Report Overview and Assurance

About This Reportt

Overview

SK D&D publishes its sustainability report to transparently disclose corporate non-financial performance. The '2023 SK D&D Sustainability Report,' the third of its kind, covers our sustainable management activities, achievements, and future strategies. We have enhanced our reporting to systematically manage and communicate with stakeholders about material topics identified through double materiality assessment. The report provides detailed performance across environmental, social, and governance sectors, and we plan to continue issuing our sustainability reports annually to report on ESG practices.

Reporting Standards

This report adheres to the GRI (Global Reporting Initiative) standards for sustainability reporting and incorporates indicators from global sustainability standards and initiatives such as the UN SDGs (Sustainable Development Goals), TCFD (Task Force on Climate-related Financial Disclosures), and SASB (Sustainability Accounting Standards Board). Additionally, we applied the concept of double materiality from the GRI Standards and European Sustainability Reporting Standards (ESRS) to conduct the materiality assessment and select reporting topics.

Reporting Scope

The scope of this report covers the performance of activities conducted by SK D&D (standalone basis) at its operations in South Korea. However, certain environmental data such as energy and greenhouse gases, waste, and water resources, encompass activities at the headquarters, other domestic sites, and subsidiaries.

Reporting Period

The reporting period is from January 2023 to December 2023. Some contents include performance from activities in the first half of 2024.

Reporting Frequency

The most recent report was published in 2022, and we publish reports regularly on an annual basis.

Reporting Assurance

To ensure the reliability, fairness, and completeness of the reporting contents and processes, our sustainability report underwent a third-party assurance by the Korea Productivity Center, an independent external verification agency. The assurance process was conducted according to the AA1000AS (Assurance Standard) v3, a globally recognized standard for sustainability-related assurance.

Contact Point

Contact department : SK D&D ESG Part Phone : 02-398-4700 E-mail : skdnd@sk.com Website : www.skdnd.com Publication date : June 28, 2024

Third-Party Assurance

GRI 2-5

Independent Assurance Statement

Stakeholders of SK D&D,

The Korea Productivity Center (hereinafter referred to as the "Assurer") has been requested by SK D&D Co., Ltd. (hereinafter referred to as "SK D&D") to provide third-party assurance on the 2023 SK D&D Sustainability Report (hereinafter referred to as the "Report"). Accordingly, we hereby submit our assurance opinion as follows.

Responsibility and Independence

SK D&D is responsible for the information and opinions presented in this Report. The Assurer takes responsibility for the assurance opinion on the Report and, as an independent assurance organization, did not participate in the preparation of this Report and has no relationships that could impair its independence.

Assurance Standards

The Assurer applied the AccountAbility AA1000AS v3 standard for the assurance. The level of assurance was conducted at a Moderate Level as defined by AA1000AS, confirming the appropriateness of the principles of Inclusivity, Materiality, Responsiveness, and Impact according to the AA1000AP (2018) assurance principles. This included Type 1 assurance for these principles and Type 2 assurance to confirm the quality and reliability of the information disclosed in the Report. Additionally, the Assurer verified the appropriateness of the impacts that could arise from the organization's activities and performance according to the assurance principles. The Type 2 assurance was based on the materials and information provided by SK D&D, covering specific Topic Standards including Energy, Emissions, Employment, Occupational Health and Safety, and Training and Education. This indicates a comprehensive review of the effectiveness and reliability of the reporting criteria during this assurance process.

302-1, 302-3, 302-4, 302-5, 305-1, 305-2, 305-3, 305-4, 305-5, 401-1, 401-2, 401-3, 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 403-9, 404-1, 404-2

Limitations

The Assurer verified the reliability of the performance data recorded in the Report according to the aforementioned scope and level of assurance as follows. The field verification was conducted at the headquarters (Seongnam, Gyeonggi-do). The financial data were verified through financial statements audited by an accounting firm and through disclosed materials. The environmental and social performance data were verified through process validation, which included data assurance and interviews. This assurance statement has been issued for the management of SK D&D as per the engagement terms. The Assurer declares that it holds no liability or joint liability for any decisions made by individuals or organizations based on this assurance statement.

Assurance Methodology

The Assurer conducted the assurance of the Report through the following methods:

Confirmed that the Report was prepared in accordance with the GRI Standards (Reporting in accordance with the GRI Standards).
Verified compliance with the principles of content and quality of reporting based on the GRI Standards.
International standards, media research, and benchmarking analysis, along with expert opinion, were used to confirm the selection of material issues covered in this report and the appropriateness of the content.
Checked the appropriateness and factual accuracy of the contents described in the Report by comparing them with other sources.
Conducted on-site assurance at SK D&D's headquarters to check the evidence of key data and information and to confirm the internal processes and systems.

Assurance Results

The Assurer determined that SK D&D's Report was prepared in accordance with the GRI Standards (Reporting in accordance with the GRI Standards) and adheres to the four principles outlined in AA1000 AP (2018).

Inclusivity: Stakeholder Engagement

The Assurer confirmed that SK D&D adheres to the principle of inclusivity by defining stakeholders as individuals and groups, categorized as employees, business partners, customers, local communities, shareholders, and investors. SK D&D has established engagement channels for each stakeholder group and promotes communication activities, ensuring that stakeholders' opinions are reflected in management. The expectations identified through stakeholder engagement are incorporated into the company's strategic planning and decision-making processes.

Materiality: Selection and Reporting of Material Topics

The Assurer confirmed that SK D&D selects material topics through a materiality assessment process. This process includes external environmental analysis such as the review of international standards, benchmarking within the industry, and media research. Additionally, internal environmental analysis is conducted through ESG strategy evaluation, business portfolio analysis, capital type and flow analysis, and surveys from the finance/strategy department. Based on these analyses, SK D&D identifies the topics that need to be prioritized for ESG activities. The activities and performance related to each topic are reported in the Report by specific action areas.

Responsiveness: Organizational Response to Material Topics

The Assurer confirmed that SK D&D identifies material topics affecting stakeholders' performance and undertakes sustainability management activities in response. SK D&D communicates how it addresses stakeholders' major expectations through the Sustainability report and the company's website. The Assurer verified that SK D&D sets clear goals for the topics raised by stakeholders and transparently discloses the performance related to these goals.

Impact: Consideration of the Organization's Social Impact

SK D&D identifies the social and environmental impacts of material topics and business activities raised by stakeholders and undertakes efforts to improve them. The impact of material issues is analyzed in terms of revenue, cost, and risk, and the results are used in management decisions to establish ESG response strategies and are disclosed through the Sustainability Report.

Review of GRI Standards Application Level

The Assurer confirmed that this Report faithfully and fairly reflects SK D&D's sustainability management activities and performance. Through this assurance process, the Assurer determined that SK D&D's Report was prepared in accordance with the GRI Standards (Reporting in accordance with the GRI Standards) and achieved a reasonable level of assurance as suggested by both Type 1 and Type 2 assurance levels. The Assurer verified that there were no errors in the claim that the contents related to the Universal Standards complied with the relevant requirements. Additionally, the Assurer reviewed the Disclosures for the Material Topics derived through the reporting item determination process according to the Topic Standards.

Universal Standards

GRI Standard	Disclosure	GRI Standard	Disclosure
The organization and its reporting practices	2-1~2-5	Strategy, policies and practices	2-22~2-28
Activities and workers	2-6~2-8	Stakeholder engagement	2-29~2-30
Governance	2-9~2-21	Material Topics Disclosures	3-1~3-3

Topic Standards

GRI Standard	Disclosure	GRI Standard	Disclosure
Economic Performance	201-1~2	Employment	401-1~3
Indirect Economic Impacts	203-1~2	Occupational Health and Safety	403-1~9
Anti-corruption	205-1~3	Training and Education	404-1~2
Anti-competitive Behavior	206-1	Diversity and Equal Opportunity	405-1
Energy	302-1, 302-3~5	Local Communities	413-1
Water and Effluents	303-3, 303-5	Supplier Social Assessment	414-1
Biodiversity	304-1, 304-4	Customer Health and Safety	416-1
Emissions	305-1~5	Customer Privacy	418-1
Waste	306-1~3

Recommendations

The Assurer, within the scope that does not affect the assurance results, provides the following recommendations:

The Assurer recommends that SK D&D explore and implement measures to enhance the involvement of external stakeholders in the selection of Material Topics.
SK D&D discloses plans and activities related to key sustainability issues. The Assurer recommends that SK D&D disclose annual targets and achievements related to key sustainability issues to further enhance its sustainability management system.

June 2024