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Table 1. Quantification results of SK hynix's social value from 2019 to 2020

Thanks to the improvement in semiconductor market conditions compared to last year, the social value created by indirect economic contributions has achieved a year-on-year increase of 32% (1.3143 trillion won) compared to 2019. However, due to environmental factors such as greenhouse gas emissions, the social value created by the social benefits of corporate operations fell by 11% year-on-year (57.1 billion won). At the same time, the social value created by the social contributions has increased by 41.3 billion won, which is mainly due to the strong support provided by SK hynix to the society in the fight against the new crown epidemic.

Looking specifically at each aspect, SK Hynix said that the company's indirect contribution to the economy has achieved remarkable results in terms of taxation, employment, and dividends. First, the company's tax-related results have improved significantly, a year-on-year increase of 211% compared to last year. In addition, SK hynix has reached the quota employment rate of disabled persons in 2020 (the quota employment rate of disabled persons in private companies with more than 50 employees is 3.1%), and has achieved remarkable results in hiring disadvantaged groups. In terms of dividends, the social value realized by the company also increased by 17% year-on-year. SK Hynix expects that as the industry and market conditions improve significantly this year, the company's indirect economic contribution will continue to grow.

The negative cost of the social benefits of business operations in the environmental protection field was 944.8 billion won, an increase of 127.2 billion won from 2019. This is caused by the particularity of the semiconductor industry, because the semiconductor manufacturing process consumes a lot of hydropower resources and emits greenhouse gases. The person in charge of SK hynix said: “SK hynix has successfully reduced greenhouse gas emissions per unit of production through resource recycling and other efforts. Despite this, the company's overall greenhouse gas emissions have shown an upward trend. Lux expresses its most sincere apologies to all stakeholders. The company will continue to invest in the development of green environmental technology to reduce the negative impact on the environment, and at the same time make every effort to reduce the total amount of greenhouse gas emissions."

Despite this, the social value created by SK hynix in the social field increased by 21% year-on-year to 322.4 billion won, while the social value in the product/service field also increased by 116% year-on-year to 25.5 billion won; this result was partially offset by this. The negative impact caused by the environmental field. In order to increase the proportion of localization of semiconductor materials, parts and equipment, SK hynix implemented "Technology Innovation Enterprise Project" and operated "Analysis and Measurement Support Center" to strengthen its support to partner companies. In addition, SK Hynix has also increased the supply of low-power products, including solid-state hard drives that can significantly reduce carbon dioxide emissions.

The social contribution of SK hynix achieved a year-on-year increase of 60% to 110.6 billion won. In the past year, SK hynix has made unremitting efforts and made outstanding contributions to the fight against the new crown epidemic. For example, SK Hynix actively demonstrates the company's strong support for medical staff and provides smart devices for distance learning to children from low-income families to build a social safety net.

In the future, SK hynix plans to implement the "Social Value 2030" roadmap by integrating the power of the entire company. The plan was announced in January this year and is a medium and long-term plan formulated by the company to realize social value. Through the implementation of this plan, SK hynix is ​​committed to achieving a series of key goals, including achieving carbon neutrality, revitalizing the semiconductor ecosystem, building a social safety net, and internalizing a corporate culture based on diversity and inclusiveness.

In particular, as the first company in the semiconductor memory industry to join the RE1001 initiative, SK hynix has shown positive actions through various efforts such as minimizing greenhouse gas emissions, reducing waste emissions, and improving water recycling during the semiconductor manufacturing process. A strong desire to improve the environment. In addition, SK Hynix will continue its previous plan to replace existing mechanical hard drives with low-power solid-state drives, and continue to expand the application of environmentally friendly technologies.

1RE100: The RE100 initiative aims to attract more global leading companies from all walks of life to participate and promote the use of 100% renewable energy to meet their electricity needs. The initiative was initiated by the British non-profit multinational organization "The Climate Group" in 2014. So far, 263 companies around the world have joined the RE100 initiative. RE100 advocates that companies that join its initiative will have renewable energy sources for all their electricity needs in 2050.

SK hynix’s Sustainability Management Deputy President Kim Yoon-wook said: “SK hynix has increased the objectivity and reliability of performance quantification by declaring the company’s social value results for three consecutive years. We will strengthen ESG management while expanding The scale of social value creation, exploring multiple ways to contribute to mankind and society."

Based on the "Double Bottom Line (DBL)" business philosophy of pursuing economic value (EV) and social value at the same time, the SK Group will quantify and announce the social value created in the previous year from 2019.

In the past three years, the SK Group has successfully obtained meaningful quantitative results in areas including products and services, and has also made achievements in expanding the scale of employing disadvantaged groups. However, SK Group's self-assessment of its social value-based business model (BM) innovation has not yet reached a truly meaningful level, and it has realized that it must further invest more efforts in order to reduce the total amount of greenhouse gas emissions on a large scale. necessity.

Today, the SK Group is composing a financial story based on ESG management, and will closely integrate the quantitative results of social value with the business strategies of its subsidiaries in the future. At the same time, the group also plans to transparently disclose its greenhouse gas emission measurement standards and related formulas to improve the reliability of the measurement results of external stakeholders.

The quantitative measurement of ESG results is also a global trend. For example, the Value Balancing Alliance (VBA) initiated by SK Group, BASF, Novartis and other famous foreign companies is working with the International Financial Reporting Standards (IFRS) and the World Economic Forum (World Economic Forum). WEF), Harvard Business School (HBS), etc. actively cooperate to expand their influence. The SK Group will further strengthen cooperation with relevant agencies and organizations to take the lead in establishing international standards for the quantitative measurement of social value.