■ 2021 social value performance records a total of KRW 928.1 billion, a drastic improvement of KRW 1.1473 trillion compared to 2020

– Changed existing classification system in line with ESG → Indirect Economic Contribution Performance/Environmental Performance/Social Performance/Governance

■ Pushing for structural change to achieve Net Zero through eco-friendly biz model innovation linked to the Financial Story

– Strengthened external communication by sharing social value measuring formula, and reflecting in Key Performance Indicators (KPI)

■ Vice Chairman Kim Jun, “SK Innovation will accelerate ESG management to gain recognition and trust of stakeholders”

On May 26, SK Innovation announced that it created social value worth KRW 928.1 billion in the year 2021. This is an improvement increased by KRW 1.1473 trillion compared to the last year, the highest in the past three years.

In terms of SK Innovation’s social value performance from last year by each domain, “Indirect Economic Contribution Performance” was KRW 1.7115 trillion, which is a YoY 129% increase (KRW 963.1 billion in 2020), “Environmental Performance” was △ KRW 948.9 billion, which is a YoY 11% increase (KRW 143.1 billion in 2020), and “Social Contribution” was KRW 165.6 billion, which is a YoY 33% increase (KRW 41.2 billion in 2020). Hence, they achieved improved performance compared to the last year across all domains.

By increasing the hiring of new employees to expand the battery business last year, SK Innovation was able to drastically improve its “Indirect Economic Contribution Performance.” For the “Environmental Performance,” the increase in sustainable solution sales, such as the carbon reduction performance through the Net Zero efforts, eco-friendly lube base oil, eco-friendly asphalt, etc., led to increased sales. “Social Contribution” also demonstrated the rising trend by strengthening shared growth with partner companies and expanding on social products and services, such as My Truck House.

SK Group re-classified its existing classification system into indirect economic contribution performance, environmental performance, social performance, and governance, starting from its social value announcement this year. The goal was to improve stakeholders’ understanding of social values by strengthening the connection with the ESG classification system.

In each domain, ▲Indirect Economic Contribution Performance measures employment, dividends, and tax payments. ▲Environmental Performance evaluates resource consumption, products and services related to environmental pollution, etc. ▲Social Performance includes labor, shared growth, social contribution, donations, volunteering activities, etc.

| Establishing and Executing the Net Zero Road Map

SK Innovation has announced that they will achieve Net Zero by 2050 not only to expand eco-friendly products/services, such as batteries for electric vehicles (EVs) but also to drastically reduce adverse environmental effects caused by greenhouse gas emissions.

In addition, SK Innovation announced this through the “Net Zero Special Report” published in July 2021 after establishing a road map that included detailed carbon reduction goals and an execution plan.

Last year, SK Innovation built a “Green Operation” system that optimized equipment operation in consideration of carbon emissions and prioritized the implementation of low carbon materials by reflecting carbon value, and, in 2021, they achieved a reduction of at least 10% in carbon emissions compared to the reference point of 2019 (12.67 million tons).

As a result of its carbon reduction achievements, SK Innovation was boosted to Level A- (Leadership) from CDP (Carbon Disclosure Project), a global ESG evaluation agency, and the company received the highest score in the Energy and Utility sector and won the “Carbon Management Sector Honors.”

| SV Ecosystem Expansion

SK Innovation is actively making efforts to cultivate an ecosystem for start-ups by launching “EGG Program (SK + Green Start-up),” the first start-up shared growth program in Korea in collaboration with the government, major corporations, and impact funds, to spread the social value.

From 2019 to last year, SK Innovation helped grow 29 start-ups with eco-friendly technology, and its plan is to cultivate 100 start-ups by the year 2025.

SK Innovation is actively pushing forward with the Financial Story of the “Carbon to Green,” and stated that cultivating eco-friendly start-ups and creating an eco-friendly ecosystem is the key solution to solving environmental issues.

| Governance Innovation

In addition, SK Innovation has accelerated practical business management, centered on a board of directors (BOD), for the governance domain, which is the basis for social value creation and has received positive evaluations internally and externally.

Starting from 2021, SK Innovation’s BOD will perform CEO evaluations and determine compensations independently, and ESG risks of all BOD decision agendas in the ESG Committee of BOD will be reviewed in advance. In recognition of last year’s governance innovation achievements, SK Innovation received the Excellent Governance Company Award from the Korea Corporate Governance Service (KCGS) and received an A+ grade in the ESG comprehensive evaluation.

SK Innovation integrated its Net Zero execution performance and progress in mid- to long-term ESG goals in the CEO evaluations and compensations and company-wide key performance indicators (KPIs) in order to systematically increase their social value performance.

SK innovation’s social value measurement formula, performance, and mid- to long-term ESG goals will be shared with external stakeholders through the 2021 ESG Report that will be published in July of this year.

Kim Jun, Vice Chairman of SK Innovation, stated, “We will further accelerate ESG management so that we can gain the recognition and trust of the market and stakeholders as a green energy and materials company in the future.” He added, “All affiliates in SK Innovation will execute these core strategies to continuously increase social values.”

[Photo]

Kim Jun, Vice Chairman of SK Innovation explained the “Carbon to Green” strategy at SK Innovation’s “Story Day” on July 1st last year.