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Partnership Management

Stakeholders’ Value and Enterprise Value Enhancement

Partnership Management

Hyosung Advanced Materials strives to meet the demands of the various stakeholders as well as to continue business in a manner that fulfills our social, economic, and environmental responsibility as part of the social community. We conduct economically sustainable activities to contribute to the enhancement of both stake-holders’ value and enterprise value.

Win-Win Partnership

Hyosung Advanced Materials pursues purchasing activities that can minimize negative economic, social, and environmental impacts from business activities. Accordingly, Hyosung Advanced Materials, along with its partners, establishes and operates a sustainable supply chain management system by fulfilling the responsibilities of quality technology, labor and human rights, safety and health, climate change response, compliance management, and the overall management system. To minimize human rights violations, and environmental destruction that occur when mining minerals in high-risk areas, conflict mineral policies are included within the Sustainable Procurement Policy and Supplier Code of Conduct.

Minimize negative social, environmental,
economical impact from business activities

Competitive quality technology and the ability to develop
Establish a healthy corporate ecosystem by pursuing mutual growth with partners by securing competitiveness in overall management such as cost, quality, technology, and delivery date
Target to exceed the quality Cpk of 1.33 of major suppliers by 2030
Fulfilling social responsibility
Operation of a supply chain management system that fulfills social responsibilities through working conditions and safety, human rights protection, and ethical management in compliance with international laws and regulations
Target to achieve 100% regular ESG assessment rate for major suppliers by 2030
Minimize negative impacts to environment
Fostering and supporting partners who are responsible for environmental issues such as climate change and biodiversity protection, carbon emissions, fine dust, waste, and chemical management;
Target to secure value chain of 5,000 ton/month of eco-friendly chips to achieve 30% conversion to sustainable materials by 2030

Sustainable Purchasing Policy

Sustainable Green Purchasing Policy

Purchasing Policy
Hyosung Advanced Materials Corporation (HAMC) faithfully strives to fulfill our economic, social and environmental responsibilities to create a CSE(Creating Social Eco-system) in close cooperation with civil society in purchasing activities to minimize the negative impacts of our business with the following principles.

1. We select suppliers who have the capability and willingness to respond to climate change as well as to prevent negative environmental impacts derive from such as water, soil, air pollution, and biodiversity.
2. We select suppliers who fulfill social responsibilities in the workplace ensuring compliance with the International Labor Organization’s labor standards, diversity protection, human rights protection and ethical management.
3. We select suppliers that do not purchase raw materials and materials in conflict mineral areas and practices responsible mineral procurement within their upstream.
4. We select suppliers who consider the safety of workers as well as their products’ users.
5. We conduct regular evaluation and monitoring activities for the selected suppliers including the on-site audits on suppliers that are classified as high-risk groups to faithfully implement this policy.

Sustainable Green Purchasing Policy
Hyosung Advanced Materials abides by the following principles when making purchases, in order to fulfil our responsibilities to the community and the users of our products, through green purchasing activities which contribute to resource preservation and minimize environmental impact.

1. For resource preservation, we refrain from unnecessary purchases to avoid excess supplies.
2. We review not only the quality and price of the products but also their environment-friendliness and prefer eco-friendly products.
3. We make continuous efforts to discover products that use less toxic chemicals, reduce waste, consume less resources, and are recycled or converted to bio-materials to expand green purchasing.
4. We conduct activities to prevent and mitigate possible biodiversity risks during purchasing activities.
5. We share our green purchasing policy with our partners/suppliers and encourage their efforts to improve the environment-friendliness of their products.

Established on June 10, 2018
Amended on July 29, 2022

ESG Support Activities for Suppliers

Hyosung Advanced Materials is building partnerships based on mutual trust with its partners to strengthen the sustainability of its global supply chain. Based on the principle of fair trade, we manage economic, social, and environmental risks in order to coexist and grow with our partners. Through the suppliers management system, we select new suppliers, and provides various support programs such as financial, environment & safety, technology, productivity, and management to strengthen suppliers’ competitiveness and minimize risks. In addition, we operate online and offline-based communication channels to hear the voice of our suppliers.

Monitor and manage on quality, safety, etc., and improve issues/
							Request for signing a contract in consideration of ESG risk and pledge of code of conduct/
							Compliance with laws and regulations including conflict minerals/
							ESG risk assessment(self-diagnosis, on-site due diligence, etc.)/
							Manage climate change response and request for GHG emissions reduction activities/
							Demand to expand the use of eco-friendly and recycled materials/
							Operate grievances communication channels/
							Conduct trainings on environmental safety and health, human rights and ethics/
							Support for ESG capacity building (social, environmental/safety, energy, etc.)

Preliminary risk management on new suppliers

When selecting new suppliers, ESG risks such as in human rights, labors, ethics, environment, safety are considered along with conventional criteria such as supply stability and product quality. HAMC is implementing its preliminary risk management in accordance with the new supplier evaluation criteria. Additional points are awarded to suppliers that have achieved a certain score or higher from major ESG evaluation institutions.

Supply contracts considering ESG risks

In 2021, HAMC further reinforced our supplier contract by adding provisions related to environmental and social issues. All key suppliers are required to make reasonable efforts to comply with the laws and regulations of each country and comply with all reasonable measures.

Supplier Code of Conduct

We require all domestic and overseas suppliers sign and comply with our Supplier Code of Conduct, which includes guidelines for labor, safety & health, environment, and business ethics. Through this, we would like to reduce the risk factors that can occur in our supply chain in advance.

Continuous Suppliers communication channel

Hyosung Advanced Materials operates a Whistleblowing Center on its website through which anyone can freely raise their opinion
at any time in cases of unreasonable request to suppliers or violation of law & regulations.
Through whistleblowing, employees of supplier companies can anonymously report unfair practices including violations of fair trade
at any time. The status of processing of received reports is shared to reporters according to corporate policy and regulations.
In addition, we listen to the opinions of our suppliers through regular communication channels, such as annual meetings with suppliers. We also provide suggestion boxes for suggestions and complaints from our employees as well as on-site suppliers.
In addition, we listen to quality-related requests through communication with suppliers during our annual on-site evaluation.

Regular Evaluations on Suppliers

Hyosung Advanced Materials considers supply stability, workers' human rights practices, ethical management levels when selecting new suppliers. We regularly monitor suppliers in accordance with international standards such as IATF 16949(automotive parts manufacturers system certification) and ISO 14001(environmental management system). Once a year, suppliers of raw and consumable materials are evaluated in the areas of quality, price, delivery, management, environment, human rights. Upon evaluation of the activities, we share the issues and improvement measures as well as provide support for improvement activities. Evaluation is conducted once a year for all domestic production partners. They are evaluated in areas such as quality, delivery, workers' strikes, unpaid wages, environment &safety, and are given benefits according to the results. In recent years, it is required to establish a stable supply chain through reinforcement of the social responsibility of suppliers, so we regularly update the evaluation process for suppliers. We are strengthening the contents of our supplier evaluation criteria to further reflect contents related to human rights, labor, ethical management, safety and health, and environment.

Supplier Evaluation Criteria (Latest revision : September 13, 2021)

Supplier Evaluation Criteria (Latest revision : 2020.06.25.)
Area Evaluation Criteria
Quality and Competitiveness Quality operation system evaluation, number of customer claims, number of defects, delayed delivery cases, etc.
General Management Management target, performance management, violations of laws & regulations related to ethical management, etc.
Human Rights Compliance, provision of excess allowance, prohibition of child labor and forced labor, pregnant women protection, freedom of association, etc.
Environment Environmental & safety accidents, violations of laws & regulations (air pollution, drainage, waste, hazardous substances, regulated substances, etc.), presence of dedicated organization for environmental management, periodic inspection and training

Rate of Conducted Suppliers Regular Evaluation (Latest revision : September 13, 2021)

  • 2020 Goal
    57%
  • 2020 Performance
    51%
  • 2021 Goal
    59%
  • 2021 Performance
    85%
  • 2022 Goal
    87%

Comprehensive Support Program for Partners

Hyosung Advanced Materials pursues a win-win partnership that manages business-related risks beyond raising the cost and quality competitiveness of suppliers. We continue to cooperate and support in various fields so that suppliers continue sustainable production activities.

Table of Comprehensive Support Program for Partners
Excellent Partner Support
  1. Payment of cash for suppliers‘ goods within 10 days after closing
  2. Prizes are awarded for Outstanding Partner Companies Award
  3. Prizes are paid for Year's proud Hyosung People's Special Award (for partners)
Finance Support
  1. Payment in cash
  2. Financial support for joint overseas expansion
  3. Investment resources for shared growth
Technical Support
  1. Joint R&D and Joint Patent Application
  2. Provide technical consulting to improve quality
  3. Award for Outstanding Partner
Productivity Enhancement Support
  1. Provide productivity-enhancing consulting
  2. Enhancement of capabilities through government-led projects such as the Energy Partnership Project hosted by the Korea Energy Agency
  3. Support for management advice through participation in the ‘Management Doctor System’
  4. Support for ESG consulting
Safety Support
  1. Focused monitoring of high-risk workplaces, potential risk assessment support
  2. Share safety & health issues and best practices during meetings with suppliers' safety & health representatives
  3. Technical support for weak areas of supplier’s safety & health activities
  4. Award partners with outstanding safety measures / activities partners
  5. Mentoring of safety & health of new partners
  6. Participate in the Win-win Cooperation Program organized by the Korea Occupational Safety and Health Agency
  7. Safety-first activities (daily safety measures guidance)
  8. Support firefighting equipment, protective equipment, first aid, etc.
Others
  1. Provide education contents and place for suppliers’ ethical management education
  2. Programs for people with obesity, smoking cessation, and musculoskeletal disorders
  3. Use of resort-facilities for individuals’ vacation and provide products to overcome summer heat
  4. Provide HAMC employee-level benefits (i.e. discount for wedding hall rent, medical services)
  5. Provide safety supplies such as helmet, gloves, safety shoes, and masks for preventing COVID-19

Enhancing Customer Value

Hyosung Advanced Materials provides optimized solutions by identifying customer needs and issues through a customized VOC (Voice of Customer) management system. We have established and operated a global quality management system so that the required quality can be realized in all business sites around the world. We are realizing customer satisfaction by enhancing product responsibility and service competitiveness.

Customer-specific VOC Management System

Hyosung Advanced Materials has a customized VOC (Voice of Customer) management system to provide optimal products and services. By listening to more than 3,000 VOCs in 2019, we identified opinions for improvement in various fields such as delivery, technology, quality, and sustainability management. In addition, we visit customers at least once or twice a year to identify customer needs and conduct technical exchanges. We listen to customers' voices through various contacts such as conferences, exhibitions, and strive to provide optimal solutions accordingly. In order to provide professional opinions to customers' VOCs, we conducted seminars and trainings for employees by inviting experts, and we want to achieve continuous customer value improvement from a long-term perspective as well as grasp market trends.

Global Quality Management System

Hyosung Advanced Materials regards quality as 'customer value' and operates a global quality management system to produce and supply products of the quality required by customers at all global production bases. The same quality policy is newly distributed to all factories, emphasizing the importance of quality, and establishing and managing production quality standards for each process. Production activities are conducted according to the quality control process from the raw material and subsidiary material drop-off stage to the final product shipment stage. We operate a quality-specialized organization centered on the Chief Technology Officer (CTO) and Chief Production Officer (CPO). Through regular monthly meetings and technical exchange meetings between business sites, cases and standards are shared with all production sites, and continuous monitoring and feedback are also provided. In addition, we are improving the common competency through job rotation and fostering the next-generation CTO·CPO through a professional manpower training program. And we strive to continuously improve the global quality management system and quality capabilities, including fostering local managers of overseas production subsidiaries.

VOC, VOCC, Collaborating with Customers

Establish
Quality
Standards
Establish detailed guidelines, under CTO/CPO supervision including raw materials usage, facility operation, and technology application to ensure equal product quality at all global sites
Inform & Train
Quality
Standards
Quality Standards Training
Regular visits to global plant and technical guidance by CTO
Technical training of local production technicians
Local manager training
Key quality control personnel training
Comply with
Quality
Standards
Production line operating based on set standards and countermeasure implementations for issue handling
Communication among technical teams, plant manager, head of technology and HQ to implement operation process
Improve
Quality
All sites’ technical staffs participate in Technical Exchange Meeting twice a year to enhance technical skills through sharing best practices
Monthly meeting to improve quality of and process index at each site

Chief Technology/Production Officer, R&D,
Technical Marketing, Global Technical Team, etc.

Social Contribution

Hyosung Advanced Materials CSR Strategy

Hyosung Advanced Materials has continued its social contribution activities with a clear vision and targets to build a CSE (Creating Social Eco-system). We will contribute in building a society where all members can live together by providing practical help to stakeholders in need.

CSR Vision and Goals

Hyosung Advanced Materials shall establish a CSE(Creating Social Eco-system)
through providing necessary help to social members based on communication and cooperation
with the community and government, creating an environment
where vulnerable groups can become self-reliant, as well as business-related CSR activities
that are mutually beneficial to
members of the society.

CSR Strategy

01Provide continued necessary help rather than one-time events which are derived from communication with local stakeholders.
Changdeokgung Palace environmental conservation
Korean National Museum of Modern and Contemporary Art sponsorship
Regional council operation for One Company-One Village
Voluntary community cleaning (One Company-One Trail)
Support physical examination for teachers who work in rural schools
Elementary school library remodeling
02Provide practical help for the independence of vulnerable social groups such as people with disabilities, the elderly, and people in poverty.
Monthly meal assistance in facilities for the disabled
Food sharing at a nursery orphanage in Ulsan
Wheelchairs inner-sheet donation for the disabled
Computer donation to vulnerable social groups
Children’s Day activities support for the disabled
Local orphanages sponsorship
03Promote business-related activities that can coexist with beneficiaries.
Carbon fiber artist sponsorship
Support for installment of heating system using carbon fiber at a local orphanage
Materials sponsorship for artists (i.e. airbags, technical yarn)

Hyosung Group’s Focus Areas of CSR

  • Vulnerable social group support
  • Culture and art sponsorship
  • Patriots and veterans support

Hyosung Advanced Materials CSR Results (2020, Global)

  • Annual
    employee participants
    5,479 persons
  • Total hours of voluntary works
    by employees
    16,508 hours
  • Number of programs
    72
  • Number of direct beneficiaries
    36,940 persons

CSR Activities by Social Contribution Strategies

01Activities for local community
Provide continued necessary help rather than one-time events which are derived from communication with local stakeholders.
  • Dream Tree Small Library

    Hyosung Advanced Materials has erected the “Dream Tree Small Library” in Chopo Elementary School in Jeonju, South Korea. The existing old library has been brought to new life again, with about 1,000 books newly donated to the place. The employees at the Jeonju plant enthusiastically lent a hand with the construction of the library, helping with the building’s interior arrangement and so on.

  • Help the villagers out by planting and harvesting rice

    Every year, the employees at the Ulsan plant visit Joongosan Village in Onyang-eup, a designated One Company – One Village community, and help the villagers out by planting and harvesting rice along with them. Since the establishment of the One Company – One Village sisterhood agreement with the village, we have been giving the villagers a helping hand every farming season.

  • The environmental cleanup

    Hyosung Advanced Materials Corporation(HAMC) strives to protect the ecosystem through activities to preserve and promote biodiversity at domestic and overseas business sites. Employees at headquarters regularly carry out Han River Plogging and marine ecosystem protection activities at Yongyu beach. Employees at Ulsan carries out 'One Company-One River' environmental cleanup and activities to eradicate ecosystem-disrupting species. Jeonju employees regularly cleans neighboring areas as part of 'One Company-One Trail' activity. As a member of the local community, HAMC makes constant efforts for ecological conservation and biodiversity promotion.

  • Invites US veterans who fought in the allied forces at the Korean War and their familie

    Each year, Hyosung USA invites US veterans who fought in the allied forces at the Korean War and their families and holds an event to appreciate their contribution to world peace. Located in the state of Alabama, which is home to a large number of Korean War veterans, Hyosung USA also donates scholarships to the Korean language courses at Alabama State University.

CSR Activities by Social Contribution Strategies

02Activities for the vulnerable social group
Provide practical help for the independence of vulnerable social groups such as people with disabilities, the elderly, and people in poverty.
  • Provide the province’s approximately 1,800 denizens inhabitants with free medical services

    Each year, we dispatch the Smile Expedition, an overseas medical corps volunteer group, to Dong Nai Province located in the vicinity of our Vietnamese subsidiary and provide the province’s approximately 1,800 denizens inhabitants with free medical services. The Smile Expedition, inaugurated in 2011, not only provides general medical care but also visits nearby elementary schools and conducts basic health checkups and preventive dental health activities for the students.

  • Hold an athletic meet on Disability Day every year at a residential facility for disabled children

    Hyosung Advanced Materials’ employees hold an athletic meet on Disability Day every year at a residential facility for disabled children. At the meet, each employee is paired with a disabled child and the pair participate in the various games. The children who usually have trouble taking outside activities are able the enjoy the athletic programs together. Afterwards, the employees help the children eat lunch.

  • Provide the children with tenderly handmade food

    The employees at the Ulsan plant visit local orphanages every year and provide the children with tenderly handmade food, as well as repair the facilities there.

  • Support the remodeling of the school library, camp activities, visit nursing homes, and givie gifts on special days

    Subsidiaries in China and Vietnam continue to provide assistance to the needy neighbors, such as the elderly, the disabled, and children in the community. We support the remodeling of the school library, camp activities, visit nursing homes, and give gifts on special days such as Children's Day and New Year's Day.

CSR Activities by Social Contribution Strategies

03Business-related sharing activities
Promote business-related activities that can coexist with beneficiaries.
  • Provides materials to artists using our materials and provides technical consulting

    Hyosung Advanced Materials provides our yarn and textiles to artists as materials for their artworks. We also provide technical consulting of the materials (i.e properties) so that artists can fully realize their ideas into the work. We provide materials so that our materials can be used not only for products but also for various fields of art, contributing to the expansion and development of art.

  • Sponsoring the work of artist Il-hoon Noh

    Hyosung Advanced Materials has been sponsoring the work of artist Il-hoon Noh, who uses new materials such as carbon fiber and aramid to structure natural patterns, starting in 2018. In October 2019, Il-Hoon Roh supported TANSOME® as a material for the Rami Series presented at the 2020 Cheongju Craft Biennale.

  • Supported the construction of a heating facility in the Jeonju

    Hyosung Advanced Materials supported the construction of a heating facility in the Jeonju area as a donation to the Jeonbuk Social Welfare Community Chest. We supplied materials(TANSOME®) which was manufactured into heating facilities by our customer making the sharing even more meaningful.

  • The center for creative economy & innovation in Jeonbuk

    Through the establishment and operation of the Center for Creative Economy & Innovation in Jeonbuk and Hyosung Business Incubator Center for Carbon located in Jeonju plant, we have continued to support commercialization of start-up companies such as technical consulting and marketing. In 2019, we supported CES's CE(Conformité Européenne) Marking for carbon fiber heating system, WIS' carbon material prototype development and S-Advanced Materials’ prototype development.

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