Hyundai Mipo Dockyard : 2022 Integrated Report

KSOE

2021

INTEGRATED REPORT

INTRO

KSOE INTEGRATED REPORT 2021

INTRO

About This Report

Contents

BUSINESS OVERVIEW

CEO Message

Company Profile

Global Network

Overview of Our Subsidiaries Value Creation and Distribution

SUSTAINABLE VALUE STORY

ESG MANAGEMENT

ESG Vision System

Stakeholder Engagement

Double Materiality Assessment

FOCUS AREA

Climate Change Response

Health & Safety Management

Human Rights Management

Labor-Management Relations

Supply Chain Management

Quality Managment

Social Contribution & Community

ESG FACT BOOK

Environmental

Social

Governance

APPENDIX

Financial Statements

GRI Index

TCFD Index

SASB Index

UN SDGs Index

Third-Party Assurance Statement

GHG & Energy Assurance Statement

Membership & Public Information

About This Report

Report Overview

This integrated report of KSOE and its shipbuilding subsidiaries details our financial performance as well as progress we have made in ESG (Environment, Social, and Governance) management. The report provides an account of the competitiveness, future plans and directions of KSOE and its subsidiaries on the section named, 'Sustainable Value Story' (page 26~29). Going forward, we will disclose our business data in a transparent manner by annually updating our integrated report, based on which we will reach out to more various stakeholders to communicate with them.

Reporting Standards and Frameworks

This report is in accordance with the Core Option of Global Reporting Initiative (GRI). In order to address the key issues that relate to KSOE and its shipbuilding subsidiaries, we comply with the disclosure recommendations of Task Force on Climate-Related Financial Disclosure (TCFD) and Sustainability Accounting Standards board (SASB) Standards. We follow the IR Framework presented by IIRC (International Integrated Reporting Council).

Reporting Period

This report details our business operations from January 1 through December 2021. Some of the data extend to the period from 2019 through the first half of 2022.

Reporting Scope

This report covers KSOE and its shipbuilding subsidiaries (HHI, HMD, HSHI). We comply with Korean International Financial Reporting Standards (K-IFRS) for financial performance.

Reporting Assurance

KSOE and its shipbuilding subsidiaries conducted the third party's independent assurance (overall sustainability management, GHG emissions, and energy consumption are separately verified) from an external institution to secure the credibility and improve the quality of the report. Please refer to page 156 of this report for the assurance result.

Organizations Helping the Production of Report

KSOE | Business Ethics Team, Compliance Team, Corporate Planning Team, CSR Planning Team, HR Management Team, IR Team, Management Support Team, Property Planning Team, Public Relations Team, Safety and Health Team, Tax & Administration Team, Technology Management Dep't

HHI | Coexisting Cooperation Team, Compensation & Benefits Team, Environment Management Team, Finance Team, Health Management Team, HRD Planning Team, Human Resources Planning Team, Human Resources Support Team, IP Management Team, Legal/Security Support Team, Management Planning Team, Procurement Planning Dep't, Quality Planning Dep't, Resources Reuse & Recycle Team, Safety Culture Team, Safety Planning Team, Shipbuilding Technology Planning Dep't, Social Contribution Team, Technology Planning Dep't, Utility Planning Team

HMD | Accounting Dep't, Coexisting Cooperation Dep't, Co-Prosperity Dep't, Cost Management Dep't, Digital Transformation & ICT Dep't, Environment & Health Dep't, Facility Maintenance Dep't, General Affairs Dep't, Human Resources Support Dep't, Legal Affairs Team, Materials Procurement Dep't, Naval Architecture & Design Administration Dep't, Project

• Production Planning Dep't, Public Relations Team, Quality Management Dep't, Safety Dep't, Technology Planning Team

HSHI | Accounting Team, Design Collaboration & Planning Dep't, Design Project Manager Team, Environment & Health Dep't, Fatal Accident Prevention Team, General Affairs Team, Hull QM Dep't, Human Resources Development Team, Human Resources Team, Industrial Relations Team, Information Technology Dep't, Maintenance Dep't, Materials Procurement Dep't, Project & Production Planning Dep't, Safety Dep't, System QM Dep't

Inquiries about the Report

Please contact KSOE ESG Strategy Team for any inquiries or comments about the 2021 KSOE Integrated Report.

75, Yulgok-ro,Jongno-gu, Seoul, Republic of Korea KSOE ESG Strategy Team

T. 82-2-746-7139 E. [e-mail]

Interactive Guide

Please download the electronic version of the 2021 KSOE Integrated Report from KSOE homepage (http:// www.ksoe.co.kr). It is an interactive PDF format for the better convenience of users.

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INTRO

About This Report

Contents

BUSINESS OVERVIEW

CEO Message

Company Profile

Global Network

INTRO

Contents

KSOE INTEGRATED REPORT 2021

Overview of Our Subsidiaries Value Creation and Distribution

SUSTAINABLE VALUE STORY

ESG MANAGEMENT

ESG Vision System

Stakeholder Engagement

Double Materiality Assessment

FOCUS AREA

Climate Change Response

Health & Safety Management

Human Rights Management

Labor-Management Relations

Supply Chain Management

Quality Managment

Social Contribution & Community

ESG FACT BOOK

Environmental

Social

Governance

APPENDIX

Financial Statements

GRI Index

TCFD Index

SASB Index

UN SDGs Index

Third-Party Assurance Statement

GHG & Energy Assurance Statement

Membership & Public Information

INTRO

About This Report	02
Contents	03

BUSINESS OVERVIEW

CEO Message	05
Company Profile	06
Global Network	12
Overview of Our Subsidiaries	13
Value Creation and Distribution	25

SUSTAINABLE VALUE STORY

Future from the Ocean	27
Eco-friendly Vessel, Weighing Anchor for
Carbon Neutrality	33
Digital Transformation Leading the Age of
Exploration in the 21st Century	40
Navigating Toward 'FutureBuilder'
Beyond No.1 Shipbuilder in the World	45

ESG MANAGEMENT

ESG Vision System	51
Stakeholder Engagement	54
Double Materiality Assessment	55

FOCUS AREA

Climate Change Response	58
Health & Safety Management	66
Human Rights Management	70
Labor-Management Relations	72
Supply Chain Management	75
Quality Management	80
Social Contribution & Community	84

ESG FACT BOOK

Environmental	88
Social	102
Governance	125

APPENDIX

Financial Statements	145
GRI Index	146
TCFD Index	149
SASB Index	150
UN SDGs Index	151
Third-Party Assurance Statement	153
GHG & Energy Assurance Statement	156
Membership Status & Public Information	158

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BUSINESS OVERVIEW

1. CEO Message
2. Company Profile

1. Global Network
2. Overview of Our Subsidiaries

1. Value Creation and Distribution

BUSINESS OVERVIEW

KSOE INTEGRATED REPORT 2021

INTRO

About This Report

Contents

BUSINESS OVERVIEW

CEO Message

Company Profile

Global Network

Overview of Our Subsidiaries Value Creation and Distribution

SUSTAINABLE VALUE STORY

CEO Message

Taking the lead in green and digital shipbuilding technologies, we will usher in a better future for the next 50 years.

Sam H. Ka / Vice Chairman & CEO

Ki-sun Chung / President & CEO

ESG MANAGEMENT

ESG Vision System

Stakeholder Engagement

Double Materiality Assessment

FOCUS AREA

Climate Change Response

Health & Safety Management

Human Rights Management

Labor-Management Relations

Supply Chain Management

Quality Managment

Social Contribution & Community

ESG FACT BOOK

Environmental

Social

Governance

APPENDIX

Financial Statements

GRI Index

TCFD Index

SASB Index

UN SDGs Index

Third-Party Assurance Statement

GHG & Energy Assurance Statement

Membership & Public Information

Dear esteemed stakeholders,

The year 2022 is especially meaningful since it marks the 50th anniversary of Hyundai Heavy Industries (HHI) Group. Korea Shipbuilding & Offshore Engineering (KSOE) has never relented in innovating and challenging ourselves to date in Korea, the barren land for shipbuilding business 50 years ago. Our persistent efforts have eventually positioned us as the world's No. 1 shipbuilding and offshore engineering company. This remarkable progress is attributed to our stakeholders who have shown unwavering support and interest in us over the years. Taking this opportunity, we would like to extend our sincere gratitude to all of you.

The world is now going through worse storms than ever before, with prolonged COVID-19 pandemic, intensifying instability in global geopolitical landscape and deepening climate crisis. Amid the uncertainty, however, we accomplished the outstanding feat of winning 219 new building orders on the strength of our superior technological prowess and the employees' tireless efforts, exceeding our annual target for 2021. Never sliding into complacence, we endeavor to redefine our roles to protect the ocean, which promises to be the source of our future growth and the home to future generations. Our commitment focuses on creating future values, guided by key drivers of change and innovation in the marine mobility market. To this end, we have established the following strategies:

First, we will drive the paradigm shift toward going greener through digital transformation.

KSOE has built the largest number of ships in the world over the past 50 years. Our expertise in shipbuilding enables us to have the upper hand in this industry. We are now making massive investment in nurturing R&D and engineering talents and striving to advance the technologies for the commercialization of low-carbon and zero-carbon ships including LNG-, methanol- and ammonia-fueled ships, and electric-propulsion ships. All industries are currently required to strengthen their digital capabilities to proactively respond to the rapidly-evolving future. In line with the irreversible trend, we will become a 'first mover' that leads the way in the era of digital transformation by preempting the smart ship market such as an autonomous navigation ship, in close cooperation with our affiliates.

Secondly, we will take the initiative in establishing a hydrogen value chain.

To meet the growing challenge of climate change, the international community has adopted stringent regulations to achieve carbon neutrality, requiring corporations around the globe to actively take measures to reach net zero emissions. Against this backdrop, carbon neutrality is an integral element in the strategy of a company to move toward 'sustainability' from 'growth'. We believe the core value for the future lies in 'hydrogen'. We will do what we can do best - the establishment

of offshore green hydrogen production plants and the development of hydrogen carriers and hydrogen fuel cell propulsion ships, thereby maximizing the efficiency in terms of hydrogen production and transportation that underpins the hydrogen value chain. Our technologies in this field will become our competitiveness that will enable us to combat the climate crisis and lead the eco-friendly marine mobility market.

Thirdly, we will step up our ESG management.

This year again, one of our primary focuses will be on the reinforcement of ESG management as the issue that stands firmly in the spotlight for the whole industry. Staying true to our ESG vision, 'Future from the Ocean', we are directing all our efforts toward advancing our ESG ambitions. The ESG Management Council will play a key role in building feasible ESG management principles while the Board of Directors will lead the drive toward increased management transparency. Moreover, being mindful of our social corporate roles and responsibilities, we will be at the forefront of various ESG management activities so that our employees, suppliers, and local communities can join hands to create a sustainable ecosystem.

We would appreciate your continued interest, support, and patronage, on our journey toward a 'FutureBuilder' beyond a 'Shipbuilder'. Thank you very much.

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