SK bioscience utilized methodologies proposed by the Science Based Targets initiative (SBTi) to analyze greenhouse gas emissions across all its facilities in 2022. Based on this analysis, we established its initial goals and implementation strategies to achieve Net Zero emissions by 2031 and updated these plans in the first half of 2024. Scope 1 emissions primarily result from the use of LNG fuel in the boilers at the Andong L House. SK bioscience aims to meet its reduction targets by leveraging government policies and expanding plans for hydrogen energy infrastructure. Scope 2 emissions mainly arise from electricity consumption. SK bioscience plans to conclude a Power Purchase Agreement (PPA¹⁾) for renewable energy in 2024, with the goal of sourcing renewable energy from 2027.

Based on the IEA¹⁾ Sustainable Development Scenario(SDS),²⁾ energy and carbon costs analysis shows a reduction in the mid- to long-term when we implement the 2022 Net Zero roadmap . In the short-term, the cost burden is expected to rise due to renewable energy costs increase. However, considering the introduction of carbon pricing policies and the price stabilization expected from government hydrogen infrastructure expansion under the SDS, energy and carbon costs are projected to decrease as of 2028. By the time Net Zero is achieved in 2031, an annual average cost saving of approximately KRW 1.2 billion is anticipated. SK bioscience plans to re-evaluate the detailed financial impacts under various climate scenarios, incorporating the updated renewable energy transition plan as of the first half of 2024.

• 1) IEA (International Energy Agency): Global energy policy advisor.
• 2) IEA Sustainable Development Scenario(SDS): A scenario that assumes the achievement of the sustainable energy goals recommended by the UN SDGs, consistent with the goals of the Paris Agreement

SK bioscience’s key decision-making bodies, namely the Board of Directors and the ESG Committee, are responsible for issues concerning climate change response strategies and activities. The Board of Directors holds the responsibility for managing and supervising all ESG management factors, including climate change. On the other hand, the ESG Committee evaluates risks and opportunities, assesses ESG management performance, and monitors and reports the implementation progress of climate change responses to the Board. Furthermore, the Board of Directors secures climate change leadership by integrating ESG performance into the CEO’s key performance indicators(KPIs) and compensation system.

SK bioscience operates an ESG Council to respond to major company-wide risks. The ESG Council makes decisions on key issues such as greenhouse gas reduction measures and investment activities, in addition to management strategies to respond to climate change, and regularly monitors the activities of departments such as strategy and risk management. Furthermore, SK bioscience operates ESG Working-level Council to support the decision-making process of the Board of Directors and ESG Committee and enhance the working-level collaboration.

Climate Change Response Implementation Framework

• 이사회 보고

  Board of Directors

  ESG위원회

  기후변화 관련 리스크 및 기회와 영향도 검토, Net Zero 목표 및 추진계획 논의 및 승인

• 경영층 회의체

  ESG 협의체

  기후변화 대응 전략 및 Net Zero 로드맵 검토, 온실가스 감축 이행을 위한 전사 협력 촉진 등

• 향후 운영 방향

• 실무 회의체

  ESG 실무협의체

  전사 조직 간 실무협의체

  Net Zero 목표 수립 및 개선과저 도출, 유관부서 실행 지원 및 이행점검, 글로벌 이니셔티브 (TCFD, SBTi, CDP 등) 대응

  온실가스 규제 대응 및 감축과제 이행, 저탄소 연료/공정 도입 등

Board Oversight of Climate Change Agenda

SK bioscience has set a GHG Net Zero goal and developed a roadmap in alignment with the Science Based Targets initiative(SBTi). In addition, we have identified GHG emissions by major sources at our worksites through voluntary GHG verification since 2021 and have established strategies for fuel switching and RE100 adoption to refine our Net Zero goal. At the same time, we have analyzed the economic feasibility of Net Zero costs to enhance the implementation of our strategies.

SK bioscience has completed the calculation of Scope 3 emissions for 2022 in order to plan reduction activities throughout the entire value chain. We plan to respond in stages by identifying the amount of GHG emissions in major categories. To achieve Scope 3 Net Zero, we will implement a gradual reduction strategy, starting with the conversion of internal and external vehicles to electric vehicles in the short term. Additionally, we will collect product LCA data and the emissions database of upstream and downstream transportation vehicles.

Worksite Net Zero Roadmap

• 2021~2050년 : Scope 3 Value Chain 온실가스 감축 역량 강화
• 2025~2030년 : Scope 2 재생에너지 공급 및 확대, 재생에너지 공급사 모색 및 계약 체결
• 2024~2031년 : Scope 1 안동 L House LNG 보일러 연료 전환 Net Zero 목표 달성 (2031)

In line with the 2022 TCFD’s recommendations, SK bioscience has identified risks and opportunities that affect the sustainability of its business and its future response to climate change. At the policy level, the strengthening of carbon emission regulations and the introduction of carbon pricing act as drivers to accelerate corporate carbon reduction efforts. Additionally, the trend of mandating non-financial performance disclosure is promoting transparent reporting of carbon reduction performance.
In the market, growing demand for environmentally friendly products and services is driving a premium for low- and zero-carbon products. From a reputation perspective, we anticipate that an organization’s brand image will soon be influenced by its climate change response performance, highlighting the importance of relevant R&D and technological capabilities. We also expect that extreme weather events will impact business operations and assets.

Climate Change Factors

기후변화 이슈

• 정책

  탄소 배출 규제 강화

  정책적 탄소 가격 도입

  비재무 성과 공시 의무화

• 시장

  친환경 제품/서비스 니즈 증가

• 평판

  기후변화 대응 성과에 따른 소비자 및 이해관계자의 인식 향상

• 기술/R&D

  친환경 기술 요구 강화

  친환경 전환 비용 증가

• 자연재해

  이상기후 현상에 따른 사업 영향

Climate Change Risks & Opportunities

Climate change brings about various risks and opportunities that can directly or indirectly impact our financial and non-financial performance. Recognizing the significance of climate change on our business, SK bioscience has categorized these risks into transition risks and physical risks and conducted risks and opportunities assessments. Building upon the evaluation outcomes, we plan to consistently manage the impacts of climate change.

To manage climate change risks that have a direct or indirect impact on both financial and non-financial performance, SK bioscience conducts evaluations of potential climate-related risks. These evaluations take into account the timeframe(short, medium, and long-term), and financial implications. The ESG Team collaborates with relevant departments to identify and assess climate-related issues, and subsequently reports them to the management. The management incorporates the identified risks and opportunities, along with their actual and potential impact, into their decision-making processes. The risk management system reflects domestic and international climate change policy objectives, Net Zero goals, achievements, and the level of exposure to climate risks. The key findings are then reported to both the ESG Committee and the Board of Directors.

Our ESG Committee is systematically monitoring climate change risks and opportunities, but moving forward, we plan to internalize climate change risk management into our Enterprise Risk Management(ERM) system, which integrates business risks for effective supervision. Accordingly, we will minimize negative risks from climate change by identifying potential impacts on the entire company in the event of severe climate change risks and proposing countermeasures.

Climate Change Risk Management Process

SK bioscience aims to reduce greenhouse gas emissions by introducing and expanding the use of renewable energy in the mid- to long-term. By gradually enlarging renewable energy usage at worksites, such as through the staged conversion of LNG fuel to hydrogen for the Andong L House multitube-through boilers and the supply of solar-generated electricity, SK bioscience plans to achieve its Net Zero goal by 2031.

SK bioscience calculates and continuously manages its Scope 3 GHG emissions in order to reduce greenhouse gas emissions not only from its own business sites but also throughout the entire value chain. To calculate our Scope 3 GHG emissions, we have selected the main categories and methodologies in line with domestic and international standards necessary for the calculation. We have identified and collected data such as the cost and quantity of raw materials purchased, fuel usage, and emission factors. Moving forward, we will continuously manage our Scope 3 GHG emissions by further advancing the template and methodology for data collection and analysis.

The majority of SK bioscience’s Scope 3 GHG emissions come from category 1(Purchased Products & Services) and 2(Capital Goods). Therefore, to reduce GHG emissions in both categories simultaneously, we will continue to work with key stakeholders to reduce our value chain GHG emissions, including intensively managing our partners.

GHG Emission Status : Scope 3