As SK Innovation celebrated its 60^th anniversary in 2022, 2023 marks the beginning of a new 60 years of its history, and it is also the second year SK Innovation and all of its subsidiaries execute their Financial Story.

To learn more about the company’s strategies and plans for this year, we’ve met the executives of SK Innovation and its subsidiaries and asked them in detail. SK Innovation Vice Chairman & CEO Kim Jun is the first guest of this interview series.

Q1. 2022 was the first year for SK Innovation to implement its Financial Story, so the company must have undergone significant changes both quantitatively and qualitatively. Could you please highlight the performance of SK Innovation in 2022?

▲ Vice Chairman & CEO of SK Innovation Kim Jun gives a keynote speech at the “SK Innovation Global Forum” held in San Jose, California, the U.S., in June 2022, introducing the direction for establishing SK Innovation’s eco-friendly business portfolio and the company’s willingness to innovate the business model.

2022 marked the 60^th anniversary of SK Innovation’s foundation and the first year of Financial Story execution, so it was a very meaningful year to us. While we congratulated this event, it also motivated us to take stronger commitment and determination. As the CEO, I’m responsible for designing a new 60 years of history in which all stakeholders could be happy. In particular, since the pandemic is still lingering and international situations are full of uncertainty, such obstacles are no longer variables but the constants that a business leader always has to take into consideration.

Looking back on the last year, we gained several achievements of “Carbon to Green” with Electrification and Recycling as the two main pillars, as well as devoting ourselves to full-scale implementation of the Financial Story and internalization of ESG management.

We’ve also laid the foundation for Business Portfolio transformation by securing New Green Portfolio businesses including Small Modular Reactors (SMRs), ammonia-based fuel cell systems, and gasification of solid waste.

As for refinery and chemical businesses, along with strengthening their existing business competitiveness, they have started consolidating the foundation for portfolio innovation. This includes the promotion of the Energy Super Station Project by SK Energy P&M CIC, the transition to a Petrochemical Chemical Balanced Refinery, along with Renewable business by SK Energy R&S CIC and SK Trading International, SK Geo Centric’s establishment of plastic Advanced Recycling Cluster Cluster in Ulsan, SK Enmove’s entering the business of liquid immersion cooling for data centers, SK Earthon’s global CCS business, and SK Incheon Petrochem’s hydrogen business that is related to other projects of SK.

As for electric vehicle (EV) battery business, Blue Oval SK – the joint venture of SK On, our subsidiary, with Ford has been launched in the US. For material business, SK IE Technology officially shipped its first battery separators to Vietnam’s largest private company. This means for our Green Anchoring strategy, we can expect further growth in the global market.

I believe these are all thanks to the pursuit of SUPEX* by members of the SK Innovation subsidiaries and the support and encouragement of stakeholders. Once again, I’d like to give my sincere thanks to everyone. Such achievements from 2022 are also the base line for this year, so we will keep on our toes to bring greater performance and enhance our corporate value.

(*) SUPEX: A short term for Super Excellent Level, or the highest level to be achieved by human capability

Q2. SK Innovation declared “All Time Net Zero” vision at the company’s 60^th anniversary held in October 2022 with specific goals for 2062, when SK Innovation reaches its 100^th anniversary. Could you explain more about it?

“All Time Net Zero” is a very differentiated and challenging goal. Nevertheless, we decided to declare it to stakeholders and the market because we believe “this is the path must be taken, and the corporate value of SK Innovation.”

To recap All Time Net Zero, it is the strategy through which SK Innovation reduces the Scope 1, 2, and 3 and expands the contributions of global carbon reduction to reach Net Zero in 2050, and in 2062, when SK Innovation celebrates the 100^th anniversary of foundation, we will create a global carbon reduction effect equivalent to the 480 million tons of direct carbon emissions accumulated since our foundation. It means SK Innovation will independently deal with not just the current and future carbon, but also the carbon we have emitted over the past 60 years.

So far, SK Innovation has implemented various reduction measures according to the Net Zero Roadmap and is creating tangible carbon reduction results. At the same time, SK Innovation believes that it has satisfied the difficult and heavy demands of external stakeholders, such as global investment groups and rating agencies.

This year, in order to continuously create performance in carbon reduction, all subsidiaries of SK Innovation are putting heads together to develop various methodologies. SK Innovation will carefully analyze and review the existing Net Zero goals, means of achievement, resources, etc., to materialize the mid-term carbon reduction measures. In addition, SK Innovation will continue to expand our representative eco-friendly business and products, such as EV batteries, plastic recycling, and Battery Metal Recycle (BMR) business to enhance the ability to implement Carbon to Green strategy for achieving All Time Net Zero.

▲ (Left) Vice Chairman & CEO of SK Innovation Kim Jun (center) declared the vision of All Time Net Zero with new employees of the company at SK Innovation’s 60^th anniversary ceremony held in October 2022. / (Right) SK Group Chairman Chey Tae-won (right) and Vice Chairman & CEO of SK Innovation Kim Jun (left) are looking around the 60^th anniversary exhibition hall for SK Innovation’s foundation.

Not long after our 60^th anniversary, SK Innovation joined 8 other member companies of SK Group to participate in CES 2023 held in January 2023. This was where we could confirm how global issues such as carbon reduction and ESG management are what we have to pay close attention to. This is also where we could show our “actions” to realize “All Time Net Zero” vision, as well as SK’s goal of reducing 1% (200 million tons) of the global carbon reduction target by 2023.

▲ Vice Chairman & CEO of SK Innovation Kim Jun (first from right in both photos) is looking around the SK exhibition hall at the CES 2023 held in Las Vegas, USA, on January 6 (local time).

Q3. From a corporate perspective, one of the main topics in 2023 that most people can relate to is “uncertainty.” How does SK Innovation plan to overcome this?

Regarding the business environment in 2023, there are many views that predict the instability of international energy prices, the uncertainty of the interest rate and exchange rate, and a slowdown in demand due to the global economic recession. Uncertainty based on geopolitical risks and global supply chain issues in Green Biz. is also getting worse, so it is expected that this year’s business environment will be challenging.

SK Innovation has already been strengthening risk management by preparing various scenarios for several situations. Business activities to continuously discuss and adjust the measures to overcome the global crisis will be more important than ever this year.

I think SK Innovation has always grown through the process of boldly overcoming difficulties. No one would have predicted that a company that started in a small town in Ulsan in 1962 would grow like this after overcoming numerous difficulties and somewhat unbearable situations to carry out the important mission of “the driving force that moves the world.” At SK Innovation’s 60^th anniversary event last year, SK Group Chairman Chey Tae-won said, “The history of SK Innovation is the history of a blessing in disguise itself, which has grown while overcoming crises.” I think this is the most accurate representation.

In the interview with SKinno News in early 2022, I mentioned that “global crises such as COVID-19 are not situations that we can avoid, so we should use them as opportunities to strengthen our constitution.” I’m confident that SK Innovation has gained global competitiveness equipped with a stronger constitution while overcoming the crises.

There are going to be multiple challenging variables in 2023 that will happen to not only SK Innovation but many others. If SK Innovation goes beyond overcoming the crisis and takes them as blessing in disguise” as Chairman Chey said, it can continue the virtuous cycle of growth. I am sure that this can be achieved with all members and stakeholders join effort together.

Q4. For SK Innovation, 2023 marks the beginning of a new 60 years, which is why it is important to enhance its corporate value by strengthening the ability to implement the Financial Story. Could you share your thoughts on this?

In this year, it is essential to show our stakeholders the company’s fundamental strength to elevate its corporate value. Thus, the most important management topic that the entire fleet of SK Innovation subsidiaries should focus on is how to accelerate implementing the Financial Story and thus enhance the corporate value.

In order for SK Innovation’s corporate value to be properly evaluated in the market, tangible results from the New Green Portfolio transition strategy that we talked about are absolutely necessary. The identity that SK Innovation pursues has been stated as “Green Portfolio Designer & Developer” several times. SK Innovation will strongly promote its role in building a New Green Portfolio via various methods including producing Electrification-linked clean energy, converting to the low carbon energy, and securing the Carbon Net Zero technology.

More specifically, energy and chemical business companies will have to continuously create concrete results that meet market expectations, and SK On and SK IE Technology plan to secure profitability and growth at the same time based on differentiated competitiveness. To achieve this goal, each company has already been implementing Financial Story effectively.

In addition, I would like to emphasize that establishing and developing a future-oriented management system are vital to achieve sustainable growth and boost the corporate value. SK Innovation will go beyond the financial performance-oriented strategies and evaluation/compensation systems, aiming to introduce compensation systems and establishment of KPIs related to the corporate values. To this end, SK Innovation is going to make the transition to Management System 2.0 in earnest.

Q5. SK Innovation’s ESG strategy has been highly evaluated for being systematic and concrete with multiple achievements. What is the strategy for this year?

▲ Vice Chairman & CEO of SK Innovation Kim Jun gives a keynote speech at the “SK Innovation Global Forum” held in San Jose, California, the U.S., in June 2022, introducing the direction for establishing SK Innovation’s eco-friendly business portfolio and the company’s willingness to innovate the business model.

SK Innovation has been carrying out ESG management philosophy through GROWTH, a set of differentiated and specific implementation strategies. Based on this, SK Innovation is creating tangible results in these areas: firstly, carbon reduction focusing on All Time Net Zero vision; secondly, governance innovation centered on the board of directors; and lastly, the happiness and growth of all stakeholders including members of the company. SK Innovation strives to communicate transparently with stakeholders by disclosing each progress through the ESG Data Platform.

Such a system has been receiving positive evaluations from external stakeholders. In particular, SK Innovation has improved in ESG evaluation ratings by major global agencies, such as MSCI and CDP.

As 2023 is a very important year for accelerating the creation of ESG performance and internalizing ESG management, SK Innovation must evolve further now. Centered on the GROWTH strategy, all business corporations and related organizations will continue to create ESG achievements that can be recognized by all stakeholders and linked to the corporate value. Also, ESG Data Platform, a differentiated action plan, is about to be expanded to global business sites.

Q6. As you said, I believe that establishing an ESG system at global business sites is an important task. As such, the value of SK Innovation’s affiliates is rapidly increasing through global positioning. Please explain this year’s global strategy of SK Innovation.

First of all, I would like to mention the CES 2023, which was held in Las Vegas, USA, last January. I think CES is a good example of how SK Innovation is currently being recognized on the global stage.

At this CES, SK On’s EV battery and SK IE Technology’s Flexible Cover Window won the Best of Innovation. 2 of the 23 Best Innovation Awards were obtained through our products. In addition, 5 of our products gained 8 Innovation Award Honorees. I think it’s an outstanding achievement.

▲ (Left) Visitors are looking at SK On’s SF battery (NCM 811), which won the “Best of Innovation” at CES 2023 held in Las Vegas, USA, last January. / (Right) SK On’s SF battery, which won the “Best of Innovation” at CES 2023

I put value on the Green Anchoring strategy and Green Transformation strategy, which are both making great achievements enough to be recognized on the global stage. Green Anchoring is a strategy to expand the field of next-generation materials and LiBs centered on the battery business, while the Green Transformation is a strategy to transform the existing carbon-generating businesses into green ones.

SK Innovation has been striving to establish a “New Green Portfolio” by the production of clean energy for electrification and the expansion of Battery Metal Recycling (BMR) business through the construction of recycling value chain. To do so, it is vital to have SK Innovation’s own technology and to create a system for collaborating with global experts and promising companies.

Good examples are the establishment of an Open Innovation Post in Silicon Valley in the US in November last year, as well as the rapid implementation aimed at accelerating green-centered innovation. SK Innovation has already established a research center in the US in 1989, the first overseas research center for a Korean company, and has an experience in successfully developing a bio business based on fine chemicals.

This year also marks the 40^th year since SK Innovation’s R&D management began in earnest. I’m confident that SK Innovation will create unparalleled corporate value by using a new level of global growth strategy.

Q7. SK Innovation seems to be doing a lot of activities including your visit to Africa and efforts to host the Busan Expo. I think the meaning of the Busan Expo must be very special

Everyone is well aware of why we need to host the Busan Expo at the national level, so there is no need to mention it again. So, I thought about the meaning in terms of SK Innovation and the corporate level.

I’m involved myself, including doing what I can at the corporate level. It was a great experience to visit several African countries last year aiming to support Busan hosting the Expo. Chairman of the Board Kim Jong-hoon has also been to several countries as a special envoy of the Republic of Korea, and I think he felt the same way. As SK Group Chairman Chey Tae-won mentioned before, it was an invaluable opportunity to explore a new market that we were not familiar with before.

▲ (Left) In November 2022, Vice Chairman & CEO of SK Innovation Kim Jun, is taking a commemorative photo with the Minister of Foreign Affairs Christophe Lutundula (right) in Kinshasa, the Democratic Republic of the Congo, where he visited in order to support Busan hosting the Expo. / (Right) A large placard installed on the outer wall of SK Seorin Building (SK Innovation’s headquarters), which is for the attraction of the Busan Expo.

I think it has a clear meaning in terms of the agenda of Expo. At the Expo, topics that are inseparable from our future, such as climate change and polarization, will be discussed. Since these topics are the biggest issues for all companies, Expo will be inextricably linked to companies. In this regard, SK Group Chairman Chey Tae-won’s proposal to view the 2030 Expo as a “solution platform” has a significant meaning in that relationships and networks can be expanded. There’s no reason why we shouldn’t lead the way.

Just as SK Innovation has grown into a global company thanks to the strength of its members and the encouragement of stakeholders, the company will continue to do everything it can to make Korea as a global leader through the successful promotion of the Busan Expo. I am sure that these efforts will also serve as a great guide for the growth of SK Innovation.

Q8. What would you like to say for your members, readers of SKinno News, and stakeholders who are sincere in hosting the Busan Expo as well as implementing the Financial Story?

▲ Vice Chairman & CEO of SK Innovation Kim Jun shakes hands (left) and takes pictures (right) with members at SK Seorin Building (located in Jongno-gu, Seoul) on January 2 this year to welcome the new year.

As I mentioned earlier, SK Innovation has been continuously providing “the driving force that moves the world” for the past 60 years. But now, the world wants SK Innovation to provide the driving force in a new way. If so, SK Innovation needs to create and present a solution accordingly. SK Innovation will still continue to play a role that provides the driving force to move the world in the future, and the key is to change the carbon-based methodology into a green-based one.

Last year, I declared “All Time Net Zero” at the event site for 60^th anniversary of the foundation, and I would like to emphasize again to SK Innovation members and all stakeholders that this year is the beginning of the new 60 years and the All Time Net Zero journey.

I told the new employees who joined SK Innovation at the starting line of the new 60 years, “SK Innovation’s competitiveness lies in its sincerity of the promises and its speed in overcoming practical difficulties and pioneering the industry.” This was a message of asking new employees to grow into leaders of SK Innovation for the next 100 years with dignity and pride, but it was also a promise to myself and a request to all executives and staff members.

I am confident that SK Innovation’s challenges will not stop until the day when everyone is happy together in a sustainable world because SK Innovation has such competitiveness. I want you to be with SK Innovation and have faith in the way. I started the new year by keeping the words of SK Group Chairman Chey Tae-won in my heart, “If we take this as an opportunity to reflect on our precious values and refine our management system, the future will be on our side”.