2022 Highlights
Supply Chain ESG Support
Supply Chain ESG Support
Supply Chain ESG Support
Supply Chain ESG Management
Globally, supply chain stability is becoming increasingly important. To foster a sustainable industrial ecosystem in a rapidly changing global business environment, we support all our partners in complying with their social responsibilities in areas such as ethics/anti-corruption, labor/human rights, safety/health, and the environment. By extending SK bioscience’s ESG management policies and activities to our suppliers, we aim to prevent various risks that may arise in the supply chain and enhance their ESG capabilities.
Supply Chain ESG Support Platform
SK bioscience is promoting ESG management across the supply chain by reflecting ESG requirements in the selection and evaluation of suppliers. As part of this effort, we introduced ‘Click ESG’, an IT infrastructure-based supply chain ESG support platform, to identify ESG risks and simultaneously assist suppliers in their improvement efforts. In 2023, we plan to further advance the platform to encourage suppliers to participate in ESG management continuously and to grow with them by managing their nonfinancial risks.
ESG Platform Serivce Areas
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- Establishing diagnostic criteria considering SK bioscience, suppliers, and external stakeholders
- Benchmarking through objective measurement and judgment of suppliers’ ESG levels
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- Establishing and monitoring improvement tasks after diagnosis to provide continuous support
- Sharing results and managing data continuously
Supply Chain ESG Support Process
Through the Supply Chain ESG Support Platform, SK bioscience has transformed its existing supply chain ESG management system into a series of processes ranging from ESG self-assessment and evaluation to improvement and management. By doing so, we are supporting our suppliers’ ESG management and enhancing the sustainability of the entire supply chain.
Supply Chain ESG Management Indicators
Based on the requirements of domestic and international organizations and assessments, SK bioscience has developed 66 supply chain ESG management assessment indicators, including 25 in the environmental sector, 28 in the social sector, and 13 in governance. Moving forward, we plan to establish a diagnostic system tailored to the industry and supplier characteristics by comprehensively reflecting the standard classification system used domestically and abroad. Additionally, we will incorporate the principles of each of the five areas(ethics, labor, health and safety, environment, and management system) outlined in the Pharmaceutical Supply Chain Initiative(PSCI), a supply chain initiative in the pharmaceutical industry. This approach will help us effectively manage a sustainable supply chain.
ESG Evaluation Indicator
| Indicator | Content |
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RBA is an industry coalition established to promote corporate social responsibility. The evaluation indicators utilized by RBA are specifically tailored for supply chain assessment, encompassing approximately 70 indicators that concentrate on environment/ labor, health/safety, management systems, and ethics. |
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ecovadis specializes in supplier assessments. It has assessed nearly 75,000 companies around the world using more than 250 indicators focused on environmental, labor, human rights, ethics, and sustainable procurement. |
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The “SME ESG Checklist” is developed by selecting essential and actionable indicators for SMEs. It consists of a minimum of 20 indicators to assess SMEs’ ESG management. |
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As a guideline for Korean companies to utilize, 61 indicators were selected by synthesizing common indicators from major domestic and foreign evaluation organizations while also considering the input of domestic experts. It serves as a starting point for Korean companies’ ESG management and assessment responses. |
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Companies obligated to disclose information under the Environmental Technology And Industry Support Act are required to have their environmental information verified and registered in the system annually. The evaluation encompasses 27 indicators, including environmental management implementation structure, resource and energy conservation, as well as targets and achievements related to environmental pollutant emission reduction. |
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The GRI Standards 2021, the global sustainability reporting guidelines that have become effective this year, have revised the process for identifying “material issues” by introducing the concept of due diligence. Additionally, they have strengthened disclosure requirements for human rights and due diligence. |
Supply Chain ESG Risk Management Framework
SK bioscience has introduced a systematic risk management process to prevent and manage various non-financial risks that may arise in the course of business activities of suppliers. We conducted a supply chain risk diagnosis for 50 of all registered suppliers, with four of them being excluded from the assessment due to their internal circumstances. To promote education on ESG management and risk management, we distributed materials and videos to all assessed suppliers and asked them to condutc a self-diagnosis based on these resources.
Status of the self-assessment of the first group of suppliers
| Total | 21/46 | Risk Level(High) | 76.19% | Risk Level(Medium) | 9.52% | Risk Level(Low) | 14.29% |
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Currently, we are in the process of devising comprehensive diagnosis and improvement plans for suppliers who have undergone the ESG risk self-assessment and evaluation process, dividing them into two groups. We have already completed the comprehensive diagnosis and improvement plan for 21 suppliers in the first group. Approximately 76% of them were assessed as high-risk due to reasons such as non-implementation of ESG management, lack of supporting data, or limited data submission because of the absence of ESG personnel. By the end of August, we will also finalize corrective measures and improvements for 25 suppliers in the second group. Furthermore, we will select 10 suppliers from the high-risk group for on-site inspections and provide support for supply chain ESG management improvement plans, training, and consulting.
Supply Chain ESG Evaluation Improvement Roadmap and Plan
Starting with this supply chain ESG diagnostic evaluation, we will gradually expand the number of suppliers to be assessed, aiming to enhance supply chain ESG risk management by diversifying improvement programs and consulting services. Moving forward, we will utilize the ESG diagnostic platform to conduct in-depth assessments of suppliers’ ESG management status, encouraging voluntary management and verifying data. Based on the results, we will offer consulting services to high-risk suppliers as needed. Additionally, we will implement various support programs to promote practical improvements and enhance management systems. We will also provide in-depth training and consulting for high-risk suppliers to build a sustani able supply chain system.
Providing Supply Chain ESG Support Guidebook
SK bioscience distributed a guidebook that takes into account the corporate environment to assist its suppliers in understanding the concepts and methodology of ESG, facilitating smooth ESG assessments. The guidebook is divided into three parts and aims to enhance ESG assessment support by providing implementation items and supporting documents for each scale question.
