SK D&D applies an ESG risk review process when evaluating projects and investment targets to build sustainable supply chains and minimize potential ESG risks throughout our business's value chain. First, we assess whether the project falls under investment exclusion or sin industries as defined by global investment institutions. Then, we review whether it is included in domestic and international green taxonomies and analyze the potential for risks in ESG areas. For projects with low ESG risks or with risk mitigation plans in place (in case of high ESG risks), the ESG risk review report is submitted to the Working Group Meeting for investment decision-making. By proactively reviewing and managing the ESG risks, as well as financial and legal risks, in our investment projects, we aim to strengthen the sustainability of our investments.

SK D&D applies Life Cycle Assessment (LCA) throughout the development of our rental housing brand, Episode, to measure the environmental impact of a building's entire life cycle, from material production to disposal. To minimize the environmental impact of buildings, we have established and implement a phased environmental impact management plan. This plan includes using eco-friendly materials and installing high- efficiency energy equipment during design and construction, as well as providing services to establish an ESG ecosystem for residents during operation.

SK D&D aims to provide a higher-level spatial experience in residential and work spaces by considering various eco-friendly elements in the spaces to proactively respond to increasing demand form customers for environmental considerations such as global climate change. In this end, we strive to obtain third-party eco-friendly certifications for all buildings we develop to minimize environmental impacts and help residents pursue environmentally friendly lifestyles. Additionally, we operate various services to improve environmental awareness and expand social participation to help customers practice sustainable living.

In 2023, Saeng-gag Gongjang Dangsan, a knowledge industry center developed by SK D&D, was recognized for its environmental excellence, winning awards such as the Excellence Award at the 41st Seoul Architectural Work Award and the Ministry of Environment Prize at the Korea Green Building Award. The ‘Saeng-gag Gongjang Dangsan’ holds eco-friendly certifications such as Building Energy Efficiency Rating (1+) and Green Building Certification (Excellent), achieving energy savings through energy management systems, renewable energy generation systems and effective sunshade design in its architecture.

Furthermore, Episode operates a mobile application-based flea market, offers refurbished product sales, and provides home furnishing subscription services to encourage residents to reuse, recycle, reduce waste, and pursue sustainable consumption and living.

SK D&D collects and manages environmental performance metrics such as energy consumption (including renewable energy) and water resources from Episode, to actively practice environmental management not only at our own facilities but also at our investment and operational sites. Utilizing quantitative environmental performance data, we identify improvement plans, establish environmental impact reduction measures tailored to each Episode site's current situation and implement ESG ecosystem expansion projects customized for each Episode.

SK D&D conducts green remodeling projects to transform low-efficiency aging buildings into high-efficiency green buildings. By applying and enhancing high-efficiency facilities such as insulation and air conditioning, as well as through interior and exterior design, we aim to improve the residential environment, reduce heating and cooling costs and increase energy efficiency, ultimately contributing to growth in the value of our buildings in the medium to long term. Furthermore, in alignment with the government’s ‘Roadmap for Mandatory Zero Energy Building (ZEB) we will advance the expansion of ZEBs and proactively implementing Plus Energy Buildings (PEB) to achieve building energy self-sufficiency and realize environmental value.

Through various urban renewal projects, SK D&D is endeavoring to enhance poor maintenance infrastructure and restore urban functionality in areas with a high concentration of aging and deteriorated buildings. In accordance with Seoul's Urban and Residential Environment Improvement Basic Plan, we have developed prime-level offices in underdeveloped areas near Seoul City Hall Station and business hotels in the Myeongdong area. In 2023, we launched a new urban renewal project to develop areas near Seoul Station. Moving forward, we will undertake a variety of urban redevelopment projects to restore urban functionality in underdeveloped areas of the city through environmental improvements and enhance the quality of residential life.