April 22, 2021 marks the 52nd Earth Day. Over the years, SK hynix, one of the world’s leading semiconductor suppliers, has been cultivating a system of working that prioritizes both economic and social values, and firmly believes that a clean and safe environment is the basic human need, as well as the responsibility of every member of society to the next generation. SK hynix aims to secure the trust and support of stakeholders to eventually increase the corporate value, by starting implementing the “Financial Story”1 in 2021. Also, SK hynix has planned an ESG business blueprint for the next decade by announcing SV 2030, a roadmap for maximizing social values across the company, and issued a Green Bondwith a total value of USD 1 billion to invest in environmentally friendly business projects for accelerating its environmental, social, and governance [ESG] management.
Promoting Long-term Vision for Social Value
SK hynix cares about the way products are manufactured and treated, and firmly believes the social value it created must equal economic value. In October 2020, SK hynix announced a financial story that envisions the fortification of its business competitiveness with both DRAM and NAND Flash segment, while engaging in social value creation via ESG activities simultaneously. In January 2021, the company put forward the Green 2030 based on SV 2030 and is committed to achieving five goals by 2030: establishing RE100-related goals that can be achieved by 2030 (and fulfilling the RE100 commitment by 2050); achieving net zero by 2050, zero additional emissions of air pollutants, a gold rating at ZWTL at global production sites; and increasing in water resource savings by 300%.
Currently, SK hynix has begun to implement the Green2030 and has achieved phased progress in some core areas.
Achieving RE100 Benchmark by 2050: On November 2, 2020, SK hynix announcedwith other SK Group subsidiaries that they will use 100% new renewable energy by 2050 and join the “RE100 (Renewable Energy 100%)” environmental movement initiative, an event launched in 2014, and 263 global companies including Google, Apple, GM, and IKEA have also announced their participation.
Prior to this, SK hynix had already embarked on initial measures to introduce renewable energy. The most representative examples are the installation of 641 kW solar power generation facilities in 2019 and two hydro-generators in 2018 at the Icheon Site in South Korea.
Figure 1: Solar Power Panels at Icheon Site
Figure 2: Inverter Panel for Solar Power Modules at Icheon Site
Figure 3: Hydro-generators at Icheon Site
Achieving Net Zero by 2050: In order to achieve net zero by 2050, SK hynix will apply green tariff plans and PPA, promoting RE100 for Chinese production sites, and participating in carbon reduction projects in developing countries; the company will also promote CO2 reduction by supplying low-power semiconductors.
Figure 4: Operation of the Emissions Trading System
Strengthening Water Resources Management: In line with the global trend, SK hynix is also committing itself to water management. According to the Green2030 plan, SK hynix has formulated core goals in the water management field, include maximizing water management efficiency through the expansion of reuse and securing ecological health. From this perspective, SK hynix plans to increase the amount of water saved in 2030 by 300% compared with 2019. Also, it will conduct real-time monitoring of the influence of effluent water on the aquatic ecosystem and carrying out more activities to secure biodiversity and prove the healthiness of water quality.
Figure5: Wastewater Recycling System & Cooling Tower Reuse System of SK hynix
Figure 6: Diagram of Water Flow at SK hynix’s Sites
Specifically, SK hynix is committed to improving the water resources management system through continuous facility investment. Representative examples include SK hynix’s Wastewater Reuse System, Cooling Tower Reuse facility, and water-free scrubber (WFS), etc. Through the process like these, SK hynix carries out quality control strictly according to the water quality standards required for each use. The capacity of wastewater reuse system is 60,000 tons a day as of 2021. Furthermore, the amount of water reused per day through the cooling tower system is 1,800 tons as of the first quarter of 2021. In the future, SK hynix anticipates to increase the capacity of wastewater reuse system to 80,000 tons a day.
Figure 7: SK hynix winning grand prize of Water Security 2019 Awarded by CDP2
Figure 8: SK hynix Discovered Otters near SK hynix Icheon Production Site
Reducing Air Pollutant Emission: SK hynix realizes that air pollution has risen as a major environmental problem. By strengthening the systematic management of pollutant emissions, SK hynix not only actively participates in activities to reduce air pollutants and greenhouse gas emissions, but also has established a treatment process in which it simultaneously removes fine dust generated while processing greenhouse gases.
Figure 9: GHG & Fine Dust Treatment Process through SK hynix’s Scrubber
SK hynix has already achieved phased results in its overseas sites. For example, SK hynix Wuxi production site has effectively reduced 2,397 tons of greenhouse gas emissions through greenhouse gas emission reduction activities in 2019. The site maintains ISO14064 and ISO50001 energy greenhouse gas certification qualifications every year and established a renewable energy TF to continue to operate and carry out greenhouse gas emission reduction activities. In 2019, the greenhouse gas and natural gas emissions of SK hynix Chongqing production sites were reduced by 1,345 tons and 360,639 m³ respectively.
In the future, SK hynix will actively explore and apply potential new technologies to reduce the environmental impact of company operations, and help neighboring communities carry out atmospheric environmental management.
Obtaining ZWTL Validation: Another major indicator of Green2030 is to successfully obtain the Zero Waste to Landfill (ZWTL) gold rating for all production sites. SK hynix has successfully obtained ZWTL Validationin all production sites worldwide by the end of 2019. All the production sites including Icheon (Silver), Cheongju (Silver) production sites in South Korea, and Wuxi (Gold), Chongqing (Silver) production sites in China have established the management systems.
SK hynix is committed to the recycling and utilization of waste in all processes of the company’s manufacturing and operations, including the recycling of high value-added by-products that accompany the chip production process such as tungsten trioxide (WO3), or that of OAC membrane for air conditioning system as Solid Refuse Fuel (SRF). In addition, SK hynix will proactively apply environmentally friendly policies including the reduction of plastic product usage and the waste plastic recycling in our sites.
In the future, the company will make concerted efforts to maximize the operation of waste resource management in all sites and to reduce waste output while increasing its recycling rate as much as possible.
Issuing a Green Bond to Fund Environmentally Friendly Projects
In January 2021, SK hynix issued a green bond with a total value of USD 1 billion to invest in environmentally friendly business projects for accelerating ESG management. A green bond is a type of bond with a special purpose, limited to use only to fund environmentally friendly projects. At present, more than 230 global institutions have participated in the issuance of green bonds, with a total subscription amount of USD 5.4 billion.
Figure 10. Concept and Classification of ESG bonds
As the world’s first semiconductor memory manufacturing company to issue green bonds, SK hynix plans to use the finances raised to invest in environmentally friendly projects which are associated with water quality management, energy efficiency improvement, pollution prevention, and ecological environment restoration. In particular, SK hynix plans to prioritize the establishment of a new state-of-the-art wastewater disposal plant and a water recycling system as water management is extremely critical in the semiconductor industry. Also, the company will proceed with various projects including the development of low-power solid state drives (SSDs), in order to reduce carbon emission throughout the IT ecosystem in general.
Seok-Hee Lee, SK hynix CEO, emphasized in his recent IRPS2021 speech: “If HDDs in data centers around the world are replaced with low-power SSDs, greenhouse gas emissions are expected to be reduced by 41 million tons based on business-as-usual (BAU3) estimates, which is equivalent to USD 3.8 billion of social value.”
Establishing ESG Management Committee, Opening a new Chapter for Transparent ESG management
SK hynix also strives to raise the level of ESG management from corporate operation and management perspectives. The company established ESG Management Committee this year. It is a new meeting body led directly by the CEO and meets quarterly to supervise and manage the progress of SK hynix’s SV 2030 goals, formulate mid-to-long-term ESG-related policies and issue ESG-related strategic decisions. It is believed that such measures will also contribute to the early realization of the Green2030 goals.
Caring for the Earth
As a forward-looking company, SK hynix is always growing and looking to the potential of tomorrow, and the day after that. In the future, the company will continue to maintain cooperation with business partners from the viewpoint of social value, and take environmental protection as our corporate responsibility, adhere to an environmentally friendly management policy, and continue to work to protect and improve the environment.
1) Financial Story: SK Group’s new management strategy to increase the total value that includes corporate value by presenting the growth strategy and future vision of each subsidiary company of SK to various stakeholders such as customers, investors, and the market, generating trust and sympathy. SK hynix has established and initiated in earnest its Financial Story to contribute to humanity and society by strengthening ESG while pursuing continuous business growth through DRAM and NAND as two main pillars.
2CDP (Carbon Disclosure Project): An organization that evaluates companies’ responses to the reduction of carbon dioxide, targeting “FT 500 Global Index” companies, which are the world’s top 500 companies based on the market capitalization (In the case of Korea, top 50 companies based on the market capitalization); headquartered in the UK, a non-profit organization founded in 2000 with the support of 35 European institutional investors; since 2003, the organization has been investigating corporate risks related to climate change, social enterprises, carbon emission reduction methods, annual reduction plans, etc., of major global companies to publish the results.
3Business as usual (BAU): A total amount of greenhouse gas expected if no artificial measures are taken to reduce greenhouse gas emissions
