Companies with better ESG performance had higher P/E ratios than those with lower ESG performance during the pandemic. This is what an analysis of 684 businesses by a research team at Korea University has found. As the world is coming out of the pandemic, ESG remains an important focus in business management. ESG, an acronym for Environmental, Social, and Governance, refers to a set of business practices for transparent management in sustainable and socially responsible business management and improving corporate governance. ESG has now become an integral part of business strategy for companies worldwide.

At Hyosung, we are dedicated to sustainable development through ESG management. By establishing an ESG Management Committee within its board of directors, Hyosung strives to put its belief in ESG into action in various areas such as ESG risk, environment, safety, and investment in climate change mitigation with an aim to grow into a ‘100-year-old Hyosung.’ The CEOs of Hyosung Group are also committed to advancing carbon neutrality and social values, spreading ESG culture across the industries, and prioritizing a better environment for future generations. Our subsidiaries are collaborating to realize these values, including Hyosung TNC, Hyosung Advanced Materials, Hyosung Heavy Industries, and Hyosung Chemical. In particular, Hyosung Heavy Industries has been leading the efforts with its emphasis on the harmony of growth and low carbon footprint under its ESG management strategy.

 

Efforts toward Eco-Friendliness to Reduce CO2

With over a half-century of history and subsequent knowledge and experiences in heavy electric machinery, the bloodline of industrial sector electricity supply, Hyosung Heavy Industries offers the world’s best technological prowess. As such, it is dedicated to developing core technologies for building future grids to achieve carbon neutrality. Hyosung Heavy Industries contributes to creating a low-carbon green lifestyle by supplying eco-friendly products.

 

  

 

Hyosung Heavy Industries has developed an extra-high voltage transformer that replaces insulating oil (mineral oil) with eco-friendly oil (synthetic, vegetable oil) to fight climate change and protect the environment. With its dedication to reducing the use of pollutant materials in the manufacturing cycle, the company has invented a 170kV Gas Insulated Switchgear (GIS). This innovation replaces the greenhouse gas SF6, traditionally used in circuit breakers, with an environmentally friendly Novec Mixture (Fluoronitrile/CO2 Mixture gas), reducing greenhouse gas emissions by approximately 98%.

 

The construction division of Hyosung Heavy Industries has been working to minimize energy consumption, particularly by reducing industrial water consumption. When building underground parking lots, the company employed demolding decks to cut down on construction waste. Significant efforts have also been made to curb the emission of scattered dust from demolition processes. Furthermore, Hyosung has committed to reducing greenhouse emissions from the construction sites in pursuit of a greener lifestyle, as part of which it calculates its emissions and has them independently verified by a third party.

 

  

 

Due to its efforts towards low-carbon green growth, Hyosung Heavy Industries has been awarded with the Carbon Management Sector Honors at the 2022 Carbon Disclosure Project (CDP). This award recognizes companies that have excelled in climate change response and water management. The CDP is a London-based non-profit organization that evaluates major publicity traded companies in 91 countries on their response to climate change, greenhouse gas emissions, and carbon management strategies, providing this information to major financial institutions.

 

Eco-Friendly Energy with Next-Generation Alternative Fuel and NRE

Hyosung Heavy Industries has been actively expanding New and Renewable Energy (NRE) projects designed for future generations. As fossil fuels are depleted, and global warming exacerbates, hydrogen charging systems are being explored as the next alternative fuel. Despite the nascent state of industry, Hyosung Heavy Industries spotted the potential of hydrogen early on and began to conduct research and development as early as 2008 based on its existing technology and 50-year experience in rotating machines and compressors. With its successful localization of the hydrogen gas cooling system, the company has cemented its position as a leading hydrogen name in Korea.

 

  

 

Hyosung Heavy Industries has been supplying hydrogen gas charging systems to meet the growing demand for hydrogen fuel cell vehicles and commercial hydrogen cars as our society transitions into a hydrogen economy. The company has also moved early to form a partnership with Linde, the world’s only company with commercialized liquid hydrogen fueling stations, to build a nationwide network of liquid hydrogen charging stations. It also plans to produce green hydrogen on renewable energy in Jeollanam-do by building two liquid hydrogen plants, each with an annual capacity of 10,000 tons, to store and utilize this green hydrogen. It will also install nine liquid hydrogen fueling stations in major areas throughout Jeollanam-do.

 

Early on, Hyosung Heavy Industries recognized the advantages of solar power businesses with low emissions of CO2 and other pollutants. Starting from its first solar power plant in Samrangjin in 2007, the company has expanded its portfolio with various solar power design, engineering, and construction projects. In addition, Hyosung Heavy Industries has offered customized solar power plant solutions, including those for roofs of parking lots and water treatment facilities, contributing to expanding the NRE industry.

 

Corporate Responsibility of Creating Safe Workplace

Hyosung has also been working on non-environmental ESG areas such as safety, supply chain, and human rights. To ensure safety and health at the workplace, the company has implemented a set of health and safety policies. As such, the Four Golden Safety Rules are established in Hyosung Heavy Industries’ sector to provide a safe working environment.

 

  

 

To prevent industrial accidents and ensure compliance with environmental & safety regulations, as well as sustainable management, Hyosung established a safety and health management system. Each department at the company continues to improve safety and health plans after identifying risk factors through risk assessment, environmental impact assessment, and safety checks. The company acquired the ISO45001 and became the first major company in Korea to complete KOSHA-MS in Changwon Industrial Complex in 2020 by enhancing the system manually and improving the practices.

 

The company’s construction arm also emphasizes safety checks to meet management targets for safety and health, with an aim to have zero major industrial accidents. It employs real-time smart safety monitoring through HSS. The division has made efforts to prevent safety accidents by introducing and distributing 370 body cameras across construction sites.

 

Efforts for Co-Prosperity as Partners are Essential for Growth

 

  

 

Competent vendors are the main driver of the company’s growth. This is why Hyosung has strived for systematic growth of harmony with its vendors. It has provided professional consulting to help vendors understand and implement ESG practices and offered continuous training, support projects, and incentives.

 

In addition, Hyosung has provided space dedicated to workers’ rest and equipment designed to prevent respiratory diseases in order to improve the workplace environment for workers on production sites, known for relatively challenging conditions. In 2021, it conducted education training for CEOs of 42 vendor companies on ethical management, construction quality management, environment and safety, and related regulations such as the Framework Act on the Construction Industry and Act on Contracts. In order to prevent risks of any unfair trading in contracts with vendors or any subsequent sub-contracts, Hyosung Heavy Industries has engaged in pre- and post-contract audits and inspections. In so doing, the company received zero complaints from vendors for dispute resolution as of 2021.

 

ESG Management Based on Transparent Decision-making Process

The World Economic Forum regards governance as the highest priority among the four pillars of ESG- governance, planet, people, and prosperity. In this respect, governance and transparent management are crucial elements in business management. Without commitment and synergy effect put forth by leaders, boards of directors, and stakeholders to resolve social and environmental issues, the two key pillars of ESG, which are environment and society, won’t be able to work properly. Only when there is a systemic decision-making process set in place to identify and respond to risks and opportunities in the environment, and society can thee be a true ESG management sustained at a given company. This is why many companies recognize the importance of governance and have continued working on them.

 

  

 

Hyosung began its efforts to improve governance by transitioning to a holdings company structure in 2018. It convened a committee for transparent management at the enterprise level for the sake of transparent, fair, and ethical management. The CEO of Hyosung Holdings has strived for responsible management for efficient group management while taking a bold step to appoint outside CEOs to each subsidiary.

 

The Committee for Transparent Management has been expanded to the ESG Management Committee, which sits directly under the CEO of Hyosung Holdings. The ESG Management Committee will continue to work on the existing areas of work of the Committee for Transparent Management, such as looking into related party transactions and deliberation on key management issues designed to protect shareholders’ rights. On top of it, the ESG Committee also works on introducing ESG policies, building risk strategies under the ESG policies, and deliberation on investment and action plans on environment, safety, and climate change. In other words, the new Committee has dramatically strengthened transparency in the decision-making process. It also has worked on improving engagement and communication with key stakeholders by continuously sharing up-to-date information on business reports, corporate governance structure, the status of voting rights execution at regular shareholders’ meetings, dividend payment, and information on the board of directors.

 

These efforts were recognized by the Korea Institute of Corporate Governance and Sustainability (KCGS) with Grade A in ESG evaluation for listed companies in 2022. Hyosung Heavy Industries will continue its utmost, faithful efforts for ESG management.