Our ESG Approach

Materiality Assessments

Double Materiality Assessment

SK D&D conducts an annual materiality assessment to identify key issues in corporate sustainability management and establish ESG strategies that align with the needs of our internal and external stakeholders. In 2024, SK Discovery, a group company, conducted a consolidated basis assessment that included its main member companies. SK D&D also participated in the assessment to systematically evaluate and review its sustainability issues.

The assessment methodology was based on the dual materiality concept of the European Sustainability Reporting Standards (ESRS) and the Materiality Assessment Implementation Guidance, a practice guideline from the European Financial Reporting Advisory Group (EFRAG).

Double Materiality Assessment Results

The double materiality assessment is a process for identifying a company's actual and potential impacts, risks, and opportunities related to sustainability issues, to determine material topics. ESRS requires that if the impacts, risks, and opportunities (IROs) are material in terms of impact materiality or financial materiality, the relevant information should be fully disclosed through a materiality assessment that considers the entire value chain. To meet the requirements of the ESRS, KS D&D proceeded with a four-step assessment process: (1) understanding the sustainability context, (2) identifying sustainability issues, (3) assessing impacts, risks, and opportunities, and (4) selecting and reporting material issues. First, we analyzed our organizational boundaries and value chain to set the scope of the materiality assessment, and then, based on the Topic List provided by ESRS, we collected material issues for each of our business sectors, and then derived a pool of issues by considering industry-related metrics.

Double Materiality Assessment Process

GRI 3-1

Step 1. Understanding the sustainability context (Understand)

To understand the sustainability context, we considered the nature of our business—real estate development and operation—and activities across the value chain, identifying key stakeholders and relevant sustainability topics.

Step 2. Identifying sustainability issues (Identify)

Based on the ESRS Topic List, a comprehensive topic pool was developed. Through quantitative, a shortlist of topics closely aligned with the company’s business portfolio was derived.

Step 3. Assessing impacts, risks, and opportunities (Materiality Analysis)

Based on the determined issue pool, we evaluated impact materiality (Outside in), which considers the positive and negative impacts of each issue, and financial materiality (Inside out), which considers the financial impact of risks and opportunities. Impact materiality evaluates the severity and likelihood of social and environmental impacts per issue, and financial materiality evaluates the scale and likelihood of financial quantitative and qualitative** factors.

*Quantitative assessment: The case in which it is expected to exceed 1% of revenues at the end of the previous year (e.g., penalties, compensation for damage, losses due to business interruption, etc.)

**Qualitative assessment: The case in which it is difficult to quantify but expected to have a significant financial impact (e.g., lower revenue due to reputational risk).

Step 4. Selecting and reporting material issues (Materiality Management)

We quantified the results of the impact materiality and financial materiality assessments and set thresholds for each assessment to select material issues to be reported. Additionally, we reflected on additional material issues in a top-down manner in consideration of their linkages to material topics at the group level. The final material topics were reviewed by the ESG Committee and approved by the Board of Directors. These topics are disclosed in detail throughout this sustainability report.

Material Topic and Issue Selection Results

GRI 3-2

Double Materiality Assessment Outcomes

● High◐ Medium○ Low

Category	Material Topics	Specific Issues within Material Topics	Impact Materiality*	Financial Materiality**	Double Materiality
Environment	Climate Change	Climate Change Adaptation	◐	●	●
		Climate Change Mitigation	●	●	●
		Energy	◐	●	●
Society	All Employees	Human Resources Management, and Health and Safety Management (Work environment)	◐	◐	◐
	All Employees	Human Rights Management (Equal treatment and opportunity for all)	●	-	◐
	Workers in the Value Chain	Health and Safety Management (Work environment)	◐	-	○
Governance	Business Conduct	Ethical Management (corporate culture, corruption and bribery, etc.) Compliance	○	-	○

*Impact Materiality: Assessed based on severity and likelihood
**Financial Materiality: Assessed based on the scale (quantitative and qualitative) and likelihood of financial impact
***In 2024, SK D&D conducted two materiality assessments, one at the corporate level and another at the group level. We reflected the results of the corporate-level assessment in the previous year's report and those of the group assessment in this report. Accordingly, the material topics and issue names in this report differ from those in the previous year's report. In the previous year's report, we reported a total of five material topics, including Climate Change Response and Energy Efficiency, Workplace Safety and Health, Green Building Development and Operation and Customer Value Innovation, and Human Rights Management. In this year's report, we added new material topics - Workers in the Value Chain and Business Conduct.

Material Topic Management

GRI 3-3

Material Topic Management

Topic		Specific Issues	Key ESG Strategy Challenges and Response Status	Indicators and Goals	Link to GRI
E1	Climate Change	Climate Change Adaptation	Review the status of Net Zero governance operations and the implementation management of the emission reduction roadmap Analyze climate change scenarios and determine financial impacts Establish a foundation/capacity to respond to mandatory domestic and international disclosures related to climate change Establish and implement strategies to transform the eco-friendly business portfolio	Measure and verify emissions on a consolidated basis (Scope1, 2) Establish and introduce internal carbon pricing guidelines	GRI 305-1~5
		Climate Change Mitigation			GRI 305-1~5
		Energy	Review renewable energy conversion (RE 100) and efficiency strategies/activities to reduce GHG emissions Develop green buildings, obtain certification, and promote green remodeling	Achieve RE 100 on a consolidated basis Identify additional energy efficiency improvement initiatives	GRI 302-1~5
S1	All Employees	Human Resources Management, and Health and Safety Management (Work environment)	Establish human rights management governance Conduct human rights impact assessment Establish human rights due diligence guidelines	Expand the target scope of human rights impact assessment	GRI 401~405 GRI 407~409
S1	All Employees	Human Rights Management (Equal treatment and opportunity for all)			GRI 406
S2	Workers in the Value Chain	Health and Safety Management (Work environment)			GRI 401~405 GRI 407~409
G1	Business Conduct	Ethical Management (corporate culture, corruption and bribery, etc.)	Secure ethical management system Strengthen internal capabilities, including additional anti-corruption training in addition to legally mandated training	Comply with laws related to fair trade Achieve a 100% participation rate in ethics training	GRI 205-1~3 GRI 206-1

Stakeholder Engagement

GRI 2-29

Stakeholder-Centric Management

SK D&D defines stakeholders as individuals and groups who are either affected by our corporate activities or who have the potential to influence them. The main stakeholders consist of employees, business partners, customers, communities, shareholders, and investors.

SK D&D pursues stakeholder-centered management to create value not only for stockholders but for all stakeholders, fostering sustainable growth and development for the company and its stakeholders. SK D&D respects its stakeholders as partners in its commitment to social and environmental responsibility, actively incorporating stakeholders' needs into its management activities to strengthen cooperation and trust.

In particular, when developing ESG management strategies and directions, SK D&D actively incorporates stakeholders' opinions through double materiality assessments and transparently discloses sustainable management performance on the company’s website to meet stakeholders' expectations. Moreover, by establishing and implementing a mid-to-long-term roadmap for expanding stakeholder participation in our human rights impact assessment process, we aim to respect the human rights of key stakeholders in our value chain, comply with the laws and codes of conduct, and fulfill our corporate social responsibility.

Stakeholder Communication

SK D&D continuously communicates with stakeholders by operating various communication channels per stakeholder to listen to the voices of its key stakeholders. Feedback collected on a regular and ad-hocbasis is actively reflected in the company’s strategic planning and decision-making processes. SK D&D strives to develop and implement diverse collaborative programs and projects that address stakeholder needs. . Information on key issues in which stakeholders may be interested is disclosed through our Sustainability Report and the company website. We continuously update our communication and disclosure channels to strengthen stakeholder accessibility to the disclosed information.

Communication Channels and Key Issues for Stakeholders

Stakeholder	Communication Channel	Frequency	Main Issues
Employees	ABCD (A Better Company D&D)* Open Talk*	Monthly	Business goals Employee performance appraisal and remuneration Main PJT news and other issues New Year's message from the CEO
	Company-wide communications (All Hands Meeting)	Quarterly	Diversity expansion Safety and Health Employee growth and happiness Affiliate transactions review Human rights and internal grievances
	Counseling/reporting channels for ethical management and human rights issues	Ad-hoc
	Internal grievance handling channel (Commuinication hotline)	Ad-hoc
Business Partners	Customer inquiry channel on the website	Ad-hoc	Fair transaction Win-win cooperation Ethical management Safety and health of partner companies
	Safety supervision meetings	Quarterly
	Counseling/reporting channels for ethical management and human rights issues	Ad-hoc
Customers	Customer satisfaction surveys	Once a year	Customer satisfaction enhancement Information security and privacy Product/service safety
	Customer center (skcenter@sk.com)	Ad-hoc
	Counseling/reporting channels for ethical management and human rights issues	Ad-hoc
Local Communities	Local governments (economy, social, welfare, education, etc.)	Ad-hoc	Community engagement/development Social contribution Social value and impact monitoring
Local Communities	Counseling/reporting channels for ethical management and human rights issues	Ad-hoc
Stakeholders and Investors	Stakeholder meetings	Regularly	Stakeholder-friendly management ESG information disclosure
Stakeholders and Investors	IR (Investor Relations)	Ad-hoc	Stakeholder-friendly management ESG information disclosure

*A Better Company D&D (ABCD) Open Talk is a monthly company-wide forum that facilitates communication between executives and employees. It serves as a platform to discuss and share a wide range of important topics, including the company’s business strategies and performance, employee work environment, and compensation systems.