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Supply Chain Management System

Supply Chain Management Policy and System

In response to stakeholder demands and changes in domestic and international supply chain regulations, SK Gas implements systematic ESG supply chain management. We have established and enforced a Code of Conduct and guidelines for our Partners, approved by top management, to foster mutual growth. ESG assessments and continuous monitoring are conducted, especially focusing on key suppliers. All Partners are required to comply with the Code of Conduct, which is stipulated in our contracts. Additionally, we have formalized a green purchasing policy to create a socially responsible purchasing environment.

Furthermore, SK Gas operates various financial and non-financial shared growth programs with our Partners, centered on three core values of shared growth.

Supply Chain Management Organization

SK Gas manages its supply chain through departments responsible for purchasing, technology, fair trade, and legal affairs. To ensure transparency in procurement and prevent unfair practices, an internal review committee is operated, led by the purchasing executive, for contracts exceeding 5 KRW billion for private contracts and 10 KRW billion for competitive procurement.

Details are provided below Details are provided below
  1. Chairperson
    Purchasing Executive
  2. Members
    Purchasing Department PL
    Technology Department PL
    Fair Trade Department PL
    Legal Department PL

Supply Chain Management Activities

Partner ESG Risk Evaluation and Management

SK Gas conducts SHE evaluations, ethical management assessments, and financial risk monitoring using data from credit rating agencies to select qualified first-tier suppliers. Key suppliers, crucial to our business, undergo comprehensive ESG risk assessments conducted by third-party experts. This includes evaluations of environmental, safety, health, human rights, labor, ethics, and governance risks. High-risk suppliers receive coaching, consulting, and audits to develop and implement improvement plans, which are closely monitored.

Partner ESG Risk Evaluation Indicators
Environmental, Social, Governance Partner ESG Risk Assessment Indicators
Category Main Criteria Sub Criteria
Environmental Environmental Management Environmental Management Control
Eco-friendly Opportunities Product Environmental Attributes
Climate Change Response Greenhouse Gas Emissions, Energy Consumption
Pollution Prevention and Waste Management Waste Management, Hazardous Substances Management, Air Pollutants
Natural Capital Soil, Noise, Vibration, Odor, Raw Materials, Water Protection
Social Social Goals Social Goals Management
Human Capital Information Protection, Human Rights, Health and Safety, Labor
Products/Customers Conflict Minerals
Partners Partner Management, Fair Trade
Community Social Contribution
Governance Corporate Governance Information Disclosure, Management Systems, Audits
Corporate Behavior Ethical Management
Partner ESG Risk Evaluation Process
Details are provided below Details are provided below
  1. Selection of Key Partners
  2. Self-assessment using 66 Evaluation Indicators (Partners)
  3. Self-assessment Coaching and Consulting
  4. Third-party Verification
  5. Selection of High-risk Partners
  6. Coaching/Consulting for High-risk Partners
  7. Receipt of Improvement Plans (High-risk Partners)
  8. On-site Audits and Monitoring of High-risk Partners
Annual Progress
Annual Participation, Diagnosis Participation, High-risk Identification, High-risk Ratio, Improvement Plan Submission, Implementation Results, Key Details
Year Participants Diagnosis Participation High-risk Identification High-risk Ratio Improvement Plan Submission Implementation Results Key Details
2021 Key Partners (LPG Construction) 6 4 66.7% 4
  • Pilot ESG Management Diagnosis for 6 Partners
2022 Key Partners (LPG Construction) 6 6 100% 5
  • Evaluation Criteria/Weight Changes in 2022 Resulted in Two Medium-risk Partners Being Reclassified as High-risk
  • Expanded ESG Management Diagnosis to Willing Partners in Addition to Key Partners
Key Partners (LPG Equipment) 10 10 100% 6
Voluntary Applicants 8 8 100% 5
Total 24 24 100% 16
2023 Key Partners 15 4 26.7% 4
  • Reduced High-risk Ratio through ESG Management Diagnosis Coaching/Consulting (22: 100% High-risk to 23: 27.8% High-risk)
  • Interest Rate Reduction of 2% for Excellent Partners (5 Partners Applied, 2 Loans Executed)
  • ESG Coaching (2 Sessions), Consulting (11 Sessions), and Safety/Human Rights Training Support
Voluntary Applicants 3 1 33.3% 1
Total 18 5 27.8% 5
  • [2023 Key Partner Selection Criteria]

    • Purchases of KRW 1 billion or more and 10 or more transactions in the last 3 years
    • Partner Criteria: Annual sales of KRW 1 billion or more and 10 or more employees
    • Exclusions: Group affiliates, overseas Partners
  • [High-risk Partners]

    • Minimize ratio through audits/consulting
Partner Support Programs and Goals
Financial Support for Partners

Cooperative Growth Fund

Under the "SK Group Cooperation Agreement for Joint Support of Partner Companies" with IBK Industrial Bank, we provide special interest rate reductions for partner SMEs.

Details are provided below Details are provided below
  1. Partner Application
  2. SK Gas Recommendation
  3. Bank Execution Notification
  • Partner Payment: SK Gas pays 100% of transactions in cash, aiming to do so within 10 days of issuing the tax invoice.
Performance and Goals of Partner Cooperative Growth Programs
2023-2027 Partner Cooperative Growth Program Performance and Goals
Program Overview 2023 Performance 2024-2026 Goals 2027 Goals
CEO Seminar on Shared Growth
  • Promoting a culture of creating social value for sustainable growth and cooperative development
  • Strengthening communication and business insights with partner CEOs
  • Expanding offline seminars
7 sessions
(5 online / 2 offline)
4 sessions/year
(online/offline)
4 sessions/year
(online/offline)
Shared Growth Team Leader Leadership School
  • Course for the roles and competencies expected of SME team leaders (new in 2024)
1 session/year 1 session/year
Online Education Platform
  • Expanding the mySUNI online education platform (targeting ESG key Partners → all interested Partners)
7 participants All partners wishing to receive Education All partners wishing to receive Education
i-ONE JOB
  • Establishing a dedicated hiring portal for SK Partners on IBK Industrial Bank's free SME job portal (new in 2024)
Ongoing Ongoing
Partner Meetings
  • Regular roundtables to explore cooperative growth and address partner concerns
1 session (per site) 1 session (per site) 1 session (per site)
Partner Safety Education
  • Providing safety training and consulting not only to first-tier Partners but also to second- and third-tier Partners
Ongoing Ongoing Ongoing
Partner Human Rights Training
  • Conducting human rights training for both first-tier and second-/third-tier Partners
1 session 1 session/year 1 session/year
Partner Shared Growth Fund
  • Providing interest rate reductions for excellent Partners under the SK Group Cooperation Agreement with IBK Industrial Bank
30% of quota 50% of quota
Partner Payment
  • Although subcontract law allows for payment within 60 days of issuing a tax invoice, SK Gas aims to alleviate partner financial burdens by making payments within 30 days
Average within 6.2 days Within 10 days Within 10 days
Partner Grievance Handling

Through regular partner roundtables, we listen to partner opinions and seek mutual growth. Various grievance handling channels are operated at each site to address industrial health and safety issues. We also operate the SK Ethical Management Consultation/Report channel to listen to and resolve partner employee human rights grievances.

2023-2027 Grievance Handling Programs and Overview
Program Overview 2023 Performance 2024-2026 Goals 2027 Goals
Partner Meetings * Regular roundtables to explore cooperative growth and address partner concerns 1 session (per site) 1 session/year (per site) 1 session/year (per site)
Partner CEO Seminars

SK Gas considers Partners and sales agencies as "extended family" and aims for mutual growth. To strengthen the management capabilities of our Partners, we hold "Cooperative Growth CEO Seminars" four times a year. These seminars include lectures on global trends, economic outlooks, management, IT, and humanities. From 2024, we will upgrade our existing Cooperative Growth MBA program and launch the Cooperative Growth Team Leader School for middle managers of Partners. Additionally, we provide SK's online learning platform "mySUNI" covering ESG, management, and six other areas for partner development.

Socially Responsible Purchasing Policy

SK Gas manages the amount and percentage of socially responsible purchases (green products, purchases from disabled-owned businesses, social enterprises) to promote sustainable management. We set and achieve ambitious goals to create a socially responsible purchasing environment.

2020-2022 Total Purchases and Socially Responsible Purchases
Category Unit 2020 2021 2022 2023
Total Purchases KRW billion 59.9 60.9 74.0 136.7
Socially Responsible Purchases Eco-friendly Products and Services KRW billion 0.74 0.70 1.23 0.19
Green Products Purchase Ratio % 1.2 1.1 1.7 0.1
Purchases from Disabled-owned Businesses KRW billion 0.12 0.09 0.10 0.22
Purchases from Disabled-owned Businesses Ratio % 0.2 0.1 0.1 0.2