Our ESG Approach

Materiality Assessments

Double Materiality Assessment

SK D&D performs annual materiality assessment to identify material topics among our sustainability matters and establish ESG strategies that reflect the needs of our internal and external stakeholders. In 2024, we conducted a double materiality assessment in accordance with the European Financial Reporting Advisory Group's (EFRAG) Materiality Assessment Implementation Guidance.

The double materiality assessment is a process for identifying a company's actual and potential impacts, risks, and opportunities related to sustainability matters, in order to determine material topics. It was conducted through impact materiality assessment which analyzes the impacts of a company's business activities on economy, environment and people, and financial materiality assessment that examines the potential financial risks and opportunities arising from sustainability matters, respectively.

Double Materiality Assessment Process

GRI 3-1

Step 1. Understanding the organization’s context

To understand the company's sustainability context, SK D&D considered business activities across the value chain and both internal and external stakeholders, and reviewed and redefined existing sustainability reporting matters. Additionally, we analyzed the media, peer companies, and global ESG disclosure and rating standards to identify sustainability matters that reflecting industry characteristics. Through this process, a total of 22 sustainability matters were determined.

Step 2. Identifying Impacts, Risks, and Opportunity

SK D&D reviewed the actual and potential impacts on the economy, environment, and people across all stages of the value chain, and identified the positive and negative aspects of each impact based on various internal and external resources used to derive our sustainability matters. We also analyzed financial risks and opportunities related to sustainability matters from short, medium, and long-term perspectives.

Identifying Impacts for Sustainability Matters

Impact Analysis	Impact type	Details
Global ESG initiatives and standards	Potential	Analysis of standards including ISO 26000, UN SDGs, UN Guiding Principles on Business and Human Rights (UNGPs), and others Review of ESG disclosure standards such as Global Reporting Initiative (GRI) Standards
Media exposure	Actual	Analysis of 239 press releases from 157 domestic media portals Period: January 1, 2023 - February 29, 2024 Keyword-centered analysis of company’s non-financial impacts related to environmental, social, and governance factors
Sustainability matters of peer company group	Actual	Analysis of disclosure documents from 7 leading companies in the domestic and international real estate construction/development/management/operation industries Reference: Sustainability Reports, Integrated Reports, Annual Reports, etc.
SK D&D’s internal/external stakeholder engagement	Potential, Actual	Review of sustainability matters and material topics from last year's materiality assessment Mapping of business area value chains by sustainability matters Analysis of ESG department (‘ESG Part’) survey results Incorporation of third-party expert advisory opinions

Identifying Financial Risks and Opportunities for Sustainability Matters

Risk and Opportunity Analysis	Details
Global ESG disclosure and rating standards	Analysis of domestic and international ESG disclosure and rating metrics requirements Morgan Stanley Capital International (MSCI) ESG Ratings Korea ESG Standards Institute (KCGS) ESG Rating Sustainability Accounting Standards Board (SASB) Standards
Media exposure	Analysis of 239 press releases from 157 domestic media portals Period: January 1, 2023 - February 29, 2024 Keyword-centered analysis of financial impacts of the company’s business
SK D&D’s internal/external stakeholder engagement	Evaluation of SK D&D's ESG strategy, business portfolio, types and flows of capital, and other factors Analysis of Finance/Strategy Department survey results Review of internal KPIs aligned with sustainability matters

Step 3. Assessing Impact Materiality and Financial Materiality

A total of 22 sustainability matters were analyzed for their impact, risk, and opportunity factors to assess impact materiality and financial materiality.

Impact Materiality Assessment

We assessed impact materiality by considering the severity and likelihood of impacts related to sustainability matters. Specifically, for negative impacts, we prioritized them by analyzing the severity of each issue in terms of scale, scope, and irremediable character.

Financial Materiality Assessment

Based on the impact materiality of the identified sustainability matters, we derived financial risks and opportunities by considering each matter’s potential impact on the company development, financial performance, cash flow, and financial condition from short, medium, and long-term perspectives, along with the likelihood of the issue occurring. Subsequently, we assessed the financial materiality of each issue by analyzing internal stakeholder surveys, organizational key performance indicators (KPIs), and requirements from domestic and international ESG disclosure and rating standards.

Step 4. Consolidating the Double Materiality Assessment Results

A total of 22 sustainability matters were prioritized through the double materiality assessment, resulting in 5 impact material topics and 3 financial material topics. The five impact material topics are: 1) climate change response and energy efficiency, 2) workplace safety and health, 3) green building development and operation, 4) customer value innovation, and 5) human rights management. The three financial material topics are: 1) green building development and operation, 2) customer value innovation, and 3) climate change response and energy efficiency; these were also selected as impact material topics.

Double Materiality Assessment Results

*In the previous year, the material topics were 1) climate change · energy, 2) safety and health management, 3) risk management, 4) eco-friendly space, and 5) talent management, in this order, totaling five topics. For this year, 'customer value innovation' and 'human rights management' have been newly selected as material topics, while 'risk management' and 'talent management' have been excluded. In addition, 'eco-friendly space' has been redefined as 'green building development and operation.'

SK D&D provides detailed disclosure on all sustainability matters, including materiality topics, throughout this sustainability report. We solidified our material topics through review and approval from the board of directors and are managing the impacts, risks, and opportunities associated with each topic in alignment with our corporate management and ESG strategies.

SK D&D Material Topics

GRI 3-2

Impact Material Topics (5)

● High◐ Medium○ Low

Impact Materiality	Topic					Reporting Table of Contents
	Priority	Scope of Impact within Value Chain	Affected Stakeholders	Impact*
	Priority			Posi-tive	Nega-tive
Climate Change Response and Energy Efficiency	1			Product/service, business sites, supply chain	Shareholders·investors, customers, local community	◐	●	Climate Change Response
Workplace Safety and Health	2	Business sites, supply chain	Business partners, local community	○	●	Safety and Health Management
Green Building Development and Operation	3	Product/service, supply chain	Shareholders·investors, Business partners, customer	●	◐	Green Building and Real Estate Development
Customer Value Innovation	4	Product/service	Shareholders·investors, customer	●	○	Customer Satisfaction Management
Human Rights Management	5	Business sites, supply chain	Employees, business partners, local community	●	◐	Human Rights Management

*Assessing each topic’s positive and negative impacts on the economy, environment and people

Financial Material Topics (3)

● High◐ Medium○ Low

Topic	Financial Materiality							Reporting Table of Contents
	Priority	Financial Impact Areas	Impact Period			Impact Aspect*
	Priority	Financial Impact Areas	Short-term	Mid-term	Long-term	Risk	Opportunities
Green Building Development and Operation	1	Cost Revenue Risk	●	●	●	◐	●	Green Building and Real Estate Development
Customer Value Innovation	2	Cost Revenue Risk	◐	●	●	◐	●	Customer Satisfaction Management
Climate Change Response and Energy Efficiency	3	Cost Risk	○	●	●	●	◐	Climate Change Response

*Assessing each topic’s impacts on the company’s financial performance, categorized into risks and opportunities

Impacts, Risks and Opportunities

Impact Materiality Topics

GRI 3-3

SK D&D has assessed the actual and potential impacts of sustainability matters on the economy, environment, and people across the value chain, and determined five material topics to identify impacts. Based on the business context related to each topic, we have identified actual and potential impacts and established mid- to long-term impact management strategies, which are being publicly disclosed along with our 2023 performance.

SK D&D analyzed the impact of sustainability matters on value creation, cash flow, and access to capital, and identified three financial material topics in terms of risks and opportunities. Referring to the International Sustainability Standards Board (ISSB)'s IFRS Sustainability Disclosure Standards S1 (General Requirements) and S2 (Climate-related Disclosures) and the Korea Sustainability Standards Board (KSSB)'s Sustainability Disclosure Standards Draft, SK D&D provides reliable information on sustainability-related risks and opportunities for each financial material topic, and discloses detailed information in each table of contents in this web-based sustainability report.

Material Topic ① Green Building Development and Operation

Green Building and Real Estate Development

Material Topic ② Customer Value Innovation

Customer Satisfaction Management

Material Topic ③ Climate Change Response and Energy Efficiency

Climate Change Response

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. We categorize our key stakeholders into employees, business partners, customers, communities, shareholders, and investors.

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

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

Stakeholder Communication

SK D&D continuously engages with its stakeholders using a range of communication channels to best hear the voices of each stakeholder group. We actively incorporate stakeholders' feedback gathered regularly and ad-hoc into our strategic decision-making processes, aiming to drive cooperation programs and projects that meet their needs. Information on key issues that stakeholders are concerned about is disclosed through our Sustainability Report and company website. We consistently update our communication and disclosure channels to enhance stakeholder accessibility to the disclosed information.

Communication Channels and Key Issues for Stakeholders

Stakeholder	Communication Channel	Frequency	Key Issues
Employees	ABCD (A Better Company D&D)*	Monthly	Business goals Employee performance appraisal and remuneration Key project 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/whistleblowing channels for ethical management and human rights issues	Year-round
	Internal grievance handling channel (Sotong hotline)	Year-round
Business Partners	Customer inquiry channel on the website	Year-round	Fair transaction Win-win cooperation Ethical management Supplier safety and health
	Safety supervision meetings	Quarterly
	Counseling/whistleblowing channels for ethical management and human rights issues	Year-round
Customers	Customer satisfaction surveys	Annually	Customer satisfaction enhancement Information security, privacy Product/service safety
	Customer center (skcenter@sk.com)	Year-round
	Counseling/whistleblowing channels for ethical management and human rights issues	Year-round
Local communities	Local governments (economy, social, welfare, education, etc.)	Year-round	Community engagement/development Social contribution Social value and impact monitoring
Local communities	Counseling/whistleblowing channels for ethical management and human rights issues	Year-round
Shareholders & Investors	Shareholder meetings	Regularly	Shareholder-friendly management ESG information disclosure
	IR events	Year-round
	Disclosures of Sustainability Reports on the website	Year-round

*ABCD (A Better Company D&D) is a monthly company-wide forum for the communication between management and employees to discuss and share various important issues related to the company's business strategy and performance, employee working environment, compensation system, and more.