair of the board. The directors are elected by a majority of affirmative votes of the shareholders present at a general shareholders meeting based on the board of directors’ recommendation of candidates who have overall experiences and knowledge about the construction industry. The directors play advisory roles through- out corporate management based on expertise and experiences, and provide help to corporate management through rational decision-making.
Board Composition (As of June 2016)
Type Name Duty Position
Kim, Wee Chul Chief Executive Officer President of Hyundai Engineering Executive Vice President of Hyundai Executive or internal Sung, Sang Rok Head of Process Plant Division directors Engineering Senior Vice-President of Hyundai Lee, Sang Kook Head of Finance & Accounting Division Engineering Non-executive or Jung, Soo Hyun Management Supervisor CEO & President of Hyundai E&C external directors Auditor Kim, Gwang Pyeong Auditor Director of Hyundai E&C
Board Operation Hyundai Engineering enacted its Board Regulations to ensure the efficient operation of the board. It does not have any sub-committees whose authority is delegated by the board. In accordance with Article 30 of the Articles of Incorporation (methods of convocation and voting at the board), a board meeting is summoned by the chairman of the board or a director designated by the board and upon convocation the board meeting, it is notified to each director and auditor in writing or orally by one day before the board meeting. However, upon the consent of all the directors and auditors, board meetings can be organized routinely. The regular board meetings are held once each quarter, as a rule, whereas its extraordinary meetings may be held as and when required. The board adopts its resolutions with majority affirmative votes of the directors present at a meeting represented by a majority of the directors. Directors who are absent may participate in board resolutions via a video conference system.
16 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Operation of the Audit System Hyundai Engineering appoints one auditor who routinely audits the company’s accounting, financial informa- tion, business status, and the status of the company’s business and property conditions. In accordance with Article 26 (duties of auditors) of the Articles of Incorporation, an auditor audits directors’ job functions and the company’s accounting and business operations, prepares an audit report on closing financial statements and reports it to general shareholders’ meeting. The auditor may attend a board meeting to express his/her opinions. He/She may report to the board or the general shareholders’ meeting when he believes that a director has committed or is feared to have committed a violation of any statutes or the company’s Articles of Incorpo- ration. Furthermore, the auditor may exercise the right to supervise the directors’ performance and may also demand overall management-related information as required to perform his/her duties.
Nomination of Directors and Auditors Hyundai Engineering’s directors and auditors are elected at a general shareholders’ meeting among candidates recommended by the board. Directors and auditors are elected through majority affirmative votes of the voting rights represented by the shareholders present at the general shareholders meeting, and the affirmative voting with one quarter or more of the total number of issued shares represented. The cumulative voting scheme pro- vided under Article 382-2 of the Commercial Act is not applied to elect two or more directors.
Evaluation and Compensation of Directors The limit of the directors’ remuneration is determined by majority affirmative votes of the voting rights repre- sented by the shareholders present at the general shareholders meeting held with one quarter or more of the total number of issued shares represented. Their remuneration and retirement allowance are paid within the set limit. The limit of the directors’ remuneration as determined at the 2015 general shareholders meeting was KRW 5.5 billion. The actual paid amount is disclosed on the stock exchange digital disclosure system each quarter.
Remuneration Paid to Directors (As of the first quarter of 2016)
Total remuneration Average remuneration per person Type Number of persons (KRW in millions) (KRW in millions)
Executive directors 5 278 56
Auditor 1 - -
Total 6 278 46
Key Agenda at the Board
Dates of Number of board meetings held Key agenda agenda
Jan. 2014 Five including the approval of the Merger Agreement Contract 5
Feb. 2014 Six including the 13th General Shareholders’ Meeting & the Merger Agreement 6
Apr. 2014 Three including the approval of launching a new branch 3
May ~ Jun. 2014 Six including the change of compliance program officer 6
Jul. ~ Aug. 2014 Five including the surety for the interim loan payment for Wireye Amco Town 5
Sep. ~ Oct. 2014 Five including the 6th issuance of non-guaranteed public bonds 5
Dec. 2014 Four including the launching of Iran Office, appointment of the office president, and POA approval 4
Jan. 2015 Four including the approval of 2014 financial statement (14th) 4
Feb. 2015 Approval of the 14th General Shareholders’ Meeting and the agenda 1
Mar. 2015 Four including the approval of issuing corporate bonds 4
May ~ Jun. 2015 Two including the approval of trading products and service with the affiliates 2
Jul. ~ Sep. 2015 Six including the approval of launching the East Timor Branch 6
Oct. ~ Dec. 2015 Four including the real estate tenancy from a specially related person 4
17 2014 - 2015 Hyundai Engineering Sustainability Report
Ethics Management
System of Ethics Management Hyundai Engineering enacted the code of ethics in 2009 to create an institutional basis to implement ethics management, help employees make proper value judgments on corporate ethics, and establish a standard for actions. Meanwhile, the company is suggesting systematic and consistent ethical action standards by establish- ing a specific code of practice and action plans.
Behavior Guidance for Ethics Management Hyundai Engineering clarified its directions for ethics management and established a systematic ethics manage- ment system. The company developed the 10 action guidelines in May 2014 to enable its employees to properly respond to the types of ethical dilemmas they might encounter in the course of their work, and to help them utilize information or counseling services in consultation with the ethics management organization in cases where it may be difficult to make sound judgments by themselves.
Ethics Management Training
Tailored Ethics Management Training Needs for tailored training that is more effective, focused and proper for the company’s condition and nature are rising. Accordingly, Hyundai Engineering conducts ethics training for executives and team leaders by inviting external specialists on ethics management. The company is creating a corporate ethics culture and inducing employees to practice ethical acts through such selective and concentrated ethics training.
Performance of Ethics Management Training
Type Unit 2013 2014 2015
Training hours Hours of training per employee Hour 8 1 1
Training cost Total training cost KRW 10,000 1,517 350 690
Number of trainees Total number of trainees Number of individuals 2,222 (online) 757 (offline) 3,525 (offline)
Company-wide Ethics Management Training Conducting Tailored Ethics As the internal and external codes of ethics have intensified, the company conducts company-wide ethics man- Management Training in 2016 agement for employees to be aware of the code of ethics and establish and internalize a proper ethics culture Conducting a company-wide ethics survey in the company. (November 2015)
5 areas (1. Basic ethics at work, 2. Business Status of Ethics Management Training performance attitudes, 3. Financial benefits for stakeholders, 4. Sound transactions with partners, 5. Protection of corporate assets) Type 2014 2015
Selecting two high-risk areas (1,3) Dissemination education for team leaders (93 project 3,066 people (including the employees dispatched Targeting all employees sites, 104 teams at the head office) as training subjects (2016) Training for section managers or higher (600 people) to other companies)
Selecting teams related to the subjects Leaders’ training 157 executives and team leaders 51 executives and 115 team leaders
Conducting training for nine teams on basic ethics at work, and nine teams on the Site construction technicians - 8 training sessions and 293 employees domestic and overseas anti-corruption laws (April 2016, 9 sessions)
Conducting a 45-minute session and a 15-minute discussion Training for new/experienced and overseas employees Routine Routine
“We will preemptively manage Partner training 195 companies 80 companies ethics risks by continuously conducting ethics management training in the future.”
18 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Ethics Management Communication
Cyber Audit Office Hyundai Engineering conducts cyber audits of all its business units, in addition to site audits, as part of its drive to establish a transparent management across the company. To that end, the Cyber Audit Office has estab- lished standards of ethical value judgment and transparent behavior, and displays its Ethics Charter, Code of Conduct and Action Guidelines, so as to enable the company’s executives and employees to practice ethics management during the performance of their duties. It also promotes these standards among its customers and business partners. In particular, the Internet-based reporting center collects information concerning illegitimate or corrupt practices and unfair trading, as well as ideas that might prove helpful to corporate management from stakeholders both in and outside the company, including its customers, partners, executives and employees, without filtering, to improve the institutions and reflect the improvements in corporate management. It has also established a transparent process for handling whistle blowers’ reports on illegitimate, corrupt or unfair prac- tices and discloses the results thereof, thus enhancing transparency in operating the online reporting center.
Sending the CEO’s Letter on Ethics The CEO’s strong commitment and continuous action are crucial for the ethics management to root in the company. Therefore, the company distributes the Ethics Letter that embeds the CEO’s will to practice ethics management and improve the performance. The Ethics Letter of the CEO is sent to employees and business partners twice a year, and it is also shared through the online board of the groupware.
CEO & President’s Ethics Management Footage
Ethics Management Posters and Newsletters The company prepares and distributes ethics management posters and newsletters for employees to easily ac- cess issues and information on ethics management. Posters are produced twice a year and the printouts are posted in offices and meeting rooms, etc. The posters are shared through pop-up notifications in the groupware. The newsletter on ethics management to convey various types of information including ethics management trends and issues is produced on a monthly basis, emailed to executives and team leaders and posted in the groupware.
Ethics Management Poster Ethics Management Newsletter
19 2014 - 2015 Hyundai Engineering Sustainability Report
Special Page. Human Rights Policy
Human Rights Approach Hyundai Engineering complies with the 10 principles in the four areas of human rights, labor, environment and anti-corruption suggested by the UNGC (United Nations Global Compact) by joining it. The company endorses labor standards suggested by the International Labour Organization as well as the Universal Declaration of Human Rights adopted at the UN General Assembly. Hyundai Engineering complies with standards of labor, human rights and working conditions in all countries and regions where the company performs business. The company’s human rights are applied to all stakeholders equally to not only its employees but also its customers, partners and commu- nities. Hyundai Engineering strives to reflect stakeholders’ interest and expectations to management activities on human rights issues by identifying them through continued communication. The company is expected to conduct training to raise employees’ awareness of human rights to prevent factors that may infringe upon their potentially vulnerable human rights, and disclose human rights-related activities and performances through its sustainability report.
01
The company complies with standards for working conditions prescribed in laws on labor relations in each country and region, and abides by regulations on labor hours and paid leaves prescribed in each country and region where its 07 project sites are located. 02
The company strives to prevent The company does not discriminate factors of infringement against the against employees for reasons for basic rights and human rights of gender, race, religion, skin color, local residents in places of its age, nationality, disability or project sites. marital and social status.
Principle of 06 Human Rights 03
The company pursues sustainable The company strives to fundamentally development that minimizes prohibit and prevent wrong labor environmental impacts accompanied practices including the employment in management activities and of illegal workers as well as forced considers the environment. labor and child labor.
05 04
The company provides a safe and The company guarantees a decent working environment, and collective agreement and freedom conducts education and training to of association pursuant to laws on prevent safety accidents. labor relations in each country and region.
20 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Sophistication of Risk Management
Risk Management System Hyundai Engineering utilizes the risk sensing1) technique, which is a capability to detect and identify risk fac- tors. Through this technique, the company manages various risks, including macro-environmental risks, risks from industrial competition and technological diversification, and internal risks, that may affect the corporate management.
1) Risk Sensing: a capability to detect and respond to core risk factors
Risk Management Organization Hyundai Engineering formed the Chief Risk Officer (CRO) Organization, aligned with that of Hyundai Motor Hyundai Motor Group Group, in order to systematically collect information about risks and effectively respond to the potential risk factors. The CRO Organization consists of the CEO, the Head of Planning Office, and the Business Planning Group Risk Management Committee Team Leader. Hyundai Engineering also appinted a working-level team in charge of core risk sensing and man- agement, thereby creating a systematic structure of risk management connecting from the working-level to Group CRO Organization the top management of the Hyundai Motor Group. Management risks are monitored quarterly, and the results of regular monitoring have been reported to the Group CRO Organization for 13 times from 2013 to the 1st quarter of 2016. Hyundai Engineering
Definition and Management of Core Risks CRO, CEO
Hyundai Engineering selected 10 core risks based on the impact of risks on the overall management environ- Risk management unit manager ment, possibilities of occurrence and vulnerability. They include macro-environmental risks, industrial envi- (Head of Planning Office) ronmental risks and strategy and operational risks. 10 core risks were selected and are managed and the risk Person in charge of working level levels of the indicators are continuously monitored. Core risks are reviewed on a quarterly basis or routinely to risk management (Management and be renewed. The company devises prior responsive measures against each risk, thus establishing an organized Planning Team Leader) responsive system to minimize the damage when risks occur. Risk monitoring (Management and Planning Team) Definition and Management of Top 10 Core Risks (As of first quarter-end, 2016)
Type of Failure to optimize Expansion of cur- Intensified Setback of the Construction Risk business plans rency volatility competition housing market quality defects
Order placement, revenues, Oil price fluctuation, Currency exchange Housing transaction profit/loss, profit ratio, amount of overseas Project Quality * rate fluctuation volume, unsold KRI net cash liquidity, project orders of Index (PQI) (dollar, euro) housing rate collection of bills, debt ratio domestic companies
* Key Risk Index
Type of Occurrence of Aggravation in Violation to regula- Risk related to over- Failure to maintain or Risk safety accidents executing projects tions and Sanctions seas advancement secure the workforce
Progress rate, rate of Penalty, legal Accident rate, rates of death cost of goods sold, Turnover ratio, the violation, completion Country credit rating, KRI in industrial accidents, recovery period of the degree of employment ratio of ethics travel warning grade environmental accidents unpaid, interim payment preference of the unclaimed training
Strengthening of Risk Management Competency Hyundai Engineering performs various activities to strengthen its competency in risk management. The com- pany plans risk response measures through the results of quarterly monitoring of management risks based on the ad-hoc or regular risk sensing activities. Furthermore, the company solidifies the basis for executing of risk management through the corporate workshops, seminars, and meetings related to the management risks.
21 2014 - 2015 Hyundai Engineering Sustainability Report
Risk Management Workshop
Financial Risk Management Hyundai Engineering is exposed to diverse financial risks arising from its business activities, including market risk, credit risk, currency exchange risk and liquidity risk. Its risk management program focuses on the unpre- dictability or uncertainty of the financial market, and concentrates on minimizing effects that are potentially Liquidity Management Status (Unit: KRW 100 million, %) unfavorable to the company’s financial performance.
■ Cash or cash equivalents Currency Exchange Risk Management ■ Liquidity ratio
As it generally takes two or more years until the payment or expenditure of foreign currency, the time of pay- 14,382 ment or expenditure of the currency transactions are often uncertain, depending on the completion of projects 164.9 167.9 after contracting. Hyundai Engineering, therefore, attempts to minimize the currency exchange risks by aligning 152.9 the currencies of receipt and payment from the beginning of the contract bidding, and if the two currencies are different, it applies the currency fluctuation to manage such risks. 8,072 6,838
Liquidity Management A business may go bankrupt if it fails to secure or maintain an optimum level of liquidity even though it posts a net profit. Hyundai Engineering, therefore, endeavors for the cash flow-focused management, thereby properly allocating and managing the short- and long-term liquidity. The company conducts preemptive activities to prevent liquidity crises by thoroughly managing the liquidity ratio and intensively managing each project. 2013 2014 2015
Project Risk Management The Corporate Risk Management Team of Hyundai Engineering manages risks throughout a project cycle: con- tracting, execution, completion, and after-sales service. When selecting a project, in particular, the company takes preemtive measure through the preview process for managing risks. In the order winning stage which is a basis of risk management, the company specifies the order winning risks into domestic, overseas, and invest- ment businesses depending on the business charteristics. Each system consists of six-stage processes - preliminary review (overseas projects), working-level meetings, review of order placement, changes in the review of order placement, practical meetings for contract review and contractual review. It uses lessons learned through cases based on the risk evaluation sheets. Such efforts manifest that the company is doing the utmost to minimize order placement risks and manage them.
Efforts to Strengthen Project Risk Management The project execution stage re-inspects risk registers selected in the order placement stage through meetings * Regular reporting of key project risks: reporting of the analysis of the risk on project execution planning prior to groundbreaking. The stage, then, comes up with additional risk factors, status for projects, using four risk and devises and continuously manages hedging measures against risks which might occur in the actual pro- factors (completion rate, rate of cost of revenue, account receivables, unbilled ject execution stage. Risks are preemptively and immediately responded to and managed through routine risk receivables) monitoring. In particular, the monitoring takes place through on-site daily reporting, and weekly and monthly regular reporting of major project risks*. Moreover, the company is proceeding with the setup of an integrated risk management system in consideration of the continuity of the order placement stage and the execution stage, and alignment with financial informa- tion for efficient management of risks. The company is planning for the system opening in December 2016. The company expects to achieve the minimization of project risks and contribute to managing complicated risks by operating the integrated risk management system.
22 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Process of Risk Management Operations Hyundai Engineering systemically manages risks which might occur in projects by dividing them into four stages - bidding, contracting, execution and completion. The company is committed to efficiently managing risks through regular reporting and close cooperation with related departments.
Specifics in Risk Management Operations
Areas of operation Content of operation Note
•Review business risks when evaluating project orders - Business feasibility, financial conditions, earnings rate, Domestic projects contractual terms and conditions, execution measures and construction period, etc. (bidding/investment) •Preliminary order review - Review and reflection of lessons learned (comparison of •Working-level meeting Bidding L/L data of similar projects) •Order review Stage •Review of changes in order •Review and feedback of project content upon bidding Overseas projects placement - Check-up of points that are reflected and modified based on the (bidding/investment) order review (profit ratio for construction, construction period, contractual poison pills, business conditions, and financial burden, etc.)
Domestic projects Review and feedback of business content upon signing (bidding/investment) • Con- a contract tracting - Check-up of points that are reflected, contracted and modified •Working-level contractual review based on the order review •Contractual review Stage Overseas projects (contractual poison pills, profit ratio for construction, construc- tion period, business conditions, and financial burden, etc.) (bidding/investment)
•Review of the project budget adequacy upon signing a contract Domestic projects - Check-up of the adequacy of budget to be executed, changes in •Hand-over workshop (bidding/investment) the profit ratio and adequacy of the process/construction period (material requirement, budget, time, cash-flow planning, etc.) •Business execution workshop Execution •Project execution planning meeting Stage •Review of changes in the cost which might occur in a •Site inspection, if necessary Overseas projects project and the pending agenda - Reporting of the pending agenda and countering measures (bidding/investment) - Check-up of changes in the execution rate (expected cost) due to increases in cost and the schedule impact - Check-up of customer claims (possible issues including L/D, EOT, reserves, construction cancellation, V/O and subcontracting)
•Check-up and review of the pending agenda on progress after completion of construction - Pending agenda including repair, customer claim and various lawsuits and miscellaneous losses Domestic projects/ •Collaboration with relevant Comple- departments in finance/legal Overseas projects Review of the corporate establishment and financial tion Stage • affairs, etc., reporting of the (bidding/investment) agenda for development/investment projects agenda and countermeasures - Review of content including financial burden and equity sell-off as a shareholder - Review of the pending agenda when issues occur including financing-related payment guarantee
23 02
SUSTAINABILITY ISSUES ISSUE 01 Value Management 26 ISSUE 02 HSE Management 34 ISSUE 03 Talent Management 42 ISSUE 04 Win-Win Management 48 ISSUE 05 Sharing Management 54
02 SUSTAINABILITY ISSUES 2014 - 2015 Hyundai Engineering Sustainability Report
Value Management Boosting Value
The ‘New Normal’, which implies the low growth in economic conditions due to intensified low interest rates and low oil prices, is still in progress. The Korean construction industry, in particular, is undergoing a rapid paradigm shift: a decrease in the supply of construction materials due to the expansion of social overhead capital (SOC), transition to low growth economy of developed countries, etc. Moreover, as de- Social mands for eco-friendliness in construction technology and processes have increased, the quality improve- Context ment through expansion of the value engineering (VE), the use of project management know-hows, and the securing of high value-added technology has become more important.
•Exploring new business in each •Diversifying business portfolios business area •Promoting the future growth •Commercializing future growth engine projects engine projects at the early stage •Developing eco-friendly/new •Sophisticating the project quality Our technologies Our management Responses •Enhancing the project quality Plans •Expanding quality improvement programs for partners
Registrations of Intellectual Quality Lessons Learned Property Rights Improvements
2015 cases cases cases Performance 10,552 636 396 (605 registered/31 applied)
Voice of Stakeholders
“I wish that Hyundai Engineering could achieve qualitative growth by securing high value- added technology and competitiveness.”
The paradigm in the construction industry is shifting according to the domestic market saturation, and accelerating trends of technological convergence, etc. A transition to high value-added is needed in the industries of construc- tion and engineering, and this requires enhancing competitiveness by expanding the public-private partnership. In particular, the independent power producer (IPP) projects and environment-related projects among Hyundai Engi- neering’s plans for future growth engines have high potential in both the national and global perspectives. I believe that Hyundai Engineering’s capacities for technology and business management have a competitive advantage in the market where diversified models for financing and project execution are required. Hyundai Engineering is seeking overseas market diversification, and it is high time to solidify its basis in the overseas projects. The term, ‘basis’, covers both technological competency and profitmaking. Thus, the company should en- hance its technical base to create high-added value throughout the planning, designing, and executing of projects, and further its competence to explore profit-making projects. Also, I suggest that Hyundai Engineering focus on fostering talents as the technological expertise is becoming more important for the strategic risk management and selective winning of profitability-focused orders. Team Leader Seong, Ho Chul/ Korea Plant Industries Association
26 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Creating Future Growth Engines
Prospective Business Projects Sustainable Cyclical Structure by Project Stage The construction industry is rapidly changing due to continued low oil prices, sluggish global economic growth, and paradigm shifts of clients and consumers. Against this backdrop, Hyundai Engineering is diversi- New Project Identify Opportunities fying its project portfolios by advancing into new projects and sophis- Exploration ticating its existing projects in alignment with its mid- and long-term development directions. To this end, we are creating future values by se- lecting the ‘10 Prospective Business Projects’, establishing correspond- ing strategies, and continuously implementing R&D activities. Develop Technology In addition, the company annually sets specific execution plans based on the long-term goals and roadmap. We are striving to strengthen our execution capacity and secure core technology for the future growth engine projects in accordance with the stages and strategies of each Plan Commercialization project. As a result of such efforts, we were ranked 7th in the 2016 Appraisal of Execution Capacity and 21st in The Top 225 International Design Firms Project by the ENR in the U.S. In the future, we plan to continuously replace the Performance Initiate a Project existing projects for future growth engines with new projects by review- Tracking ing their suitability in order to create a sustainable project environment, thereby establishing a cyclical project structure.
Prospective Business Projects Priority Projects Competency-building Projects (short-term performance) (long-term core competency)
Considering the growth trends in the global oil and gas indus- try and the market outlook, the company designated the future growth engine projects: ‘Gas to Liquid Plant’, ‘LNG Liquefaction Process Plant’ and ‘Coal Gasification Plant’. Accordingly, the company Plant is making efforts to create a new market by intensifying internal competencies and expanding opportunities for engagement in projects. Gas to Liquid Plant Coal Gasification Plant LNG Liquefaction Plant
Driven by its seasoned experiences and expertise in power plants, the company is seeking engagement in ‘IPP Projects’ in tandem with the trends and growth directions of the global power gener- Power & ation market. The company is developing professional engineers Energy Plant and securing expertise by selecting the ‘Concentrated Solar Power Projects’ as a new and renewable energy project and the ‘Small Modular Reactor Projects’ using the next generation nu- clear power technology as future growth engines. Independent Power Plant (IPP) Concentrated Solar Power Small Modular Reactor
The company has selected new future growth engines in the building and housing works, and focuses on developing technical competency and business models: ‘modular building project’, Building an eco-friendly construction method to install and assemble Works the modules, manufactured at plants, in the field; and ‘Financ- ing-linked Housing Projects’, a new finance-based housing pro- ject which reduces general real estate PF risks. Modular Building Financing-linked Housing
The company continuously nurtures its project competency to advance into overseas markets for the ‘Water Projects’ includ- Infrastruc- ing Africa and the Middle East, driven by abundant technologies ture & Envi- and experiences in water treatment. The company is initiating the ronment ‘Waste-to-Energy Projects’ as a future growth engine project using the biomass and abandoned vehicle resources. Water Project Waste-to-Energy
27 2014 - 2015 Hyundai Engineering Sustainability Report
Strengthening Value Engineering (VE)
Perception of Value Engineering Knowledge System for Value Engineering Value Engineering (VE) can be defined as all activities for removing un- necessary cost, including technological improvement, intensification of creative development, enhancement in working habits and attitudes and time saving. Compiling/ Operating the ‘VE Platform’, Registering the Input of unnecessary costs might occur due to the duplication of func- an information space for VE cases tionalities or inappropriateness of methodologies to execute necessary existing cases functions. Therefore, once all the resources are leveraged usefully, high-value output can be obtained. This, in turn, leads to customer sat- isfaction and profit generation for a company and its employees. Cost reduction and competitiveness buildup through VE have emerged Accumulation of Using best VE know-how practices/ as breakthroughs against such crises as the recent economic slow- VE utilizing system and continued Proposing new (VE Checklist) down for the construction industry and fiercer competition. Against this improvement ones backdrop, Hyundai Engineering strives to establish a company-wide VE mindset and drive the generation of business performance by sharing VE information and establishing a system to utilize it. Compiling/ Value Engineering System registering Selecting and rewarding best practices in VE improvement Publishing the VE Best Practices Handbook Hyundai Engineering carries out VE activities throughout the entire pro- practices ject process, ranging from design, construction and commissioning, based on its diverse experiences with design and project execution in the process plant, power & energy plant, building works, and Infrastructure & Environment. The goal of VE activities is to enhance customer satis- VE Platform faction and secure business competitiveness through quality improve- ment and cost reduction. The company rewards employees engaged in excellent VE activities by selecting best practices in company-wide VE and adopting a reward scheme. The objective is to explore various VE enhancing ideas to dynamically respond to a project environment and establish a creative VE mindset to be applied to projects. The company is creating an environment that enables employees to register and search VE cases anytime by opening the VE Platform - an information space for VE to register and utilize VE cases anytime and anywhere.
Case Study
VE Contest and Publication of the VE Best Practices Handbook Hyundai Engineering selected and rewarded HEC VE best practices by organizing the VE Contest on VE cases. Such cases are reflected in actual projects in order to facilitate VE and raise awareness of employees about VE. A total of 12 VE best practices were selected in each division: out of 210 cases registered for VE activities, 89 VE cases recommended by each division were selected through the internal evaluation and recommendation of each division, and were screened through a primary review (working-level employees) and sec- ondary review (executives) based on such criteria as cost reduction, shortening of the con- struction period, quality improvement and applicability. The rewards for VE best practices consist of one grand prize, three top excellence prizes, eight excellence prizes and one prize for a project that suggested the highest number of VEs. The awardees of the year - excel- lent employees in VE activities - were offered prizes and rewards. Moreover, registered VE cases were published in the ‘2015 Value Engineering Best Practices Handbook’ to provide opportunities to share and utilize VE information internally. Hyundai Engineering expects Publication of the VE Best Practices Handbook to continuously expand the selection and compensation of best practices to secure tech- nological competency and raise cost competitiveness through in-house VE activities.
28 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Securing New Technologies
R&D System Development of New Technologies Hyundai Engineering continues to carry out activities for R&D in alignment Hyundai Engineering strives to enhance technological competency con- with core business areas and for acquiring of new technologies. The goal tinuously, aiming to create high value-added new growth projects and is to secure technological competency which can be applied to the entire prioritizing customer satisfaction and service quality. To this end, the project stage, ranging from project planning, designing and construction, company has accumulated diverse project experiences and developed and to enhance the engineering-based corporate competitiveness. technologies in various fields. R&D is a key element for activities for a company to boost its competi- The company develops and possesses diverse new technologies which tiveness and achieve new growth. Through R&D, customer satisfaction can not only be applied in an eco-friendly manner to the environment and service quality can be enhanced. Hyundai Engineering identifies the and building works sectors, but can also contribute to social develop- periodic internal technological demand especially at the Hyundai Engi- ment. Such technologies are crystalized through steady efforts for tech- neering Technology Research Institute and the Planning Office. The R&D nological development and commercialization. The Hyundai Engineering system also creates an environment for systematic R&D by exploring and Technology Research Institute and the Planning Office take the lead in selecting tasks for technological development. Selected tasks as such are various activities to raise the reliability of newly developed technologies researched through classification into internal tasks and national policy and pave the way for their commercialization. Such activities include tasks driven by the specialized research work force at the Hyundai Engi- supporting the procedure for acquiring and managing the certification neering Technology Research Institute and business divisions. The pur- from domestic certifiers - certifications for new environmental technol- poses of research are technological enhancement in target areas, acquisi- ogy, new construction technology, new transportation technology and tion of new technologies and alliance with advanced technologies. green technology - and technologies to be applied to project sites.
R&D Performance Ownership of IPRs R&D tasks of Hyundai Engineering from 2014 to 2015 amounted to 21 Hyundai Engineering holds many intellectual property rights (IPRs) in- cases centered on the Process Plant, Building Works and Infrastruc- cluding various industrial property rights (patent, utility model, trade- ture & Environment. In 2015, the company participated in the ‘national mark and design, etc.) in the entire business areas of the process plant, modular project for proposing measures to secure economic efficiency power & energy plant, building works, and Infrastructure & Environment. of performance-based modularhousing (3rd year)’. The company is con- The company has established an invention scheme for job functions and ducting four research tasks: virtual design of mid-rise modular apart- a procedure to manage IPRs so that engineering-based in-house techno- ments, development of resource-recycling PC products and Korean-style logical improvement and performance of technological development, etc. rust-proofing concrete development. can be linked to improvements in corporate technological competitiveness and also to corporate technological assets. Spearheaded by the Planning Office, the company provides routine support and continued management so that employees’ project experiences, technical know-how and creative ideas will lead to industrial property rights and new technologies.
R&D Performance (as of 2015-end) Status of IPRs (as of 2015-end, unit: cases) 220 Unit 2013 2014 2015 207 172 R&D cost KRW in millions 1,916 3,073 766 R&D cost compared to revenues % 0.07 0.06 0.01
3 3 Total 605cases
Patents Utility Trademarks Design Programs Case Study
HEC Technology Award Hyundai Engineering organizes the In-house Technology Award to establish a voluntary culture and environment for technologies in the company by enhancing employees’ technological prowess and raising awareness about system improvement. The award ceremony is held during the company’s an- niversary event to reward employees who performed excellent activities that year. The company selects technical tasks which have generated outstand- ing research activities and performance in the following areas: technological development, research papers published in the public sphere, technological enhancement, utilization of new technologies and system improvement. The Publication of the HEC Technology Prize Awarding in the HEC Technology top winning task in 2015 was the ‘Intelligent 3D Design Verification System’. Booklet Award Cases of excellent activities including technological development, overseas training and new technologies were covered in the HEC Technology Booklet, which is shared to employees.
29 2014 - 2015 Hyundai Engineering Sustainability Report
Special Page. Creating Environmental Values through Modular Technology
Modular Technology The recent construction industry is dynamically engaged in value engineering activities which can boost the quality and constructability by securing a clear structure system, while maintaining cost competitiveness. Morevoer, industry-wide efforts for reducing environmental impacts by improving eco-friendly construction technology is increasing. Due to this trend, the modular technology is more highly recognized for its eco-friendliness, expand- ability, high quality, economic efficiency, safety, and promptness. The modular technology is a construction method where standardized modules are made in a plant by 70-80% and assembled on site. These modules are standardized for shortening the construction period, moving the building, reusing the modules and reducing the construction cost. The modular construction technology developed by Hyundai Engineering is, unlike the existing modular technology, a high-performance seismic mod- ular construction technology named as the ‘modular construction method for steel moment frames’. The existing modular technologies were only capable of low-rise construction structures, but Hyundai Engineering’s new modular structure system can be applied to high-rise modular building con- struction because it can enhance safety against earthquakes. Having been recognized for its differentiated excellence, Hyundai Engineering’s modular technology was designated as a new construction technology (No.770)*.
* New Construction Technology No. 770: Modular Construction Method of Steel Moment Frame with Ceiling Beam Bracket Using High Strength Bolts and Connection Plates
Characteristics of the Modular Technology
Economic Promptness Safety Eco-friendliness Scalability High-quality Efficiency
Scale and Prospect of the Modular Market The domestic market scale of the modular technology is gradually on the rise, and is expected to increase over the medium and long term. Its application in schools, military camp barracks and offices steadily increased in the initial phase. Thereafter, the market volume continued to rise to KRW 15 billion in 2005, KRW 41 billion in 2010 and KRW 100 billion in 2011. The Ministry of Land, Infrastructure and Transport announced that it would expand its R&D support for the modular technology designated as a new promising technology for the future in 2014. Accordingly, the modular technology is expected to make up KRW 1 trillion of the market by 2020. Hyundai Engineering plans to continuously strive to raise the technological competitiveness for advanc- ing into domestic and global modular construction markets: dormitories, hotels, urban housing and temporary housing such as disaster relief housing.
Outlook of the Modular Construction Market
(Unit: KRW billion)
1,000 940
800 720 KRW billion → KRW billion 560 201.1 942.3 600 Outlook of the Scale of the Modular 400 Construction Market (2015 → 2020) 200 200 15 41 0 2005 2010 2015 2018 2019 2020
30 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Strengthening Quality Management
Quality Management System Operation of the Quality Management System Hyundai Engineering continues to conduct activities for quality improve- Hyundai Engineering systematically establishes goals based on quality ment to provide better products and services to customers. To this end, measures, and dynamically carries out quality planning, management, the company established and practices quality measures for creating fu- assurance and improvement. The company operates the Project Qual- ture values for customers, securing EPCM (engineering - procurement ity Index (PQI), and provides optimal quality services based on periodic - construction - management) technique and quality competitiveness, quality audits and analyses of partners. maximizing job efficiency through knowledge management, and facil- itating systematic risk management. All the divisions and employees Track Records of Quality Management upgrade the quality competitiveness by identifying and improving the quality in each tier and stage in design, procurement and construction in •Operating the in-house quality management system accordance with quality measures. Engineering •Conducting the Lessons Learned Workshop of teams/projects •Operating the Project History Book Quality Certifications Hyundai Engineering implements its quality management system in ac- •Conducting the trend analysis of NCR (Non-conformity Report) of 1) 2) cordance with ISO 9001 and KS Q ISO 9001 . Since obtaining the ISO materials and providing feedback 9001 certification for the first time in 1994, the certification has been Procurement •Monitoring vendors reviewed each year in all engineering fields, including construction sites. •Leading procurement partners to conduct quality evaluations and KEPIC3) applies the certification of the nuclear power quality system to improve quality (11 companies in 2014, and 17 companies in 2015) the nuclear power design sector after acquiring it in 2011. The certifica- tion is to secure the reliability of energy & power facilities demanded by •Conducting quality evaluations on projects and providing feedback KEPIC3). (60 in 2014, and 75 in 2015) Construction •311 types of formulated/revised construction standards 1) ISO 9001: International standards for quality management systems •Conducting project site analyses of NCR (Non-conformity Report) 2) KS Q ISO 9001: Korean Industrial Standards for quality management systems developed of materials and providing feedback (1,377 cases in 2015) based on ISO 9001 3) KEPIC: Korea Electric Power Industry Code, certification of Korea Electric Association
Operation Process of the Quality Management System
Quality management system (QMS) Document management Identification/ Management of processes QMS documentation Record management
Management responsibility Management commitment/ Work responsibility/ Quality policy Establishment of objectives QMS planning Communications Management review Promotion
Resource management Measurement, analysis and improvement Customers Human resources Internal audit Customer management Customers Communication Monitoring and Analysis of data Securing resources Infrastructure measurement Improvement
Work environment Control of nonconforming Corrective action/ product Preventive action
Product realization Order Purchasing Customer-related Engineering or Outcome of project Satisfaction Requirements processes Planning development performance Construction
Case Study
Ratio of Grades for Project Quality Index (PQI) (in EPC, Unit: %) Project Quality Index (PQI) ■Grade S ■Grade A ■Grade B ■Grade C ■Grade D The Project Quality Index (PQI) is an index for 93.6 96.0 comprehensively evaluating five items to establish 3.8 quality management for projects and autonomous 6.4 2.5 quality management activities, and grading the 38.5 46.3 quality level of projects as an outcome of quality 97.0 % audits. In 2015, in particular, the company-wide 2014 2015 quality level increased thanks to the efforts to ini- (%) (%) Target for 2016 (Grade B of PQI tially support on-site quality systems and providing or Higher) continued monitoring and feedback. 55.1 47.5
* Grade A ratio going up for the company-wide quality target (△ 7.8% compared to 2014), Grade B ratio going up (△ 2.4% compared to 2014)
31 2014 - 2015 Hyundai Engineering Sustainability Report
Quality Management Programs
Quality Management Review Quality Management in Procurement Hyundai Engineering conducts an annual review and assessment of its Hyundai Engineering has introduced an advanced inspection technique quality management system to derive improvement solutions while en- for equipment and materials and a special management system for suring the adequacy, sufficiency and effectiveness of its quality man- sub-standard or low quality equipment and materials to enhance project agement system. The quality management review targeting all business performance. Quality data is accumulated using a Material and Procure- divisions and departments are developed into a comprehensive report, ment System (MAPS). In so doing, the company enhances the efficiency based on the performances of each organization or business, and re- of inspection and the soundness of equipment and materials sharing the ported to the CEO. data with related teams.
Quality Management in Engineering Quality Management in Construction Hyundai Engineering operates a project collaboration system (Pro- Hyundai Engineering pursues ‘Zero Defect Quality’ by training opera- ject-Space), which it developed to facilitate the standardization and tors and conducting thorough quality inspections, while reinforcing its transparency of its engineering services. It efficiently manages the in- quality risk management by setting up a quality management system terface among areas, teams, and partners through systematic design on site immediately upon the opening of a project site to secure quality review and verification of engineering outputs. in advance. It also controls the quality of its construction work efficient- ly using advanced IT systems such as Hyundai Construction & Quality Management system (HCQM), Advanced Quality Management System (AQMS) and Welding Inspection and Testing system (WIT).
Case Study
Knowledge Management System (KMS) Hyundai Engineering established and operates the Knowledge Management System (KMS) focused on information sharing and utilization for generating business performance beyond information management-oriented knowledge management. The KMS enhances job productivity by exploring and sharing individual and organizational knowledge, and generates corporate value by turning such knowledge into assets. The Lessons Learned System within the KMS is a system that extensively collects and databases errors and cases for improvement which occurred in EPC projects. The system was developed to easily discover clues upon executing similar projects or confronting problematic situations. The Lessons Learned Workshop for each team/project is carried out regularly, thus minimizing the failure cost through systematic risk management and prevention. Best practices among the Lessons Learned and project completions registered in the KMS are rewarded, and the booklets about these best practices are shared to the employees.
Operational Status of the KMS (Unit: cases) Composition of the KMS Performance of Lessons Learned
Knowledge Manage- Standard Manage- Transfer Data Man- 2,221 2,195 ment Category ment Category agement Category 1,914
Knowledge information Management standard Project transfer data •Business knowledge •Per job classification •Business type/ cases •General knowledge Data type 10,552 •Engineering Terminol- Number of ogy Dictionary registered cases Lessons Learned Technical standard Project completion •Case management •Per business division •Case activities
e-Librany cases Database on country 589,622 2013 2014 2015 information Number of cases for search and utilization VE Platform
32 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Expansion of Customer Satisfaction Management
System for Customer Satisfaction Management Strengthening Information Security Management on Design and Or- der Placements Hyundai Engineering enhances customer satisfaction by assigning the highest values to the common fundamental requirements of ‘quality’ Hyundai Engineering acquired a certificate for the ‘2013 Version of ISO and ‘safety’ and systematically approaching them. The company oper- 27001’ from British Standards Institution (BSI) Group Korea in 2015. The ates customer satisfaction centers by gathering and managing diverse ‘2013 Version of ISO 27001’ certification is the most authoritative in- VOCs into a single channel. Progress is continuously checked by iden- ternational standard certification in the area of information protection. tifying causes for customer complaints and designating managers in Only companies that are verified through stringent screening on 14 are- charge until complaints are resolved, thus enhancing customer satisfac- as including the protection of the physical environment, operational se- tion. The company also attempts to improve sustainability by creating curity and access control, and 114 specific items are eligible to acquire it. highly loyal customers while enhancing opportunities for re-orders and Hyundai Engineering plans to continuously improve its security scheme additional orders based on the trust of the project vendors. so that security issues which gain social attention including the leakage of personal information could be promptly and sufficiently reflected in Customer Satisfaction Management Activities corporate policies driven by the acquisition of the certificate.
Internal Customer Satisfaction Survey In 2014, the company conducted the internal customer satisfaction survey in order to study job satisfaction of its employees and establish strategies for the customer satisfaction management. A total of 3,384 employees responded (68.4%), and the satisfaction point reached 69.2 out of the full score of 100 points. This is the highest level since the first employ- ee satisfaction survey was conducted in 2008, which went up 2.5 points compared to the previous year. Results showed that intensive efforts for communication and the vendors setup of a flexible corporate culture and reinforcement of the leadership of top management were needed in order to improve employees’ satisfaction. As such, the company strives to es- tablish a new corporate culture based on such efforts.
External Customer Satisfaction Survey Since Hyundai Engineering’s area of business expanded due to its merg- er with Hyundai AMCO in 2014, identifying customer needs systemati- Acquisition of the Certification for cally and objectively has gained a higher weight. As a consequence, the International Information Protection company established objective evaluation standard modules, and con- ducted an external customer satisfaction evaluation for 266 employees of at home and abroad who have had transactional experiences with Tenant Satisfaction Survey Hyundai Engineering. The company discovers areas for improvement by Hyundai Engineering’s Building Works Division conducts customer identifying superior and inferior areas in each business division, con- satisfaction surveys through the Happy Call survey to gather tenants’ ducting comparative evaluations with competitors, and gathering cus- complaints and suggestions for improvement. The company caters to tomer feedback. customer demands by dynamically reflecting the complaints of tenant customers which might occur due to design and construction issues, External Customer Satisfaction Survey Process excluding simple petitions, out of tenant customers’ requests for im- Determination of Direction review provement, in the design stage afterwards. Plan evaluation items
Do Data collection
Identification of points for Set up of strategies for See improvement improving customer management
External Customer Satisfaction Levels (Unit: points)
57.7 60.2 73.6 81.5
Process Power & Building Infrastructure & Plant Energy Plant Works Environment
33 2014 - 2015 Hyundai Engineering Sustainability Report
HSE Management Preservation for All
Social attention on companies’ safety, health and environmental issues is rising due to global environ- mental pollution, industrial disasters and accidents, while related laws and regulations are intensified. In addition, due to higher social attention on climate change responses, expanding the scope of managing environmental pollutants is growing in importance. While heavy construction equipment used on con- Social struction sites has a huge environmental impact due to the emission of energy and GHGs, waste manage- Context ment on construction sites is a critical element. Preventing and managing accidents thoroughly on project sites is the top priority to protect people’s lives.
•Operating the HSE •Advancing the HSE management management system system •Developing and operating •Realigning business units for HSE eco-friendly technologies •Creating a global HSE culture Our •Initiating eco-friendly projects Our •Implementing a compensation Responses •Complying with international Plans responsibility scheme for damage standards due to environmental pollution
Converted Amount of Investment in Accident Ratio Energy Consumed Energy Protection
2015 % GJ KRW million Performance 0.12 449,479 2,213 (domestic)
Voice of Stakeholders
“I hope that Hyundai Engineering will minimize environmental impacts during the course of a project including construction, operation and demolition, and perform prevention- oriented safety management activities.”
The construction industry, as one of Korea’s key economic drivers, is classified as an industry with a significant environmental impact. The GHGs, fly ash, noise & vibration and waste which occur on construction sites must be dynamically managed to implement eco-friendly management. Moreover, Hyundai Engineering needs to make more aggressive investments in eco-friendly technologies than now, since domestic construction companies are fiercely competing against one another with new eco-friendly technologies using wastewater and waste fuel as well as waste materials as future growth engines. A single safety accident directly impacts order placement for construction and insurance benefits of industrial ac- cidents as well as casualties, thus requiring preventive safety management. In this sense, Hyundai Engineering’s safety management system and activities to establish a safety culture are considered to be excellent. It would be essential for such safety and health management activities to be expanded to not only Hyundai Engineering but also the supply chain. Along with support for a safety management system for partners, training and education to foster safety specialists (equipment, electricity and environmental measurement, etc.) must be strengthened. Team Leader Kim, Tae Kyung/ LRQA Korea
34 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Upgrading the HSE Management System
Measures for HSE Management HSE/Quality Organization Corporate responsibilities and dynamic responses to the environment The HSE Innovation & Quality Mangement Office is engaged in HSE ac- have become essential for sustainability management. Hyundai Engi- tivities suited to each business division by forming an exclusive unit in neering clearly recognizes that safety, health and environmental man- each division in order to strengthen HSE management. In particular, the agement is a core management element, striving to create eco-friend- company expanded the business scope by launching an exclusive divi- ly project sites where people and nature live in harmony. In particular, sion for asset management safety in May 2016. the company set up the ‘mobile HSE system’ using portable devices for each individual driven by IT, thus quantifying safety activities in real Key Results of HSE Management time. By doing so, the company sophisticates prior safety management. Moreover, the scope of business has been expanded to asset manage- Type Key activities Results ment as well as construction sites, striving for post-construction main- The Environment Setup of the GHG inventory and management system Completion tenance safety management. Distributing the Life Saving Rules 11, a multi-lingual safety Safety Completion training video clip Mobile HSE System Sending of public notices for employees’ health management 13 times Health Health manager meetings Once Enhance Strengthen participation promptness of Publication of a booklet for the risk evaluation model for Completion rate of supervi- all-time duty work type sors Common 898 ideas submitted, Mobile HSE Public contest to choose a safety slogan 16 prize-winning System ideas
Minimize Enhance portal-related system usage Compliance with Domestic and International Environmental Laws jobs Hyundai Engineering complies with domestic and international environ- mental laws, and reflects them in various environmental regulations. HSE Management Infrastructure First, specialists are invited every year to conduct training for environ- Hyundai Engineering obtained the ISO 14001 standards certification en- mental managers on cases of environmental accidents and environmen- acted by the International Standards Organization (ISO) for eco-friendly tal issues related to construction. Moreover, violations of environmental management systems. It maintains eco-friendly systems that satisfy the laws which might occur in the middle of executing projects are eliminated international standards through periodic follow-up reviews and re-cer- through on-site environmental support and Q&A. The company satisfies tification reviews. The company adopted the 2015 version of the ISO noise and vibration standards by using low-noise equipment and meth- 14001 which has been recently revised, to maintain the environmental ods and appropriately installing noise prevention facilities. The objective management system suited to international standards. is to minimize the occurrence of noise and vibration-related complaints.
HSE Management Process
Plan Do Check Action
Establishing Performance and Reviewing/ Measures, Goals Inspection Management Taking Action and Plans
• Establishing the HSE policy • Developing environmental technology •Monitoring and measuring •Measures for correction and prevention • Understanding environmental issues & • Organization: granting authority and •Incident investigation risk assessment obligation Report on HSE management •Complying with and evaluating • performance, executive review • Understanding legal requirements • Education and training: enhancement of requirements awareness about environmental management • Comprehend stakeholders’ demands •Internal evaluation, performance • Communication: documentation and evaluation • Establishing goals & plans document management • Measures: operation management based on procedures and plans • Preparing for and responding to emergencies
Continued improvement ↓ Globalization of HSE Management
35 2014 - 2015 Hyundai Engineering Sustainability Report
Spread of Environmental Management
Eco-friendly Technologies
Solar Power Generation Green PHC Pile Hyundai Engineering is preparing to enter a market for concentrated so- For the Green PHC pile, the utilization rate of fine furnace slag power was lar power generation as a part of an effort for a future growth engine raised from 15% to 40% compared to the existing PHC pile1). It is a tech- project. The company is initiating new solar power projects mostly in nology where CO2 emissions are minimized and manufacturing costs are Chile, South Africa, Australia and Algeria. While forging close relation- lowered by using modified Type I cement, replacing the expensive Type ships with advanced companies with proprietary technologies, the com- III cement2). The Green PHC pile is expected to reduce CO2 emissions by pany focuses on nurturing specialists internally. Moreover, the company 77.2kg/m3 compared to the existing PHC pile, and lower CO2 emissions cooperates with the R&D Division of Hyundai E&C, a Group affiliate, and of 8,152 tons based on the sales volume of 260,000 tons as the amount the Korea Institute of Energy Research, a national policy research insti- of usage of fine furnace slag power, a by-product of steel mills increases. tute for developing a technology for the heliostat, a core equipment for As a consequence of such environmental performances, the company solar power generation. acquired the Green Technology Certification (GT-15-00092) in 2015. The Green PHC pile has been applied to apartment sites in Baekun-dong, Gwangju and Sinbu-dong, Cheonan.
1) PHC pile: It refers to a high-strength pre-stressed pile as concrete pile manufacturing in a factory (compressive strength of over 80 MPa). It is also a pile that complements drawbacks of concrete which is weak in bending and tensile strength by adding com- Steam generator pressive force to a pile or pre-stress. Receiver 2) Problems which might occur in the process of manufacturing an ultra-high strength PHC pile whose compressive strength is over 110 MPa are addressed by using a dedicated Steam turbine admixture. Burner optional Inorganic Insulating Material An inorganic insulating material is an output of ‘resource-recycling PC Hot storage development [Stage 3]’ as one of research tasks of Hyundai Engineer- Condenser ing. The existing inorganic insulating material has a disadvantage of be- ing vulnerable to fire, but the inorganic insulating material developed Solar field Solar tower by Hyundai Engineering has a fire-proof property as a non-flammable Cold storage material. The method of manufacturing an inorganic insulating material using animal-based lightweight foam (excellent heat insulation and wa- terproofness as a closed foam) was patented in March 2016. Its technol- ogy transfer is ongoing as of now. Diagram of a Solar Power Generation Plant
Case Study
Eco-friendly Energy Town Construction Project The Eco-friendly Energy Town produces biogas through anaerobic digestion using organic waste including livestock manure. The gas is supplied and sold to a nearby village, and the residues can be used as compost and liquid fertilizers. The Eco-friendly Energy Town in Hongcheon-gun in Gangwon Province was established for the first time in Korea as an environmentally cyclical energy self-sufficient village achieving economic profits and energy self-sufficiency. It is the current government’s first pilot project initiated as a part of its expansionary policy for new energy industries. Hyundai Engineering acquired an order for a biogas plant for organic waste including livestock manure of 100 tons/day from Hongchun-gun in 2014 and completed construction at the end of 2015, which is in full operation now. Hyundai Engineering plans to dynamically advance into overseas markets including Asia and Africa as well as the domestic market based on its successful experience with this project.
Utilizing biogas from livestock manure for the first time as city gas Livestock manure Amount of anaerobic digestion Compost and liquid (80m3/day) (30m3/day) fertilizers
Food waste Dehydrated (KRW 52 million/year) (20m3/day) A biogas plant for residue Facility for Golf range, livestock manure turning compost and nearby farmland (20tons/day) liquid fertilizers into Biogas resources (3,000m3/day) Supply and sales of city gas
Gas purification (Saving the heating cost of KRW Biogas storage tank Purification and heat value 910,000 per household/year) adjusting facility
36 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Rust-Proof Concrete Hybrid Smart Cement Techniques The existing rust-proof technologies have no adequate quality standard and Hybrid Smart Cement (HSC) is cement composed of three materials that management regulations on structure sections. Their disadvantages include is produced by mixing Portland cement with fine furnace slag power, a a need for multi-layered hybrid construction using membranes (coating, by-product of steel mills and fly ash, a by-product of coal-burning pow- sheet and panel), and increases in the construction cost and period. Hyundai er plants. HSC is environmentally friendly as it discharges 50% less car- Engineering developed and applied the world’s first convergent rust-proof bon dioxide and 35% less hexavalent chrome than existing mass con- concrete by improving such problems. Additional membrane construction crete. It also offers high stability as quality disparity is minimized among is unnecessary as rust-proof performance is secured at the concrete per se, concrete mixers as it is premixed. Further, it is extremely durable as it is while it is possible to reduce the construction cost and period. highly resistant against sulfuric acid and salt. It has been utilized at the The rust-proof concrete technology of Hyundai Engineering secured the composite facility in Seocho, Hillstate Giheung, Hillstate Gwanggyo and chemical rust-proof function by using the copper hydroxide that restrains many other project sites. the growth and straightness of plant roots. It reduced concrete cracks and improved concrete strength by comfounding the synthetic macro fiber. It Steam Supply Facility Installation Project can control fine cracks by compounding a closed admixture for cracking The Ulsan steam supply facility is a Waste-To-Energy (WTE) project to consisting of a cement crystal structure. produce steam by using waste heat generated after incinerating the Au- tomotive Shredder Residue (ASR) and flammable municipal waste, and supply and sell it to nearby clients for heat supply and demand. Hyundai Engineering conducted the design, procurement and construction by engaging in the private PE project through equity investment in 2014. Macro-synthetic fibers The construction project which is to turn flammable waste into ener- gies in the scale of 220 tons a day will be completed by the second half Rust-proof admixture of 2016. The company will play its roles as an equity-holding company Crack closure admixture of the SPC during the management period after completion. This will enable the company to fulfill the goals of expanding its project portfo- lio through entry into the Waste-To-Energy (WTE) market and imple- menting the government’s low-carbon green-growth policy externally beyond the Group. At the Group level, the company will establish the Eco-friendly cement resource-recycling structure in order to boost the vehicle waste recy- cling rate of Hyundai Motor Group up to 95%.
Technical Concept Map for the Rust-proof Concrete Technology
Rust-proof admixture: chemical rust-proofing 01 (inducing chemotropism of roots)
Synthetic macro fiber: improving concrete strength, lowering 02 cracks
Closed admixture for cracking: improving the water tightness of 03 concrete, closing micro cracks
The rust-proof concrete technology includes various eco-friendly ele- ments: reducing CO2 by 60% which occurs upon producing cement; low- ering the occurrence of chromium trioxide; reducing the occurrence of construction waste by improving the durability of protective concrete; and utilization of industrial byproducts. The rust-proof concrete technology is undergoing a new technology inspection as of now. It has been applied to Bird’s Eye View of the Ulsan Steam Supply Facility Amco Town Floriche (2014) and Wirye Amco Town Centro El (2015) on a pilot scale. It will be applied to a composite facility site in Seocho in 2016. Greening of the artificial ground which used to be applied to rooftops of buildings has been expanded nationwide after the national vision for green growth was set in 2008. In particular, greening of the artificial ground on the upper section of underground parking space has rapidly increased to construct eco-friendly apartments. Here, the rust-proof technology is ap- plied to prevent damages of structures from plant roots.
37 2014 - 2015 Hyundai Engineering Sustainability Report
Eco-friendly Operation
Eco-friendly Construction Management Waste Management and Recycling Hyundai Engineering supports project execution on a project site through Hyundai Engineering proprietarily developed its environmental manage- on-site support for environmental permits and approval of documents ment system and uses it by aligning with the Allbaro system, which is the before groundbreaking and reviews the legitimacy of waste treatment a waste management system, of the Ministry of Environment. Within the companies. Moreover, the company prepares an environmental impact system, the waste treatment process of all sites nationwide is searched assessment report on a project’s impact on the surrounding environment. and managed in real time to analyze the types and amount of occur- After a project opens, the company provides environmental support suit- rence by waste type, while information on delivery companies and the ed to each site and recommends the usage of eco-friendly materials. The unit price of treatment is shared. This has reduced the amount of waste ‘Construction Environment Guidebook’ is prepared as an environmental emissions (459,338 tons (2013) → 294,177 tons (2015)), and secured management guidebook, and it is distributed to sites which is revised an- transparency in corporate operations. Continued environmental training nually. Based on such a procedure, the company conserves the ecosystem takes place on the ATOM project site in Pakistan on waste segregation and the environment for areas near a project site. so that different types of waste are not mixed by providing specific types of wastes storage bins.
Total Amount of Expenditure and Investment in (Unit: KRW million) Environmental Protection Domestic Overseas
Type 2014 2015 2014 2015
Process Plant 38 1 66 Building Works 778 1,450 - - Infrastructure & Environment 102 626 4 33
Management of Raw and Subsidiary Materials Waste Management Training (ATOM site in Pakistan) Various raw materials are used to construct buildings on construction sites of Hyundai Engineering, including steel reinforcement, ready-mixed concrete, cement, sand and aggregate. The company continues to seek measures to utilize alternative raw materials including formwork substi- tutes and recycled aggregate to efficiently utilize resources. By doing so, the company seeks to prevent environmental pollution and minimize the material procurement cost.
Volume of Raw Materials Used Amount of Waste Generated and Methods of Treatment
Domestic Overseas Domestic Overseas
Type Unit 2014 2015 2014 2015 Type Unit 2014 2015 2014 2015
Reinforcing steel bars ton 592,026 2,342,238 4,315 8,872 Waste concrete debris ton 156,029 147,770 267 4,254
Ready-mixed concrete m3 422,425 1,106,246 41,330 90,397 Sludge (sludge generated at project sites) m3 810 1,119 - 31
Cement ton 14,793 23,632 8,648 7,509 Waste asphalt ton 27,044 56,817 50 956
Sand m3 46,855 124,282 12,423 13,832 Mixed wastes m3 42,657 39,527 27,475 37,669
Aggregates m3 151,425 593,702 178,083 132,243 Waste wood m3 13,774 11,738 2 38
Asphalt concrete ton 13,687 106,795 68,100 102,221 Others ton 20,794 43,779 62 275
Timber ton - 70 78 105 Total amount of waste generated ton 261,108 300,750 27,856 43,223
Concrete ton - 29,360 24,445 207,051 Recycled (Outsourced handling) ton 194,355 216,325 1,911 3,271
Formworks m2 629,446 1,413,318 18,742 71,914 Recycled (Internal treatment) ton - - 11 136
Smaller lump coals kg 145,630 321,505 - - Incineration ton 7,732 4,182 1,622 5,340
Others (concrete pile) m 229,112 301,613 20,368 2,982 Buried ton 59,022 80,244 23,941 27,420
38 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Management of Air Pollutants Water and Wastewater Management The company strives to prevent the occurrence of dust since it might Wastewater generated after using water in the course of construction occur and spread on particular projects sites, given the nature of the and commissioning on project sites is legitimately treated below the lo- construction industry. For project sites, the density of fly ash within sites cal emission standards. Reverse Osmosis Treatment (ROT) facilities and is periodically monitored and an anti-fly ash net is installed along with Waste Water Treatment (WWT) facilities are installed on the UKAN site in the removal of topsoil in areas of fly ash and gravel packing. Uzbekistan, self-purifying and discharging the wastewater amounting to 120~150 tons a day on the site. On the TACE site in Turkmenistan, the Energy and GHG Management water that is purified using WWT facilities and evaporation ponds is used Hyundai Engineering uses gasoline, diesel and electricity as major energy for sprinkling the prevention of fly dust. The company is striving to raise sources to execute projects, and the key emission sources of GHGs are the recycling rate by finding measures to additionally utilize non-potable to manage on-site equipment and power generators. The heat recov- clear water. ery system and techniques are applied at construction sites to save the amount of energy used and reduce GHG emissions. Various campaigns Eco-friendly Communication are carried out to save electricity in the company building. The company conducts diverse eco-friendly communication activities to control environmental pollution and raise awareness of the importance of environmental conservation. On the LSR site in Yeosu, employees of Hyundai Engineering and its partners conduct monthly collections of garbage and waste in the nearby 3km-long section. Meanwhile, the Setup of the GHG Inventory System composite facility site in Seocho-dong installed and operates a facility The company started to measure and manage GHG emissions on all sites to control the occurrence of fly ash. Hyundai Engineering’s excellence in nationwide by completing the setup of the GHG inventory system in Sep- operation and management has been recognized, enabling the site to be tember 2015. The company plans to reduce GHG emissions by analyzing selected as a construction of excellence in 2015 by the head of Seocho data on overseas sites. District Office.
Case Study Amount of Energy Used and GHG emissions
Domestic Overseas Creation of Environmental Value by
Type Unit 2014 2015 2014 2015 Exploring a New Waste Treatment Market Amount of direct GJ 63,785 47,619 20,374 121,626 energy consumed Amount of indirect GJ 186,673 223,807 35,511 56,426 energy consumed Total amount of energy GJ 250,458 271,427 55,885 178,052 used Amount of direct tCO eq 4,230 2,801 1,411 8,455 emissions (Scope 1) 2 Amount of indirect tCO eq 9,066 10,870 5,237 8,321 emissions (Scope 2) 2 Total amount of tCO eq 13,296 13,671 6,648 16,776 GHG emissions 2 The company organized the Master Plan Workshop for Waste Improvement* in Bogota in Colombia in 2015. The company plans to secure a gateway to dominate the environmental Amount of Water Used market by exploring and initiating projects for environmental cooperation and investment measures in Colombia. This will Domestic Overseas be conducted through the master plan program, resolving Type Unit 2014 2015 2014 2015 environmental problems in the country which would be in- Total amount of water duced by rapid urbanization and suggesting adequate waste L 34,025 101,492 113,772 184,199 used treatment techniques suited to the region.
* It is initiated by the Ministry of Environment and Korea Environmental Industry & Technology Institute (KEITI) through the master plan pro- gram for environmental improvement in developing countries for Ko- rean companies to enter overseas environmental markets. Hyundai Engineering conducted its service for about 14 months by forming a consortium with Dohwa Engineering and E-Teco Asia.
39 2014 - 2015 Hyundai Engineering Sustainability Report
Enhancement of Safety and Health Management
Safety and Health Management System Hyundai Engineering continues to maintain the OHSAS 18001 and ISO 14001 certifications, striving to prevent accidents through diverse pro- grams. As a result of such endeavors, the company was ranked No. 1 for the lowest accident rate (0.12%) among the top 10 construction compa- nies in executing constructions in Korea. The company plans to establish the world-class HSE management system based on international stand- Video Clip on the Life Saving Rules ards by acquiring the ISO 45001 certification which is currently being under development. Safety Inspection Activities Pursuit of Zero Accidents All the employees at the head office are mandated to implement safety Hyundai Engineering is waging a zero-accident campaign at domestic inspections on target sites when they are on a business trip. In writing a and international sites. By conducting the zero-accident campaign driv- business travel report, items on safety inspection must be filled in. Over en by the company’s belief in respect for humans, Hyundai Engineering 120 domestic and international on-site safety inspections a month have strives to prevent industrial accidents autonomously through joint en- been implemented. Results of safety inspections are used for regular gagement with its workers. Moreover, the company is rewarding sites safety inspections. and employees for having achieved no accidents in order to boost em- ployees’ morale and facilitate the zero-accident campaign. Strengthening Fire Prevention Activities Hyundai Engineering designated the 15th of each month as the Fire Rewarded Sites for Having Achieved No Accidents in 2015 Prevention Inspection Day with special training on inspections and fire prevention for each site. Employees of sites including site managers and Type Site Content Institutes selected managers of partners inspect offices, construction sections, equipment Achieving the zero acci- Petronas Carigali (Turk- TGEM in Turkmenistan dent target of five times menistan) Sdn. Bhd. and fire extinguishers. Special training on fire prevention is conducted Achieving the zero acci- Turkmenbashi Oil Com- for workers. TORE in Turkmenistan dent target of ten times plex of Oil Refinery Moreover, items on a checklist for inspection are thoroughly identified, Overseas National University in Achieving the zero acci- Ministry of Defense in and inappropriate items are subjected for correction. The company pre- Turkmenistan dent target of five times Turkmenistan vents fires on-site camps and temporary buildings by using inflammable Achieving the zero acci- Safety and Health Wirye Amco Town Floriche dent target of three times Agency materials, installing fire preventive facilities and providing a guideline Hillstate Seocheon which indicates the operation of anti-smoking areas, etc. Tera Tower in Munjeong Station Imposition of Rights on Flagmen/Security Guards and Operation of Achieving the zero Safety and Health Nowon Premier’s Amco Call Centers for Safety Domestic accident target Agency Wirye Amco Town Centro El Although flagmen and security guards on sites play key roles for on-site Daegu Seocheon Amco safety management, they have a low status on sites and are not given Town The Solarnew the control right. To improve such problems, Hyundai Engineering, im- posed on flagmen the right to summon construction supervisors, and Evaluating Risks by Work Category security guards to only allow vehicles of drivers who have completed Hyundai Engineering prepared a risk assessment model by work catego- training before entering the workplace. ry to provide a proper risk assessment guideline. This helps successful The company operates an integrated call center for workers of partners completion of projects by evaluating and reducing risks which might oc- to report and inquire on safety matters to immediately transfer them to cur at the construction stage. It enables the managers and supervisors the companies and take action for them. The company also implements and partners on site to take improvement measures by identifying risks a program to verify flagmen’s qualifications and self-driven training en- in the middle of construction. A booklet on the process plant, power & gaging flagmen so that qualified flagmen could be dispatched to sites. energy plant and building works has been published, which is distributed to each site, executive and top management, and is used as a material Process of Flagmen’s Exercise of the Calling Right for HSE training. Non-implementation of drivers’ signal/control
Safety Management of Project Sites Hot Line Hot Line Construction supervisors Flagmen (Flaggers) Senior safety mangers Calling of construction Calling of safety Strengthening Safety Awareness supervisors managers Instruction on the Upon completion of drivers’ non-implementation of Hyundai Engineering is raising employees’ awareness about safety safety training construction managers through an open competition to choose a safety slogan. ‘No Safety No [Reporting to the integrated safety call center] Identification of site Drivers situations Tomorrow’ was the selected safety slogan, which is being now used for Linkage of the out system/the time Out System: a scheme out system Time Out: suspension various banners, PC background screen and documents, etc. Moreover, to expel from sites of construction for the a safety campaign and a video clip on the ‘Life Saving Rules’ were pre- given work * Time-Out system: It refers to the temporary work suspension right to block the resumption of work after taking actions for pro- pared, and the video has been aired during a weekly morning meeting, gression and situations of construction work violating safety rules. It cannot be exercised by safety managers inducing employees’ interest and strengthening a safety awareness. now, and it is expected to be expanded in the second half of the year by devising specific measures.
40 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Strengthening Safety Management for Overseas Sites Employees’ Health Promotion In some overseas sites, the following issues have emerged: inadequate application of the safety management system due to the absence of On-site Employees’ Safety and Health Management a local manual; inadequacy of the standard for the expense of safety The company manages the health of all the workers including employees management cost; and safety managers’ low awareness about safety. of partners for each site. Safety awareness is enhanced through induc- Accordingly, the company strengthened systematic safety management tion training, regular training and special training, and workers’ health is and initiated the system setup. The company identified the current sta- managed through mobile health check-ups. tus and problems for 12 specific items in six areas - organization, sys- On the TACE site in Turkmenistan, a 24/7 medical clinic is up and running tem, training, safety management expense, partners and others - and to assure employees’ safety and health. Salt tablets are provided during established measures for improvement. a season of scorching heat, and the frequency and time of resting are adjusted depending on the temperature. From April to June when there Area Item is a high frequency of snake infestations, snake repellents are placed and antidotes are made available. As such, the company is striving to ensure •Establishing standards to dispatch overseas employees and safety officers per construction cost workers’ health and safety. Organization •Setting R&R for corporations/overseas employees/safety officers •Improving the reporting system for local safety officers Emergency Medical Aid Service at Overseas Project Sites
•Operating the HSE portal Hyundai Engineering ensures that adequate medical services are System •Preparing a local manual promptly provided to its employees at overseas sites when they are di- •Setting up medical support service agnosed with a serious medical condition due to disease or injury. It pro- vides an emergency medical support service for employees and those of Improving the level of local safety officers and installing safety partners working in relatively high-risk areas with high accident or injury Training • training sites risks comprising 24-hour phone-based medical consultation, location and advance reservation of local medical service institutions. It also of- fers a transfer service in key dangerous project areas with relatively high Safety •Payment/Budgeting/Analysis, scope of standards of Management partners, specialized companies in safety facilities, occupational accident or injury rates such as Iraq, Pakistan and Algeria. Expense standardization of safety items, etc. The ATOM site in Pakistan signed an MOU with a local medical insurer in Pakistan. Employees in need of medical help or emergencies can receive •Evaluating partners and reflecting in safety-related special medical services in a hospital near their site. Partners contracts •Introducing the penalty system
Others •Providing on-site safety patrol vehicles
Case Study
ATOM Site in Pakistan Pursuing and Builds up the Safety First Principle The company communicates with local employees and shares a safety culture with them based on the ‘safety first’ principle to spread the safety awareness of local partners and workers and strengthen safety management.
Key Safety Management Activities ▶ Signing an MOU with a local Pakistani medical insurer, and promptly providing medical services in a nearby hospital for employees in need of medical help or emergencies ▶ Catering to needs of clients on safety in the chemical process including Pre Startup Safety Review (PSSR), General Safety Inspection and special awareness training ▶ Dynamically complying with Pakistani safety management laws
“Always safety first on the ATOM site!” “Efforts to execute a safe project!” At first, we had difficulties with the basic construction Hyundai Engineering requires all partners to comply work for structures due to a lack of measures on the clay with safety standards on sites. The Pakistani safety ground of the ATOM site. However, we suggested replac- culture is not up to the level of Hyundai Engineering ing it with granular soil, which led to economic efficiency yet. That is why education/training on safe opera- and safety in the basic construction work. Yet, numerous tions is taking place on sites and through programs in challenges are confronted: sub-standard execution ca- accordance with a safety training plan for sites. As a pacity of local companies; conditions for equipment pro- consequence, the safety level of all sites on average is curement; workers’ skills; and religious and geographical improving day by day. features. Nevertheless, we are overcoming them with uni- ty, endurance, a winning attitude and pride as members of Hyundai Engineering. Manager Kim, Hak Bong | Civil works manager Mohammed Qasim | HSSE manager ARL Upgradation Project-2013
41 2014 - 2015 Hyundai Engineering Sustainability Report
Talent Management Escalating Talent
Securing competent talents with seasoned experiences has become ever more important due to the diversification and globalization of projects within the construction industry. Acquisition and reten- tion of talents, and buildup of corporate competency to develop them are directly linked to enhance- ment of corporate competitiveness. Spread of the work-life balance, fair performance appraisal and Social compensation, and labor-management harmony through open communication are critical factors to Context fundamentally support talent management by creating a sound corporate culture.
•Providing competency •Strengthening global expert development training training •Supporting new employees to •Expanding customized support settle in programs Our •Striking a work-life balance Our •Facilitating family-friendly Responses •Building a creative corporate Plans programs culture •Pursuing a new corporate culture
Designated by Training Hours the Ministry of Employment Return Rate after the Use per Employee and Labor in 2015 of Childcare Leave
2015 One of the Top 100 Companies with Performance 56hours Best Performance in Job Creation 83%
Voice of Stakeholders
“Hyundai Engineering will be reborn as a flexible, yet strong player suited to its prestige as a global organization.”
In order to dominate competitive advantages in competitions which are getting fiercer, securing and developing talents with global competency is critical. As such, Hyundai Engineering is focusing on job training and global com- petency buildup training needed for Engineering Procurement Construction (EPC) projects. The company is striving to enhance its corporate competitiveness by focusing on selecting and nurturing employees to be appointed to overseas sites, that is, cornerstones for the company to advance into overseas market where its presence is being scaled up. After a merger with Hyundai AMCO in 2014, Hyundai Engineering is making continued efforts to find mutual sim- ilarities, and exerting the synergies on a gradual basis. Competitiveness has improved through mutual comple- mentation for different business areas. In the area of talent development, some of the achievements include the systematization of job training and setup of a talent development system in job operations for plants. Hyundai Engineering will be reborn as a flexible, yet strong player suited to its prestige as a global company through activities to internalize the corporate culture by establishing a new corporate culture.
Team Leader Byeon, Woo Ryang/ Talent Development Team of Hyundai Engineering
42 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Strengthening Global Talent Competency
Talent Recruitment Talent Development
Securing Excellent Talents Talent Development Strategies and Process Hyundai Engineering strives to select new employees every year and nur- Talents of Hyundai Engineering are the subjects of creating a new value, ture excellent engineers. The company is making all-out efforts for the and establishing a corporate culture of innovation and challenges. The sluggish construction industry to achieve sustainable growth through company is developing specialists, reinforcing international competency talent management by reinforcing its core area of design competency. and conducting tailored training suited to individuals based on its tal- The company’s recruitment criteria for selecting competent engineers ent development measure that the human capital equals a company. As have been reinforced to steadily intensify their competency through the such, Hyundai Engineering is focused on talent development. transfer of design know-how. The company is making steady efforts to secure competent seasoned workforce to seamlessly execute construc- tion work and upgrade its design competency. By doing so, high quality HRD Targets jobs are provided, and preferential recruitment is available for the social- ly vulnerable including the disabled.
2014~2015 2016~2017 2018~2020 Acquiring Global Talents Confronting fiercer competitions with global top players is an inevitable part of leaping higher as a global engineering company providing com- prehensive engineering solutions with the best technology. The reality Systematic HRD Strategic HRD Global HRD is that executing projects with the domestic workforce alone has many Establishing/Operating Stabilizing the Sophisticating the HRD obstacles. HRD fundamentals HRD quality to reach the top level Securing global talents equipped with cutting-edge technologies is essen- in the industry tial at a time when the value chain is to be expanded up to the basic design area. The domestic workforce can also be nurtured through business ex- changes with the gaining of a global workforce. To this end, the company Key Directions for HRD is striving to acquire global core talents for business operation every year. Systematically strengthening Strengthening global competency First, the company is strengthening points of contact with global talents specialized job competency •Establishing a system to develop who could be potential recruitment candidates although they might not •Establishing a specialized job training workforce to execute overseas projects system for each division be actively looking for jobs, while reinforcing the traditional talent acqui- •Setting up an environment to share •Developing training materials and experiential knowledge for executing sition strategies which target a small number of the workforce which is curricula overseas projects active in job searching. Moreover, global social networks including Linked-In are utilized for the Reinforcing leadership competency Fostering core talents company to implement strategies for channel diversification. The com- pany is doing its best so that global talents may adapt to and intermingle •Strengthening the leadership of PM/ within the organization quickly. site managers •Establishing a system to develop the •Intensifying the leadership of team core talents of Hyundai Engineering leaders/executives
Creating an advanced corporate culture Improving the training infrastructure
•Establishing Hyundai Engineering’s •Establishing an online learning exclusive corporate culture environment •Developing and executing programs to •Improving the training system and internalize the corporate culture strengthening HRD competency
Case Study
Hyundai Engineering, one of the Top 100 Companies with Best Performance in Job Creation In March 2015, Hyundai Engineering became the only domestic major construction company to be nominated as one of the ‘Top 100 Companies with Best Performance in Job Creation of 2015’. The company played a leading role in introducing a job creation scheme by implementing the re-employment-based wage peak system for the first time in the construction industry in 2014. It has significantly contributed to job creation through dynamic overseas entry by becoming No. 1 in overseas order placements (2015) along with its dramatic external growth. Moreover, it was designated as the Family-friendly Certified Corporation by the Ministry of Gender Equality and Family in December 2014, and was selected as the ‘Best Companies to Work for’ by the Job Planet and Fortune in 2015.
43 2014 - 2015 Hyundai Engineering Sustainability Report
Development of Global Talents
▶Specialized Job Training ▶Training for Experienced Employees The company has strengthened its company-wide job training system It is critical for experienced employees to understand a new corporate to reinforce the job expertise and management competency of manag- culture to adapt quickly to their job functions and work life. Hyundai En- ers/supervisors suited to a project amid the increases in EPC projects. gineering supports early adaptation through training regarding the cor- In-house instructors who have completed an instructor development porate vision, culture and various systems in place. Moreover, the com- program transfer the job expertise and technical know-how needed for pany runs the ‘Buddy’ program to target employees in similar job ranks job execution in projects. Training programs in line with job ranks and so that they could form personnel networking within the organization. functions are in operation so that competency for project execution and employees’ Individual Development Plan (IDP) could be established. The ▶Training for Foreign Employees company plans to develop and operate a course to nurture key manag- Talents from different countries including France, Vietnam, India, the ers/supervisors. Philippines and Russia work at Hyundai Engineering where various programs are operated for foreign employees to exert their capability ▶Training for Employees Appointed Overseas and Vacationers through adaptation to the Korean culture and the company. Not only Many employees at Hyundai Engineering work on overseas project sites are Korean language courses offered, but training on different cultures, due to the nature of its business operations. Thus, the company extends Korean cultural experiences and programs to network with Korean em- help for employees appointed overseas to adapt to their site in an initial ployees are also in operation. phase through periodic training. Training takes place on the HR scheme, systems and safety which must be recognized prior to being appointed Training Performances to sites. Amid the diversification of target countries, the company has strengthened not only training on the understanding of other cultures Classification 2013 2014 2015 Number of internal training courses but also meetings for returnees from abroad. Periodic vacationer train- 31 37 39 opened ing for employees on overseas sites helps them communicate with the Number of hours of training completed 44 64 56 headquarters and manage their stress. per person Training expenses per person (KRW) 1,401,447 550,000 553,300 Early Settlement of New Employees
▶Training for New Employees ▶Selected as the Best Place to Work The company conducts diverse levels of training for new employees to Hyundai Engineering was nominated as one the ‘Best Companies to adapt to their work life early, including the introductory training at the Work for’ by the Job Planet and Fortune Korea in 2015. The company re- Group and company levels and practical OJT sessions. EPC project-spe- ceived the excellence award in the comprehensive sector in the industry cialized competency training has been conducted since 2014 by adopting of conglomerates, and the top excellence award in the top management a course for early upgrades of new employees’ performance skills. The sector in the industry of conglomerates. Hyundai Engineering is the only company also extends support for them to stably settle in their organ- unlisted construction company to have increased level in evaluation, and ization through not only such training but also the mentoring program in particular, the company had the highest employee satisfaction in 2015 with senior employees and summer retreats. despite of its merger in 2014.
Case Study
Preparation of a Moving Toon for Training for Design The Process Plant Division prepared and utilizes ‘a Moving Toon for Training for Design’ as a training material for employees to easily access. The moving toon for training spe- cifically covers possible errors which might likely occur in the project execution stage and improvement practices. Some of the topics are: ‘extension of the construction period due to omission of design volumes’, and ‘on-site cases with problems due to delays in design and procurement’. The moving toon for training has been highly acclaimed because it can be applied to practical work by conveying the message easily and it raises employees’ accessibility to materials. The Process Plant Division plans to boost training effects by utilizing more diverse media materials including the moving toon and ensure that it could be conducive to successful project execution. Moving Toon for Training for Design
44 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Spread of the Talent-oriented Corporate Culture
Work-Life Balance
Family-Friendly Programs Hyundai Engineering annually offers opportunities for employees and their families can spend time together through overseas English camps in summer and winter, mini debates camps, etc. The company also builds a basis for the family-friendly management by organizing various activities including ski camps and essay contests every year.
Childcare Support for Employees The company runs a variety of childcare support programs for employ- ees to exert their competency in a more comfortable environment with- out much childcare burdens. To alleviate this, Hyundai Engineering and a Group affiliate opened the Hyundai Dasom Children’s Home, an in- Hyundai Engineering’s Essay Contest and Picnic with Employees’ Families house childcare center. Since 2015, the company has also been providing desks designed for pregnant women in order to increase their conveni- Benefits Package ence while working. The company also encourages employees to use the childcare and maternity leaves. Employees on childcare leave do not ex- Hyundai Engineering implements diverse welfare policies to guarantee a perience any disadvantages in terms of employment, pay or promotion. higher quality of life for employees. The company sponsors comprehen- sive health check-ups for employees and their families in order to pro- mote their health. In 2015, the company spent KRW 1.03 billion to pro- vide comprehensive health check-ups for 1,988 employees and 1,229 Use of Childcare Leave (Unit: persons) spouses (totaling 3,217). Moreover, the company offers other health
■ Number of persons on leave programs including metabolic syndrome check-ups and an anti-smok- ■ Number of persons returned ing clinic aligned with the Medical Clinic of Jongno-gu District Office, ■ Persons who work for 12 months after their return 50 and a fitness measurement program from the Korea Sports Promotion Foundation.
Key Welfare and Benefit Programs
Support for childbirth/ Support for leisure maternity protection 23 21 22 Support for the operation of intra-com- Childcare leave, payment of childcare 20 pany communities, bi-weekly Family Day allowances (infant to middle school age (leaving work at 5pm), and recuperation children), offering of the desks designed 15 center, and payment of summer holiday for pregnant women, the Hyundai Dasom 12 13 allowances children’s home 9 Support for housing/ Support for medical/ security healthcare
Low-interest rate housing loans by raising Comprehensive health check-ups, group 2013 2014 2015 a social welfare fund disability insurance
Statutory welfare/ Performance Appraisal and Remuneration Support for education benefits Hyundai Engineering complies with laws and regulations in areas where each of its projects is executed, including the ‘Fair HR Guidelines’ of the Awarding of scholarships for employees’ children, allowances based on qualification Maternity leave Ministry of Employment and Labor. The company focuses on fairness certificates, support for telephone English and rationality in evaluations for performance assessment and remu- courses neration, and enhancement efficiency in operating assessments. First, Welfare and Others evaluator training takes place for fair performance assessments to boost benefits - selective their awareness about the importance of assessment. In 2015, two train- ing sessions were offered, and the number of sessions will expand start- Operation of the company cafeteria, commuting bus, and gifts to selected Welfare cards, personal annuity, retirement ing in 2016. employees on the corporate anniversary and pension system national holidays - Number of DB-type subscribers: 5,573 For evaluators working in Korea or other countries, meanwhile, evalu- Selective gifting on employees’ anniversaries - Number of DC-type subscribers: 147 (birthday of parents, children’s college ator training content is distributed, and their communication with em- (KRW 157.3 billion in 2014/KRW 183.4 admission, Children’s Day, children studying billion in 2015) ployees is strengthened through performance management interviews. for the college entrance exam, and health re- The company plans to upgrade the fairness of assessments by strength- juvenating food), Parents’ Day for overseas workers and birthday gifts for spouses ening the actual monitoring and assessment system and reflecting the characteristics of each job function.
45 2014 - 2015 Hyundai Engineering Sustainability Report
Strengthening Employees’ Communication
Intensifying Mutual Understanding and Establishing a Cooperative Scheme Hyundai Engineering expands exchanges among organizations and strengthens communication among members for them to generate syn- ergies through cooperation. As the first step, the company organized a communication workshop in Vietnam for team leaders throughout the company in the first half of 2016. This facilitated better communication among team leaders in business divisions and supporting divisions who have almost no chance to meet while working. Accordingly, face-to-face contacts between organizations will expand to strengthen their collab- oration.
Operation of the Grievances Committee Hyundai Engineering runs the Grievances Committee which handles em- ployees’ grievances by providing solutions or appropriate alternatives to employee grievances by analyzing their causes. Employees could raise objections to irrational systems or practices by regular/irregular, online/ offline communication system which the management fails to notice in advance. Adopting a Unique Communication Program with Foreign Employees
Opening of the Employee Counseling Center (ECC) The 24/7 hotline and the Employee Conseling Centors (ECCs) are of- Operation of the Labor-Management Council fered to employees for difficulties and ethics related to the company. The Hyundai Engineering operates a labor-management council where all ECC directly collects the issues raised by the employees and responds to employees belong - except the division head or higher officers - to them immediately. protect the rights and benefits of employees while pursuing the sound development of the company. The council, which consists of an equal Core Value & Engagement Survey (CVES) number of representatives from labor and management, discusses mat- Hyundai Engineering takes part in the Core Value & Engagement Sur- ters related to enhancement of productivity, distribution of earnings, vey targeting 27 affiliates of Hyundai Motor Group on a yearly basis. human resources, and labor and welfare issues at both quarterly regular Moreover, the core value programs of the next year are continuously meetings and ad hoc meetings. developed based on the response outcome. Examples of programs are: The council gathers information concerning grievances, recommen- Humanity Concert, discovery of best practices, preparation and sharing dations and issues that may affect the employees, in addition to wage of web toons and the Core Value Week Festival. The company dynami- negotiation, distribution of achievements, and welfare or benefits. Com- cally collects and reflects employees’ feedback on the program to con- piled opinions are fine-tuned at ad hoc informal meetings and finalized centrate on communication. at regular or ad hoc meetings where both labor and management are equally represented, before being delivered to the employees. In par- ticular, business disruptions are minimized by informing the employees of important matters concerning management changes or reshuffles at least 30 days in advance. Case Study
Designation as the Family-friendly Certified Corporation The family-friendly certification system intends to enhance the quality of life for workers and their families and raise corporate competitiveness by creating a family-friendly corporate culture with a work-life balance. To this end, various programs are in operation: flexible working hours, support for childbirth, childcare and educa- tion, support for dependents and support for workers. Hyundai Engineering was designated as the Family-friendly Certi- fied Corporation by the Ministry of Gender Equality and Family in 2014. This demonstrates that the company brings up not only the happiness of employees’ families but also corporate competitive- ness through family-friendly management.
46 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Special Page. Establishing a New Corporate Culture
Creating a System for a New Corporate Culture New Corporate Culture System Hyundai Engineering strives to become a great workplace to work to fundamentally boost corporate competitiveness VISION Global Premier Engineering Partner through talents, and implement a people-centered corporate culture where the company and employees develop themselves in tandem with each other. We strive to make a workplace loved by all the employees To this end, the company conducted a project to find directions Charter by sharing the three directions of ‘Pioneer, Professional and for a new corporate culture in order to create a flexible corpo- Humanist’ based on rationality and trust. rate culture and find the driving force in 2015.
Operation of the Corporate Culture Council Pioneer Professional Humanist Hyundai Engineering runs the ‘Corporate Culture Council’ for execution for tasks for change and their continuous manage- Aims ment, while systematically establishing a corporate culture. Through the council, the company not only puts in place sys- tems, programs and infrastructure which might impact the corporate culture but also conducts improvement activities, Make bold Think about Approach attempts and what is best shares performance and is engaged in collaboration. The com- Code of first and listen Conduct complete them and make the pany continuously monitors tasks for change by measuring the carefully. correlations among outcome including factors related to the fully. best one. corporate culture such as internal communication and working conditions, and employees’ satisfaction, and their impact.
Directions for Changing the Corporate Culture
•Lack of responsibility and Key •Weakened and decreased sensibility •Intensified individualism •Needs for systematization •Needs for strengthening issues challenging spirit •Needs for stronger on- •Bureaucratization and consensus building work-life balance site authorization
•Continuously upgrading the •Establishing the headquarters •Strengthening a system to •Planning institutions and •Encouraging a work-life learning system for success/ & on-site leadership model support adaptation to one’s strengthening actionable balance by considering job failure and strengthening related organization change management functions, the organization •Suggesting clear criteria training, improving a leader •Facilitating organizational •Improving HR system related and a region for working Direc- for success and failure selection process networking for friendship and on-site working and •Expanding the scope of tions for •Managing messages •Expanding face-to-face a sense of belonging a small group program targets to change hampering the challenging contacts between leaders and •Forming and spreading a •Strengthening communi- employees’ families spirit employees code for a united identity cation on the leader-driven •Strengthening the competen- vision and strategies cy to provide organizational support services
Executing Tasks for Changing the Corporate Culture To pursue a new corporate culture, the company devised directions for change based on the three aims of ‘Pioneer, Professional and Humanist’, based on which, 21 tasks for change were selected and are executed.
Key Tasks for Change in 2016
Facilitating Upgrading Empowerment Programs for HEC Work communica- Work &Life of site-related of on-site Empowerment emotional Change Smart tion among Balance training communica- support tion divisions
Establishing a Organizing Holding a workshop Improving Standardizing and Operating a healing Facilitating face-to- Offering planned training system for on-site seminars to spread the regulations on simplifying program for face contacts in- leaves and the personnel appointed at home and abroad corporate culture delegation decisions documents employees’ cluding a workshop Family Day to overseas sites during Team mindset (aligned for communication Seminars with an outside among team leaders counseling center)
47 2014 - 2015 Hyundai Engineering Sustainability Report
Win-Win Management Winning Together
A need for securing competitiveness through shared growth with partners is gradually increasing as the corporate competitive landscape has recently expanded to competitions among corporate supply chains including partners. Supply chain management that supports partners’ social responsibilities and imple- menting fair trades beyond simple business relationships is gaining a greater importance. Growth through Social the competency buildup of competitors, and risk management through partners’ economic, social and Context environmental issue management have become more and more essential.
•Spreading a sustainable culture for •Establishing a system for shared shared growth growth •Establishing a system for fair trade •Putting in place an order for fair monitoring trades •Expanding financial support programs •Diversifying the support for by securing the financial soundness of Our partners Our partners Responses •Systematizing communication Plans •Adopting a scheme for listening to and among partners reflecting the complaints of partners
Designated by Korea Amount of Number of Commission for Corporate Funding Trainees in Partners Partnership in 2015 2015 ‘ Excellent’ rating in KRW 21.2 billion 3,081people Performance the Win-Win Index
Voice of Stakeholders
“I expect that Hyundai Engineering’s activities for shared growth throughout the entire supply chain will be sustained.”
I believe that improving the competitiveness of partners can be directly linked to the competitiveness of Hyundai Engineering since the corporate competitive landscape has been recently expanded to competency competitions among corporate supply chains. In this sense, it seems that Hyundai Engineering is engaged in supporting activities in consideration of SMEs’ conditions by dynamically gathering social demands for shared growth. Such activities include strengthening the financial soundness of partners, maintaining technical competitiveness and training. The company is keenly involved in communicating with partners, which is the basis for shared growth, along with train- ing on 3D-CAD for plans to secure partners’ exclusive capabilities for plant projects. I think that in order to expand the shared growth of Hyundai Engineering, its CSR for the supply chain must be strengthened, targeting the entire supply chain covering not only primary partners but also secondary and tertiary ones. The company must also remove elements of irrationality in transactions and strive for fair contract settlement. As it is the case with any market, the construction industry is driven and developed by various stakeholders. I expect that Hyundai Engineering could proactively communicate with various stakeholders including partners, and operate diverse shared growth programs, thus exerting its leadership throughout the society in its efforts for shared growth. President Kim, Seok Hee/ Bolim Construction Co., Ltd.
48 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Implementation of Shared Growth
Win-Win Management Strategies Hyundai Engineering is implementing a sustainable growth for the future Fair Selection and Evaluation of Partners based on the greater mutual competitiveness with partners. The compa- ny is engaged in many efforts including putting in place an order for fair ▶Expanding the application of subcontractor-oriented selection/ trades and supporting the growth of partners by establishing a system to evaluation to vendors beef up its capabilities of taking action for shared growth. The company has expanded the application of subcontractor-oriented selection/evaluation to vendors so that fair trade opportunities could be provided to new companies, and transparent competitions among the Strengthening Mutual Competitiveness existing companies could be ensured. In so doing, the company can ex- between Hyundai Engineering and Partners pect to secure partners’ continued growth opportunities and strengthen its competitiveness for procurement. Realizing a sustainable growth for the future
▶Expanding the criteria for selecting/evaluating companies to be applied to overseas construction work The company has expanded the criteria for selecting/evaluating con- struction and vendors which have been confined to domestic construc- tion work to be applied to overseas construction work. In addition, the Establishing Putting in Supporting company has computerized the bidding process to ensure fair compe- a system for place an order the growth of titions among domestic and overseas companies. As a consequence, shared growth for fair trades partners competent domestic companies could be facilitated to make overseas advancements, raising their continued growth potentials. Hyundai En- gineering, meanwhile, could establish a system for shared growth by securing competitiveness in executing overseas construction work. •Establishing a •Improving •Supporting department exclusively transactional management stability for shared growth relationships between for partners ▶Improving measures for managing unregistered work types •Devising and large companies and •Supporting The criteria for managing/operating partners which used to be confined partners implementing yearly competency buildup to registered work types have been expanded to unregistered ones in plans for shared •Complying with for partners growth obligations for large small-scale transactions. In so doing, the company set the stage for companies small partners to seek management stability through fair trade opportu- nities and grow further as competent companies.
Introduction of Four Major Guidelines for Fair Trades Operation of the Partner Council Hyundai Engineering executes and monitors diverse measures to es- The company runs the Partner Council to share its vision with partners tablish an order for rational and fair trades. First, it complies with the and solidify a system for shared growth. The council, which launched in ‘Four Action Steps for Fair trades’ to bring up transparency and fairness 2013 with 50 companies, has been expanded to include 123 companies in selecting and managing partners, which are shared by all partners in in 2016. As such, the company is broadening the scope of companies transactional relationships. for transactions. Moreover, the company adopted the standard subcontract agreement The company shares its corporate status and its key policies on procure- for overseas construction work in 2015 and uses it, following the intro- ment, quality and safety, etc. through the council, and exchanges ideas duction of the one for domestic construction work, for the sake of fair on directions for mutual development. contracting with partners.
Case Study
Acquisition of the ‘Excellent’ Rating in the 2015 Win-Win Index The company has forged partnership-oriented trust by signing a voluntary agreement Performance in the Evaluation of the Win-Win Index with partners to implement fair trades and shared growth since 2012. As a result of its efforts to beef up the win-win cooperative partnership, the company acquired the ‘excellent’ grade in both the Fair Trade Commission (FTC)’s evaluation of implemen- tation of fair trade contracts, and the Korea Commission for Corporate Partnership’s evaluation of the Win-Win Index. The company also took the helm in creating an environment for shared growth in the construction sector. As such, it acquired the Good Excellent Excellent highest rating for three consecutive years from 2014 to 2016 in the evaluation of mu- 2013 2014 2015 tual cooperation among construction companies organized by the Ministry of Land, Infrastructure and Transport.
49 2014 - 2015 Hyundai Engineering Sustainability Report
Win-Win Management Programs
Fund Formation and Support Improvement of Subcontracting Payment Terms The company jointly formed a fund for low-interest loan extensions The company is continuously improving its subcontracting payment worth KRW 42.4 billion in 2015 to ease the financial burden of partners. terms to stabilize the management of partners in transactions. The pay- The scale of the fund was revised upwards to KRW 50 billion in 2016. The ment period was shortened from 14 days on average to less than 13 interest rate on loans could be additionally discounted by 1.2% for com- days. Payment delays are prevented through the monitoring of the pay- panies recommended by Hyundai Engineering through a fair screening ment status. Moreover, Hyundai Engineering pays in cash for progress process. Management funds are offered as interest rate-free loans in or- payments of KRW 100 million or less, and pays 100% in cash by utilizing der to boost the quality through partners’ stable execution of projects. secured loans of credit sales. The company extended loans worth KRW 1.5 billion in 2015 to support partners’ financial soundness. The loans were scaled up to KRW 6 billion Expanding the Performance Sharing System in 2016 as the company strives to help increasing partners’ manage- The company sponsors research costs for partners conducting joint ment value. R&D, and distributes industrial property rights acquired through such research. The company also runs a performance sharing scheme to Performance of Financial Support Programs (Unit: KRW 100 million) fairly distribute the performance generated through joint research ef- forts. In 2015, in particular, a multilateral performance sharing scheme ■ Shared Growth Fund ■ Direct loans was adopted to expand the scope of performance sharing to second- ary partners, thus broadening the basis for win-win cooperation. The 212 190 company plans to diversify paths to explore tasks by aligning the Value Engineering (VE) with the performance sharing scheme, and increase the 150 applicability of the performance so that its activities can be linked to the scheme. 15
5 5
2013 2014 2015
Case Study
Organizing Hyundai Engineering’s Partner CEOs Seminars - Partners Taking the Same Paths
Hyundai Engineering is creating grounds for communication seeking Key Point mutual development by organizing the annual Partner CEOs Gener- First, establishing a system to comply with subcontracting payment al Meeting and Seminar. The Partner Council, launched in Septem- terms to prevent violations of the Subcontracting Act, and ber 2013, shares ideas among Hyundai Engineering and partners, thoroughly complying with regulations on HR sanctions against and discusses ways for win-win cooperation and shared growth in a violating employees casual atmosphere. Moreover, letters of appreciation are presented Second, checking the status of subcontract payments to contracting to excellent partners selected based on the performance of win-win companies on a monthly basis, and improving and expanding the criteria for direct loans to partners cooperation during the previous year. The company expresses its Third, expanding technology sharing, VE activities and OJT to secure gratitude for their decision to take the same paths in Hyundai Engi- the technological competitiveness of partners, and supporting neering’s journey for further development. their overseas advancement The 2016 Partner CEOs General Meeting and Seminar held at a re- sort in Vietnam was attended by the top management of Hyundai Engineering and partner CEOs, accompanying a discussion session for finding ways for mutual cooperation to secure competitiveness for each work type. The occasion served as a forum of mutual un- derstanding, meanwhile, since sessions for everyone’s get-togeth- er were included: programs for Vietnamese cultural experiences and sports, and a gala dinner for all.
Hyundai Engineering’s 2016 Partner CEOs General Meeting and Seminar
50 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Win-Win Management through Communication
Strengthening Communication with Partners Hyundai Engineering runs diverse communication channels to listen to and resolve the difficulties of partners in their corporate management and trading. The company opened a channel for partners’ problems and suggestions and a bulletin board for win-win cooperation in the e-pro- curement system, thus improving their accessibility. The company also paid visits to their sites to promote its win-win cooperation policies. In addition, the company discovers points for improvement based on the feedback gathered through such visits, and reflects them in directions and planning for win-win policies.
Training for Employees of Partners on 3D-CAD Techniques for Plants Sharing Best Practices Hyundai Engineering’s partners exchange information and know-how on Securing Competitiveness through Training Support quality improvement and shares best practices in quality improvement The company provides education and training with various curricula in with one another. In 2015, the company organized training for 94 em- order to strengthen the job competency of employees. In 2015, not only ployees of 27 partners, covering presentations of best practices, analyses online courses on finance and accounting, etc. but also group training of quality-related accident cases, quality-related policies of the Ministry was carried out on the Framework Act on the Construction Industry, the of Land, Infrastructure, and Transport, and countering measures. Subcontracting Act, taxation and labor management. A prime example In the presentation session on partners’ best practices for quality, in of training support is for developing the ‘3D-Modeler’ which started in particular, the improvement of reinforced concrete quality on 21 con- 2003. Plant designing in 3D-CAD beyond simple CAD drawing has be- struction sites nationwide was analyzed and shared, which was signif- come an essential capability due to the exponential development of IT. icantly helpful. At the ‘Quality Declaration Ceremony’, the company As such, the company is supporting partners to boost their capability to reached a resolution on establishing a construction culture of quality utilize ‘3D-CAD’. Against this backdrop, there will be further collabora- innovation, improvement in customer satisfaction and full compliance tion in future projects along with maximized job efficiency on both sides. with basic principles. At the same time, the company supports partners that are struggling to advance overseas to minimize risks which might occur in overseas advancement by transferring its related know-how. The company also contributes to creating the basis for the overseas entry of partners by offering training sessions on overseas taxation, labor and safety, etc.
Training Support Programs (Unit: persons)
■ Consignment training to specialized agency ■ Training on overseas advancement
433 414 368
102 98 87
2013 2014 2015
Sharing Best Practices and Conducting the ‘Training Day’ for Partners
51 2014 - 2015 Hyundai Engineering Sustainability Report
Fair Trades by Establishing a Fair Trade Order
Establishing the CP System Hyundai Engineering strives to establish a fair and clean fair trade by Appointment of Compliance Managers adopting the Compliance Program (CP). The company runs a CP manager scheme for the effective operation of CP. Systematic training is offered to all employees to raise their under- Strengthening the CP Organization standing of compliance with the Competition Law and also for them to The company revised the CP operating rules and operates its unit to perceive its legitimacy. As such, the company is taking the lead in es- systematically implement CP activities. It also reports to the board of tablishing fair trade practices. At the same time, the company runs the directors CP plans and performance of the first and second half of a year. CP Council, while appointing CP managers for each working-level team The company declares its commitment for action on fair trades internally and division. and externally by posting a declaration covering CEO’s commitment for fair trade and a corresponding pledge.
Compliance Program CP Organization
CEO
Early preven- Incentives tion of legal against legal violations violations Compliance Managers
Head of Planning Office
Working-Level Compliance Team Compliance Council
Person responsible: Working-level employees Clear guidance Reinforcement Business Planning Team Leader of divisions Person in charge: (execution groups, offices) on standards of the compli- working-level CP employees Besides CP managers for action ance mindset
Internal and External Declaration of the CEO’s Commitment for Action Establishing a fair and transparent corporate culture tops the agenda for global companies worldwide beyond Korea. Therefore, the company encourages all employees to establish a fair trade and the spirit of free Suggesting standards for action for legal compliance competition by internally and externally announcing the CEO’s commit- Preventing acts of legal violation ment for action.
Case Study
Declaration of the Voluntary Compliance with Fair Trade Hyundai Engineering internally and externally announces its commitment for voluntary compliance with fair trade by posting a declaration covering the CEO’s commitment for fair trade and a corresponding pledge.
ONE, We perceive that voluntary compliance with fair trade is a genuine corporate competitiveness and proactively practice it. ONE, We play exemplary roles to create a fair competition environment in the industry, and prohibit unfair acts of any kind. ONE, We strive to prevent violating acts against the Fair Competition Law and voluntarily impose sanctions on violations. ONE, We strive with partners driven by partnership to establish clean trading practices.
52 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Facilitating the CP Operation Hyundai Engineering enhances awareness about fair trades and ethics by operating the CP.
Spread of the CP Culture The company routinely shares laws and regulations, and cases with corrected actions by operating the CP board on the website more sys- tematically. In particular, every 5th of the month is designated as the ‘CP Day’, boosting employee’s compliance spirit through participatory programs including a quiz on fair trade. Moreover, a handbook on CP is prepared and distributed to employees, and employees are required to sign a pledge on fair trade. Compliance Program (CP) Training
CP Operational Performance
2014-2015 2016
•Number of trainees for the general training on fair trade for new •Offline training to prevent unfair collective practices employees in 2016: 149 •Cyber training on fair trade for new employees •Number of trainees for training on the Fair Labelling and Adver- •Training on the understanding of CP/Training on the Fair CP tising Act and Regulation of Standardized Contracts Act: 44 Labelling and Advertising Act and the Subcontracting Act Training •Number of trainees for training on anti-bid rigging: 53 •Training on the prevention of unfair intercompany trans- •Number of trainees for the general training on fair trade for the actions Planning Office: 44 •CEO and executive training on voluntary compliance with •Training on unfair intercompany transactions and negotiated fair trade contracts: 137
Reinforce- •Launch and operation of the CP Council •Appointing compliance officers, and CP managers in each ment of CP •Launch and operation of the Risk Management Council for division Governance Housing Subscription Advertisement
•Preparing and distributing a booklet on intercompany Spread •Operation of the CP Board transactions and unfair collective practices of the CP •Number of CP booklets on labelling and advertisement prepared •Preparing and distributing a CP booklet Culture and distributed: 200 •Designating and operating the CP Day
CP •CP monitoring in the first and second half of the year •CP monitoring in the first and second half of the year •CP operating results in the second half of 2015, and reporting Monitoring the 2016 plans to the board of directions
Future Plans for CP Activities
Strengthening the CP Governance Preventing Legal Violation Risks by Strengthening CP Activities and Reviewing Fair Trade Hyundai Engineering launched and operates the CP Council under the CEO in 2016, which monitors CP-related issues and status. Moreover, The company plans to continuously initiate efforts to establish a fair the Risk Management Council for Housing Subscription was launched trade order. To this end, efforts will be made to internalize CP through and is operated pursuant to the Fair Labelling and Advertising Act. As intensified training and prevent legal violations through stronger moni- such, the company is doing the best to comply properly with the Com- toring of fair trade. Moreover, compliance with fair trade will be reviewed petition Law. by improving risk management on labelling and advertisement and strengthening reviews of the business combination and incorporation of affiliates upon investing in other companies.
53 2014 - 2015 Hyundai Engineering Sustainability Report
Sharing Management Returning a Favor
Recent social contribution activities are initiated in the direction of generating economic and social values in alignment with corporate projects, going beyond simple donation or volunteering. Companies can con- tribute to their community through the implementation of strategic social contribution activities, and link such activities to business performance in exerting its competencies. In particular, companies can create Social sharing values to be alongside the community by providing technologies and competency most needed on Context both domestic and overseas project sites.
•Dynamically participating in Cooperative social contribution • the Group’s social contribution activities among affiliates activities •Business-aligned social •Focusing on key and core activities contribution activities •Strengthening activities to Our Systematizing overseas social Our • leverage corporate competency Responses contribution activities Plans •Concentrating on strategic hubs
Number of Employees Amount of Social Hours of Social Participating in Contribution Expenses Contribution Engagement Social Contribution
2015 Performance KRW1.4billion 7,104 hours 1,654people
Voice of Stakeholders
“I hope that Hyundai Engineering will carry on its social contribution activities by leverag- ing its competency and know-how in the construction industry.”
The Korea Disaster Relief Association has run the Hope Bridge Program by forging a partnership with Hyundai En- gineering since 2015. The program covers activities to inherit the Korean traditional sharing spirit (such as mutual aid and collective laboring) instead of a general contribution. It is significant in that the program targets everyone hit by a natural disaster as a Korean national. Besides the program, Hyundai Engineering is engaged in the Hope House Project and the Gift House Campaign, etc. These campaigns provide victims with housing and the means of self-sufficiency to recover from their struggles by fully utilizing Hyundai Engineering’s techniques for designing and maintaining small houses, and its modular construction technique. I think the contribution level of such programs is significantly high. Meanwhile, I heard that Hyundai Engineering is strengthening its overseas social contribution activities beyond Ko- rea amid the expansion of its overseas projects. Successfully executing overseas social contribution activities must accompany efforts for regional development or the creation of a physical environment, and livelihood and emo- tional support for the local community. I hope that the company will initiate social contribution activities in an area specialized in the construction industry by fully leveraging its construction and design techniques, and its know-how Secretary General Park, Young Jin/ on materials and new techniques in providing shelters where it can fully exert its competency. Korea Disaster Relief Association
54 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Strategic Implementation of Social Contribution
Social Contribution System
Social Contribution Strategies Social Contribution Organization Hyundai Engineering is practicing the happy act of sharing to make the Driven by its Planning Office, Hyundai Engineering conducts various activi- world a more beautiful place. Upon conducting social contribution ac- ties including establishing strategies for social contribution activities, devis- tivities, they are systematically organized by category: domestic and ing and executing yearly business plans and raising and managing funds. overseas representative programs, core activities, community activities Moreover, employees’ social contribution activities are encouraged and activities jointly participated by Hyundai Motor Group. In so doing, through facilitators (FT) for social contribution in divisions/offices. The the company is raising its contribution level in addressing socio-cultural Stepping-stone Volunteer Group is strengthening is ties with the com- issues while providing more pragmatic support to each stakeholder. munity by prioritizing recipients’ needs.
The Social Contribution System of Hyundai Motor Group The Hyundai Engineering Social Contribution System
The Social Contribution Vision of the Group Vision Trustworthy Partner for Today & Tomorrow Happy Energy Contributor
Social Contribution Slogan 3 Major Principles Happy Voluntary Sustainable win-win participation sharing survival
Key Areas of Business for Social Contribution Project Areas Strategic Six Moves Donation in Community activities at groups and volunteering domestic and NGOs overseas sites
Supporting the Engaging in Enhancing Boosting Engaging Preserving the self-sufficiency social contribu- convenience in transportation employees and environment and of the socially tion by utilizing mobility for the safety and social customers in responding to underprivileged the business transportation safety volunteering climate change and developing competency of vulnerable and talents affiliates the socially Objectives for Actions Directions for Actions Key Goals underprivileged
Culture and Art • Developing strategic • Systematizing site • Realizing happiness through domestic and overseas application driven by sharing globally on-site activities representative activities Communication of • Establishing a great Talent Development Cultural Sharing • Exploring experiential • Expanding the scope of workplace and a great culture Culture volunteering models engagement in social • Becoming an iconic contribution activities Developing future talents to Providing opportunities for Communication through • Leveraging the system company in social contribution drive the culture cultural and art experiences lectures and performances for the social contribution • Accumulating social and appreciation system contribution performance continuously
Key Performance of Social Contribution
Type Unit 2013 2014 2015
Number of social contribution programs Number 26 21 27
Number of participants People 1,126 911 1,654
Number of volunteering hours per employee Hour 1.4 0.6 1.2
Cost of social contribution KRW 100 million 9 12 14
55 2014 - 2015 Hyundai Engineering Sustainability Report
Core Activities
Housing: Support for Disaster Relief Housing by Using the Modular Technology Community The company developed the disaster relief housing by utilizing the mod- Representative activities in each division/office are selected and con- ular technology. It newly launched the Hope House Project and the Gift ducted to facilitate employees’ engagement. House Campaign in 2015 for housing support for displaced persons and households hit by a disaster in partnership with Hope Bridge - Korea Division/Office Title of activities •Volunteering in the logistics center of the Beautiful Store Disaster Relief Association. Process Plant Division (a Korean nonprofit organization and charity shop) •Hope House Project: MOU signing in July 2015 Power & Energy Plant Division Volunteering in the Cultural Properties Protector campaign •Gift House Campaign: constructing four houses in Eeumseong in the • North Chuncheong Province in December 2015 Building Works Division •Supporting the underprivileged in Jungnang-gu, Seoul Infrastructure & Environmental •Volunteering in the Knitting Newborn Caps campaign People with Disabilities: Rehabilitation Support for the Severely Disabled Execution Group Finance & Accounting Division •Giving out rice bags to the underprivileged The company dynamically supports economic self-sufficiency and job cre- General Administration & •Support for Holt Town ation for the severely disabled. Starting with the support for production Management Division facilities in the ‘Hope Cultivation Center’, a vocational rehabilitation facility Procurement Execution Group •Preparing and giving out kimchi to the underprivileged for the severely disabled in 2010, the company has secured a resting space •Giving out bread to the underprivileged/Cultural support Planning Office by remodeling old workshops, raising convenience in the working space in for the underprivileged 2015. The company plans to be engaged in employee volunteering for pro- Business & Marketing Office •Giving out briquettes to the underprivileged duction support and product sales support and procurement so that the HSE Innovation & Quality •Giving out diapers to the underprivileged Hope Cultivation Center could provide more jobs to the severely disabled. Management Office Asset Management Office •Support for the Community Children’s Center in Jongno-gu Multi-culture: Support for Move-in for Public Rental Multi-Family Housing The company carries on its diverse support so that multicultural families could more stably settle in as important members of society. The com- Other Activities pany extended guarantee deposits for tenants to move in public rental Cultural events on the company’s anniversary/Habitat for Humanity - Help multi-family housing and also housing repair costs in order to provide with Housing/Volunteering in the cemetery clean-up in Seoul National Cem- a stable housing environment to multicultural families in Ansan in 2014. etery/Volunteering in food distribution on weekends/Support for infants In 2015, a total of 25 multi-cultural households moved in thanks to the and babies/Blood donation campaign/Donation of goods to the underpriv- company’s assistance to solve their housing struggles. ileged (including PCs)
Case Study
•
The biggest value in Hyundai Engineering’s social contribution is ‘self-sufficiency’. The goal is to set conditions for the under- privileged to autonomously stand up again and settle in the society as its sound members by serving as the ‘stepping-stone’ in their new life, going beyond the concept of supplying goods and relief activities.
The first stepping stone titled the ‘Stepping-stone House Pro- Stepping-stone House Project ject’ took place in 2013. It covers diverse activities to help out residents in rundown jjokbang (one-room shanty housing) town Extending various support to serve as the ‘stepping-stone’ for a new to be self-sufficient. The company extended support to open the life of residents in the jjokbang town by supporting their housing and 1st ‘Stepping-stone House’ (housing support) and ‘Flower Blos- rehabilitation in an integrated manner soming (rehabilitation support)’, an art studio-like rehabilitation Rehabilitation and workshop. Moreover, the company has carried out culture class Housing support emotional support Facility support programs including photography and choir (emotional support), a counseling center for the jjokbang town and remodeling of com- munity facilities (facility support), and continued exchanges with local residents (sharing activities). In 2016, the company plans to carry on its continued interest in the underprivileged in housing by steadily various sharing activities in partnership with various in- Specific Specific Specific stitutions in 2016: opening the 2nd ‘Stepping-stone House’, and Programs Programs Programs
expansion of the Stepping-Stone Culture Class. •Supporting sub-letting at a •Support for the operation of •Remodeling of a counseling low price in the jjokbang town community workshops center at the jjokbang town •Supporting guarantee depos- •Support for the operation of •Support for the construction its for rental housing the Stepping-stone School of convenience facilities •Support for picnicking for local residents
56 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Special Page. CSV Activities Utilizing the Competency of the Construction Industry
Hope House Project Gift House Campaign The company carries out the ‘Hope House’ project to provide the mod- The Gift House Campaign is aligned with Hyundai Motor Group’s Gift Car ular technology-based disaster relief housing for displaced persons who Campaign. It sponsors modular housing to disaster-hit households with have lost or cannot live in their living space due to a disaster. The relief housing instability, thus contributing to housing stability and disaster housing developed this time has been applied with Hyundai Engineer- prevention. ing’s modular construction technology: a structure framework with In 2015, the company sponsored four modular housing buildings to the minimized modifications, improved heat insulation and expanded resi- low income class including the elderly living alone on high lands being dential space. Its performance was dramatically improved compared to prone to land disruption or loss in Eumseong in the North Chungcheong the existing relief housing constructed in 2007. Province. The company also raised a fund in ‘Gift House Campaign Season Building No. 1 of the Modular Relief Housing was shipped into the Paju 1’ through Naver’s Happy Bean campaign. The amount reached about Warehouse of the Korea Disaster Relief Association, and was even exhib- KRW 5 million, which was used to donate essential household items to ited at the 1st International Safety & Security Expo. target recipients, including washing machines, blankets and kitchenware. Support will be extended to 50 households for a maximum of two years The company plans to expand the targets to four-member families as when a disaster hits. The company expects to extend help in providing well as the elderly living alone by developing modular housing with a safer and more pleasant housing environment until displaced persons different areas. Moreover, the company will develop modular housing are resettled. where inconveniences of the existing housing are improved to wage the Gift House Campaign Season 2.
Features of the Hope House Status of Households under the Gift House Campaign
Type Content Details Type Age Land ownership Extent of aging
Considering road Mrs. Han Low incomer 78 (female) Owned (by her son) High Dimension 1F (3,000(W) x 7,200(L) x 2,900(H)) transportation conditions Basic livelihood security recipient as Not owned (owned by Room and kitchen (3.95m2), bathroom Mr. Hong High Area (2.18m2), entrance canopy (2.98m2) - a visually impaired person 68 (male) his wife’s brother) Mr. Jeon Low incomer 60 (male) Not owned (free rental) High One room-type layout (room/kitchen/ •Ease in transportation and installation bathroom), improvement in housing quality Features •Improvement in the quality of housing Basic livelihood security recipient (interior design and storage space), im- Mrs. Yeom Not owned (free rental) High provement in exterior quality (modern type) •Sophisticated exterior design as a disabled person 77 (female)
Winning the Porter Prize for Excellence in CSV Hyundai Engineering is taking the lead in solving social problems by leveraging its specialized technical competency. The company extends practical help by giving out its self-developed mod- ular relief housing to displaced persons who have lost their housing due to an unexpected dis- aster. Moreover, the company sponsors modular housing to households hit by a disaster in line with a relief paradigm whose focus has shifted from disaster recovery to disaster prevention. Its activities for Creating Shared Values (CSV) were highly acclaimed by winning a prize in the Shared Growth Sector of the 2nd Porter Prize for Excellence in CSV in December 2015.
* A prize created by the Institute for Industrial Policy Studies (IPS) and Dong-A Ilbo in partnership with Michael Porter, a guru of management strategies and professor at Harvard Business School
57 2014 - 2015 Hyundai Engineering Sustainability Report
Expansion of Global Social Contribution
Donation of the New Hope School Opening of the Welding Training Center The company has initiated the New Hope School project since 2010. To Hyundai Engineering is engaged in diverse educational programs for the this end, it provides learning opportunities and eases educational gaps self-sufficiency of community. For instance, the company opened the for children in areas with impoverished educational environment near Welding Training Center to generate 400 trainees for four times a year in its overseas project sites. Starting with the construction of the 1st New Turkmenistan. The company also invested in the educational infrastruc- Hope School in Cambodia in 2010, the company has completed the do- ture by placing equipment in the center for 50 students to experiment nation of the 4th one in 2015, constructing and donating a multi-pur- with at the same time. pose room in BATO Elementary School in the Philippines. Children can It is expected that after the training, they will be recruited to its sites, be taught in a better environment instead of the existing old classrooms which will contribute to the local industrial development by stabilizing thanks to the construction of the multi-purpose room, which will also be the local employment market and technology transfer. used as a science lab, etc. The company plans to expand its projects to a vocational training school so that not only children but also adults as school graduates could be economically self-sufficient.
Uzbekistan Pakistan
Region: Buhara, Kungrad, Akchalak, etc. Key facts: •Organizing an event to donate second-hand Key facts: •Operating the training center clothes and stationeries •Sponsoring medical volunteering •Developing the capabilities of the female and the Children’s Day workforce, providing scholarships and extending medical fees for the underprivileged
Bangladesh
Turkmenistan Region: Netrokona Durgapur Key facts: •Supporting operating cost for Region: Turkmenbashi etc. elementary schools Key facts: •Sponsoring a youth soccer team •Donating a middle school free of •Welding Trainng Center Open charge (New Hope School No. 3)
Philippines
Region: Bato, Toledo City Equatorial Guinea Key facts: •Organizing a job fair •Donation of the newly constructed Region: Mongomo, etc. multi-purpose room Key facts: •Supporting the demolition of a (New Hope School No. 4) closed school and city clean-up
Kenya
Region: Turkana Cambodia Key facts: •Sponsoring a project to give out Region : Phnom Penh drinking water to children in Kenya Key facts: •Establishing the New Hope School •Forging one-on-one sisterhood between employees of Hyundai Engineering and Cambodian students
58 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Special Page. Participation in the Global Initiative
Endorsement of the UN Sustainable Development Goals (UN SDGs)
Hyundai Engineering seeks to develop solutions to achieve and implement UN SDGs to seek new growth opportunities, thus discovering new growth opportunities and initiating sustainable growth as the UN declared the Sustainable Development Goals (SDGs) to be attained by the international community following the Millennium Development Goals (MDGs). The company joined the Korean Association for Supporting UN SDGs (ASD) to endorse SDGs, planning to perform dynamic activities. In particular, the company set priorities for activities for response by re- flecting its business features: formation of a sustainable city and housing, industrialization of infrastructure and enhancing innovation, response to climate change and increases in jobs to trigger economic growth. The company will initiate related activities by considering the priorities in devising corporate strategies.
Subscribing to the ASD and Performing Related Activities
Hyundai Engineering officially subscribed to the Korean Association for Supporting UN SDGs (ASD) for the first time in the domestic construction and engineering industries. The ASD is an official UN supporting body to ‘address various issues confronted by the man- kind - food security, water and hygiene, energy, education, poverty eradication and health, etc.’ In 2015, the company joined the ASD to continuously support related activities. It also attends the quarterly National Assembly forum to strengthen private-public communica- tion, and contributes to the development of indicators for the UN SDGs.
17 Agenda of the UN SDGs The UN SDGs are the development agenda to be applied from this year up to 2030 by the UN. It covers 17 goals and specific targets including economic growth, job growth and sustainable industrialization.
UN Global Compact The Ten Principles Principles Hyundai Engineering complies with 10 prin- 1. Businesses should support and respect the protection of internationally proclaimed ciples in 4 areas of human rights, labor, en- Human Rights human rights; and vironment and anti-corruption by joining the 2. Make sure that they are not complicit in human rights abuses. UN Global Compact. 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; 4. The elimination of all forms of forced and compulsory labour; Labour Standards 5. The effective abolition of child labour; and
6. The elimination of discrimination in respect of employment and occupation.
7. Businesses should support a precautionary approach to environmental challenges.
Environment 8. Undertake initiatives to promote greater environmental responsibility; and
9. Encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption 10. Businesses should work against corruption in all its forms, including extortion and bribery.
59 03
SUSTAINABILITY REVIEW Economic Performance 62 Social Performance 63 Environmental Performance 66 Stakeholder Engagement and 68 Materiality Testing The 3rd Party Assurance Statement 70 GRI G4 Index 72 Key Awards & Membership in Associations 76
03
SUSTAINABILITY REVIEW 2014 - 2015 Hyundai Engineering Sustainability Report
Economic Performance
Hyundai Engineering has shown a rapid growth for six consecutive years despite a challenging economic environment after reaching the ‘era of trillion won in revenues’ in 2009. The revenues of 2015 stood at KRW 7.3485 trillion, up about 29% year on year along with the net income of KRW 329.2 billion, which is 4.5% compared to the revenues. The company recorded KRW 1,577.9 billion in revenues as of the first quarter of 2016, and its revenues are expected to reach KRW 7,200 billion.
Consolidated Financial Statements Summary (Unit: KRW million)
Type 2013 2014 2015
Current assets 2,191,890 4,501,789 5,102,445 Noncurrent assets 266,324 1,266,574 1,309,902 Total assets 2,458,214 5,768,363 6,412,347 Current liabilities 1,433,584 2,729,812 3,039,573 Noncurrent liabilities 64,113 569,469 687,835 Total liabilities 1,497,697 3,299,281 3,727,408 Capital stock 20,215 37,977 37,977 Other paid in capital 2,228 1,287,494 1,287,494 Other components of equity 31,666 21,376 -5,685 Retained earnings 906,404 1,119,802 1,360,907 Non-controlling interest 5 2,433 4,246 Total equity 960,517 2,469,082 2,684,939 Total liabilities and equity 2,458,214 5,768,363 6,412,347
Income Statement Summary (Unit: KRW million)
Type 2013 2014 2015
Sales 2,623,569 5,689,177 7,348,520 Cost of sales -2,305,353 -5,095,774 -6,717,046 Gross profit 318,216 593,403 631,474 Selling and administrative expenses -52,709 -185,006 -188,484 Operating income 265,507 408,396 442,989 Other income 66,846 60,000 116,977 Other expenses -58,064 -99,874 -152,116 Finance income 26,143 41,896 39,458 Finance expenses -8,242 -17,427 -16,751 Share of profit of associates - 788 280 Profit before income tax 292,191 393,780 430,837 Income tax expense -72,734 -78,795 -101,654 Net income 219,457 314,985 329,183
Distribution of Economic Performance The economic value created by Hyundai Engineering is shared with various stakeholders through tax payment, procurement and investment in the community, etc.
Distribution of Economic Value (Unit: KRW 100 million, as of 2015-end)
Stakeholders Item 2013 2014 2015
Shareholders Dividends - 1,667 870 Raw material procurement cost 1,097 1,767 2,150 Partners Amount for supporting shared growth 125 195 227.4 Employees Salaries and welfare benefits 3,289 5,772 6,942 Government/Media/Association Corporate tax 727 788 1,017 Community Donations and investment cost for social contribution 3.9 12 14
62 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Social Performance
Talent Management The total number of domestic employees of Hyundai Engineering is 5,832 along with 5,890 overseas employees as of 2015-end, which are steadily increasing after 2013. Overseas local employees, in particular, amount to 4,799. The company’s recruitment of local employees helps economic revitalization, and it is providing training and medical support for them.
Type Unit 2013 2014 2015
Total employees persons - 10,905 11,722
Total employees1) Domestic persons 3,214 5,621 5,832
Overseas persons - 5,284 5,890
Regular persons 2,134 3,617 4,053 Employment type Non-regular persons 1,080 2,004 1,779
Male persons 2,871 5,052 5,262
Regular persons - 3,353 3,783
Non-regular persons - 1,699 1,479 Gender Status of Female persons 343 569 570 Employees Regular persons - 264 270
Non-regular persons - 305 300
20s persons 820 921 880
30s persons 1,060 2,276 2,505 Age group 40s persons 693 1,449 1,552
50s and over persons 641 975 895
Employees dispatched overseas persons - 1,237 1,091 By region Locally recruited employees persons - 4,047 4,799
Executives Total employees persons 53 73 67
Total employees persons 848 1,703 1,485 New Male persons - 1,499 1,353 employment Female persons - 204 132 Changes in Total employees persons 68 92 100 Workforce Male persons 64 84 89 Retirees2) Female persons 4 8 11
Retirement rate % 3.2 2.5 2.5
3) Status of Diversity in Socially Disabled persons 23 35 45 Workforce marginalized Veterans persons - 10 11
Male % 100 100 100 Gender ratio Status of Female % 100 100 100 Employees Subjected to Performance Assessment Ratio by Regular % 100 100 100 employment Non-regular % 100 100 100
1) Data calculation: as of 2015-end 2) - Including voluntary retirement, normal retirement, recommended resignation, voluntary resignation (personal reasons, childcare, school admission, or transfer to another company), dismissal and transfer to an affiliate of the Group - Upon compiling data for voluntary retirees by distinguishing from others, voluntary resignation is regarded as voluntary retirement. - Based on regular positions 3) The number of the socially underprivileged in 2013 is impossible to distinguish the sub-categories.
63 2014 - 2015 Hyundai Engineering Sustainability Report
Talent Management
Type Unit 2013 2014 2015
Childcare leave users persons 20 23 50
Returnees to work after using childcare leave persons 12 15 22 Status of Number of employees with over one year of Status of Child- returning to work after continuous service period after returning from persons 9 13 21 care Leave childcare leave4) childcare leave Return rate % 60 65 44
Rate of continuous service of over 12 months % 75 87 96
Training on the Hours of training hours - 1 1 Human Rights prevention of sexual harassment Number of participants persons - 4,287 5,401 Labor-man- Status of handling Number of employees’ grievances received cases 119 116 221 agement employees’ grievances Relationships Number of days for response processing days 5.5 7.0 4.5
4) - Childcare leave users: based on the number of those who gave birth in that year - Return rate: (would-be returnees in that year - retirees on the scheduled return day in that year)/would-be returnees)×100 - returned less than one year ago)/returnees of the previous year)×100
Shared Growth
Type Unit 2013 2014 2015 KRW 100 Shared Growth Fund 150 190 212 million Financial Support KRW 100 Direct loans 5 5 15 million Technical Support Joint R&D cases 3 3 4
Consignment training to specialized agencies persons 368 414 433
Training Support Training on overseas advancement persons 91 87 102
In-house training for a specialized workforce persons - 6,545 9,100
Ethics Management
Type Unit 2013 2014 2015
Hours of training per employee hours 8 1 1
Total training cost KRW 10,000 1,517 350 690
Total number of trainees persons 2,222(online) 757(offline) 3,525(offline)
Social Contribution
Type Unit 2013 2014 2015
Number of social contribution programs Number 26 21 27
Number of participants persons 1,126 911 1,654
Number of volunteering hours per employee hours 1.4 0.6 1.2 KRW 100 Cost of social contribution 9 12 14 million
64 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Safety and Health
Accident Rate (Unit: %)
Type 2013 2014 2015
Domestic Converted disaster rate 0.05 0.16 0.12
Company-wide occupational accident rate 1.30 1.10 0.46
Overseas Lost time injury rate 0.07 0.05 0.04
Severity rate of injury 0.81 0.29 0.02
Number of the Injured by Type (domestically) (Unit: cases)
Type 2013 2014 2015
Overturn - 4 5
Crash 1 4 3
Fall - 2 2
Structure - 3 3
Collision - 3 1
Others - 4 -
Status of Certification for Achieving the Zero-Accident Target (Unit: hours)
Type 2013 2014 2015
Turkmenistan TGEM - 3,000,000 5,000,000
Turkmenistan TORE - 5,000,000 12,000,000
Uzbekistan UGCC - 10,000,000 15,000,000
Saudi Arabia JPP 5,000,000 10,000,000 -
Daesan HDO LBO - 1,820,000 - Process Plant UAE UONE 10,000,000 15,000,000 -
Pakistan ATOM - 2,000,000 -
Thailand TLAB - 3,000,000 -
Oman MGP 10,000,000 - -
Algeria BMS - 2,000,000 -
Bangladesh BAPP - 2,000,000 3,000,000
Power & Energy Plant Iraq RGP 3,000,000 - -
Kenya OKB1 - 2,000,000 -
Wirye Amco Town Floriche - 1,820,000 2,730,000 Building Works National University of Turkmenistan - 2,000,000 5,000,000
65 2014 - 2015 Hyundai Engineering Sustainability Report
Environmental Performance
Amount of Raw Materials Used (non-recycled)
Domestic Overseas Total amount for Infrastructure & Power & Energy Infrastructure & domestic and Type Unit Process Plant Building Works Process Plant Building Works Environment Plant Environment overseas sites 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Reinforcing ton - - 32,401 87,538 559,625 2,254,700 26 103 31 1,150 190 4,741 4,068 2,878 596,341 2,351,110 steel bars Ready-mixed m3 - - 393,556 1,007,742 28,869 98,504 - - - - 4,159 79,024 37,171 11,373 463,755 1,196,643 concrete Cement ton - - 13,808 21,343 985 2,289 ------8,648 7,509 23,441 31,141
Sand m3 - - 17 4,278 46,838 120,004 140 455 - - - - 12,283 13,377 59,278 138,114
Aggregates m3 - - 16,464 37,125 134,961 556,577 18 20 - - - 74,658 178,065 57,565 329,508 725,945
Asphalt concrete ton - - 13,546 27,659 141 79,136 ------68,100 102,221 81,787 209,016
Timber ton - 70 - - - - 74 95 - - - - 4 10 78 175
Concrete ton - - - - - 29,360 14,876 9,403 - 6,439 9,566 181,756 3 9,453 24,445 236,411 Form (regard- m2 - - 629,446 1,413,318 - - - - - 5,644 3,798 34,182 14,944 32,088 648,188 1,485,232 less of type) Smaller kg - - 145,630 321,505 ------145,630 321,505 lump coals Others m - - 225,557 291,330 3,555 10,283 - - - - 20,368 - - 2,982 249,480 304,595 (concrete pile)
Energy (Unit: GJ)
Domestic Overseas Total amount for domestic and Infrastructure & Asset Power & Infrastructure & Type Headquarters Process Plant Building Works Process Plant overseas sites Environment Management Energy Plant Environment 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Amount of direct energy 17,331 18,557 - 108 36,421 18,955 9,010 7,492 1,023 2,507 2,988 64,303 2,508 9,747 14,878 47,577 84,159 169,246 used (Scope 1) Amount of in- direct energy 55,143 60,487 - 463 102,273 143,142 28,961 19,031 296 684 28,041 39,084 3,647 11,600 3,823 5,742 222,184 280,233 used(Scope 2) Total amount 72,474 79,044 - 572 138,694 162,097 37,971 26,523 1,319 3,191 31,029 103,387 6,155 21,347 18,701 53,318 306,343 449,479 of energy used
GHG (Unit: tCO2eq)
Domestic Overseas Total amount for domestic and Infrastructure & Asset Power & Infrastructure & Type Headquarters Process Plant Building Works Process Plant overseas sites Environment Management Energy Plant Environment 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Amount of di- rect emissions 937 1,004 - 5 2,648 1,162 583 459 61 171 202 4,466 175 679 1,034 3,310 5,641 11,256 (Scope 1) Amount of indi- rect emissions 2,642 2,938 - 22 5,683 6,952 691 924 51 33 4,135 5,764 538 1,711 564 847 14,303 19,191 (Scope 2) Total amount of 3,579 3,942 - 28 8,331 8,113 1,274 1,384 112 204 4,338 10,230 712 2,389 1,598 4,157 19,944 30,447 GHG emissions
* Environmental data are compiled and reported based on each department with the occurrence of each item. ** The amount of energy generated abroad and the amount of GHG emissions are calculated based on the domestic heat release amount and the emission factor (calculation is based on fixed combustion for overseas data because fixed/mobile combustion cannot be distinguished). *** For sites subject to compilation of data for 2014, calculation is based on operating sites as of 2015-end.
66 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Water (Unit: ton)
Domestic Overseas Total amount for Infrastructure & Power & Infrastructure & domestic and Type Process Plant Building Works Process Plant Environment Energy Plant Environment overseas sites 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Total amount of - 386 16,315 76,674 17,710 24,432 64,968 94,067 10,200 18,973 38,604 71,159 147,797 285,691 water used
Amount of Waste Generated (Unit: ton)
Domestic Overseas Total amount for Infrastructure & Power & Infrastructure & domestic and Type Process Plant Building Works Process Plant Building Works Environment Energy Plant Environment overseas sites 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
Waste concrete debris - - 108,285 118,486 47,744 29,284 - - - - 217 4,124 50 130 156,296 152,024 Sludge (sludge generat- - - 720 1,039 89 80 ------31 810 1,150 ed at project sites) Waste asphalt - - 25,699 22,268 1,345 34,550 - - - - 50 950 - 6 27,094 57,773
Mixed wastes - - 38,503 33,280 4,154 6,248 27,373 35,609 - 116 102 1,944 - - 70,132 77,196
Waste wood - - 3,868 6,780 9,906 4,958 - - - - 2 38 - - 13,776 11,776
Others - 7 19,853 40,402 942 3,370 - - 62 155 - - - 120 20,856 44,054 Total amount of waste - 7 196,929 222,253 64,180 78,490 27,373 35,609 62 271 371 7,056 50 287 288,965 343,973 generated
Waste Treatment (Unit: ton)
Domestic Overseas Total amount for Infrastructure & Power & Infrastructure & domestic and Type Process Plant Building Works Process Plant Environment Energy Plant Environment overseas sites 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Recycled (Outsourced - - 137,732 147,533 56,623 68,792 1,872 3,120 - - 39 151 196,266 219,596 handling) Recycled ------11 136 11 136 (Internal treatment) Incineration - 7 6,790 3,603 942 573 1,560 5,185 62 155 - - 9,354 9,522
Buried - - 52,407 71,119 6,615 9,125 23,941 27,304 - 116 - - 82,963 107,664
Waste recycling rate - - 69.9 66.4 88.2 87.6 6.8 8.8 - - 100 100 67.9 63.9
Environmental Investment Cost (Unit: KRW million)
Domestic Overseas Total amount for Infrastructure & Infrastructure & domestic and Type Process Plant Building Works Process Plant Environment Environment overseas sites 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
Facility investment - 38 576 563 3 25 - - 3 19 582 645
Environmental cost - - 202 887 99 601 1 66 1 14 303 1,568
67 2014 - 2015 Hyundai Engineering Sustainability Report
Stakeholder Engagement and Materiality Testing
Stakeholder Engagement and Materiality Testing Hyundai Engineering conducts the materiality testing in consideration of the level of impact of each issue on stakeholder interests and sustain- ability management. Stakeholders’ opinions are proactively gathered for the materiality testing.
Materiality Testing Hyundai Engineering selects material issues for internal and external stakeholders through structured materiality testing methodologies - the composition of an issue pool, key issue assessment, and core issue selection, etc. The material issues are then reflected and reported in the Sustainability Report.
Step 1. Composition of an issue pool for reporting
Research was conducted to identify issues which were mostly actively discussed on sustainability management during the reporting period.
▶ Media research: Issues covered by the media on Hyundai Engineering during the reporting period were studied, and issues that are highlight- ed the most were selected. ▶ Analysis of international standards and benchmarking of global enterprises: sustainability management-related international organizations including UNGC, GRI and UN SDGs·The company could identify key issues related to the construction industry in global initiatives. The company studied the trends of sustainability management reporting of global enterprises that belong to the same industry with Hyundai Engineering, and identified the reporting trends on sustainability management within the industry.
Step 2. Materiality assessment by issue
The interest level of stakeholders on 34 sustainability management issues was evaluated through research. Major issues were selected through the assessment on the magnitude of impact and possibilities of occurrence for each issue.
▶ Assessment of the level of impact for each issue: Employees in charge of report writing, and those in sustainability management-related business units - Environmental Management Team and Win-Win Management Team, etc. - assessed the magnitude of impact for each issue. ▶ Assessment of the interest level of stakeholders: The company assessed the interest level of stakeholders in consideration of the frequency of mentioning and the weight of reporting and coverage, etc. during the reporting period for each issue.
Stakeholder Engagement Hyundai Engineering listens to the opinions of key stakeholders by comprehensively considering environmentally and socially critical issues along with potential issues which might occur in initiating business. The company operates communication channels for each stakeholder, and identifies its major expectations, which are appropriately reflected in our management activities.
Stakeholders Communication channels Key expectations and requirements •Developing new national technologies and green technologies, strengthening technological Shareholders and General meeting of shareholders, publicly disclosed competitiveness Investors materials, analyst meetings •Improving profitability, dividend policies, sound corporate governance, business opportunities and risk management Increasing customer satisfaction through preventive activities including quality inspection Customer satisfaction survey, operation of the • Customers Strengthening safety & health of customers, intensifying the protection of customers’ customer center on the website • personal information
e-procurement/procurement management system, Practicing fair trade, strengthening the CP system, supporting to boost competitiveness of Partners • conducting meetings partners
Raising employees’ satisfaction, striking a work-life balance Junior Committee, Dialogue with the CEO • Employees Intensifying communication among employees and departments, disclosing the performance (E-Mail To President within the in-house groupware) • of ethics management activities
Social contribution activities at the company level/ Communicating with the community, conducting various social contribution and volunteering Community engaged by all employees • activities, implementing the environmental impact assessment in areas near sites Publication of the Sustainability Report
Government/ Public hearings, materials for media coverage, •Legal and regulatory compliance, public-private cooperative partnerships Media/Association engagement in surveys •Transparent disclosure of corporate information
68 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Step 3. Results of selecting issues through the materiality testing
As a result of the materiality testing, a total of 34 issues were selected from the economic, environmental and social sectors.
Economy Environment Society
•Economic performance and value •Sophistication of the environmental •Shared growth with partners •Pursuit of a work-life balance creation management strategy •Intensification of risk management in the •Establishing a sound labor-management •Overseas business diversification •Efficient management of resources supply chain (environment, safety and culture and global market expansion •Response to Climate Change anti-corruption in the business process) •Fair and transparent performance •Buildup of competitiveness by •Intensification of water management •Spread of the safety culture on sites and assessment securing future growth engines reinforcement of safety management •Protection of biodiversity around •Development of global talents and •Sophistication of a company-wide project sites •Strategic activities for social contribution competency buildup risk management system •Minimization of the emission of •Establishing fair competitions and trade •Respect for employees’ diversity and •Buildup of R&D competency hazardous air pollutants •Intensification of compliance management guarantee of equal opportunities •Sound corporate governance •Systematic waste management and •Improvement in safety and health •Provision of a working environment suited increases in the recycling rate throughout the entire business initiation to domestic labor standards (ILO) •Intensification of handling and process •Enhancement of human rights protection managing hazardous chemicals •Enhancement of customer satisfaction for all the stakeholders in the business process •Development of eco-friendly •Stronger management of information products and technologies security •Transparent ethics management •Compliance with environmental laws •Intensified talent recruitment and and regulations management
Step 4. Results and reporting of the materiality testing results
A total of 10 aspects were selected by considering the correlations between the stakeholder impact, business and sustainability management, which are covered with a priority in the report. Selected core aspects are highlighted on each page. Other aspects to be importantly handled by the company were also considered.
Materiality Test Results Reporting boundary
Stakeholder interest Core Custom- Employ- Shareholders Com- Govern- Material Issues aspects ers ees and Investors Partners munity ment Aspects (Relevance) Spreading a safety HSE Industrial culture on sites and 1 manage- ● ● ● ● ● ● safety and strengthening safe- ment health Core topics ty management (High) Enhancement Value Product 2 of customer manage- ● ● and service satisfaction ment labeling Development of Talent global talents Training and 3 manage- ● ● and competency education ment buildup Evaluating Win-Win Shared growth with human rights 4 manage- ● ● partners and labor of ment partners Strategic activities Sharing 5 for social contri- manage- ● ● ● Community bution ment Key topics Improving Talent Labor-man- (Medium) employees’ rights 6 manage- ● agement including striking a ment relationships work-life balance Value Buildup of R&D Management 7 manage- ● ● competency performance ment Impact on business Buildup of Value Management 8 competitiveness by manage- ● (Impact) performance securing future ment
HSE Efficient manage- Raw 9 manage- ● ● ● ment of resources materials ment Economic perfor- Value Management 10 mance and value manage- ● ● ● ● ● ● performance creation ment
69 2014 - 2015 Hyundai Engineering Sustainability Report
The 3rd Party Assurance Statement
2014-2015 Independent Assurance Statement to Hyundai Engineering
Introduction We are commissioned to carry out the assurance engagement of the 2014-2015 Sustainability Report (the ‘Report’) of Hyundai Engineering (the ‘Company’).
Scope of Assurance As stated in the Report, the Company is responsible for all content within the Report in respect of the GRI Sustainability Reporting Guidelines. It is the responsibility of the Company’s management to establish and maintain appropriate performance manage- ment and internal control systems from which the reported sustainability information is derived. Our responsibility is to perform a limited assurance engagement and to express a conclusion on the work performed. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement, and consequently does not enable us to obtain assurance on all significant matters that we may become aware of in a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance conclusion. This statement has been prepared solely for the Company in accordance with the terms of our engagement. We do not accept or assume responsibility to anyone other than the Company for our work, or for the conclusion we have reached in the assurance report.
Independence and procedures performed Our performed the engagement in accordance with Deloitte’s independence policies, which cover all of the requirements of the IFAC (International Federation of Accountants Code of Ethics). There were no events or prohibited services provided which could impair that independence and objectivity in the provision of this engagement. We conducted our engagement based on the International Standard on Assurance Engagements (ISAE) 3000 Assurance En- gagements other than Audits or Reviews of Historical Financial information, issued by the International Auditing and Assurance Standards Board, and also AA1000AS (Moderate level, Type 1). The standards require that we comply with applicable ethical requirements, including independence requirements and that we plan and perform the engagement to obtain limited assurance about whether the Report is free from material misstatement.
70 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Conclusion Based on the procedures performed, as described below, nothing has come to our attention to indicate that the Report is not presented fairly, in all material respects, in accordance with the reporting criteria.
Inclusivity The Company operates communication channels with key stakeholders and we are not aware of any key stakeholder that has been excluded from dialogue in the Report.
Materiality The Company conducts a materiality test in determining material issues and we are not aware of any material aspects concerning its sustainability performance which have been excluded from the Report.
Responsibility The Company applies reporting scope, boundary and temporal criteria. In terms of criteria mentioned above, we confirm that the Report is suitable for stakeholders to assess sustainability performance.
Recommendation Without prejudice to our conclusions presented above, we believe the following matters can be considered for improved sustain- ability reporting. Oversea sites have problems which are irregular scope and difficulties in collecting data. We recommended to manage consistent data in systematic management which retain reliability of data. In the long-term, the company provide data in comparison of time-series by business unit and location that stakeholders can compare the company’s sustainability goals and achievements. Also, the biannual published report has a limit that data discontinuity and cannot report in a timely manner. Therefore, we recommended to publish sustainability report annually.
05 August 2016 Deloitte Anjin LLC
CEO Ham Jong-ho
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/abou t for a more detailed description of DTTL and its member firms.
Member of Deloitte Touche Tohmatsu Limited
71 2014 - 2015 Hyundai Engineering Sustainability Report
GRI G4 Index
General Standard Disclosures
Indicator Specific Standard Disclosures Page
Strategy and Analysis
Provide a statement from the most senior decision-maker of the organization (such as CEO, chair, or equivalent senior G4-1 6~7 position) about the relevance of sustainability to the organization and the organization’s strategy for addressing sustainability
Organizational Profile
G4-3 Report the name of the organization 10
G4-4 Report the primary brands, products, and services 10~11
G4-5 Report the location of the organization’s headquarters 10 Report the number of countries where the organization operates, and names of countries where either the organization has G4-6 10~11 significant operations or that are specifically relevant to the sustainability topics covered in the report. G4-7 Report the nature of ownership and legal form 16
G4-8 Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) 10~11
Report the scale of the organization, including: - Total number of employees - Total number of operations 10~11, G4-9 - Net sales (for private sector organizations) or net revenues (for public sector organizations) 62~63 - Total capitalization broken down in terms of debt and equity (for private sector organizations) - Quantity of products or services provided
A. Report the total number of employees by and gender. B. Report the total number of permanent employees by employment type and gender. C. Report the total workforce by employees and supervised workers and by gender. D. Report the total workforce by region and gender. G4-10 63 E. Report whether a substantial portion of the organization’s work is performed by workers who are legally recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors. F. Report any significant variations in employment numbers (such as seasonal variations in employment in the tourism or agricultural industries)
Not applicable (Operation of the G4-11 Report the percentage of total employees covered by collective bargaining agreements Labor-Management Council)
G4-12 Describe the organization’s supply chain 48~49
Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain, including: G4-13 - Changes in the location of, or changes in, operations, including facility openings, closings, and expansions 49 - Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations) - Changes in the location of partners, the structure of the supply chain, or in relationships with partners, including selection and termination
G4-14 Report whether and how the precautionary approach or principle is addressed by the organization 21~23 List externally developed economic, environmental and social charters, principles, or other initiatives to which the G4-15 20, 59 organization subscribes or which it endorses
List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization: - Holds a position on the governance body G4-16 - Participates in projects or committees 76 - Provides substantive funding beyond routine membership dues - Views membership as strategic
A. List all entities included in the organization’s consolidated financial statements or equivalent documents. G4-17 B. Report whether any entity included in the organization’s consolidated financial statements or equivalent documents is not covered by the 62 report Identified Material Aspects and Boundaries
A. Explain the process for defining the report content and the Aspect Boundaries G4-18 68~69 B. Explain how the organization has implemented the Reporting Principles for Defining Report Content
G4-19 List all the material Aspects identified in the process for defining report content 69
72 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Indicator Specific Standard Disclosures Page
For each material Aspect, report the Aspect Boundary within the organization, as follows: a. Report whether the Aspect is material within the organization b. If the Aspect is not material for all entities within the organization (as described in G4-17), select one of the following two approaches and G4-20 report either: 68~69 - The list of entities or groups of entities included in G4-17 for which the Aspect is not material or - The list of entities or groups of entities included in G4-17 for which the Aspects is material c. Report any specific limitation regarding the Aspect Boundary within the organization
For each material Aspect, report the Aspect Boundary outside the organization, as follows: - Report whether the Aspect is material outside of the organization G4-21 - If the Aspect is material outside of the organization, identify the entities, groups of entities or elements for which the Aspect is material. In 68~69 addition, describe the geographical location where the Aspect is material for the entities identified - Report any specific limitation regarding the Aspect Boundary outside the organization
G4-22 Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements 2
G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries. 2
Stakeholder Engagement
G4-24 Provide a list of stakeholder groups engaged by the organization 68
G4-25 Report the basis for identification and selection of stakeholders with whom to engage 68 Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and by G4-26 stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report 68 preparation process
Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has G4-27 responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised 14~15, 68 each of the key topics and concerns
Report Profile
G4-28 Reporting period (such as fiscal or calendar year) for information provided 2
G4-29 Date of most recent previous report (if any) 2
G4-30 Reporting cycle (such as annual, biennial) 2
G4-31 Provide the contact point for questions regarding the report or its contents 2
A. Report the ‘in accordance’ option the organization has chosen. B. Report the GRI Content Index for the chosen option (see tables below). G4-32 2, 70~75 C. Report the reference to the External Assurance Report, if the report has been externally assured. GRI recommends the use of external assurance but it is not a requirement to be ‘in accordance’ with the Guidelines.
A. Report the organization’s policy and current practice with regard to seeking external assurance for the report. B. If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided. G4-33 70~71 C. Report the relationship between the organization and the assurance providers. D. Report whether the highest governance body or senior executives are involved in seeking assurance for the organization’s sustainability report.
Governance
Report the governance structure of the organization, including committees of the highest governance body. Identify any G4-34 16~17 committees responsible for decision-making on economic, environmental and social impacts
Ethics and Integrity
G4-56 Describe the organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics 13, 18~19
Report the internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related to G4-57 18~19 organizational integrity, such as helplines or advice lines.
Report the internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters G4-58 19 related to organizational integrity, such as escalation through line management, whistleblowing mechanisms or hotlines
73 2014 - 2015 Hyundai Engineering Sustainability Report
Specific Standard Disclosures
Material External Aspects Indicator Specific Standard Disclosures Page Assurance
Economic
G4-EC1 Direct economic value generated and distributed 62 v
Financial implications and other risks and opportunities for the organization’s activities due to G4-EC2 34, 39 v Economic climate change Performance G4-EC3 Coverage of the organization’s defined benefit plan obligations 45 v
G4-EC4 Financial assistance received from government 29 v
Ratios of standard entry level wage by gender compared to local minimum wage G4-EC5 229% v Market at significant locations of operation Presence Proportion of senior management hired from the local community G4-EC6 63 v at significant locations of operation
Indirect G4-EC7 Development and impact of infrastructure investments and services supported 56~58 v Economic Impacts G4-EC8 Significant indirect economic impacts, including the extent of impacts 43, 56~58 v
Environmental
Materials G4-EN1 Materials used by weight or volume 66 v
G4-EN15 Direct greenhouse gas (GHG) emissions (scope 1) 66 v Emissions G4-EN16 Energy indirect greenhouse gas (GHG) emissions (scope 2) 66 v
Monetary value of significant fines and total number of non-monetary sanctions for non compli- 4 cases/Fines of Compliance G4-EN29 v ance with environmental laws and regulations KRW 4 million
Social
Labor Practice and Decent Work
Otalnumberandratesofnewemployeehiresandemployeeturnoverbyagegroup, G4-LA1 63 v genderandregion
Benefits provided to full-time employees that are not provided to temporary or part-time G4-LA2 45 v employees, by significant locations of operation Employment
64 (Gender-specif- G4-LA3 Return to work and retention rates after parental leave, by gender ic data are not reported)
Labor/Management Minimum notice periods regarding operational changes, including whether these are specified in G4-LA4 46 v Relations collective agreement
Type of injury and rates of injury, occupational diseases, lost days, and G4-LA6 65 v absenteeism, and total number of work-related fatalities, by region and by gender Occupational Health and G4-LA7 Workers with high incidence or high risk of diseases related to their occupation 41 v Safety
G4-LA8 Health and safety topics covered in formal agreements with trade unions None v
G4-LA9 Average hours of training per year per employee by gender, and by employee category 44 v
Programs for skills management and lifelong learning that support the continued employability Training and G4-LA10 44 v Education of employees and assist them in managing career endings
Percentage of employees receiving regular performance and career development reviews, by G4-LA11 63 v gender and by employee category
74 01. Sustainability Overview 02. Value Management 03. HSE Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review
Material External Aspects Indicator Specific Standard Disclosures Page Assurance
Human Rights
Total number and percentage of operations that have been subject to Assessment G4-HR9 100% v human rights reviews or impact assessments
G4-HR10 Percentage of new partners that were screened using human rights criteria None v Partner Human Rights Assessment Significant actual and potential negative human rights impacts in the G4-HR11 No cases v supply chain and actions taken
Society
Percentage of operations with implemented local community engagement, impact assessments, G4-SO1 100% v and development programs Local Communities Operations with significant actual and potential negative impacts on G4-SO2 None v local communities
Anticompetitive Total number of legal actions for anti-competitive behavior, anti-trust, G4-SO7 No cases v Behavior and monopoly practices and their outcomes
Product Responsibility
Product and G4-PR5 Results of surveys measuring customer satisfaction 33 v Service Labeling
Monetary value of significant fines for non-compliance with laws and regulations concerning the Compliance G4-PR9 None v provision and use of products and services
Construction and Real Estate
CRE3 Greenhouse gas emissions intensity from buildings 39, 66 v
Emissions Greenhouse gas emissions intensity from new construction and CRE4 39, 66 v redevelopment activity
Land Degradation, Land remediated and in need of remediation for the existing or intended land use, Contamination CRE5 Not applicable v According to applicable legal designations and Remediation
Occupational Percentage of the organization operating in verified compliance with an CRE6 35, 40~41 v Health and Safety internationally recognized health and safety management system
Local Number of persons voluntarily and involuntarily displaced and/or resettled by CRE7 None v Communities development, broken down by project
Product and Type and number of sustainability certification, rating and labeling schemes for CRE8 31, 35, 40 v Service Labeling new construction, management, occupation and redevelopment
75 2014 - 2015 Hyundai Engineering Sustainability Report
Awards & Prizes
Prize name Date Awarded by
MBN, Maeil Business Newspaper, Ministry of Land, Infrastruc- The Presidential Prize at the ‘18th Good Living Apartment Award’ Jul. 2014 ture and Transport
The Excellence Prize in Landscape & Ecosystem at the Aug. 2014 Seoul Metropolitan Government ‘2014 Environmental Award of Seoul Metropolitan Government’ (Mayoral Prize)
The Excellence Prize in Landscape Policies at the Oct. 2014 Korea Institute of Landscape Architecture ‘7th Korea Landscape Architecture Awards’
The Most Excellent Prize (Environmental Ministerial Prize) in Urban and Nov. 2014 Ministry of Environment Artificial Ground at the ‘14th Natural Environment Award’
The Best CEO Award at the ‘General Meeting of Korea Engineering & Feb. 2015 Korea Engineering & Consulting Association Consulting Association’
The Grand Prize in the Private Sector of Completed Buildings Ministry of Land, Infrastructure and Transport, Korea Institute Nov. 2015 at the ‘2015 Korea Architecture Award’ of Registered Architects, Seoul Economic Daily
The Prize at the the Shared Growth Sector of the Dec. 2015 Korea Institute for Industrial Economics & Trade, Dong-A Ilbo ‘2nd Porter Prize for Excellence in CSV’
BeijingSteel Structure Chapter of the Construction Metal Gold Prize at the ‘2015 Beijing Steel Structure Gold Award’ Mar. 2016 Structure Association
Membership in Associations
Membership in Associations
Korea Electric Engineers Association Korea International Trade Association Transportation Investment Evaluation Association
Korea Association of Construction Engineering and Korea Railway Signal Engineer Association Korea Industrial Technology Association Management
The Korean Railway Electricity Technology Seoul Chamber of Commerce & Industry Korea Plant Industries Association Association
Korea Atomic Industrial Forum Korea electrical Contractors Association Korea Plant EPC Association
Korean Radioactive Waste Society Korea Association of Surveying & Mapping FED Union
The Society of Air-conditioning and Korea Institute of Registered Architects Operating Committee of Korea Housing Association Refrigerating Engineers of Korea
The Korea Society For Environmental Korea River Association Korea Construction Engineers Association Restoration And Revegetation Technology
Environmental Influence Assessment International Contractors Association of Korea Korean Association for Supporting the SDGs (ASD) Association
Korea Water and Wastewater Works Association Korea Fire Safety Association Korea Building Owners & Managers Association
KATIA Korea Information & Comm.Contractors Association Fair Competition Federation
Korea Facility Management Association Korea Facilities Maintenance Association The Korea Institute of Landscape Architecture
Korea Water Resources Association The Federation of Korean Industries Korea Housing Association
Korea Fire Facility Association Association of Workplace Police Officers Korea Personnel Improvement Association
Construction Association of Korea Korea Engineering & Consulting Association Korea Environment Construction Association
76 2010
2012 2014 2016
Inquiries about this report
This report has been published in Korean and English. You may download it from the Sustainability Management Section of Hyundai Engineering’s website. If you have any questions or suggestions, please contact:
•Team: Sustainability Management Representative, Business Plan- ning Team, Planning Office •E-mail: [email protected] •Tel: +82-2-2134-1809 •Website: www.hec.co.kr •Address: 75 Yulgok-ro, Jongno-gu, Seoul, Korea