■ An MOU joined by the Financial Supervisory Service, major Korean companies, Ewha Womans University, and British Embassy on September 13th

■ Aiming to develop the first climate risk model via industry-academia-government cooperation in and out of Korea.

■ Leading the conversion to a low-carbon economy with a systemic climate risk response.

SK Innovation will set out to advance climate risk management based on industry-academia-government collaboration.

On September 13th, SK Innovation sealed an MOU on the development of global climate risk* management model (“Frontier 1.5D”), an industry-academia-government initiative pursued in conjunction with the Financial Supervisory Service, major Korean corporates, Ewha Womans University, and the British Embassy. Besides SK Innovation, the other major domestic companies are CJ Cheil Jedang, KB Financial Group, Shinhan Financial Group, Samsung Biologics.

(*) Climate risk: divided into physical risk or physical damage caused by abnormal climate and implementation risk associated with financial losses created in the process of transforming into a low carbon society.

The Frontier 1.5D Project signifies to “take the lead in accomplishing a global agreement” to hold the increase in the global temperature to below 1.5℃ above pre-industrial-revolution levels. The participating industry, government, and academia will seek to develop a model to measure and manage the overall climate risks across the economy in consideration of possible climate change. SK Innovation, a leading energy corporation in Korea, takes part in this project as it has a business structure that encompasses petrochemical and battery, and materials.

The MOU signing event for the Frontier 1.5D Project was attended by CEO of CJ Cheiljedang Choi Eun-seok, CEO of SK Innovation Kim Jun, Chairman of KB Financial Group Yoon Jong-Kyoo, Governor of the Financial Supervisory Service Jeong Eun-bo, British Ambassador to South Korea Simon Smith, President of Ewha Womans University Kim Eun-mee, Chairman of Shinhan Financial Group Cho Yong-byoung, CEO of Samsung Biologics John Rim, and the 26th UN Climate Change Conference (COP26)** High Level Climate Action Champion Nigel Topping. The 26th UN Climate Change Conference of the Parties in 2021

(**) UN Climate Change Conference: An annual conference held by the United Nations Framework Convention on Climate Change (UNFCCC). It serves as a formal meeting of the UNFCCC Parties (Conference of the Parties, COP), which are responsible for examining the implementation of the provisions of the Convention and making institutional decisions necessary for promoting effective implementation of the Convention. The 26th UN Climate Change Conference (COP26), hosted by the UK in partnership with Italy, will take place from October 31st to November 12th this year in the Scottish Event Campus (SEC) in Glasgow, UK.

The participating companies including SK Innovation plan to develop a climate risk management model by analyzing climate risk-related data such as GHG emissions per company with Ewha Womans University, the only institution with a specialization in Climate/Energy System Engineering in Korea. The Financial Supervisory Service plays the role of a coordinator to ensure smooth cooperation among participating institutions and support with management model development methodologies. As a leading country of global climate finance, British Embassy assumes an advisory role regarding risk management.

As the MOU marks the first of its kind to tackle climate risks by industry-academia-government collaboration along with the financial supervisory body in the world, it is expected to make a more systemic analysis of climate risk across the economy using actual data.

Besides, it is anticipated that it will set a remarkable precedent for future global attempts to develop climate risk models.

In particular, it is expected that a climate risk management model would be used as a barometer for decision-making on future climate change responses including uncertainty management regarding climate risks, eco-friendly investments, and more as it might conduct an intricate analysis of the financial impact on climate change response policies such as GHG reduction and abnormal climates.

Furthermore, against the backdrop of strong demand on information disclosure on climate change response such as TCFD (Task Force on Climate-related Financial Disclosures), this cooperation model with credible institutions may help to provide domestic and overseas investors with reliable information and is viewed to lay a foundation for a cooperative system for future climate information disclosure in Korea.

With this MOU, SK Innovation plans to make a more systematic approach to climate change risk while solidifying its status as a leading company in climate change response by elevating its level of climate change-related information disclosure.

CEO of SK Innovation Kim Jun said, “Climate change is a highly tricky task for a business to predict its intensity and extent.” “I hope this project may serve as starting point to set the direction for climate change response for the overall financial and industrial sectors by squarely figuring out climate change-related risks and opportunities encountered by businesses, industries, and finance based on different scenarios,” he added.

[Photos]

1) MOU group photo:

(From left) CEO of CJ Cheiljedang Choi Eun-seok, CEO of SK Innovation Kim Jun, Chairman of KB Financial Group Yoon Jong-Kyoo, Governor of the Financial Supervisory Service Jeong Eun-bo, UN Climate Change Conference (COP26) High Level Climate Action Champion Nigel Topping, British Ambassador to South Korea Simon Smith, President of Ewha Womans University Kim Eun-mee, Chairman of Shinhan Financial Group Cho Yong-byoung, and CEO of Samsung Biologics John Rim at the business agreement ceremony for 『International Climate Risk* Management Model Development』 (“Frontier 1.5D”)

2) MOU signing ceremony:

(From left) CEO of SK Innovation Kim Jun and President of Ewha Womans University Kim Eun-me are signing the agreement at the business agreement ceremony for 『International Climate Risk* Management Model Development』 (“Frontier 1.5D”). (※ The signing was carried out in pairs)