SAMSUNG C&T CORPORATION S u s t a i n a b i l i t y R e p o r t 2 0 1 4 Samsung C&T Corporation 2 ABOUT THIS REPORT Overview Samsung C&T Corporation Sustainability Report 2014 aims to report our economic, environmental and social initiatives and performance to our stakeholders. It mainly covers sustainability management issues deemed important to both our stakeholders and the company. This report is available in the form of a brochure or on our website (www.samsungcnt.com) for all the stakeholders. Reporting Period This report covers our major activities and accomplishments from January 1 to December 31, 2013. Some quantitative data in this report includes figures for the last three years, 2011 to 2013. For key company information, including corporate governance and the board of directors, this report covers information up to 2014. Reporting Principles Samsung C&T follows the Global Reporting Initiative (GRI) guidelines, which are international reporting standards on sustainability management. This years report has been prepared in accordance with the Core Option of the recently revised GRI G4 Guidelines. It reports all the essential indicators of the Core Option among the General Standard Disclosures, as well as covering the Disclosures on Management Approach (DMA) and more than one indicator concerning key aspects identified through the Materiality Assessment. CONTENTS
Corporate Profle CEO Message Global Samsung C&T Corporate Governance Creating Sustainable Value Integrated Risk Management Stakeholder Engagement Material Issues
Ethics and Compliance Environment Safety and Health Employees Supply Chain Local Communities Key Sustainability Indicators Independent Assurance Report Independent Assurance Report of Greenhouse Gas Emissions Association Memberships and Awards GRI G4 Index Overview Sustainable Business Our Key Sustainability Priorities
Appendix
06 07 08 12 16 20 22 24 28 32 40 44 50 54 59 62 64 66 68 Shareholders/ Investors 3 Reporting Scope Major topics for the Engineering and Construction Group and the Trading and Investment Group have been identified, respectively, based on the report content decision-making processes proposed by the GRI G4 Guidelines. For the connection between the identified issues and the Material Aspects of the GRI G4 Guidelines, please refer to Material Issues and GRI G4 Aspects of the E&C Group and the T&I Group on page 25. This report covers DMAs by major Aspects and one or more Indica- tors, as well as initiatives and achievements in other Aspects. Reporting Boundaries This report includes the business management activities of our domestic and overseas worksites, excluding entities invested by or affiliated with our company. For environmental data, we have collected data on our entire operation sites in Korea and abroad. In the case of data on global operation sites of the Engineering and Construction Group, we have collected data on operation sites within the top 70% in sales to enhance data credibility. We plan to broaden the scope of data collection in the future. For some data, such as greenhouse gas emissions, education/training and support performances, data on our value-chain partner companies are also included. Concerning financial statements, this report contains the financial performances of Samsung C&T and its affiliated companies on a consolidated basis compiled in accordance with the Korean International Financial Reporting Standards (K-IFRS), the Korean financial reporting standards adopted in 2011. External Assurance To ensure the credibility of the report content and data, this report has received third-party assurance from Samil PricewaterhouseCoopers. The data on greenhouse gas emissions in Korea received third-party verification from BSI. Shareholders/ Investors Employees Customers Local Communities Business Partners Government/ Media OVERVIEW 1 / Corporate Profle / CEO Message / Global Samsung C&T / Corporate Governance Samsung C&T Corporation 4 Overview Sustainable Business Our Key Sustainability Priorities Appendix 5 Founded in 1938 as the parent company of Samsung Group, Samsung C&T has pioneered Koreas overseas sales operations since it was registered as the rst general trading company in Korea in 1975. In December 1995, the company acquired Samsung Construction, and has since operated two dis- tinct business groups: the Trading & Investment Group (T&I Group) and Engineering & Construction Group (E&C Group). The company is actively engaged in operations around the world with a busi- ness presence in more than 50 countries. What We Do Company Name Samsung C&T Corporation Headquarters Samsung C&T Building, 14, Seocho-daero 74-gil, Seocho-gu, Seoul, 137-956, Korea Foundation 1938 (Merged with Samsung Construction in 1995) Total Assets KRW 25.4659 trillion CEO Chi-Hun Choi Business Areas Building, Civil Infrastructure, Plant, Housing & Development Global Network and Sales (as of the end of 2013) Engineering & Construction Group Trading & Investment Group Consolidated Subsidiaries Regional Headquarters, Subsidiaries and Ofces International Procurement Ofces 32 6 Subsidiaries 47 Ofces 53 Korea Overseas 2 84 KRW 1,348.1bil Europe KRW 757.6bil Americas KRW 17,057.7bil Korea
92,700 KRW
28,433.4 bil Total Sales As of the end of 2013 CEO Shin Kim Business Areas Trading, Organizing Corporate Profle KRW 9,270.0bil Asia, Middle East and Africa E&C Group T&I Group Samsung C&T Corporation 6 7 Overview Sustainable Business Our Key Sustainability Priorities Appendix Greetings to Stakeholders I would like to extend my sincerest gratitude to you, our valued stakeholders, for your immense support and continuous trust in us. Despite the enduring global economic down- turn in 2013, Samsung C&T marked meaningful achievements in its construction and trading businesses over the past year. The companys Engineering & Construction Group achieved more than $12.6 billion in annual overseas or- ders, a record amount for a Korean construc- tion company. In addition, the companys Trad- ing & Investment Group won an order for the construction and operation of a power plant in Chiles power generation market, which had been dominated by leading global companies, the rst time a Korean company had done so, thereby successfully opening a new market. Such achievements are the result of concerted eorts made by our people at Samsung C&T to deliver the best value to our customers and society. With the impact of corporate activities on stakeholders and society gradually expanding, the values a company should pursue are no longer conned merely to nancial ones. Now, a company should be able to deliver positive value not only to its diverse stakeholders, including its employees, partner companies, customers, and local communities, but also to society as a whole. Samsung C&T is engaged in an extensive range of CSR initiatives to become a company trusted by its stakeholders and society, as well as to create value for the company. Our key social responsibility activities include ecient use of resources and energy based on our global-standard environmental management system; enhancement of the support system for shared growth with our partner companies; and social contribution activities tailored to the needs of local sites and over- seas locations. In particular, as ethical management and safety management are matters that receive immense attention and high demand from society, including our stakeholders, we at Samsung C&T recognize their importance and make continuous investment and eorts in actively implementing them in every activity we are involved in. Our valued stakeholders, We hope that you will maintain your support for Samsung C&T, while keeping a close eye on the various activities we are engaged in to create not only the companys value, but also sustainable values for society in general. Thank you. May 2014 Samsung C&T Corporation President and CEO Chi-Hun Choi CEO Message Global Samsung C&T Engineering & Construction Group Goal Vision Core Value Proftable Growth Safety Employees Shareholders Partners Communities Integrity Appreciation Customers STAKEHOLDERS 8 Samsung C&T Corporation 9 Overview Sustainable Business Our Key Sustainability Priorities Appendix The Engineering & Construction Group is engaged in a broad portfolio of businesses including building, civil infrastructure, plants, and housing and development. Our skilled manpower and tech- nological prowess, as demonstrated by numerous landmark projects in each business eld, have allowed us to achieve competitiveness on the global stage. We will continue to expand our services across the value chain to include full EPC services (Engineering, Procurement and Construction), and independent power plant (IPP) and public private partnership (PPP) projects, ensuring that we will be able to continuously and preemptively deliver the value customers desire as a global top-tier company. Building Samsung C&T has been acclaimed for its cutting-edge technology, constructing some of the worlds tallest and most intelligent high-rise buildings, including the Burj Khalifa in the United Arab Emirates, and one of the Petronas Towers in Malaysia. Moreover, we have successfully constructed high-tech production facilities (semiconductor, LCD, and biotech facilities) and we are expanding our business scope to cover other sectors such as healthcare and aviation. Thanks to our accumulated technology and expertise, in 2013 we successfully won orders for the Tanjong Pagar building project in Singa- pore and the New Ulaanbaatar International Airport project in Mongolia. Civil Infrastructure Samsung C&T has developed global top-tier technologies in bridge construction, as indicated by its successful completion of the Incheon Grand Bridge, a cable-stayed bridge with the worlds fth- longest span. In recognition of our capabilities, we have been actively engaged in global projects, including the High Speed Rail C280 project in Taiwan, the Jurong Island reclamation in Singapore, the Delhi Metro in India, and the Al Salam Underpass construction project in the United Arab Emir- ates. We are also combining our existing strengths in subway, railway, bridge, tunnel, and harbor con- struction toward becoming a leader in mining infrastructure. In 2013, we won contracts for global civil infrastructure projects that include the Riyadh Metro project in Saudi Arabia, the Doha Metro project in Qatar, and the Roy Hill project in Australia, consolidating our position as a leading civil infrastructure contractor. Plant Samsung C&T has proven it has top-tier technologies by undertaking such projects as the Qurayyah Independent Power plant project in Saudi Arabia, a nuclear power plant project in the United Arab Emirates that is the world's largest Combined Cycle Power Plant (CCPP), and an LNG terminal project in Singapore. In addition, we have made strong progress toward becoming a value creator by ex- panding our business scope to cover operation and maintenance (O&M) services, going beyond our role as an engineering, procurement and construction (EPC) player. In 2013, we consecutively won new contracts including the Rabigh II Independent Power Project in Saudi Arabia, an LPG terminal expansion project in Thailand, and a phosphate plant in Morocco. Housing Samsung C&T was the rst company in Korea to introduce the brand concept into apartment construction with its launch of the Raemian brand apartments. The company is also taking the lead in enhancing housing culture by providing new products and exceptional customer services. From residential to community and commercial facilities, we are evolving into a leader in providing mixed-use residential and commercial complexes. We are proud to have received the rst prize in the National Customer Satisfaction Index (NCSI) apartment category for 16 consecutive years, and constantly strive to realize homes where love among family members is conveyed, and where nature and humans coexist harmoniously, as well as to provide a more comfortable and convenient living environment with our cutting-edge technology. Major Businesses Vision Management Goal 2020 Management Direction Enhancement of Four Core Capabilities Strengthen integrated global risk management system Expand business capabilities through efcient operation of management resources Secure and nurture core talents Enhance execution of global business strategies Global Top 10 Trading Company 3 rd in chemicals, 5 th in steel, 10 th in coal and copper Earnings Return on Equity (ROE) KRW 700 billion 20% Ensure competitiveness in trading through selection and focus by 2015 Pursue stable growth based on core capabilities by 2020 Global Samsung C&T Trading & Investment Group Samsung C&T Corporation 10 11 Overview Sustainable Business Our Key Sustainability Priorities Appendix The Trading & Investment Group is engaged in a wide range of projects, focusing not only on the traditional trading business, but also on organizing businesses that comprehensively integrate our key competitive capabilities, such as a global network, market intelligence, marketing, and nancing capabilities. We intend to create global value by strengthening dierentiated competitiveness in trading and organizing. To this end, we strive to eectively execute our global business strategies by exploring new markets and strengthening our global network, while expanding our business capabilities by eciently operating management resources. We also aim to secure and foster core talent who will lead our businesses, thereby continuously reinforcing our business expertise. Trading _ Chemicals and Industrial Materials With the goal of joining the ranks of leading global companies specializing in chemicals and materi- als, Samsung C&T oers a wide range of trading and business solutions in chemicals and industrial materials by fully leveraging our expertise and a global network accumulated over the past three decades. Trading _ Steel Pursuing a vision of becoming a global steel trader, Samsung C&T exports, imports and engages in intermediary trade of steel products around the world. We operate overseas coil centers in several countries, including China and Malaysia, as well as overseas precision stainless steel plants in Roma- nia and Japan. Trading _ Energy and Minerals Samsung C&T is engaged in the trading of minerals such as coal, copper and rare metals. We have also secured coal and copper mines in Russia and Chile, while operating oshore oil and gas produc- tion elds in the Gulf of Mexico and Texas in the United States. Trading _ Living Industrial Samsung C&T globally sources and trades various industrial materials such as textiles and wood pel- lets, as well as mobile accessories. We also operate a palm plantation in Indonesia. Organizing As a global project organizer, Samsung C&T is involved in various projects with global partners around the world in the eld of plants and machinery, including power generation, plant, ship- building and infrastructure projects, as well as in the green energy sector, such as wind/solar power generation and sales of solar components and materials. In 2013, the second phase of the Ontario solar and wind power generation cluster project was successfully launched in Canada. In the same year, the company won an order for a gas combined power plant project in Chile, securing a solid springboard for advancement into Latin America. Major Businesses Samsung C&T Corporation 12 Board of Directors The Board of Directors (BOD) of Samsung C&T makes decisions concerning not only major manage- ment issues, but also matters related to corporate social responsibility, including ethical manage- ment and corporate governance. The BOD consists of three internal and four external directors. The CEO serves concurrently as the Chairman of the Board, and external directors are nominated by the External Director Recommenda- tion Committee. Committees under the BOD Samsung C&T has set up three committees under its BOD the Management Committee, Audit Com- mittee and Outside Director Recommendation Committee. The Management Committee consists of in- ternal directors selected by the BOD and deliberates on matters mandated by the BOD and other major management issues submitted for consideration by the Management Committee. The Audit Committee consists of only external directors to ensure its independence. It carries out various activities, including conducting audits on directors job performance, investigating subsidiaries, and conducting audits on or investigating other major business management issues of the company. It also oversees company-wide sustainability management activities. The results of activities conducted by the Sustainability Manage- ment Committee, consisting of key executives of the company, are also reported through the Audit Committee. Members of the Outside Director Rec- ommendation Committee appoint external directors who can contribute to creating value for the compa- ny by evaluating the expertise and ethical standards of outside director candidates. The Outside Director Recommendation Committee consists of one inter- nal and two external directors elected by the BOD, with external directors making up the majority of the committee. Board of Directors Profle Name Company and Position Remarks Internal Direc- tors Chi-Hun Choi President and CEO, Head of Engineering & Construction Group Samsung C&T Corporation Chairman of the Board, Chairman of Executive Committee Shin Kim President and CEO of Trading & Investment Group, Samsung C&T Corporation Chairman of Outside Director Recommendation Committee, Member of Executive Committee Young-Jo Sang Head of Management Support Division (T&I Group) and Manage- ment Planning Division, Samsung C&T Corporation Member of Executive Committee External Direc- tors Chong-Ook Rhee Professor of Economics, Seoul Womens University Chairman of Audit Committee Hyun-Soo Lee Professor, Architecture & Architectural Engineering, Seoul National University Member of Outside Director Recommendation Committee Kyu-Jae Jeong Chief Editorial Writer, The Korea Economic Daily Member of Audit Committee, Member of Outside Director Recommendation Committee Chang-Hyun Yun President, Korea Institute of Finance Member of Audit Committee * As of the end of January, 2014 Corporate Governance Board of Directors Organization of the BOD and Its Committees Management Committee Audit Committee Sustainability Management Committee Outside Director Recom- mendation Committee 13 Overview Sustainable Business Our Key Sustainability Priorities Appendix Major Activities of the BOD and the Audit Committee Major activities of the BOD in 2013 included approval of the companys participation in large-scale global projects, amendment of regulations on operation of the Board of Directors and the Manage- ment Committee, and review and approval of the 2013 business management plan. In 2013, the Audit Committee was engaged in the following activities: evaluating the operation of the internal accounting management system; nalizing audit reports; receiving reports on the progress of nan- cial statement and accounting audits; receiving reports on meeting results of the Sustainability Man- agement Committee; and receiving reports on results of services conducted by external auditors. Compensation Compensation for the BOD members and the management are dierentiated according to the re- sults of regular business target reviews and performance evaluations. The limit of the compensation is approved by a resolution of the general shareholders meeting. In 2014, compliance will be added to the evaluation criteria. Sustainability Management Committee The Sustainability Management Committee, established in 2010, consists of key executives from the company. Under the leadership of the CFO, the committee coordinates and supports overall sustain- ability management activities including compliance, shared growth and publication of sustainability reports. The results of its meetings are reported to the Audit Committee on a regular basis. Major issues dealt with by the committee in 2013 include nalization of detailed plans such as risk management strategies and PR initiatives in response to the changing external environment, compliance support, and inspections, monitoring and training aimed to strengthen fair trade, as well as a report on the publication of the Samsung C&T Corporation Sustainability Report 2013. In 2014, we plan to carry out various activities with the goal of internalizing compliance and safety. Date Agenda BOD Meeting Attendance Jan. 28, 2013 Two agenda items, including approval of the 62nd business report and financial statements 6 / 7 Feb. 21, 2013 Four agenda items, including HQ guarantee of the Prai combined cycle power plant in Malaysia 6 / 7 Mar. 15, 2013 Four agenda items, including participation in the Rabigh 2 thermal power plant project in Saudi Arabia 7 / 7 Apr. 25, 2013 Two agenda items, including renewal of payment guarantee for the Gangdong mixed-use development project 7 / 7 Jul. 25, 2013 Four agenda items, including amendment of regulations on the operation of the Board of Directors/Management Committee 7 / 7 Oct. 17, 2013 Approval of financial statements for the first through third quarters in 2013 6 / 7 Dec.13, 2013 Five agenda items, including approval of transaction ceilings with affiliate persons for 2014 and four additional items 7 / 7 * For more information, please consult the DART website managed by the Financial Supervisory Service (http://dart.fss.or.kr), which is the repository of Koreas corporate filings. BOD Performance BOD Performance In 2013, a total of seven BOD meetings were convened. The attendance rates of the internal and external directors stood at 100% and 89%, respectively. Samsung C&T Corporation 14 Overview Sustainable Business Our Key Sustainability Priorities Appendix SUSTAINABLE BUSINESS 2 15 / Creating Sustainable Value / Integrated Risk Management / Stakeholder Engagement / Material Issues Samsung C&T Corporation 16 Creating Sustainable Value Value Chain Supplier Partnerships / Signing of Project Contracts Based on our brand value, global network, and capabilities to in- tegrate our various businesses, Samsung C&T provides early stage support for exploring potential projects, including financing and business planning/proposal services. Financing / Legal Afairs / Risk Management Samsung C&T manages any obstacles that may be encountered unexpectedly by customers in the project process including financ- ing, legal and other risks. Financing / Logistics / IT / Marketing Samsung C&T plays diverse roles in the trading process ranging from financing and logistics to marketing. EPC ( Engineering, Procurement, Construction) Samsung C&T mobilizes employees and suppliers with top-tier capabilities at each stage of a project, from engineer- ing and procurement through construction. Through ongoing technology R&D activities, we enhance not only our internal capabilities but also customer value. Materials &Product Purchasing / Processing In order to match suppliers with customers by taking into consideration imbalances in regional demand and supply and price differences, Samsung C&T estab- lishes partnerships by identifying regional characteris- tics and exploring promising items and customers. F/S (Feasibility Study), Financing Prior to project development, Samsung C&T conducts feasibility reviews from multiple perspectives. We also support the arranging of financing to facilitate smooth development of our projects. Engineering / Procurement / Construction S u p p l i e r
Customers Project Development Exploring and Securing Projects TRADING ORGANIZING 53% 32% Sales by Business Group Sales by Region E&C Group T&I Group Korea Asia, Middle East and Africa Europe Americas 60% 5% 3% 47% E&C Group T&I Group 17 Overview Sustainable Business Our Key Sustainability Priorities Appendix Samsung C&T is a unique company in that it concurrently operates in two industries with dierent characteristics engineering and con- struction, and trading and investment. The combination of the two dierent businesses has led to positive synergies that allow the company to implement strategies and policies that can respond to the external environment in an ecient and preemptive manner throughout the entire value chain. Such eorts have ultimately led to the creation of business models that can contribute towards boosting the value of the company. O&M (Operation & Maintenance) Going beyond the traditional business areas of construction companies, Samsung C&T offers total solutions across the entire value chain by providing O&M services to customers on an ongoing basis after the completion of projects. Project Management / Project Completion Based on its accumulated project operation capabilities, Samsung C&T scrutinizes its successfully completed projects to ensure they become internal assets, which contributes to its project management capabili- ties. Samsung C&T also strives to maintain strong networks with its customers that can lead to future opportunities. Product Sales / Customer Use Samsung C&Ts trading sector not only handles obstacles caused by imbalances between suppliers and customers up until the final stages of the value chain involving product sales and customer use, but also fully fulfills a role as a main player at each stage of the value chain. Engineering / Procurement / Construction Operation / Maintenance Project Management / Project Completion Product Sales / Use by Customers Financing / Logistics / IT / Marketing Financing / Legal Afairs / Risk Management 21,545.5 25,325.9 28,433.4 Sales Unit : KRW 1 bil 2011 2012 2013 Samsung C&T Corporation 18
Samsung C&Ts Engineering & Construc- tion Group won a US$1.214 billion contract for the Rabigh II independent power plant project tendered by the Saudi Electricity Company (SEC). The project will deliver a 2,100MW combined-cycle gas-fired power plant to Rabigh, 150km north of Jeddah, the second-largest city in Saudi Arabia. The Engineering & Construction Group will not only provide engineering, procurement and construction (EPC) services, but also partici- pate in project planning and development through an equity investment and engage in operation and maintenance in the future, thereby securing diverse revenue models. Rabigh II Independent Power Plant Project in Saudi Arabia Riyadh Metro Project in Saudi Arabia Roy Hill Project in Australia Samsung C&Ts Engineering & Construction Group won a con- tract for the Package III portion (Lines 4, 5, and 6) of a massive subway network expansion in Riyadh, Saudi Arabia tendered by the Arriyadh Development Authority (ADA). This is a turnkey project in which the subway infrastructure and rail system are tendered in a single package. Construction of the lines is taking place concurrently. In congested downtown areas, we will apply advanced construction methods that enable rapid construction and establish detailed resource procurement plans in order to successfully carry out the project. Based on its extensive experi- ence in partnering with the worlds leading construction com- panies and winning large-scale projects, Samsung C&T expects to win additional business opportunities in the global railway infrastructure market in the future. Major Projects by Business Group in 2013 The Roy Hill project, tendered by Roy Hill Holdings, is an EPC project that will deliver both an iron ore processing plant and infrastructure, including a railway and a port. By winning this contract, Samsung C&T has established itself as a mining plant and infrastructure player, an area considered to be one of the new growth engines for the company. It also sees Samsung C&T make a successful entry into the construction market in developed countries and mega/complex projects market. The Engineering & Construction Group will successfully imple- ment the project by establishing project implementation strategies through thorough market analysis and by maintaining close cooperation with local construction companies. The Roy Hill project in Australia is a mega-project that delivers an iron ore processing plant with an annual processing capacity of 55 million tons, a 344km-long railway, a port and container yards with hourly processing capacity of 12,700 tons in four different locations. Therefore, it is extremely important to possess supporting technologies and real-time integrated management capabilities. Samsung C&T is effectively employing the technologies and capabilities it has ac- cumulated while successfully implementing diverse projects around the world. We are carrying out integrated manage- ment through daily meetings and real-time field monitoring. We are also managing social and environmental impacts, including the protection of local cultural heritage and other historical sites, and the protection of endangered animals and plants through habitat relocation. Meanwhile, we offer safety education to workers and visitors to enforce our top priority of Safety First. When selecting new partners, we consider their health and safety record as a major selection criterion. The employees involved in the Roy Hill project are doing their utmost to successfully complete the project, thereby securing new business opportunities for Samsung C&T as it joins the ranks of the top global mining EPC players. STAKEHOLDER'S INTERVIEW Australia Roy Hill Project Head Ofce, E&C Group _ Senior Vice President Suk Lee E&C Group 19 Overview Sustainable Business Our Key Sustainability Priorities Appendix Ontario Project in Canada Samsung C&Ts Trading and Investment Group signed the Green Energy Investment Agreement (GEIA) with the Gov- ernment of Ontario in 2010 to construct the worlds largest solar and wind power generation cluster with a capacity of 1,369MW. As of March 2014, the construction of the phase one solar and wind power plant is underway, with a capacity of 270MW completed in Chatham-Kent and a wind and so- lar power generation plant with a capacity of 250MW under construction in Haldimand. In addition, the construction of phase two, with a total capacity of 550MW, will commence in 2014, including construction of a wind power plant in Huron in March 2014. The Trading & Investment Group of Samsung C&T won an order for construction of the Kelar gas- combined power plant, with a capacity of 517MW, in Chile in November 2013. The project holds a great significance in that a Korean company was able to enter Chiles power generation market, which had been dominated by European companies. The groundbreaking ceremony for the proj- ect tendered by BHP Chile, a local subsidiary of BHP Billiton, was held in February 2014. The BHP Kelar power plant is scheduled for completion in 2016, supplying power to two copper mines operated by BHP for 15 years. Demand for expansion of power plants, including this project, is steadily rising as BHP continues to expand its mining projects in Chile. However, the expansion of coal-fired thermal plants in Chile is becoming difficult due to environmental problems. Thus, Samsung C&T anticipates additional business opportunities for gas-fired combined cycle power plants in the future. BHP Kelar Project in Chile Samsung C&Ts Trading & Investment Group is actively seeking independent power plant (IPP) projects as one of its growth businesses. We possess core capabilities for project organizing including investment, financing and partnering. The Manzanillo LNG terminal project and the Norte II 433MW combined cycle power plant project in Mexico are some of the projects that show our outstanding project organizing capabilities. Most notably, the 517MW BHP Kelar project holds a great significance in that we have pioneered the power generation market in Chile. Chilean citizens have very high standards for safety, health and environmental protection. Therefore, we plan to select local personnel in charge of safety, health, environment and local CSR activities to carry out top-notch sustainability management activities in accordance with strict standards set jointly with our clients. We will repay our clients' trust placed in us with our outstanding project execution capabilities, and timely completion of projects, thereby becoming a locally trusted power developer. Plant&Machinery Division,T&I Group _ Senior Vice President Ki-Jung Kim STAKEHOLDER'S INTERVIEW T&I Group Samsung C&T Corporation 20 Eective risk management is a core element driving the value creation of a company. Amid in- creasing uncertainties over the global economy, risk management should not only focus on de- fensive aspects, but also lead to the creation of new opportunities through preemptive measures. Samsung C&T's Engineering & Construction Group and Trading & Investment Group have estab- lished systems for identication of, responses to, and management of risks by sector and carry out activities to ensure these systems are rmly rooted in all of our operations across the globe. Risk Management System Samsung C&T Corporation conducts risk management through a process designed to identify assess respond tomonitor and report risks. We have established optimized risk managem ent systems by sector in consideration of the characteristics and dierences of the construction and trading businesses. The risk identication, control and monitoring results are ultimately reported to the Audit Committee under the BOD.
E&C Group With increased orders for overseas mega-projects, the importance of the risk man- agement capabilities of the Engineering & Construction Group is emphasized more than ever. We have classied the risks related to our construction projects into 43 core risk factors in ve areas (strategic, environmental, nancial, compliance, and op- erational) to preemptively manage elements that may undermine the companys value creation for customers and its growth. E&C Groups 43 Core Risks in Five Areas Possibility of losses by changes in external conditions, including business environment, competitors, customers, policies and regulations (uncontrollable areas) Characteristics by country, price fluctuations, clients, business petitions, external labor unions Environmental Risks M&As, new business strategies Risks associated with the possibility of failures in strategies adopted by the organization Strategic Risks Direct or indirect impacts by non-compliance with domestic and international regulations Fair trade, compliance Compliance Risks Losses resulting from errors, corruption, and inefficiency caused by problems associated with employees, processes and systems in the organization Operation of overseas bases, business management plans, IT security, cost information security, document security, facility security, manpower allocation, execution capabilities, partner companies capabilities, contract terms and conditions, contract administration, selection of partner companies, participation of subsidiaries in joint ventures, granting of credit, design errors, capabilities of facility design planners, ground obstacles, omission of site characteristic calculations, project delays, feasibility studies, bidding, project direct petitions, errors in specification application calculation standards, safety incidents, environ- mental incidents, natural disasters, material quality, construction quality Operational Risks Integrated Risk Management System Response Monitoring & Reporting Assessment System Risk Registry LAS EVM PJT Portal Organization Business Divisions Management Support Division
Response
Assessment Operation Limit management Issue management Inspection/Assessment Inspection Assessment Training Organization Business divisions/ Regional Headquarters Management Support Division System S-ERP ERMS I-ONE Patners-ONE LSS Preliminary Management Market conditions Business Model Customers Integrated Risk Management Identifcation E&C Group T&I Group Financing, foreign exchange transactions, changes in foreign ex- change rates and interest rates Financial Risks Possibility of financial losses resulting from changes in interest rates, stock prices, liquidity, credit ratings, etc. 21 Overview Sustainable Business Our Key Sustainability Priorities Appendix T&I Group For the Trading & Investment Group, a solid network with overseas customers is the key to its business operation. Therefore, we place paramount importance on the management of not only nancial risks, but also nonnancial risks, including the political and environmental characteristics of countries where our customers are located. Therefore, the Trading & Investment Group conducts company-wide management of a total of eight risk factors including risks associated with changes in the internal and external environments of customers. We have established detailed standards for each area to identify and respond to the risks concerned. Risk Management Enhancement Activities E&C Group With the expansion of its markets and products, the Engineering & Construction Group has introduced the Project Life Cycle (PLC) Management System to carry out preemptive risk management. We operate the Plan-Do-See-Feedback (PDSF) system in which quality projects are explored and developed through country surveys, risk surveys and company-wide collaboration in a phased manner from the project exploration stage. In addition, the company-wide support department and business divisions provide support for early Field setup through project MOB (Mobilization), while enhancing the eciency of sales activities through project screening at the marketing and proposal phase and resolving problems in advance through early detection of risks at the implementation phase by holding monthly PLC management committee meetings. Also, the Engineering & Construction Group provides online education courses and training courses tailored to the characteristics of business tasks aimed at raising employees awareness of risk management, thereby fostering independent risk management capabilities. T&I Group The Trading & Investment Group strives to strengthen its capabilities to build and manage an organizational culture where all the employees recognize the importance of risk management and take action based on our global risk management system. The group laid the groundwork for enhancing preemptive BM management and the check and balance function by establish- ing a new risk management system called the Enterprise Risk Management System (ERMS) following the adoption of the S-ERP in 2013. In addition, employees check on and improve risk management on their own through the My Risk Care Week program, which has been implemented since 2007. In particular, the group has reinforced safety and environmental management of operation sites with in- creased importance placed on safety and environmental management in recent years. Furthermore, Samsung C&T has established a taxation management system to eectively manage tax-related risks amid its global business expansion. T&I Groups Risk Factors in Eight Areas Risk of non-fulfillment of contracts or contingent liabilities caused by a downgrade of credit ratings due to the bank- ruptcy of customers and deterioration of financial conditions or other external factors such as rises in raw material prices Partner Risk of changes in the structural environment of the industry caused by changes in the life cycle and value chain of the industry, as well as changes in competitors and replacements; direct risks caused by poor management of customers, corporate and brand image, and local communities Industry Risk of failure to achieve business goals due to inappropriate business strategies, business structures, investment deci- sions, etc. Business Risks associated with fluctuations in market prices, including market products such as metal and petrochemicals, ex- change rates, and derivatives Market Risk of property damage and incidents caused by natural disasters such as earthquakes and tsunamis, explosions, fires and environmental pollution; risks caused by changes in the global environment such as financial crises and climate change Event Risks caused by noncompliance with laws and regulations (trade, taxation, accounting standards, etc.) and business regula- tions of countries affecting business, as well as noncompliance with internal regulations such as corruption and irregularities Compliance Direct risks caused by changes in the political environment (politics, policies, regulations, etc.) of the countries con- cerned, uncertainties over or changes in macroeconomic policies and economic conditions (inflation, economic reces- sion, etc.) and indirect risks caused by overall impacts on the business environment due to such changes Country Risks caused by inappropriate internal processes, manpower and systems involving sales, procurement, inventory, logis- tics, production, management and project operation or negligent management/ management failure Operation System Risk Registry LAS EVM PJT Portal Samsung C&T Corporation 22 Customer use Feasibility Study Financing Materials and product purchasing Processing Building Civil infrastruc- ture Plants Housing Chemical and Industrial materials Steel Energy and Minerals Living industrial Plants and Machinery Green energy Customer use Operation and Management Project management Samsung C&T classies major stakeholders into six groups shareholders and investors, employees, customers, local communities, business partners, and media and the government. Each stakeholder group has diverse interests and requirements, and we operate communication channels suitable for the points of contact by stakeholder groups. In addition, we carry out activities that can connect the value pursued by our stakeholders with our eorts to create value. V A L U E C H A IN S T A K E H O L D E R Supplier partnerships Signing of project contracts Customers Shareholders Investors Local communities Business Partners Employees Government Media Stakeholder Engagement P r o je c t d e v e lo p m e n t E x p lo ration of customers for promising item s Exp lo ra tio n a n d s e c u r in g o f p r o je c t s E n g i n e e r i n g
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23 Overview Sustainable Business Our Key Sustainability Priorities Appendix Areas of Interest The government manages the companys compliance with its legal and social responsibilities, while the media demands the companys transparent disclosure of information as a medium connecting stakeholders and the company. Samsung C&Ts Response Samsung C&T actively engages in government policies and complies with relevant regulations, while transparently disclosing information of interest for stakeholders through the media. Ethical management Supply chain Safety and health Safety and health of employees Areas of Interest Employees hope that they are offered a safe and pleasant working environ- ment. They place importance on the formation of an organizational culture that promotes both the organizations development and the cultivation of personal capabilities. Samsung C&Ts Response Coming from an organizational culture that consolidates and promotes solidarity among employees, Samsung C&T supports employees development of profes- sional capabilities. In addition, the company strives to create an environment where employees can focus on their work by guaranteeing safety at work sites and offering a wide range of welfare benefits. Supply chain Ethical management Areas of Interest Business partners major areas of interest include the establishment of a fair trad- ing relationship and partnerships. They also think highly of capability develop- ment through cooperation with the company. Samsung C&Ts Response Samsung C&T endeavors to establish fair and transparent transaction relation- ships with its business partners. The company realizes the value of shared growth by disseminating information and technology and supporting its business partners efforts for sustainable capability development. Local communities Environment Areas of Interest Local communities call for the companys improvement and management of the direct and indirect impact of its business activities on the economy and environ- ment of the local communities. Samsung C&Ts Response Samsung C&T maximizes the effects of social contributions and enhances the satisfaction of local communities and employees by carrying out environmental protection and social contribution activities tailored to the characteristics and needs of its operation sites in Korea and abroad and in local communities. Homepage Public hearing sessions Press releases Intranet Webzine Blogs CEO message Business partner portal - http://www.seccpartners.co.kr Various briefing sessions Business partner council Employees volunteer activities Partnership with NGOs Sustainable& value-oriented management Integrated risk management Areas of Interest Shareholders and investors invest their capital in companies with stable perfor- mance and think highly of sustainable growth.Additionally, due to the recent increase in receiving orders for mega-projects they also pay keen attention to the companys capabilities to execute mega-projects. Samsung C&Ts Response Samsung C&T pursues stable creation of profits, with its E&C Group focusing on selective orders and project implementation management and its T&I Group concentrating on invigorating trading business and continuously exploring organizing business opportunities. Furthermore, the company has established an integrated risk management system by sector, reinforcing its project implementa- tion capabilities. IR information disclosure Credit ratings Homepage Roadshows and conferences in Korea and abroad Sustainable& value-oriented management Eco-friendly construction and operation Areas of Interest Customers call for continuous communication concerning information and value related to the companys products and services. Samsung C&Ts Response Samsung C&T strives to provide top-quality products and services to customers by researching ways to improve the quality of its products and services at each stage of the value chain. In addition, the company operates diverse communication channels to reinforce customer trust. Homepage Customer centers Customer satisfaction surveys Government Employees Business Partners Local Communities Shareholders and Investors Customers Communication channel Samsung C&T Corporation 24 Samsung C&T performed a materiality test in order to identify issues of interest among our stake- holders, as well as other key issues that will be discussed in further detail in the Samsung C&T Cor- poration Sustainability Report 2014. Material issues were selected through a process of identica- tion, issue pools, prioritization, and validation and report in accordance with the GRI G4 Guidelines. Selection Process for Material Issues STEP 1. Identifcation Samsung C&T identied a total of 42 key issue pools by analyzing CSR-related international stan- dards, including the GRI Index and ISO 26000; media research; analysis of construction and trading business trends in Korea and overseas markets; and interviews with business divisions. STEP 2. Prioritization Samsung C&T prioritized issues by analyzing the degree of materiality perceived by external stake- holders and the company, respectively. In 2013, we divided issue prioritization into those of the Engineering & Construction Group and the Trading & Investment Group to reect the characteristics of the respective industries. The degree of materiality perceived by stakeholders was assessed by identifying external stakehold- ers perceptions and preferences toward the company in relation to the issues concerned and the impact of such issues on stakeholders activities and decision-making related to the company, as well as by analyzing surveys taken among external stakeholders, industry reports and media research on a weighted basis. The materiality perceived by Samsung C&T is designed to comprehensively under- stand the connection between the issues concerned and the companys short-term, mid-term and long-term strategy directions, as well as the companys impact on economic, environmental and social conditions related to the issues concerned. To this end, surveys of employees, interviews with employees, internal strategy and management document analysis and collection of opinions from the management were undertaken. Analysis for forming issue pools Analysis of global initiatives related to sustainability management, including the GRI G4 Guidelines (sustainability reporting guidelines) and ISO 26000 (international standards on social responsibility) International standards on sustainability management Analysis of domestic and international media reports on Samsung C&T Corpora- tion in 2013 Media Analysis of key sustainability management issues of global industry competitors Peer Group Analysis of interviews with Samsung C&T employees who are in charge of sustain- ability management Interviews with employees Prioritization Process Perceptions and preferences toward the company related to the issues concerned The companys impact on activities and decision-making related to the issues concerned External shareholders surveys Industry analysis Media research Materiality from the standpoint of Samsung C&T Corporation M a t e r i a l i t y
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Materiality Matrix High High Low Materiality from the standpoint of stakeholders Connection between issues and short-term, mid-term, and long-term strategy directions The companys impact on economic, environmental and social conditions related to the issues concerned Analysis of strategy and management documents Surveys of internal stakeholders Opinions of the management and employees Materiality from the standpoint of Samsung C&T Corporation Material Issues of E&C Group and T&I Group Material Issues 25 Overview Sustainable Business Our Key Sustainability Priorities Appendix STEP 3. Validation and Reporting Samsung C&T's major activities and accomplishments by material issues in 2013 were covered in this report by identifying the material issues of the Engineering & Construction Group and Trading & In- vestment Group through prioritization and by reecting the opinions of executives and employees of divisions in charge of publishing sustainability reports and material issues. The views of external stakeholders in the value chain, as well as those of internal stakeholders, were fully reected in the issue pool formation and prioritization process. Therefore, the scope of material issues to be reported includes the diverse stakeholders that exist in the value chain. Category Major Activities and Accomplishments Page Ethics and Compliance Establishment of compliance system 29 Compliance enhancement activities 30 - 31 Environment Environmental impact response 33 - 34 Climate change response and creation of new business opportunities 34 - 35 Special issue of the E&C Group : Eco-friendly construction and operation 36 - 39 Safety and Health Establishment of global integrated safety and health system 41 Activities to establish safety culture 42 - 43 Employees Family-friendly management 46 Innovation of organizational culture 46 - 47 Cultivation of employees 47 - 48 Special issue of the T&I Group - Cultivation of employees with business execution capabilities 48 - 49 Supply Chain Fair supply network management 51 - 52 Special issue of the E&C Group - Efforts for shared growth 52 - 53 Local Communities Social contribution activities in Korea and abroad 55 - 57 E&C Groups Material Issues T&I Groups Material Issues Aspects Material Issues and GRI G4 Aspects of the E&C Group and T&I Group Economy Economic performance Indirect economic impacts Procurement practices Environment Society Labor practices and quality jobs Employment Occupational safety and health Training and education Diversity and equal opportunities Society Support for partner companies New growth businesses Response to climate change Protection of biodiversity Establishment of safety culture Cultivation of global talents Employee diversity and equality Ethical management education Fair transaction process Local communities Anti-corruption Anti-competitive behavior Compliance Integrated risk management Global businesses New growth businesses Management innovation activities New growth businesses Cultivation of global talents Balance between work and life Employee diversity and equality Incidents and disaster prevention Innovation of organiza- tional culture Compliance with code of ethics Compliance with regula- tions related to ethical management Contributions to and investment in local communities Energy Biodiversity Emissions 3 OUR KEY SUSTAINABILITY PRIORITIES / Ethics and Compliance / Environment / Safety and Health / Employees / Supply Chain / Local Communities
Samsung C&T Corporation 26 Overview Sustainable Business Our Key Sustainability Priorities Appendix 27 Samsung C&T Corporation 28 ETHICS AND COMPLIANCE Samsung C&T continues to express its commitment to ethics and compliance. Based on the CEOs uncompromising dedication to ethics and compliance, our Company has built the compliance system into the business process to align the compliance system with the business goals, while encouraging all employees to practice compliance. 2013 KEY PERFORMANCE Number of employees who received compliance training 14,061 10,821 21,058 2011 2012 2013 Unit : persons 29 Overview Sustainable Business Our Key Sustainability Priorities Appendix External Environment Samsung C&Ts Approach Chief Compliance Ofcer T&I Group Fair Trade Anti-corruption Environment and Safety Information Security Prevention of Operational Misconduct Integrity E&C Group Fair Trade Anti-corruption Information Security Employment /Labor Subcontracting Safety/Environ- ment/Quality Compliance Risk Management Categories Chief Compliance Ofcer and Chief Legal Advisor, Corporate Management Division (E&C Group) _ Senior Vice President Sun-Myung Kang Since 2010, Samsung C&T has conducted a variety of compliance-related activities to make ethics and compliance a part of the corporate culture. Based on the CEOs firm belief that violating the laws, regulations, or the customs of any of the countries in which we do business will cause a devastating harm to our companys reputation and credibility, and ultimately undermine growth, the Compliance Team has prepared the Compliance Control Standards, Compliance Operation Regula- tions, and Compliance Code of Conduct. In addition, to ensure employees understand the Compliance Way which is the Right Way to do business, and the CEOs way to do business, the Compliance Team provides online and offline education programs to all of our employees. There are also campaigns, newsletters, and an internal broadcasting services, which will increase employees knowledge on ethics and compliance. To monitor bad behaviors and incentivize good behaviors, we have inspected the headquarters and construction sites, Depending on the findings, sanctions were imposed against vio- lators and awards were showered on those who have shown exceptional behaviors. During the mandatory self-directed compliance period (which takes place at least 4 times a year) employees in the business units are required to take initiatives in compliance activities. Our Company is committed to creating sustainable growth-through transparency and fairness, and by actions, not mere words. Ethics and compliance are the keys to creating sustainable growth. Ethics and compliance must be engrained in our culture. STAKEHOLDER'S INTERVIEW Stakeholders, including the government and NGOs, have shown a continuous interest in the diverse impacts of the construction industry on local communities. The trading and investment business also centers on trading activities closely related to the national economy. Under the circumstances, diverse stakeholders are continuously paying keen attention to the business activities of Samsung C&T. Therefore, in order to ensure sustainable business operations, it is a prerequisite for the com- pany not only to comply with laws and regulations, but also to establish a solid ethical management system and have a positive impact on its internal and external stakeholders. Putting the companys ethics and compliance management into practice begins with the com- mitment of top executives, including the CEO. The top executives of both the Engineering & Con- struction Group and the Trading & Investment Group have continuously stressed the importance of ethics and compliance management. The E&C Group and T&I Group have consolidated their com- mitment to ethics and compliance management under the respective goals of contributing to the companys sustainable management by establishing a culture of global compliance and prevent- ing incidents and protecting the companys reputation through compliance. Based on this strong commitment to ethics and compliance management, Samsung C&T has built a company-wide com- pliance system that includes not only its employees but also its partner companies.
Establishment of Compliance System Samsung C&T operates departments dedicated to compliance risks to ensure its compliance with laws and regulations in various elds related to its business activities. The departments inspect the compliance status of the E&C Group and T&I Group regarding domestic and international regula- tions related to sustainability management such as fair trade and environmental and safety issues, as well as the companys internal regulations. They also oer education and training to strengthen employees mindset towards compliance. In addition, the e-Cyber Audit Team, a channel where employees and external stakeholders can report matters on compliance anonymously, has been established on the Samsung C&T website. When reports are received, dedicated and related depart- ments promptly handle them and take appropriate actions. Major Activities in 2013 Samsung C&T Corporation 30 E&C Groups Compliance Training System Common Courses Information Security, Anti-corruption, Employment and Labor Advanced Courses Track1 Subcontracting, Safety, Environment, Quality For employees engaged in construction-related work in the four business divisions Track2 Cartels, Unfair Support, Misleading Advertising For employees engaged in such job groups as marketing, sales, quota- tion, design For All Employees E&C Groups Inspection Categories by Compliance Risk Compliance Risk Inspection Categories Object of Inspection Sites in Korea Overseas Sites Overseas Subsidiaries Key Areas Fair Trade Cartels - - Unfair Assistance - - - Misleading Advertisements - - - Anti- Corruption Bribery - - Agent - - - Information Security Personal Information Protection Unfair Competition Prevention Employment and Labor Unlawful Employment - - Subcontracting Subcontracting - - Safety/Environ- ment/Quality Safety/Environment/ Quality Q-HSE Key Inspection Categories T&I Groups Inspection Categories by Compliance Risk Compliance Risk Inspection Categories Korea Overseas Subsidiaries/Offices Fair Trade Subcontracting - Environment and Safety On-Site/Facility Safety Information Security Inspection of Status of S/W Use - Prevention of Operational Misconduct Inspection on Compliance with Operation Regula- tions/ Processes Integrity Inspection on Compliance with Regulations/ Interna- tional Regulations Compliance Reinforcement Activities E&C Group The Engineering & Construction Group has a Compliance Team as a working-level organization responsible for implementing compliance. The group operates the Com- pliance Committee, which is presided over by the CEO and deliberates and makes decisions on key matters on compliance control, and the Compliance Steering Com- mittee (CSC), which is headed by the Head of Corporate Management Division and discusses de- tailed compliance activities. In addition, compliance managers are appointed by team and on-site unit to ensure that voluntary compliance activities at work sites take root through self-inspection and self-training activities. The group oers online training for all employees and oine training tailored to positions and job duties on an ongoing basis. The online training, oered in Korean, is divided into common courses (information protection, corruption prevention, employment and labor) designed for all employees, and advanced courses oering specialized training depending on the work characteristics of employees. The in-depth courses have a two-track system consisting of construction (subcontracting, safety/environment/quality) and sales (cartels, unfair support and misleading advertisements). The group also oers separate online training programs in English and Chinese for foreign employees. Furthermore, the group conducts compliance self-diagnosis among its employees every year, while establishing an around-the-clock monitoring system involving a competitor contact system where employees are required to receive prior approval and produce follow-up reports when they contact competitor companies; the issuance of warning e-mails to those who send e-mails using prohibited words related to compliance in key areas; and the intro- duction of an e-mail ltering system that automatically blocks outgoing e-mails. In 2013, the group expanded on-site compliance inspections, particularly for overseas projects and subsidiaries. It conducted an inspection of compliance risk categories including information protec- tion and the Labor Act at 24 eld sites in Korea, eight overseas eld sites and an overseas subsidiary, while inspecting key areas in 25 departments in the headquarters, including the marketing depart- ment. The E&C Group performed voluntary on-site inspections related to subcontracting at all of its eld sites in Korea and conducted on-site inspections in 21 locations. It also conducted voluntary inspections concerning safety, the environment and quality on 2,358 occasions and on-site inspec- tions on 2,408 occasions at home and abroad. During the I Compliance Week event, which was held six times, a variety of programs were featured to make compliance part of daily life, includ- ing a Compliance Academy attended by compliance managers from dierent business divisions; a Compliance Lunch Concert, designed to emphasize the meaning of compliance while listening to classical music; and a compliance slogan contest. 31 Overview Sustainable Business Our Key Sustainability Priorities Appendix T&I Group The Trading & Investment Group operates the Compliance Committee, a supreme decision-making body on compliance led by the CEO and consisting of top domestic and overseas executives, and the Compliance Aairs Committee, consisting of com- pliance ocers and compliance managers designated by business divisions and sup- porting divisions under the leadership of the Compliance Oce. The Compliance Aairs Committee is a body aimed at promoting independent operation of the group's compliance programs and discusses details on the operation of compliance programs, cooperates in activities and devises plans. The group operates an ombudsman system to monitor the compliance status of business di- visions and promptly responds to compliance-related inquiries or complaints led by employees. The ombudsmen of each business division share their respective business divisions compliance ac- tivity results and hold meetings to set future directions, striving to strengthen the compliance mind- set of employees. In 2013, the group implemented compliance training under the leadership of the Compliance Of- ce for all of its employees in Korea and abroad, thereby enhancing their understanding of compli- ance and reinforcing their commitment to compliance. Furthermore, in order to reduce the risk of violating regulations related to the groups diverse business activities, group has produced and distributed a Guide to Compliance with Subcontract Regulations, thereby enhancing employees understanding of Korean subcontract regulations, while helping employees determine whether they might have violated Korean subcontract regulations on their own through the internal contract review system. In addition, it provided support for environmental and safety inspections led by the Human Resources Division conducting inspections based on checklists during on-site inspections of chemical tank terminals and tank lorry companies. The group also obligates all employees to sign compliance-related pledges, including a compliance and ethics pledge and an information security pledge, thereby inducing the establishment of a cul- ture of compliance and enhancing employees commitment to compliance. In addition, the group encouraged employees to participate in such activities as a compliance quiz contest, while sending newsletters on the monitoring of related regulations for reference. In recent years, CEOs and top executives of the Engineering & Construction Group and the Trading & Investment Group have continuously declared their unwavering commitment to putting compli- ance into practice at home and abroad. In particular, they have emphasized their eorts to establish a strong organizational culture of compliance led by top executives and implemented by business divisions with strong determination. To this end, Samsung C&T plans and implements education programs through various channels, including online and oine education programs with the goal of achieving a compliance education completion rate of 100% among all the employees of the E&C Group and T&I Group. The company will also carry out activities to further substantiate inspection, evaluation and compensation. The two groups also plan to use compliance as one of the factors in evaluating top executives and award prizes to employees and operation sites that show outstanding performance. E&C Group The E&C Group will operate an exclusive organization to inspect compliance status and strengthen its support for activities carried out by independent compliance op- eration organizations formed by business divisions. The group will reinforce penalties for violations of compliance in connection with the personnel management system, while awarding prizes to compliance managers and sites with outstanding performance to raise employees awareness of the importance of compliance and their commitment to complying with the laws and regulations. T&I Group The T&I Group will further encourage employees to carry out compliance activities by renewing its compliance portal, while striving to put compliance management into practice by reinforcing compliance inspection through individual self monitoring. In addition, the T&I Group will provide more vigorous support for voluntary and inde- pendent compliance activities by facilitating communication among compliance organizations through increased Compliance Aairs Committee and ombudsman meetings and dispatch of new- style newsletters covering monitoring of related regulations. Future Goals T&I Groups Compliance Training System Common Courses Advanced Courses Advanced Training on Subcontract Transactions Offered for employees from business divisions on subcontract transactions Courses for Employees in Korea (Understanding Compliance) Courses for Employees Overseas (Fair Trade, Corruption Prevention) Advanced Training on Chemicals Offered for employees from the Chemicals Division and related support divisions Samsung C&T Corporation 32 ENVIRONMENT Samsung C&T has preemptively responded to the demands of its stakeholders and society for environmental management. The company continues to make multifaceted eforts to create value for the company and society as a whole through eco-friendly activities including reduction of greenhouse gases and pollutant emissions, advancement into green businesses, and protection of biodiversity. 2013 KEY PERFORMANCE GHG Emissions Intensity Energy Consumption Intensity Environmental Management Expenditures 0.154 0.193 2011 2012 2013 0.146 2.142 2.639 2011 2012 2013 2.310 16.1 21.2 2011 2012 2013 18.6 Unit : tCO2-eq/KRW 1 bil Unit : GJ/KRW 1 bil Unit : KRW 1 bil 33 Overview Sustainable Business Our Key Sustainability Priorities Appendix External Environment Samsung C&Ts Approach Major Activities in 2013 The World Economic Forum, a private international forum in which the worlds renowned busi- ness leaders, economists, journalists and politicians gather together to discuss and research the world economy, publishes its Global Risks report annually. In the latest report, water supply, climate change and sudden natural disasters were included among the top 10 risks. As such, the environ- mental crisis is not some distant problem of the future, but a situation facing our generation. In order to overcome such a crisis situation, governments are coming up with various environment-related regulations, including for greenhouse gas emissions and protection of fauna and ora, while NGOs and local communities are calling for companies to take more responsible actions regarding their business activities impact on the environment by adopting stricter criteria than before. Numerous companies are making eorts to prevent nancial or reputational risks that may be generated when they do not fulll their environmental responsibilities. Leading companies are using the crisis as an opportunity by pioneering new business markets. Samsung C&T endeavors to minimize environmental incidents and related issues through thorough management of environmental impacts associated with its business operations. The company also intends to identify and explore business opportunities generated in the process to create new markets. E&C Group At the Engineering & Construction Group, the Safety and Environment Team, under the company-wide Q-HSE Management Division, coordinates company-wide environmen- tal activities. Environment managers from business divisions are appointed to join the Q-HSE team to take care of environmental management activities on project sites. In addition, the group systematically manages environmental performance data, achievements and greenhouse gas emissions on domestic and overseas project sites through the Integrated Environ- mental Performance Management System, which is the rst of its kind in Koreas construction industry. T&I Group The Trading & Investment Group conducts regular environmental inspections on op- eration sites in Korea and abroad and oers environmental training to employees concerned. The group intends to transform the environmental business into one of the new growth engines that will lead the group in the future by making ongoing investments in the eco-friendly energy sector and winning orders for related projects. Environmental Impact E&C Group The Engineering & Construction Group makes concerted eorts to minimize negative environmental impacts that may be generated in the course of its entire business operation processes and to ensure that a better environment can be handed down to future generations. Starting from 2013, the group has given additional points to sup- pliers and partners with eco-friendly achievements and performances by conducting CSR evalua- tions when selecting outsourcing and procurement partners. In addition, it supported its suppliers eorts to acquire eco-friendly certications, build eco-friendly construction processes, and estab- lished greenhouse gas inventories through its initiative aimed to support the spread of environmen- tal management among suppliers that had been implemented from 2010 to 2013. The E&C Group has set up an integrated environmental management system that oversees both the headquarters and construction sites, thereby ensuring that construction activities with potential environmental impacts can be managed in an eco-friendly manner. The headquarters company-wide organization lays the foundation for on-site management through environmental planning, environmental orga- nization management, establishment and implementation of environmental training plans, environ- mental documentation standard management and revision, environmental incident management and the maintenance and management of the environmental management system (ISO14001). Moreover, Q-HSE teams from each business division provide rigorous on-site support by carrying out project site support, inspections, and evaluation, as well as providing support for on-site envi- ronmental training. Project sites strive to improve the site environment and prevent environmental incident under the leadership of project managers in accordance with the headquarters environ- mental policy, while environmental managers are appointed to deal with on-site environmental matters that include complaints management, drawing up of on-site environmental management Samsung C&T Corporation 34 plans, environmental training, waste management, and the installation and maintenance of environ- mental pollution prevention facilities. In order to promote mutual exchanges between on-site envi- ronmental organizations and the company-wide organization at the headquarters, quarterly region- al environmental council meetings are held in six areas featuring the participation of on-site environmental managers, while workshops attended by on-site environmental managers are held annually on a regular basis. Through systematic environmental management, as seen above, project sites in Korea and abroad have shown outstanding eco-friendly management performances. In the case of the Jamsil Veterans Association Tower project in Songpa-gu, Seoul, the group operated wheel washing machines and high-pressure sprinklers at all times using ground water available in projects to prevent the genera- tion of fugitive dust. In addition, it installed a stone and wood processing facility to prevent the scat- tering of stone powder and sawdust. It also endeavored to minimize the spread of dust by installing anemometers in construction sites to check the wind speed and suspend construction work if the average wind speed was 8m/sec or more for 10 minutes. In the meantime, in order to minimize possible complaints due to noise caused by construction work, the S3/S3-A project site in Hwaseong City, Gyeonggi Province, established comprehensive noise prevention countermeasures by introducing a noise simulation program at the early construc- tion phase. Additionally, the project site endeavored to minimize light diusion toward residential areas by measuring light luminance generated by construction equipment to minimize complaints due to light generation. T&I Group The Trading & Investment Group inspects hazardous chemicals management pro- cesses, while conducting regular environmental safety inspections in business sites with tanks storing chemicals. In September 2013, the CEO of the Trading & Invest- ment Group visited the Ulsan chemical tank terminal to inspect its compliance with environmental and safety regulations, demonstrating the top managements strong commitment to the prevention of environmental incidents. In November 2013, the Chemicals Division conducted an emergency response simulation assuming a tanker lorry capsizing accident and photosensitizer leakage. Climate Change Response and Creation of Opportunities Samsung C&T is striving to preemptively respond to climate change on a company-wide level, while creating new business opportunities in energy management, which is directly related to climate change. E&C Group The Engineering & Construction Group is making continuous eorts to achieve its goals by 2015 based on mid-to long-term greenhouse gas management strategies. The group has established internal GHG emissions calculation guidelines, while devel- oping guidelines on GHG emissions reduction during construction processes, con- tributing to taking the construction industrys GHG emissions management level to the next height. In addition, in order to respond to the GHG and Energy Target Management System that is sched- uled to be implemented from 2014, the group has established a management system that examines emissions generated not only by its headquarters and all the project sites, but also by other business sites, including precast concrete (PC) plants and the Construction Technology Center. In addition, the group has created new business opportunities through continuous research on building energy-saving technologies. The E&C Group signed an agreement on a project to improve the energy eciency of the Guardian Building in Detroit, USA in September 2013. The achievement was made possible thanks to the groups continuous investment in the development of the Korea Micro Energy Grid (K-MEG) technology and system. Based on its judgment that such technology may create great opportunities not only in the domestic market, but also in global markets, Sam- sung C&T Corporation is pushing ahead with 10 global research demonstration projects in collabo- ration with 60 institutions in Korea and abroad. In collaboration with VTT, a state-funded research institute in Finland, the E&C Group has been separately implementing a pilot project aimed at reducing energy use in the VTT research wing and Aalto University campus buildings by up to 15% since 2012. 35 Overview Sustainable Business Our Key Sustainability Priorities Appendix Future Goals On-site Environmental Data Collection Targets (relative to sales) 2014 2015 2016 70% 90% 100% Solar Power Cluster in Ontario, Canada Wind Power Cluster in Ontario, Canada Department of Materials Chemistry & Engineering, Konkuk University_ Professor Tak Hur STAKEHOLDER'S INTERVIEW T&I Group The Trading & Investment Group is making investments in eco-friendly energy sourc- es and exploring business opportunities in the area on a continuous basis. The group cultivates internal capabilities for wind and photovoltaic power generation organiz- ing projects, which are eco-friendly energy sources, while vigorously pushing ahead with such businesses as photovoltaic component material trading. As part of the Ontario wind and solar power generation cluster project, the group is building 270MW and 250MW wind and solar power generation plants in Chatham-Kent and Haldimand, Canada, re- spectively. It is also actively engaged in eco-friendly energy power generation organizing projects in North America and Europe. E&C Group The Engineering & Construction Group will continue to carry out a wide range of ac- tivities and improve its systems to reduce the environmental impact of its business activities and create business opportunities. In consideration of the gradual increase in its share of overseas projects, the group plans to focus on environmental manage- ment of overseas project. It will operate an overseas base council by designating environmental managers in major overseas bases, while establishing a system that collects and manages the envi- ronmental data of all projects, including overseas projects, from a long-term perspective in a phased manner. In response to the introduction of the GHG and Energy Target Management System in the construction industry in 2014, the group will improve its integrated GHG management system, as well as implement an internal emissions trading scheme and campaigns aimed at reducing green- house gas emissions. T&I Group The Trading & Investment Group plans to build a foundation for environmental man- agement by nurturing a professional workforce in the environmental sector, while establishing long-term goals to evolve into a global leader in the eld through con- tinuous investments in the eco-friendly energy sector. Samsung C&T founded as the parent company of Samsung Group, has the responsibility to lead the groups image and should serve as an industry role model befitting the name Samsung. As the Engineering & Construction Group aims to be- come the worlds top-tier construction company, it should be able to deliver not only financial performances, but also con- struct world-class landmark buildings. To this end, environmental considerations are essential. In particular, the construction industry has unique characteristics, such as an extremely long usage period of final products, compared to other industries and has a big impact not only on users, but also on the surrounding environment, and thus environmental issues should be taken into account from the design phase. The company possesses a leading management system compared to other competitors in Korea, as evidenced by its ability to carry out environmental issues through close collaboration between environmental managers at project sites and the environmental organization at the headquarters. I am impressed by the companys on-site environmental management activities tailored to the characteristics of projects and locations. In order to create a future as designed by the company, Samsung C&T should become a company desired by the future. I hope that the company will continue to lead the industry not only in terms of sales, but also in terms of environmental aspects. I also wish that the company will achieve shared growth with its stakeholders through continuous communication. Samsung C&T's eorts to conduct systematic management and develop technology on an ongoing basis to respond to climate change earned external recognition in 2013, including its selection as a Sector Leader in the Carbon Disclosure Project for three consecutive years, and joining the Carbon Management Global Leaders Club for two consecutive years. Samsung C&T Corporation 36 Saudi Arabia Singapore Mongolia Korea The Andong Imha Dam Transition Canal project site has created a separate habitat for otters to minimize the reduction of activity range of otters in the vicin- ity of the construction site during the construction period. In addition, in order to preserve fish, which are a key prey species for otters, as well as conserve the aquatic environment, it strictly enforces soil ero- sion reduction measures to ensure that soil is not dis- charged into streams during the construction stage. Singapores Tanjong Pagar project site requires sys- tematic effluent management due to its location sit- uated in the vicinity of crowded office buildings and subway stations, and a year-round rainy climate. The site has established an internal erosion control mea- sure system in which water is recycled by channels of use and released after a final purification process. Moreover, the site has controlled ground water con- tamination caused by residues through a 24-hour monitoring system, thereby preventing civil com- plaints and reducing cost by saving water resources. The ARBHQ site in Saudi Arabia is faced with such prob- lems as excessive fugitive dust and water shortages due to its geographical features. In the case of water shortages, its local water supply method is dependent on seawater desalination plants that cover long distances, and its local water storage method using water trucks had many dis- advantages in terms of environmental aspects and water supply efficiency. In order to overcome the situation, the ARBHQ site has developed ground water from wadis, which refers to dry valleys that contain water only during times of heavy rain. The ground water generated from wa- dis is more eco-friendly compared to the old water supply method in Saudi Arabia and can reduce water consump- tion at the project site and resolve the risk of water short- ages through continuous water supply. The underground water is stored in water tanks to be used as domestic or construction water to eliminate fugitive dust after under- going a water purification process. SPECIAL ISSUE E&C Group Cleaning for safety shoes Using at Washing Bay Site Cleaning Sum Pit ECM Tank Water Circulation System Riyadh The Gulf Wadi Wadi Patch-Water Global Eco-friendly On-site Management Eco-friendly Construction and Operation 37 Overview Sustainable Business Our Key Sustainability Priorities Appendix Mongolia USA Austrailia The Engineering & Construction Group is engaged in construction projects across the globe. Each project site strives to minimize negative en- vironmental impacts and deliver eco-friendly value by taking into consideration the characteristics of surrounding environments and projects. Whats more, the group has provided low-cost, high-eciency buildings to its customers, thereby contributing to the creation of nancial value for customers through reductions in energy use and encouraging them to join the companys eorts to create eco-friendly value. The Austin project site in the United States has established internal water manage- ment plans and has come up with detailed checklists to minimize storm water pollution that may be caused by construction activities. It also strives to achieve its goal of Zero environmental incidents by designating staff in charge by construc- tion zones who conduct daily environmental management activities. Employees at the Shangri-La Hotel project site in Mon- golia carry out environmental campaign near the proj- ect site on a regular basis. All the employees at the site voluntarily clean up the vicinity of the project site, while engaging in social contribution activities for local com- munities, including road snow removal for pedestrians and motorists. The Roy Hill project site in Australia has conducted a preliminary on-site assessment to conserve habitats for fauna and flora in the vicinity of the site. It was revealed that the Northern Quoll (listed as endangered according to the IUCN and Australian standards), Mulgara (IUCN- Least Concern; Australia-Vulnerable), Bilby (IUCN-Near Threatened; Australia-Vulnerable), and Pilbara Olive Python (Australia-Vulnerable) were found to live in the area. The site hired a qualified zoologist to conduct a fauna survey four to six weeks prior to vegetation elimination and, based on the survey results, safely relocated the fauna habitat. Mulgaras were captured during non-breeding periods (except for the period between June and September) and were kept in a safe and dark environment at 25 degrees Celsius on the night of their capture after inserting microchips attached with radio transmitters on them. The next day, they were relocated to an alternative habitat within three hours after sunrise. The alternative habitat is located less than five kilometers from the place of capture. The project site continuously monitors the locations and adaptation status of Mulgaras that have been relocated throughout the construc- tion period. Samsung C&T Corporation 38 Samsung C&T takes the lead in capturing new business opportunities and taking the constructions industrys environmental standards to the next level through the development of eco-friendly tech- nologies. Acquisition of Green Technology Certifcation The Construction Technology Research Institute, an R&D arm of Samsung C&T Corporations Engineering & Construction Group, mainly conducts research on eco-friendliness and energy eciency, including the development and evaluation of materials for a healthy environment, building energy diagnosis and en- ergy eciency technology development. In 2013, the research institute obtained the Ministry of Environ- ments Green Technology Certication for two of its new technologies. The certication is awarded by the ministry to technologies that minimize greenhouse gas and pollutant emissions by saving and eciently using energy and resources. Companies acquiring the certication receive an additional two points in the PQ (prequalication) credit rating for government-awarded projects implemented by the Public Procure- ment Service. The rst certied technology is one that is soil remediation technology optimized to purify heavy metals contamination using dispersant and magnetic separators. Compared to the existing soil- washing technology that adopts an acid-washing method for heavy metals regardless of the types of pol- lution, the new technology removes particulate heavy metals rst through dispersant/electro-magnetic separation and then washes the heavy metals with water or acid to minimize acid washing, thereby reduc- ing the use of resources and waste generation, as well as reducing facility and operation costs through the selective removal of particulate heavy metal matter. The second technology is an exterior insulation monolithic placement system technology using gang forms. The technology not only minimizes side ef- fects that may take place in high-rise exterior insulation construction projects, such as construction delays and rising costs, but also reduces costs by 40% compared to existing construction methods. Improvement of Indoor Air Quality and Use of Eco-friendly Materials Samsung C&T strives to protect the health of customers and increase the eco-friendly value of buildings by improving the indoor air quality of buildings and using eco-friendly materials. More specically, in an eort to prevent sick building syndrome and multiple chemical sensitiv- ity, which have attracted keen social attention in recent years, and to achieve healthy indoor air quality, the company measures and evaluates the concentration of hazardous chemicals in indoor air on an ongoing basis, while managing pollutants and ventilation status at construction sites. Furthermore, Samsung C&T uses selected materials that have undergone internal eco-friendly material screening processes, such as a toxic release inventory for buildings constructed by the company that includes Raemian apartments. Also, it has operated an internal eco-friendly mate- rial certication system since 2005 to ensure the systematic management of eco-friendly ma- terials used for constructing buildings and secure credibility for their performance. Through the internal certication system, the company applies internal standards that are stricter and more systematic than external certications, such as HB Mark, Environment Mark, and KS Standards, thereby upgrading indoor air quality levels and the construction quality of Samsung C&T buildings. Capturing New Opportunities through the Development of Eco-friendly Technologies Eco-friendly Construction and Operation Indoor Air Quality and Material Chemical Release Analysis Equipment at the Construction Technology Institute in Giheung SPECIAL ISSUE E&C Group 39 Overview Sustainable Business Our Key Sustainability Priorities Appendix Biodiversity Protection Eco-friendly Construction and Operation Samsung C&T conducts environmental impact assessments on areas around construction sites and actively incorporates ecosystem pres- ervation designs to protect biodiversity during the course of construction. The company also investigates each site for any protected areas or endangered animals and plants around the site. Based on the results, it modies the designs and construction methods to protect the ecosystem around the site. Gyeonggi Province Incheon Gangwon Province Jeolla Province Gyeongsang Province Busan Jeju Island Class 1 endangered species of wild fauna and fora Swinhoes Egret, Otter Black-faced spoonbill Otter, goral Cypripedium japonicum Otter, Gobiobotia nakdongensis Class 2 endangered species of wild fauna and fora Eurasian oyster- catcher, Eurasian eagle owl, Korean golden frog, Polygonatum stenophyllum max, Gobiobotia macrocephala, Chinese Spar- rowhawk Eurasian oyster-catcher, Saunderss Gull Korean ratsnake, Leopard cat, Water hemlock, Aconitum koreanum R.Raymund, As- ter altaicus var. uchiyamae Kitam, Iris ruthenica Ker Gawl Kestrel Goshawk, Chi- nese Sparrow- hawk, Long-billed plover, Leopard cat, Black-headed stork, Far Eastern brook lamprey, Whooper swan, Eurasian hobby, Little red dragon fly Euryale ferox Soft coral habitat, Antipathes lata, Orange cup Coral, Dendro- nephthya suensoni, Dendronephthya Put- teri, Dendronephthya mollis, Dendronephthya castanea, Plexauroides reticulata, Plexauroide Complexa, Euplexaura crassa,Verrucella stellata, Antipathes white coral Wild animals for which poaching is prohibited Kestrel, Eurasian buzzard Eurasian buzzard Kestrel Kestrel, Eurasian buzzard
Site East Hongcheon-Yangyang Expressway Section 7 Otters, a class 1 endangered species, were found in the vicinity of Nacheon Stream located near the East Hon- gcheon construction site. Samsung C&T Corporation created a habitat for otters in the lower part of the Naechon Stream Pier based on expert consultations and other case studies, including the otter ecological habitat in Jingyang Lake in Jinju. Sihwa Multi-Techno Valley Project Section 4 The nests of little terns and Eurasian oystercatchers were found near a construction site, while natural monu- ment eagle-owls were also found out- side of a burrow pit. Subsequently, the company minimized human access to the locations to help the animals safely preserve their species. Wonju-Gangneung High-Speed Railway Project Section 10 Samsung C&T installed escape routes and water retention tanks to pre- vent small animals such as frogs and snakes from getting stuck and killed in gutters or drainage canals at the con- struction site. Tangjeong 2nd Industrial Complex Fish species that were isolated by fail- ing to be released into streams due to the creation of a detention basin at the construction site were at risk of death following the change in living environment. Therefore, the company captured and released them into near- by streams. Jeju Naval Base Project Section 1 In order to protect colonies of soft coral, Natural Monument No.442, lo- cated near the construction site, Sam- sung C&T Corporation prevented sus- pended solids caused by construction work from spreading into the sea. To this end, the company installed fixed/ mobile silt protectors, as well as tremie pipes in the case of riprap drop. Gyeongsang Province Chungcheong Province Gyeonggi Province Gangwon Province Jeolla Province 12 species 12 species 8 species 15 species 2 species Jeju Island Class 1 Endangered Species of Wild Fauna and Flora 7 species Class 2 Endangered Species of Wild Fauna and Flora 33 species Wild Animals for Which Poaching Is Prohibited 2 species Distribution of Endangered Species under Protection SPECIAL ISSUE E&C Group Samsung C&T Corporation 40 SAFETY & HEALTH Based on its Safety First management policy, Samsung C&T has estab- lished and operated a world-class integrated safety and health manage- ment system. Through the management system, the company carries out safety inspection and management activities at key operation sites around the globe, including construction sites and chemical and steel business sites. Increase in Safety and Health Specialists 114 154 2011 2012 2013 129 No. of Overseas Employees Receiving Professional Safety Training (NEBOSH) 16 30 2011 2012 2013 42 2013 KEY PERFORMANCE Unit : persons Unit : persons 41 Overview Sustainable Business Our Key Sustainability Priorities Appendix Safety and health at operation sites can have a big impact not only on employees, but also on consum- ers. In the case of the construction industry in particular, building safety and health issues have signi- cantly aected the companys nancial value, including related damage compensation, let alone its external corporate image. Governments around the world are gradually reinforcing safety and health- related policies and regulations, while civic groups such as NGOs conduct their own safety and health inspections on the activities, products and services of companies and call for their improvement. The Engineering & Construction Group is implementing projects not only in Korea, but also in coun- tries with high regulatory standards on safety and health issues such as Australia, the United King- dom, and Singapore. The Trading & Investment Group also operates domestic and overseas business sites with high safety and health standards, including its chemicals and industrial materials business. Under the circumstances, Samsung C&Ts top management underscores its Safety First manage- ment policy more than ever and has established and implemented a global-standard integrated safety and health management system to turn such management policy into tangible results. The companys safety and health management will not only ensure the safety and health of its employ- ees, but also will go beyond incident prevention by taking into account its buildings and product users, thereby leading global standards. Establishment of the Global Integrated Safety and Health Management System In order to prevent danger and eliminate serious incidents in the course of construc- tion, the Engineering & Construction Group has established a safety and health man- agement system called the Samsung Occupational Health and Safety Management System (OHSMS). Based on the four cycles Plan Do Check Action (PDCA Cy- cle), the Samsung OHSMS systematically manages safety and health issues across the construction process. Along with the system, the company also operates incident prevention models to provide preemptive safety management. The incident prevention models include activities designed to pre- vent safety incidents from the fundamental operation stage, including the Safety Kick-O Meeting (S-KOM), a permit-to-work system in carrying out dangerous jobs, and a qualication acquisition system for responsible managers for dangerous construction work types. The Trading & Investment Group has established the Independent Safety and En- vironment Management System by Sites that checks on the current levels of basic requirements for on-site safety management, including systems, standards, training and inspection. More specically, the group has established a voluntary management system that enables high-risk sites such as steel coil centers, precision stainless plants and chemical tank terminals to independently carry out incident prevention activities by using a checklist consist- ing of 32 items in seven categories. Top management regularly participates in and manages their activity results, striving to spread a culture of safety management across the company. External Environment Samsung C&Ts Approach Major Activities in 2013 Samsung OHSMS (Occupational Health and Safety Management System) Plan Do Check Action Based on the CEOs unwavering philosophy and vision on safety, Samsung C&T has established a high-standard safety and health management system. In 2007, the company built a safety and health management system and acquired both KO- SHA18001 and OSHA18001 certifications. As a leader in the nations safety and health management system, The company should take the lead in upgrading the nations safety and health systems to meet global standards. To this end, there is a need for continuously upgrading risk assessment and securing on-site operability for efficient risk management. Most of all, it should formulate strategies to expand internal and external communication and establish a culture of safety. Internally, the PDCA cycle should be strictly in place where the CEOs philosophy and policies on safety and health are reflected in safety and health management strategies, which are in turn implemented at sites, producing tangible results. On the external front, the company should be able to transparently respond to disclosure of its safety management information that may directly affect customers and citizens. Ultimately, in order to operate and develop a top-tier safety and health management system, it is important to create a mature culture of safety in which standards and procedures are strictly observed and to win the trust of stakeholders concerning the companys transparent and responsible safety and health management. Korea Occupational Safety and Health Agency _ Director of Seoul HQ Chung-Ho Lee STAKEHOLDER'S INTERVIEW E&C Group T&I Group * The seven categories are : Establishment of Incidents Prevention infrastructure, Prevention Activities by Top Manage- ment and Managers, Preventive Training, Reward/Punishment, Internal Inspection for Incidents Prevention, Accident Report and Response, Incident Performance. Samsung C&T Corporation 42 Activities Geared Toward Establishing a Safety Culture E&C Group The Engineering & Construction Group is making continuous investments and is in- volved in diverse activities to ensure zero incidents and disasters at operation sites. The group, in particular, is expanding its investments in the improvement of facilities at sites and cultivation of workforce to eliminate industrial disasters. Since 2013, in an eort to improve the working environment for employees and workers at project sites, the group has made facility investments, including the purchase of advanced and large equipment, replace- ment of obsolete facilities, and improvement of safety and convenience facilities, while striving to expanding safety training for all employees, increasing the ratio of full-time safety managers and supplementing related personnel. Also, as the construction environment is undergoing rapid trans- formation, with buildings increasingly becoming larger and taller, large construction equipment such as tower cranes are being used more frequently and incident ratios are also on the rise. Under the circumstances, the group conducts preventive safety inspections on a regular basis through certied inspection institutions, while giving awards such as the Safety Champion prize to projects sites and workers that show outstanding performances. In 2013, the group invested a total of KRW 1.56 billion in the aforementioned safety activities and plans to increase the investment to KRW 12.6 billion by 2014. Furthermore, in a bid to reinforce employees awareness of safety and establish a culture of safety, the group in 2013 implemented the Safety Talk system in which employees watch safety or com- pliance-related videos or discuss their opinions on near-miss incidents during part unit or higher- level meetings. In order to encourage employees to access the issues in an easier and more familiar manner, the group has established a support system by using daily-life episodes, newspaper articles, magazines and media and utilizing data suitable for meeting venues and purposes. It is also en- gaged in other activities to promote a culture of safety such as operating a blog where employees can freely post safety and health-related videos, on-site experiences and exemplary case studies and exchange ideas. The group also operates a wide range of programs, including customized safety training in con- nection with career development programs by position and job duties; the OJT program, in which new engineers are required to experience safety-related tasks for two months when they join the company; and meetings by various groups such as on-site directors, construction team leaders, and safety managers to eliminate serious disasters. Moreover, the group has selected and managed dangerous work categories and priority manage- ment categories through disaster analysis over the past decade as part of its top-down safety and health management activities, while conducting systematic safety activities that include expanding audit personnel at the headquarters, performing regular and unannounced inspections on busi- ness divisions and project sites to induce the implementation of the Samsung OHSMS and incident prevention models, and expanding the inspection scope to overseas sites. In 2013, the E&C Group increased unannounced inspections at high-risk sites, conducting a total of 241 HQ-administered audits of sites, including overseas ones. Thanks to such eorts, the Engineering & Construction Group achieved such accomplishments as winning a safety award for achieving zero disasters at the Lusail City development site in Qatar on two occasions and reaching the 10 million man-hour no-incident milestone for its 483 construction site of the Marina Coastal Expressway in Singapore. Increased Investment in Ensuring Safety 2013 2014 (Projected) 1.56 12.6 times Winning a safety award twice for no disasters at the Lusail site in Qatar Unit : KRW 1 bil Safety and Health Training Performance in 2013 Category Courses No. of Trainees Training Cost Employees Twelve online/offline courses, including SCU safety training in connection with temporary structure and career devel- opment programs 1,478 KRW 110 million Seven courses, including construction safety experience and acquisition of hazardous work certifications 1,731 KRW 27 million Workers Basic safety and health training for the construction industry 42,238 KRW 1,309 million 2 million man-hours 10 Achieving the no-incident milestone at the MCE 483 site in Singapore 43 Overview Sustainable Business Our Key Sustainability Priorities Appendix Making Safe Behavior Part of Daily Life Introduction and Operation of STOP Dispatch of newsletters on a safe environment Distribution of safety rule cards Reinforcing Safety Inspections Top management conducts inspections for a safe environment through on-site visits Operation of internal patrols for a safe environment at sites HQ-administered regular inspections Five Key Strategic Directions T&I Group The Trading & Investment Group will continue to reinforce its safety and environment management system by selecting the following ve priority directions to create a safe workplace. T&I Group The Trading & Investment Group conducted regularly scheduled on-site safety in- spections in 11 tank lorry companies, including the Ulsan chemical storage tank, six chemical tank terminals (including ones in Ulsan and Busan), and overseas sites, in- cluding the Slovakia Coil Center. In order to ensure eective on-site inspections, the group drew up an environmental safety checklist based on safety regulations at home and abroad related to the businesses concerned, while building a process of systematically identifying areas of improvement after inspections. In 2013, the T&I Group produced a safety-related emergency re- sponse manual based on safety inspection results covering overseas sites and coil centers and shared it with the departments concerned, building a concrete prevention and response system. Future Goals E&C Group The Engineering & Construction Group has selected the following four directions for its safety and health policies for 2014: Establishment of a Safety First culture; ad- vancement of system operation mechanisms; Enhancement of safety leadership and Implementation capabilities; and Preemptive risk management, and it plans to rein- force its safety and health management. Implementation of safety activities led by all the top executives, including the CEO, and reflection of their safety performance in the top executive MBO Mandating all employees to take safety training Operation of a safety community Increase in safety performance ratio and linkage to the incentive system when conducting on-site evaluations Expansion of construction suspension rights over sites with poor safety management and resumption of construction after receiving approval from top executives Reinforcement of worker training, including setting up safety experience installations at all work sites Benchmarking safety standards of leading companies and conducting system innovation Analysis of incidents, including near-miss incidents and countermeasures Conducting a safety culture level diagnosis among employees and workers Development of a quantitative risk index by site and enhanced monitoring of hazardous work Expanded application of the Permit to Work system for key hazardous work to include overseas sites Conducting audits by risk grade and implementing differentiated inspections Establishment of a Safety First Culture Enhancement of Safety Leadership and Implementation Capabilities Advancement of the System Operation Mechanism Preemptive Risk Management Entities Subject to Safety Inspections Chemicals Tank Termi- nals (Ulsan, Busan, Yeosu, Pyeongtaek) Overseas Operation Sites 11companies 12sites 6terminals Chemicals Tank Lorry Companies Raising Safety Awareness Operation of the Safety and Environment Council presided over by the CEO Major meetings to offer emergency evacuation guidelines Reinforcement of safety and environment training Reinforcing Organization for a Safe Environment Operation of a committee on a safe environment Workshops attended by safe environment staff Reinforcement of capabilities of managers in charge of a safe environment LTIR (Global) 2013 2014 (Projected) 0.03 0.03 Loss Time Injury Rate Establishing a System for a Safe Environment Establishment and operation of safety management standards Introduction of the Permit-to- Work System at operation sites Establishment of discipline standards Awarding prizes to sites with outstanding safety performance Samsung C&T Corporation 44 EMPLOYEE Samsung C&T has a frm belief that the growth of employees leads to the sustainable growth of the company. It is building an advanced corporate culture where all employees, both at the Engineering & Con- struction Group and the Trading & Investment Group, can work freely to achieve their full potential. The company not only provides support for ensuring the physical and mental health of its employees, but also continues to invest in improving the quality of life for their families. 2013 KEY PERFORMANCE Employees 12,759 14,359 2011 2012 2013 16,558 Turnover Rate 0.7% 0.7% 2011 2012 2013 0.7% Unit : persons Unit : % 45 Overview Sustainable Business Our Key Sustainability Priorities Appendix Samsung C&Ts Approach External Environment The Engineering & Construction Group and Trading & Investment Group form relationships with stakeholders from dierent countries, including suppliers and customers located around the globe, and deliver tangible and intangible values to them. Therefore, the recruitment and cultivation of talents with global capabilities who can build solid relationships with stakeholders from all around the world and deliver the values they desire are an essential element for the sustainable growth of the company. In recent years, in order to attract and maintain competitive talents, numerous global companies have created a good working environment and have heavily invested in ensuring a life- work balance to help their employees proactively work for the company with a sense of loyalty. Samsung C&T endeavors to explore and cultivate talents with expertise and global perspectives. Both groups possess and operate training programs that can enhance an employees capabilities related to business characteristics to develop talents with a competitive edge on an ongoing basis. They also created a work environment and an organizational culture where all employees can exert their capabilities to the fullest through communication based on trust established through commu- nication between the organization and employees. In addition, in an eort to help employees pur- sue work and life in a stable and balanced manner, the company operates a wide range of welfare programs, including support for leisure life, medical and health services and education. Ideal Employees at Samsung C&T
Humanity and Morality
Humane and honest people with high ethical standards, who are willing to act out corporate ethics and the companys management philosophy, while comply- ing with regulations 01 02 Creativity and Challenging Spirit People with passion and imagination who create new businesses and lead change and innovation 03 Expertise and Global Perspectives People with expertise, know-how and understanding of various foreign cultures who desire to venture into the world 04 Cooperative Mindset and Comprehensive Understanding People who maximize business synergy through collaboration and are capable of increasing value along the value chain by merging various functions and the organizations capabilities T&I Group People who are filled with humanity and morality Warm-hearted people who have the courage to rectify wrong practices and put living with others harmoniously into action; people who abandon collective and individual selfishness and exert a true camaraderie 01 Open-hearted People who pioneer the future based on creativity and cooperation People who lead the change and accept and create the new, instilling vitality and originality to the organization and society Open Thinking 02 People with global perspectives and capabilities as open-minded global citizens People with an attitude of understanding their position from a multilateral and global standpoint based on clear goals and purposes; people with fundamentals and capabilities to survive in the era of unlimited, fierce competition 03 Open Action E&C Group Samsung C&T Corporation 46 Family-friendly Management Samsung C&T has established a family-friendly management system and oers a wide range of support programs to help its employees strengthen family bonds and enjoy an enriched lifestyle. The company supports employees eorts to eectively maintain a balance between work and fam- ily through various programs, including employees health care and support by life cycles; maternity support for employees and their spouses; support for employees child-rearing and education; ex- ible working hours; promotion of family relationships and support for leisure activities; encourage- ment of marriage; and support for family congratulations and condolences. To address the social issue of child rearing by dual-income families, the company set up two child care centers at its Seocho building in 2013, supporting the care of employees children under age 6. The company also provides education expense support, including school tuition fees for employees who have children attending middle school or higher educational institutions or children with dis- abilities. As a result of such family-friendly management activities, the company was selected as a certied family-friendly company by the Ministry of Gender Equality and Family and ranked No.1 in the indus- try in a survey on the Korea Great Work Place Index conducted by Korea Management Association Consulting. Innovation of Organizational Culture E&C Group The Engineering & Construction Group operates online/oine channels, including an employee representative council and an online bulletin board to create a healthy or- ganizational culture. When employees are faced with problems in the organization, the group works actively to address them. In addition, in an eort to make managers recognize the importance of organizational culture and create a healthy organizational culture, the group obligates department heads to create a self-diagnosis checklist once a week, while oering monthly organizational management training sessions to construction site directors. Major Activities in 2013 Category Details Support for Leisure Activities Support for corporate recreational facilities, fitness centers, and leports centers Support for water parks and internal club operations and operational expenses Support for Childbirth and Maternity Protection Childbirth celebration money, pregnancy celebration money, childbirth gifts Rest areas for pregnant employees, milk expression areas Rest areas for female employees Housing and Livelihood Stabilization Support Operation of an employee welfare fund Operation of a credit union (loans at low interest rates) Medical and Health Support Support for health check-up expenses, operation of an internal medical center Support for medical bills (support for medical insurance coverage that includes employees, their spouses and children) Educational Support Operation of various education support programs, including online education, external education, and external language courses Legal Employee Benefits Support for four social insurance programs Selective Benefits Awarding points worth KRW 600,000 (designated online shopping malls) Others Support for partial amounts paid for personal pension Employee leave, money, and wreathes on the occasions of family congratulations and condolences Employee Benefts Programs The Family-friendly Company Certificate 47 Overview Sustainable Business Our Key Sustainability Priorities Appendix Global Talent Cultivation at E&C Group Securing advanced technology and global competency. Academic training and MBA courses at various overseas educational institutions. 286 employees Regional Specialist. 127employees in 27countries In 2013, the group integrated and refurbished various internal online communication channels into CommZone (2.0) to create a sound forum for public opinions and facilitate unreserved vertical and horizontal communications. Through CommZone (2.0), employees at the E&C Group can have access to domestic and international news, and freely exchange their opinions through various sections, including Hot Issue, where employees can engage in discussions on company issues by posting replies; Talk! Talk! where they can exchange their ideas on company life and ask questions freely; and an Idea & Suggestion bulletin board where employees can present various suggestions on company life and systems. The group will make concerted eorts to build a transparent organi- zational culture where interactive communication is made possible and spread the atmosphere of change and innovation to all employees by actively utilizing CommZone (2.0).
T&I Group The Trading & Investment Group is endeavoring to consolidate unity among employ- ees through its New Culture Wave initiative, while creating an organizational culture promoting communication and a challenging spirit. In an eort to nurture an organi- zational culture of communication, the group regularly holds the Empathy Chat pro- gram where employees and top executives unreservedly communicate with each other, while helping employees le complaints or present suggestions through the Multong (Samsung C&T Voice Box) and online bulletin board CommTalk. In addition, it holds a New Culture Day (NCD) program focusing on sports and cultural activities to depart from the hierarchical culture at company get-togethers after work and create a culture that promotes horizontal communication at such events. In 2013, the group operated the Winning Spirit Award program in which employees with outstanding performances are selected from each business division, team, and oce, and their stories of challenge and achievements are shared. It also shared external success stories on a regular basis to enhance the business capabilities of employees and instill a spirit of challenge among employees. Cultivation of marketing professional and establishment of a platform for country surveys. 83 employees in 28 countries Employee Training E&C Group The Engineering & Construction Group operates a wide range of employee training and communication programs with the aim of fostering top-notch construction experts and creating a healthy organizational culture. The group oers training courses aimed at nurturing experts in four categories (project managers, technical experts, marketing ex- perts and functional experts). Furthermore, in order to nurture female construction experts, the group oers a junior program targeting female employees who are either assistant managers or have at least three years seniority, as well as a senior program for female executives. Amid the growing importance of overseas projects, the Engineering & Construction Group oers a training program where employees are trained in leading overseas companies to assist them in build- ing global capabilities. To date, a total of 286 employees have been given the opportunity and have acquired advanced technology and global capabilities. The group also oers academic training and MBA Courses at overseas educational institutions. In order to cultivate global personnel, including em- ployees dispatched overseas, and build a regional information database, the group has dispatched a total of 127 regional experts in 27 countries from 1992 to the present. Starting from 2010, it has dispatched 83 employees to 28 countries through a short-term, intensive marketing expert training program and the Global Marketing Leader (GML) program. The group supports online, mobile and telephone language programs covering various languages including Chinese, Japanese and Spanish. T&I Group Recognizing that talents with expertise and global perspectives are the core driving engine for future growth, the Trading & Investment Group systematically carries out activities to reinforce employees competencies. The competency building activities are divided into three areas: group-wide basic competencies, specialized competencies tailored to specic business division and global competencies. These are designed to help employees utilize their acquired competencies in actual work to improve work eciency and deliver results. Samsung C&T Corporation 48 E&C Group With the number of overseas projects on the rise, the Engineering & Construction Group will expand programs designed to promote the work-life balance for overseas employees. In addition, the group will further facilitate the use of CommZone (2.0) among employees, while applying employees ideas that may lead to business perfor- mance in actual business activities in consultation with the departments concerned. T&I Group The Trading & Investment Group will build an organizational culture that can boost its fundamental competitiveness by revamping and launching various programs under the three strategies of empathy, challenge and vitality. In addition, in order to strengthen competencies tailored to respective employees, the group will identify areas of support by business part for the enhancement of specialized competencies by departments and provide support accordingly. Future Goals Reinforcement of Basic Competencies The SELF Two-Track Course, designed to reinforce fundamental competencies, refers to training on the four subjects of strategy (management strategy), execution (trade and in- vestment), legal and nancing. Reecting the characteristics of the T&I Group, which con- sists of trading and organizing businesses, they are made up of the SELF trading course and the SELF organizing course. Reinforcement of Specialized Competencies The Trading & Investment Group operates a range of programs to strengthen employees specialized competencies. The group oers the Best Practice Lecture by inviting employ- ees who have experience in conducting projects worthy of sharing with others as instruc- tors. This program helps employees gain vicarious experience and knowhow. Samsung C&T is committed to creating a company that makes employees and their families happy. In 2013, it expanded the flexible working hour system across the company, helping employees devote morning hours to their families and them- selves, while designating one day per week as a family day by department, encouraging employees in the department to leave work earlier than usual. In addition, employees at Samsung C& T take great pride in the companys support for various clubs, such as a handcraft club, an arts research club, and a console game club, as well as its meditation and psychological counseling programs. In order to improve employee welfare, the company places a top priority on forming an organizational culture where unnecessary practices are eliminated and employees can freely discuss issues that they believe are truly im- portant and put them into action. To this end, the Trading & Investment Group launched CommTalk by incorporating the existing internal bulletin board and the in-house CommZone to help employees freely express their views anonymously. The group also operates diverse communication channels for employees, including regular meetings with the CEO and the Junior Board to listen to the voices of all employees and extend assistance to them. T&I Group _ Assistant Manager Min-Seok Joo STAKEHOLDER'S INTERVIEW Cultivation of Employees with Business Execution Competencies SPECIAL ISSUE T&I Group 49 Overview Sustainable Business Our Key Sustainability Priorities Appendix Reinforcement of Global Competencies The Trading & Investment Group provides support for employees to eectively learn various lan- guages to ensure smooth communication with customers all around the world. The group oers learning opportunities for various languages, including Chinese, Spanish and French, during the ori- entation training for new employees to encourage them to take an interest in regions and markets and expand the areas of their business activities in the future, while providing opportunities for new recruits to visit overseas locations to have a better understanding of the companys overseas projects and local business environments. In addition, the group provides language course fees, including for English, Japanese, Chinese and other strategic languages, while operating internal language courses to assist employees to eciently study Chinese and English in the morning and during lunch time. Nurturing Global Employees In order to nurture local business leaders who will lead the companys overseas local projects, the Trading & Investment Group operates the Global Mobility system (Global Assignees: reverse dis- patch/Global Trainees: short-term dispatch) that dispatch personnel with exceptional abilities at overseas sites to the headquarters or other operation sites. In 2013, the group also oered a lead- ership training course for global employees (GE) in overseas regional headquarters, while inviting candidates for organizational heads at local sites to the headquarters in Seoul to give them an op- portunity to learn the groups history, core values and leadership, and oered the Global Successor Program aimed to foster organizational operation capabilities. The OJT Course, led by in-house experts, is a program in which the heads design training courses for team members. It provides the members with training that can be directly applied to actual busi- ness activities and enhance expertise, improving both individual members specialized competen- cies and the overall business capabilities of the business divisions concerned. Furthermore, the group has come up with a Competency Development ABC that links employ- ees competency development through training with the achievement of strategic goals of busi- ness divisions and has established a virtuous cycle involving training competency development achievement of strategic goals. Competency Development ABC Strategy modification Evaluation Performance analysis Check Analysis of the organizations and individual employees competencies Development Training course design / operation Analysis Strategy analysis Big picture Identification of necessary competen- cies and desired competency levels Samsung C&T Corporation 50 KEY PERFORMANCE SUPPLY CHAIN Samsung C&T pursues sustainable growth together with partner companies. It establishes fair trading relationships with them and supports their eforts to deliver economic performance and promote green management. By doing so, the company responds to social demand for shared growth and minimizes various business risks, while maintaining mutually benefcial relationships with its partners. Purchases from Business Partners 9,787.2 2011 2012 2013 4,638.7 8,462.9 Unit : KRW 1 bil Number of Business Partners 6,883 2011 2012 2013 2,554 4,734 Unit : Companies 51 Overview Sustainable Business Our Key Sustainability Priorities Appendix External Environment Samsung C&Ts Approach Major Activities in 2013 Projects undertaken by the Engineering & Construction Group and the Trading & Investment Group have become increasingly complicated and larger in scale in recent years. One of the essential pre- requisites for the success of these mega-projects is close collaboration with partner companies. Under the circumstances, customers, shareholders and investors are increasingly considering not only the business competencies of a company, but also its partners competencies and social re- sponsibility activities as important factors for corporate assessment. In 2013, Samsung C&T set a record high in overseas orders since its founding, conrming its position as a global company. Such accomplishments have not been made alone, but have been the result of strong partnerships with its business partners around the world. The companys supply chain management goes beyond simple support activities. Rather, it focuses on strategies and activities aimed at systematically reinforcing the capabilities of its supply network and promoting the growth of their sustainability levels, matching that of Samsung C&T. In an eort to eectively support and foster business partners, the Engineering & Construction Group designated a dedicated department for shared growth called SRM (Subcontractor Relationship Management) under the Domestic Pro- curement Team at the Global Procurement Division. Fair Supply Network Management E&C Group In 2013, the Engineering & Construction Group selected improvement of the compli- ance levels of the company and its business partners as one of its priority goals and conducted various activities to achieve it. The group ensures that its business partners are not aected by unfair transactions and contract terms by establishing various systems in the Partners Portal. They include a payment objec- tion system in which business partners can request mediation concerning disagreements on on-site payments; a subcontracting amount adjustment system; a subcontracting contract conrmation sys- tem; and a legal advisory support system aimed at providing legal assistance to business partners. Furthermore, in order to establish a corruption-free organizational culture in business partners and lay the foundation for shared growth, the group oered integrity management training to CEOs, sales managers and project managers of partner companies. In 2013, a total of 2,115 persons com- pleted the training program. With respect to partner company evaluation, the group conducts a biannual construction implementation capability assessment that covers the areas of construction and safety environment, as well as a yearly comprehensive competitiveness assessment for the reg- istration of business partners. In the comprehensive competitiveness assessment, partner compa- nies can earn additional points depending on their acquisition of environment-related certications, their level of commitment to environmental management and their winning environment-related awards in Korea and abroad. The nal evaluation record of the construction implementation capabil- ity assessment is reected in the comprehensive competitiveness assessment. T&I Group The Trading & Investment Group conducts contract total inspections to ensure that no violations occur when it deliberates on objects of investment or makes transac- tion decisions with partners. An immediate response system to deal with particular social issues is also in place in the group. With respect to transaction contracts with its supply network, the group conducts a biannual contract total inspection to determine whether subcontracting transactions have occurred. As for transactions found as subcontracting deals, the group inspects whether legal violations have occurred in the course of transactions such as pay- ment processes and the issuance of local L/Cs, and makes necessary improvements, striving to es- tablish a fair trade order with its business partners. As for responses to social issues, immediately af- ter the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA), an Iran sanctions act by the United States, went into force in July 2010, the group formed a taskforce on Iran to analyze trends in related laws, regulations and market conditions. It shared Iran-related laws in Korea, such as the Iran Trade and Investment Guidelines, while coming up with internal guidelines on transactions with Iran and modifying them on four occasions, to ensure that there would be no violation of domestic or international laws. Integrity Management Training for Partner Companies in 2013 No. of Persons Who Completed the Training Course 2,115 persons Samsung C&T Corporation 52 Samsung C&T plans to consider sustainability management categories, including compliance and the environment, when selecting and evaluating not only Korean, but also overseas partner compa- nies. It will also establish a system to prevent and manage sustainability management-related risks that may take place at project sites. Future Goals Achieving shared growth through the establishment of a win-win model based on mutual respect and trust
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Reinforcement of ethical management and compliance Support for business partners enhancement of technological competencies Support for business partners efforts to build a foundation for business management Improvement of professional skills of business partners employees Facilitation of interactive communication Support for business partners efforts to expand sales Vision and Future Direction of Shared Growth Establishment of the Shared Growth Framework The Engineering & Construction Group has taken the lead in pursuing shared growth with its partner companies since 2007, when it signed a shared growth agreement with its business partners for the rst time in Koreas construction industry. The group operates a department and personnel dedicated to shared growth, while oering training programs on shared growth to its employees to raise their awareness of the importance of mutual growth with business partners. The group scored a good rating, which is the highest grade in the construction industry, in the shared growth index in 2013 from the National Commis- sion for Corporate Partnership and received a positive evaluation that it is proactively implementing shared growth with small and medium-sized partner companies by playing a leading role in seeking shared growth in the construction industry. Under its 2014 vision of building a mutually benecial win-win model based on mutual respect and trust, Samsung C&T will make continued eorts to become a leading global construction company that grows together with its business partners by support- ing their eorts to enhance competitiveness and oering them opportunities for growth. Samsung C&T is strongly committed to shared growth and operates an independent Team dedicated to this, pursuing shared growth that is of great assistance to its partner companies. In particular, the company offers financial support to its partners by extending loans with lower interest rates than market rates, which is immensely helpful to us. In addition, the company maintains the worlds highest-level compliance and safety systems and assists its business partners to maintain the same standards. In the case of compliance, the company strives to help not only its own employees, but also employees of its business partners internalize the value of compliance through its top managements continuous emphasis on com- pliance, training and inspections toward its partner companies. I hope that the company which always takes the initiative in shared growth, will continue to listen to the voices of its partner companies and achieve mutual growth by taking their positions into consideration. Gusan Construction Co., Ltd. _ President & CEO Young-Suk Kim STAKEHOLDER'S INTERVIEW
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Eforts for Shared Growth SPECIAL ISSUE E&C Group Laying the foundation for shared growth 53 Overview Sustainable Business Our Key Sustainability Priorities Appendix Unlike the existing practices of the construction industry, Samsung C&T accurately coordinates business with its partners and communicates with them in a transparent manner, minimizing the damage that might be caused by differences in opinions. In addition, the company operates a council consisting of partner companies, an official communication channel with its business partners, which is the first of its kind in the industry, leading the effort to promote shared growth. Through such a work consultation process, partner companies can focus on tasks at hand without paying attention to unnecessary work processes or unfair contracts, and thus are able to produce results that meet Samsung C&T's standards. Samsung C&T, which is contributing to improving the overall culture of the construction industry in Korea, is also making multifaceted efforts to assist its partners to internalize compliance and safety. For instance, Samsung C&Ts Safety and Environment Team manager visited our company to provide safety training to our employees who were working at the construction site. the company is also taking the lead in eliminating bad business practices and introducing advanced systems. I hope that the company will continue to promote shared growth with its business partners and advance a healthy culture in the construc- tion industry. STAKEHOLDER'S INTERVIEW Cultivation of Business Partners The Engineering & Construction Group makes concerted eorts to provide not only nancial support to its business partners with exceptional performances, but also opportunities to reinforce their internal competencies. In 2013, the group operated a shared growth fund worth KRW 29 billion and loaned KRW 11 billion with no interest rate to its partner companies as a management fund, thereby improving cash ow. In order to enhance the capabilities of its partners companies, the group oered online job skills training courses such as English and IT courses for the employees of its partners, while providing special training courses to man- agers and employees with outstanding performance from partner companies. Also, it hosted a technology development project contest targeting its business partners and oered free-of-charge technology development funds to selected partner companies. Facilitation of Communication with Business Partners The Engineering & Construction Group has established channels through which its partners can actively express their opinions and communicate with the company. The Suppliers Council consists of 35 sub-committees in consideration of dierent types of construction projects. The council not only works to improve the technological standards of its members, but also acts as a com- munication channel between the group and its partner companies. The group also organizes a Partners Day event, an annual occasion to share the achievements of the group and its partners and renew their commitment to shared growth to achieve further growth. At the event, partner companies with outstanding performances are awarded prizes, and a safety declaration ceremony is held. Jangwon Landscaping Co., Ltd. _ CEO Kyung-Jun Shin Unit : KRW 1 bil Shared Growth Support Programs in 2013 Category Program Description Performance in 2013 Financial Assistance Shared Growth Fund Formation and operation of Shared Growth Fund Samsung C&T deposited KRW 29 billion. 29 Direct loans Direct, no-interest loans to be used as management funds Management funds were loaned to qualified partner companies 11 Technological Assistance Technology Development Project Contest Hosting technology development project contests Prize-winning partners in the technology development contest are offered development funds free of charge 0. 36 Sales and Purchase Assistance Partner's day Hosting the Partner's Day event (Jan 23-24) No. of participating partners : 710 Programs : Exchanges among partner companies, prize-awarding ceremony for partners with exceptional performances, etc. 0.12 Personnel Training Training program for on-site managers Collective training for 449 on-site managers 0.11 Online job training programs for employees managers IT, foreign languages, certificate courses, etc. (445) Integrity management training Compliance training (2,115 employees) Training for next CEOs, etc. Training for next CEOs (four times a year, 20 partners) Export Assistance Joint overseas advancement with partners with partners Organizing briefing sessions on joint overseas advancement with partners, etc. with partners, etc. - Total 40. 59 Samsung C&T Corporation 54 LOCAL COMMUNITIES Samsung C&T's social contribution activities are a process of creating better social value. The company is carrying out corporate responsibility activities by proactively employing the characteristics of its businesses. It is actively engaged in social contribution activities not only in Korea, but also across the world, reinventing itself as a responsible global corporate citizen. 2013 KEY PERFORMANCE Investments in Social Contribution Activities 6.7 6.3 5.7 2011 2012 2013 34,853 70,174 Number of Employees Who Participated in Social Contribution Activities 38,581 2011 2012 2013 Unit : Persons Hours Spent for Social Contribution Activities 45,268 76,649 47,731 2011 2012 2013 Unit : Hours Unit : KRW 1 bil 55 Overview Sustainable Business Our Key Sustainability Priorities Appendix All the activities carried out by companies aect local communities and citizens either positively or negatively. As construction is mostly a locally based economic activity, the understanding and co- operation of local communities are essential for the success of construction projects. Recent global success stories of companies that have successfully won the understanding and cooperation of local communities show trends that they not only take the form of donations to local communi- ties, but also deliver long-term positive value, including addressing social problems based on the companys management activities and employees values and capabilities, and build a foundation for the sustainable development of local communities. Therefore, stakeholders have high expecta- tions for Samsung C&T, which is making concerted eorts to evolve into a global top-tier company in pursuit of strategic social contributions that meet the needs of local communities and develop their capabilities on a continual basis. Samsung C&T is continuously engaged in social contribution projects in line with its business strate- gies and the characteristics of the construction and trading industries. The company has selected the environment, housing and education, areas where the company can actively utilize its core competencies, such as technology, personnel and resources, as major social contribution categories, and carries out social contribution activities tailored to local needs across the globe by analyzing the capabilities of employees, including those on construction sites, as well as the needs of local com- munities. It also receives feedback on these social contribution activities from internal and external stakeholders, including the participants in such activities and local communities concerned to en- sure ongoing management and improvement. External Environment Samsung C&T s Approach Samsung C&Ts Strategy Framework for Social Contribution Activities Social contributions linked to characteristics of the companys businesses Analyzing the needs of stakeholders Interviews with members of local communities Identifying characteristics of employees Environment Housing Education Major Areas Selection of Items Participant satisfaction surveys Performance assessments by external stakeholders Internal performance assessments Major social contribution activities Shared growth with local communities Global social contributions Plan Korea has a special relationship with Samsung C&T. Samsung C&T was the first company among the Samsung Groups affiliated companies that launched sponsorship programs with Plan Korea for children overseas. The company has gradually drawn the participation of other Samsung and, as of now, employees of Samsung are sponsoring a total of 3,000 children overseas. Plan Korea is operating sponsorship programs for children in 49 countries, and the company is sponsoring children in 40 countries. Unlike corporate social responsibility activities of the past, which had mainly focused on publicity programs, Samsung C&Ts sponsorship for overseas children is very significant in that it goes beyond financial support and helps the children and their parents have hope for the future, which can lead to a change in the mindset of the whole family. In addi- tion, the company is offering practical assistance to beneficiaries based on its deep understanding of local conditions thanks to its brisk overseas projects. This is in contrast with other Korean companies that carry out social contribution activities without proper understanding of local conditions, failing to provide practical assistance to beneficiaries and ending up mak- ing unnecessary spending. Unlike them, Samsung C&T aptly identifies common denominators between what it can do best and what local communities need most and reflects them in their social contribution activities. I hope that the company will continue to show such a genuine and authentic attitude, making the world a better place. Plan Korea _ Director of External Relations & Communications Je-Hong Park STAKEHOLDER'S INTERVIEW Action Assessment of Social Contribution Activities Samsung C&T Corporation 56 Joint Social Contribution Activities by the E&C Group and the T&I Group In 2013, Samsung C&T carried out company-wide social contribution programs that encompassed both the Engineering & Construction Group and the Trading & Investment Group. About 1,100 em- ployees participated in the Nanum (sharing) Lunch Concert and a blood donation campaign to help children with leukemia. Employees also made hope T-shirts and delivered them along with nutritious meals to Filipino children aected by Typhoon Haiyan. They also made educational tools for learning the Korean alphabet, Hangeul, and delivered them to childcare centers for children from multicultural families in Seocho-gu, Seoul. By operating these company-wide social contribution activities on an ongoing basis, Samsung C&T Corporation will continue to foster loyalty among employees from both groups and meet the needs of local communities in the future. Major Activities in 2013 Social Contribution Activities Tailored to the Needs of Local Communities E&C Group In an eort to eectively meet the needs of local communities by actively taking ad- vantage of the characteristics of the industry and capabilities of its employees, the Engineering & Construction Group has implemented the Happiness Project, a social contribution activity tailored to the needs of local communities by each construction site. For the project, employees carry out volunteer activities in environmental zones located within a 10-km radius from construction sites, as well as social contribution activities customized in consid- eration of local characteristics. Social contribution activities, which are dicult to conduct at each local construction site, are carried out at a business-division or company-wide level. In 2013, key Happiness Project activities included improvement of the housing environment for low-income families, elderly people who live alone, and families vulnerable to natural disasters lo- cated in the vicinity of construction sites across the nation in partnership with local governments; volunteer services to extend helping hands to farmers in villages with sisterhood relationships dur- ing busy farming seasons; and support for local communities prot-making activities by operat- ing direct trading marketplaces and participating in them. The group also carried out global social contribution activities including the construction of a regular elementary school in Lembang, Java, Indonesia, and activities to protect UNESCO World Heritage Sites in Morocco. Also, the group is engaged in diverse activities aimed at solving social problems, including support for study centers for children from low-income, multicultural families, and donating survival kits such as clothing and winter supplies to 2,200 homeless people in Seoul. Samsung C&Ts Social Contribution Activities Ofering Survival Kits Including Clothing and Winter Supplies to 2,200 Homeless People 10,000 items The Nanum (sharing) Lunch Concert for Children with Leukemia Making T-shirts of Hope for Filipino Children Korean Alphabet Learning Tool for Multicultural Families in Seocho-gu 57 Overview Sustainable Business Our Key Sustainability Priorities Appendix Future Goals Employee-Participatory Social Contribution Activities at Overseas Sites T&I Group The Trading & Investment Group carries out unique social contribution activities at major overseas sites. Through the Global Volunteer Festival held in 2013, the group featured a wide range of programs by overseas oces, including those in the Ameri- cas, Europe and Japan, such as support for low-income families, environmental cam- paigns and improvement of the educational environment for local communities. In order to en- hance solidarity with strategic local partners and reinforce the sustainable development capabilities of local communities near the local partners, the group has been actively involved in social contri- bution activities in collaboration with the employees of local partners since 2011. For instance, the group carried out activities to improve the poor educational environment facing local children in Uttam Nagar, India, in cooperation with employees of VIDEOCON based in India, such as repairing drainage and rainwater facilities in schools in the region, construction of waste incinerators, and support for the construction of a disabled children center and libraries. Such activities oered an opportunity for employees of the Group and employees of its trading partner to cement their trust and understanding of each other. Also, employees of the group actively participated in various social contribution activities for local communities, including the opening of a youth center, extending a helping hand to farming vil- lages, and ongoing volunteer activities by each business division. In particular, all the employees of the group participate in donation campaigns for charity organizations in Korea and abroad.
100% participation Donations Samsung C&Ts social contribution activities are characterized by both continuity and promptness. What is most important in corporate social responsibility (CSR) programs is to provide continuous care to beneficiaries. the company goes beyond one-time CSR activities and places more emphasis on continual, ongoing CSR activities and expands the voluntary participa- tion of its employees. Moreover, the company is not merely limited to pre-planned activities. It promptly extends assistance to those who are faced with sudden, unexpected difficulties. I think such a flexible attitude by the company sets a good example for other companies. When the Philippines was devastated by a typhoon last year, the company sought ways to provide assistance faster than any other company, and its employees organized a bazaar and donated the proceeds to Phil- ippine typhoon restoration projects. The greatest strength of the companys CSR initiatives lies in the fact that its employees are highly aware of the importance of social contribution activities. Employees at the company voluntarily participate in a matching grant project (the company matches donations made by employees). I hope that the company will continue to show sincerity and extend its helping hand to those who need assistance most, based on trust with its partners. Good Neighbors_ Senior Director of Fundraising Division Bueng-Ki Park STAKEHOLDER'S INTERVIEW E&C Group In 2014, the Engineering & Construction Group will make continuous eorts to be- come a company that b uilds happiness for the future by carrying out major social contribution activities that can best employ the characteristics of its businesses and local sites and meet the needs of local communities. They include the Global Habitat project, support for elementary education institutes near overseas construction sites, and the Up- cycling School project aimed at raising environmental awareness among youth in Korea. T&I Group In 2014, the Trading & Investment Group will continue to expand its major social contribution projects, including support for children from multicultural families and a project to create mugunghwa (Korean national ower) hills. The group intends to provide full support for children from multicultural families by oering history classes to help them develop a proper view of history, as well as Korean language classes to help immigrant children acquire Korean language skills. It will also continue to go ahead with the project to create mugunghwa hills to establish a sound citizenship and view of the nation. 4 APPENDIX / Key Sustainability Indicators / Independent Assurance Report / Independent Assurance Report on Greenhouse Gas Emissions / Awards and Memberships / GRI G4 Index Samsung C&T Corporation 58 59 Overview Sustainable Business Our Key Sustainability Priorities Appendix key Sustainability Indicators Unit 2011 2012 2013 Economic Performance Consolidated Basis Revenue KRW 1 bil 21,545.5 25,325.9 28,433.4 Operating income KRW 1 bil 351.0 490.3 433.3 Net income during the term KRW 1 bil 409.1 465.4 266.4 Sales by Region Korea KRW 1 bil 14,121.3 14,933.0 17,057.7 Overseas Asia, Middle East and Africa KRW 1 bil 5,515.3 8,200.3 9,270.0 Europe KRW 1 bil 1,041.5 778.3 757.6 Americas KRW 1 bil 867.4 1,414.3 1,348.1 Sales by Business Engineering & Construction Total KRW 1 bil 7,313.8 8,943.2 13,441.3 Domestic KRW 1 bil 5,471.3 5,168.4 6,893.6 Export KRW 1 bil 1,842.5 3,774.8 6,547.7 Trading & Investment Total KRW 1 bil 14,231.7 16,382.7 14,992.1 Domestic KRW 1 bil 3,223.8 3,985.2 3,261.7 Export KRW 1 bil 11,007.9 12,397.5 11,730.4 Income statement Gross margin on sales KRW 1 bil 1,702.3 2,008.8 1,971.4 Operating income KRW 1 bil 351.0 490.3 433.3 Earnings before tax KRW 1 bil 610.0 555.7 448.7 Corporate tax KRW 1 bil 201.0 90.3 182.3 Net income during the term KRW 1 bil 409.1 465.4 266.4 Balance sheet Total assets KRW 1 bil 20,922.0 25,964.0 25,465.9 Total liabilities KRW 1 bil 4,230.8 4,905.0 4,551.8 Distribution of Economic Value Partners and Suppliers Material and subcontracting costs KRW 1 bil 4,638.7 8,462.9 9,787.2 Employees Labor cost, benefits KRW 1 bil 509.5 619.4 629.5 Government Corporate tax, taxes and dues KRW 1 bil 252.2 136.9 220.5 Local communities Donations, social contribution expenses KRW 1 bil 6.7 5.7 6.3 Capital expenditures Dividends KRW 1 bil 75.8 75.9 75.9 Interest expenses KRW 1 bil 144.0 149.3 115.1 R&D Investment R&D expenses KRW 1 bil 100.0 115.1 127.9 The figures indicated in the Economic Performance have been drawn up on a consolidated basis. For more details, please refer to Samsung C&T Corporations Annual Report 2013. Compliance and Ethical Management Compliance and Ethical Management Training No. of Trainees Persons 10,821 14,061 21,058 The figures indicate the number of hours spent on ethical management and compliance training conducted by the company-wide audit team, human resources teams by business division, and a designated compliance department. Environment GHG Emissions Scope 1 tCO2-eq 82,446 108,076 94,850 Scope 2 tCO2-eq 72,612 205,298 154,960 Scope 3 tCO2-eq 177,081 175,984 164,453 Total emissions tCO2-eq 332,139 489,358 414,263 GHG emissions intensity tCO2-eq/KRW 1 bil 0.154 0.193 0.146 Samsung C&T Corporation 60 Unit 2011 2012 2013 GHG Emissions in Korea and Abroad Korea tCO2-eq 227,047 249,258 226,897 Overseas tCO2-eq 105,092 240,100 187,366 Energy Consumption LPG GJ 927,841 27,054 3,718 Diesel fuel GJ 2,403,782 2,586,309 2,675,018 Town gas GJ 95,099 1,164,881 832,737 Kerosene GJ 79,017 80,127 41,193 Heavy oil GJ 0 11,870 0 Electricity GJ 915,990 2,535,374 2,663,213 Aviation fuel GJ 113,057 160,442 188,211 Gasoline GJ 80,321 117,971 162,659 Total GJ 4,615,106 6,684,028 6,566,749 Energy intensity GJ/KRW 1 bil 2.142 2.639 2.310 Resource Consumption Steel bars Ton 164,745 185,493 281,308 Ready-mixed concrete m 3 1,658,657 1,643,220 2,977,577 Recycled aggregate m 3 51,609 32,040 3,269 Water Consumption Tap water Ton 4,864,327 7,657,346 4,862,045 Stream water Ton 273,872 3,660,077 497,385 Ground water Ton 741,649 278,905 1,261,610 Recycled water Ton 116,538 211,619 1,079,536 Total consumption Ton 5,996,386 11,807,947 7,700,576 Waste Generation and Processing Status Construction waste generated Ton 849,243 871,390 736,948 Construction waste recycling rate % 92 98 82 Waste generated at operation sites Ton 8,751 647,116 11,085 Designated waste generated Ton 202 1,299 1,050 Environmental Management Expenditures Environmental management expenditures KRW 1 bil 16.1 21.2 18.6 GHG emissions are reported separately in terms of Scope 1, Scope 2 and Scope 3. - Total GHG emissions reviewed by PwC based on GHG emissions in Korea verified by BSI have been reported. The decrease in the volume of recycled aggregate used in 2013 attributes to the fact the processes without the use of recycled aggregate were concentrated in 2013. The decrease in the volume of recycled waste in 2013 attributes to the fact that the incinerated volume of waste synthetic resin made up the majority of waste gener- ated in 2013. - The recycling rate of construction waste refers to the recycling rate at construction sites in Korea calculated in accordance with recycling statistics standards of the Ministry of Environment. Starting from 2013, the internally recycled volume was also included in the recycling rate. Environmental management expenditures generated at overseas sites were calculated by converting them into KRW based on the exchange rate posted on March 18, 2014 Safety and Health Lost Time Injury Rate (Overseas) % 0.01 0.02 0.03 Converted Incident Rate (Korea) % 0.22 0.35 0.24 Increase in Safety and Health Professionals Persons 114 129 154 Number of Overseas Employees Who Completed Safety Training Persons 16 30 42 The converted incidents rate is applied to Korean sites, while the lost time injury rate is applied to overseas sites. Employees Total Workforce Total Persons 12,759 14,359 16,558 Korea Persons 7,529 8,436 8,904 Overseas Persons 5,230 5,923 7,654 61 Overview Sustainable Business Our Key Sustainability Priorities Appendix Unit 2011 2012 2013 Employees by Employment Status Regular employees Persons 6,275 6,884 7,256 Temporary Persons 1,254 1,552 1,648 Locally hired Persons 5,230 5,923 7,654 By Position Executives Persons 211 214 234 Diversity Percentage of female employees % 10.6 11.3 11.7 Turnover Status Turnover rate % 0.7 0.7 0.7 Numbers of Parental Leave Users and Those Who Return to Work after Leave Parental leave users Persons 25 34 38 Women who return after parental leave % 92 94 90 Percentage of continued employment for 12 months or longer after return % 83 91 100 Employee Education and Training Training hours per person Hours 114 134 102 The difference in the total number of employees between this years report and previous years report comes from the fact that locally hired overseas employees were included in calculating the figure. Figures on female employees and parental leave include only employees in the E&C Group and the T&I Group in Korea Supply Network Payments to Business Partners (Including Purchasing and Subcontracts) Total Purchasing Amount KRW 1 bil 4,638.7 8,462.9 9,787.2 Purchases KRW 1 bil 2,110.4 4,235.8 3,559.0 Subcontracts KRW 1 bil 2,528.3 4,227.1 6,228.2 Number of Key Business Partners Companies 2,554 4,734 6,883 Number of New Business Partners Companies 379 4,175 2,688 Purchases from Local Business Partners Percentage of local purchases of goods and equipment % - 17 24 Number of New Business Partners that Were Screened Using Environmental Criteria Korea Companies 245 Overseas Companies 344 Number of New Business Partners That Were Screened Using Labor Practices Criteria Korea Companies 121 The total number of partner companies for 2013 differs from data for 2014 due to the inclusion of overseas subcontract partner companies. The difference in the percentage of local goods and equipment purchases between this years report and the previous years report attributes to the fact that the standards for purchases from local business partners were incorporated into goods and equipment purchasing amounts from suppliers located in nearby areas in the same country among global construction and business sites and recalculated accordingly. The data for 2011 was excluded from the report as it was deemed difficult to accurately calcu- late the data using the given standards. Environmental audits and labor practices audits were officially launched in 2013 targeting new business partners. Labor practices audits targeting global partner companies will be conducted in the future. Local Communities Social Contribution Activities Number of participants Persons 34,853 38,581 70,174 Participating hours Hours 45,268 47,731 76,649 Investment KRW 1 bil 6.7 5.7 6.3 Samsung C&T Corporation
Independent Assurance Report Scope and Subject Matter The information for the year ended on December 31, 2013, on which we provide limited assurance, consists of : The Companys conclusion on meeting the principles of Inclusiv- ity, Materiality, and Responsiveness in the AA1000 Accountability Principles Standard 2008 (AA1000APS) The non-nancial information, stated in GRI Content Index on the pages 67 through 70 as subject to an external assurance (the Sus- tainability Data) is prepared based on the reporting principles set out on ABOUT THIS REPORT (the Reporting Principles) With regard to the nancial data included in the Report on page 59, our procedures were limited to verifying that they were correctly de- rived from the Companys audited consolidated nancial statements. We read the other information included in the Report and consid- er whether it is consistent with the Sustainability Information. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Sustain- ability information. Our responsibilities do not extend to any other information. Assurance Work Performed We conducted our engagement in accordance with ISAE 3000 (1) and AA1000AS (2). The term moderate assurance used in AA1000AS (2008) is designed to be consistent with limited assurance as articulated in ISAE 3000. Our assurance is a Type II assurance engagement as defined in the Guidance for AA1000AS. Our work involved the following activities : Interviews with the personnel responsible for internal reporting and data collection to discuss their approach to stakeholder inclu- sivity, materiality and responsiveness. Visits to the Companys headquarters and four operation sites to understand the systems and processes in place for managing and reporting the Sustainability Data. Review of a sample of internal documents relevant to output from the risk assessment process, sustainability-related policies and standards, the Sustainability Materiality Assessment Matrix and other documents from stakeholder engagement activities. Evaluating the design and implementation of the key processes and controls for managing and reporting the Sustainability Data. Limited testing, through inquiry and analytical review procedures, of the preparation and collation of the Sustainability Data. Respective responsibilities of the management of the Company and Samil PricewaterhouseCoopers The management of the Company is responsible for establishing assessment criteria that meets the principles of Inclusivity, Material- ity and Responsiveness in the AA1000APS, measuring performance based on the Assessment Criteria, and reporting this performance in the Report. Our responsibility is to provide a conclusion based on our assurance procedures in accordance with ISAE 3000 and AA1000AS. This report, including the conclusion, has been prepared for the management of the Company as a body, to assist the management in reporting on the Companys sustainability performance and ac- tivities. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the management of the Company as a body and the Company for our work or this report save where terms are expressly agreed and with our prior consent in writing. Inherent limitations Non-nancial performance information is subject to more inherent limitations than nancial information, given the characteristics of the subject matter and the methods used for determining such informa- 1. International Standard on Assurance Engagements 3000 (Revised) Assur- ance Engagements other than Audits or Reviews of Historical Financial In- formation issued by International Auditing and Assurance Standards Board 2. AA1000 Assurance Standard (2008), issued by AccountAbility To the management of Samsung C&T We have been engaged by Samsung C&T Corporation (the Company) to perform an independent assurance engagement in regard to the following aspects of Samsung C&T Corporations 2014 Sustainability Report. 62 Overview Sustainable Business Our Key Sustainability Priorities Appendix
tion. Qualitative interpretations of relevance, materiality and the ac- curacy of data are subject to individual assumptions and judgments. A limited assurance engagement is narrower in scope than a rea- sonable assurance engagement under ISAE 3000. Consequently, the nature, timing and extent of procedures for gathering sufficient, ap- propriate evidence are deliberately limited relative to a reasonable assurance engagement. In particular. We did not attend any stakeholder engagement activities. There- fore our conclusions are based on our discussions with manage- ment and sta of the Company and our review of selected docu- ments provided to us by the Company. The scope of our work was restricted to 2013 performance only, as set out in the scope and subject matter section above. Informa- tion relating to the year ended on December 31, 2012 and earlier periods have not been subject to assurance by us. Conclusion Based on the results of the assurance work performed and the Assessment Criteria, our conclusion is as follows On the AA1000APS principles Inclusivity The Company has collected concerns and opinions through stake- holder communication channels that include customers, employ- ees, the government, business partners, local communities, stock- holders/investors, the press and NGOs. Nothing has come to our attention to suggest that material stake- holder groups were excluded from these channels. Materiality The Company has identied the most relevant and signicant sus- tainability issues through a process for identifying material issues. Nothing has come to our attention to suggest that material issues were omitted in this process. Responsiveness The Company has included in the Report its response to the ma- terial sustainability issues that are defined through a process for identifying material issues. Nothing has come to our attention to suggest that there were material deficiencies in the issue management system. Nothing has come to our attention that causes us to believe that Sustainability Data for the year ended on December 31, 2013 are not fairly stated, in all material respects, in accordance with the Report- ing Principles. Recommendations As a result of our work, we have provided the following recommen- dations to the management: It is advised to establish a dedicated team responsible for the ef- fective management and communication of sustainability issues with internal and external stakeholders. In order to achieve its strategic sustainability goals, Samsung C&T Corporation will need to further formalize standards of perfor- mance management with regard to key indicators of each sustain- ability sector as well as consistent improvement of performances through establishment of targets. 63 May, 2014 Samil PricewaterhouseCoopers Seoul, Korea Independent Assurance Report on Greenhouse Gas Emissions To the management of Samsung C&T Corporation We have carried out a limited assurance engagement in order to provide an opinion on the subject matter detailed below, and as presented in Samsung C&T Corporations (the Company) 2014 Sustainability Report (the Report). The subject matter for the Sustainability Report 2014 comprises total greenhouse gas emissions (including Scope 1, Scope 2 and Scope 3) from Korean and international facilities and sites under the Companys operational control for the year ended on December 31, 2013. Respective responsibilities of the management of the Company and Samil Pricewater- houseCoopers The Companys management is responsible for the preparation and fair presentation of greenhouse gas emissions data in accordance with WRI/WBCSD GHG Protocol (2004) and ISO 14064-1 Specication with guidance at the organization level for quantication and reporting of greenhouse gas emissions and removals. Our responsibility is to express a conclusion on the subject matter based on our limited assurance engagement. We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information (ISAE 3000) accredited by the International Auditing and Assurance Stan- dard Board, and Specication with guidance for the validation and verication of greenhouse gas assertions (2006) (ISO14064-3). This report, including the conclusion, has been prepared for the management of the Company as a body, to assist the management in report- ing on the Company greenhouse gas emissions. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the management of the Company as a body and the Company for our work or this report save where terms are expressly agreed and with our prior consent in writing. We read the other information included in the Report and consider whether it is consistent with the Sustainability Information. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Sustainability informa- tion. Our responsibilities do not extend to any other information. Assurance Work Performed We conducted our engagement in accordance with ISAE 3000 and ISO14064-3. Limited testing of the preparation and collation of the data has been conducted, mainly through inquiry and analytical review procedures. We designed and conducted our engagement to obtain a moderate level of assurance to ensure that there is no misrepresentation of the subject matter in all material respects. Inherent limitations Non-nancial performance information is subject to more inherent limitations than nancial information, given the characteristics of the subject matter and the methods used for determining such information. The absence of a signicant body of established practice on which to draw allows for the selection of dierent but acceptable measurement techniques that can result in materially dierent measurements and can impact accuracy and comparability. The precision of dierent measurement techniques may also vary. Furthermore, the nature and meth- ods used to determine such information, as well as the measurement criteria and the precision thereof, may change over time. It is important to read the subject matter information along with the Companys greenhouse gas emissions calculation guidelines. Samsung C&T Corporation 64 Overview Sustainable Business Our Key Sustainability Priorities Appendix A limited assurance engagement is narrower in scope than a reasonable assurance engagement. Consequently, the nature, timing and extent of procedures for gathering sucient, appropriate evidence are deliberately limited relative to a reasonable assurance engagement. Conclusion Based on our limited assurance procedures, nothing has come to our attention that causes us to believe that the Companys total greenhouse gas emissions, including Scope 1, Scope 2 and Scope 3 for the year ended on December 31, 2013, is not presented fairly in all material respects in accordance with the Companys greenhouse gas emissions calculation guidelines. Scope Total GHG Emissions in 2013 Scope 1 94,850 Scope 2 154,960 Scope 3 164,453 Total GHG Emissions 414,263 Unit : tCO2-eq 65 May, 2014 Samil PricewaterhouseCoopers Seoul, Korea Samsung C&T Corporation 66 Awards and Memberships Association Memberships Council of Korea Employers Organizations Korea Fair Competition Federation Defense Council Korea Defense industry Association Korea AEO Association Korea Chamber of Commerce & Industry Federation of Korean Industries Ministry of Trade, Industry and Energy Korea CFO Association Korea IR Service Korea Gas Union Korea Employers Association Korea Economic Research Institute Korea Management Association Korea International Trade Association Korea Listed Companies Association Korea Chemicals Management Association Energy & Mineral Resources Development Association of Korea Korea Construction Engineers Association Busan Environmental Preserva- tion Association Korea Fire Safety Association Korea Energy Engineers Association Korea Housing Association Korea Business Council for Sustainable Development Korea International Trade Association International Contractors Association of Korea Korea-Japan Economic Association Construction Association of Korea Korea Federation of Construction Contractors Korea Housing Association Korea Road & Transportation Association Korea Water & Wastewater Works Association Korea Atomic Industrial Forum Korea Association of Smart Home Korea Ubiquitous City Association Korea Electric Association Ranked No.1 in the Korea Great Work Place Index (K-GWPI) in the construction category The Korea Great Work Place Index (K-GWPI) is an index announced by Korea Management Association Consulting (KMAC) every year to recognize great workplaces where the company and its em- ployees can grow together. Samsung C&T was ranked No.1 in the construction category of K-GWPI in 2013. Supreme Award winner in the manufacturing category of the Customer Satisfaction Management Awards The Customer Satisfaction Management Awards are given by the Korea Sustainability Management Evaluation every year to successfully establish a culture of customer satisfaction. Sam- sung C&T has received the Supreme Award in the manufactur- ing category for six years in a row as of 2013, and has been inducted into the Hall of Fame. Ranked No.1 in the Most Admired Companies in Korea List in the construction category The Most Admired Companies in Korea list is surveyed and announced by Korea Management Association Consulting (KMAC) every year to present a direction for desirable compa- nies and to help stakeholders properly understand corporate activities. Samsung C&T has been ranked No.1 in the construc- tion category for seven years in a row as of 2013. Samsung C&T joins the Carbon Disclosure Project (CDP) Global Leaders Club CDP Korea evaluates companies levels of response to climate change by analyzing management information related to corpo- rate response to climate change. Samsung C&T joined the CDP Global Leaders Club for two consecutive years in recognition of its outstanding performance in response to climate change. Ranked No.1 in the National Customer Satisfaction Index (NCSI) in the apartment category The Korea Productivity Center evaluates customer satisfaction levels for products and services produced in Korea and over- seas in the pertinent year and releases the results every year. Samsung C&Ts apartment brand Raemian has been ranked No.1 for years since the survey was launched. Consecutively ranked No.1 in Green Ranking The Green Ranking is an annual ranking announced by the JoongAng Daily to show the environmentally friendly perfor- mances of companies by sector and country. Samsung C&T has been ranked No.1 for two consecutive years in recognition of its environmental technology, such as the development of concrete with less CO2 emissions. Ranked No.1 in the Korea Great Work Place Index (K-GWPI) in the trading category The Korea Great Work Place Index (K-GWPI) is an index an- nounced by Korea Management Association Consulting (KMAC) every year to recognize great workplaces where the company and its employees can grow together. Samsung C&T has been ranked No.1 in the trading category of K-GWPI for three consecutive years. Ranked No.1 in the Most Admired Companies in Korea list in the trading category The Most Admired Companies in Korea list is surveyed and announced by Korea Management Association Consulting (KMAC) every year to present a direction for desirable compa- nies and to help stakeholders properly understand corporate activities. Samsung C&T has been ranked No.1 in the trading category for nine years in a row as of 2013. Ranked No.1 in the Top 50 Most Admired Companies in Korea list in the trading and distribution category Samsung C&T was ranked No.1 in the trading and distribution category for a second year in a row in the Top 50 Most Admired Companies in Korea list selected and announced by Fortune Korea every year in recognition of the high quality of its prod- ucts and services and its global business capabilities. Outstanding Trading Company Awards in Recognition of Export Promotion In 2013, POSCO selected three outstanding trading compa- nies that contributed to the export expansion of the company and awarded prizes to them. Samsung C&T received a group award, Marketing Champion, in recognition of its contribution to POSCOs advancement into the global steel market and ex- panded sales of strategic products. Prizes for Energy and Mineral Resources Development Samsung C&T was awarded the Industrial Service Medal (En- ergy Team, Resource Business Division, Managing Director Seong-do Kim) and the Minister of Trade, Industry & Energy's commendation (General Manager Pan-yeong Jeong) in recog- nition of contributions to the development of energy and min- eral resources for Korea at the Energy and Mineral Resources Development symposium. Prime Ministers Commendation Marking the 50th Anniversary of Trade Day Marking the 50th anniversary of Trade Day, General Manager Sang-gyun Sohn from the Precision Chemicals Part, Chemicals Team, Chemicals and Industrial Materials Division was awarded the Prime Ministers Commendation in recognition of export expan- sion, qualitative advancements and pioneering global markets. E&C Group T&I Group 67 Overview Sustainable Business Our Key Sustainability Priorities Appendix GRI G4 General Standards Disclosures Category Indicators Core Contents Reporting Level Page External Assurance Reason for Omission Strategy and Analysis G4-1 Statement from the most senior decision-maker of the organiza- tion (such as the CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and the organi- zations strategy for addressing sustainability 7 Organi- zational Profile G4-3 Name of organization 6 G4-4 Primary brands, products, and/or services 6 G4-5 Location of organization's headquarters 6 G4-6 Number of countries where the organization operates, and names of countries where either the organization has significant opera- tions or that are specifically relevant to the sustainability topics 6 G4-7 Nature of ownership and legal form 6 G4-8 Markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) 6 G4-9 Scale of the organization 59 G4-10 Total number of employees by employment contract, employment type and by gender; Total workforce by employees and supervised workers and by gender; Total workforce by region and gender; Whether a substantial portion of the organizations work is performed by workers who are legally recognized as self- employed, or by individuals other than employees or supervised workers; Any significant variations in employment 60, 61 G4-11 Percentage of total employees covered by collective bargaining agreements - There are no labor unions established or operating at the company. Instead, it operates a management-labor council to deal with employee demands G4-12 Organizations supply chain 61 G4-13 Any significant changes during the reporting period regarding the organizations size, structure, ownership, or its supply chain
18, 19, 60,
61 G4-14 Whether and how the precautionary approach or principle is addressed by the organization 20, 21 G4-15 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses 65, 66 G4-16 Memberships of associations (such as industry associations) and national or international advocacy organizations 65, 66 Identified Material Aspects and Boundaries G4-17 All entities included in the organizations consolidated finan- cial statements or equivalent documents; Whether any entity included in the organizations consolidated financial statements or equivalent documents is not covered by the report - Specified through the business report G4-18 Process for defining the report content and the Aspect Boundaries; How the organization has implemented the Reporting Principles for Defining Report Content 2, 3, 24, 25 G4-19 List of all the material Aspects identified in the process for defining report content 2, 3, 24, 25 G4-20 For each material Aspect, the Aspect Boundary within the organization 2, 3, 24, 25 G4-21 For each material Aspect, the Aspect Boundary outside the organization 2, 3, 24, 25 G4-22 Effect of any restatements of information provided in previous reports, and the reasons for such restatements 59-61 G4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries 6 Fully Reported Partially Reported Not Reported Samsung C&T Corporation 68 Category Indicators Core Contents Reporting Level Page External Assurance Reason for Omission Stake- holder Engage- ment G4-24 A list of stakeholder groups engaged by the organization 22, 23 G4-25 Basis for identification and selection of stakeholders with whom to engage 22, 23 G4-26 Organizations approach to stakeholder engagement (including frequency of engagement by type and by stakeholder group) 22, 23 G4-27 Key topics and concerns that have been raised through stakehold- er engagement, how the organization has responded to those key topics and concerns, and the stakeholder groups that raised each of the key topics and concerns 22, 23 Report Profile G4-28 Reporting period (such as fiscal or calendar year) for information provided 2, 3 G4-29 Date of most recent previous report (if any) 2, 3 G4-30 Reporting cycle (such as annual, biennial) 2, 3 G4-31 Contact point for questions regarding the report or its contents 2, 3 G4-32 In accordance option the organization has chosen (Core vs. Comprehensive); GRI Content Index for the chosen option; Refer- ence to the External Assurance Report, if the report has been externally assured 2, 3 G4-33 Organizations policy and current practice with regard to seeking external assurance for the report; Scope and basis of any external assurance provided; Relationship between the organization and the assurance providers; Whether the highest governance body or senior executives are involved in seeking assurance for the organizations sustainability report 3, 67-70 Gover- nance G4-34 Governance structure of the organization, including committees of the highest governance body; Any committees responsible for decision-making on economic, environmental and social impacts 12, 13 G4-38 Composition of the highest governance body and its committees 12, 13 G4-39 Whether the Chair of the highest governance body is also an executive officer 12, 13 G4-40 Nomination and selection processes for the highest governance body and its committees, and the criteria used for nominating and selecting the highest governance body members 12, 13 G4-48 Highest committee or position that formally reviews and approves the organizations sustainability report and ensures that all material Aspects are covered 12, 13 G4-52 Report the process for determining remuneration; whether remuneration consultants are involved in determining remunera- tion and whether they are independent of management; any other relationships that the remuneration consultants have with the organization 12, 13 Ethics and Integrity G4-56 Organizations values, principles, standards and norms of behavior such as codes of conduct and codes of ethics 28-31 G4-57 Internal and external mechanisms for seeking advice on ethi- cal and lawful behavior, and matters related to organizational integrity 29 G4-58 Internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity 29 69 Overview Sustainable Business Our Key Sustainability Priorities Appendix Category Sub- category Aspect Core Indicators Contents Reporting Level Page External Assurance Reason for Omission Eco- nomic Economic Perfor- mance DMA Generic DMA (Disclosures on Management Approach) 16-19 G4-EC1 Direct economic value generated and distributed (EVG&D) 59 Indirect Economic Impacts DMA Aspect-specific DMA 55 G4-EC7 Development and impact of infrastructure investments and services supported 56, 57 Procure- ment Practices DMA Aspect-specific DMA 51 G4-EC9 Proportion of spending on local suppliers at significant locations of operation 61 Environ- mental Materials DMA Generic DMA 33 G4-EN1 Materials used by weight or volume 60 G4-EN2 Percentage of materials used that are recycled input materials 60 Energy DMA Aspect-specific DMA 33 G4-EN3 Energy consumption within the organization 60 G4-EN5 Energy intensity 60 G4-EN7 Reductions in energy requirements of products and services 38 Water DMA Generic DMA 33 G4-EN8 Total water withdrawal by source 60 G4-EN9 Water sources significantly affected by withdrawal of water 36 G4-EN10 Percentage and total volume of water recycled and reused 34, 36 Biodiver- sity DMA Aspect-specific DMA 33 G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 39 G4-EN13 Habitats protected or restored 39 G4-EN14 Total number of IUCN Red List Species and National Conservation List Species with habitats in areas affected by operations, by level of extinction risk 39 Emissions DMA Aspect-specific DMA 33 G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 60 G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) 60 G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) 60 G4-EN18 Greenhouse gas (GHG) emissions intensity 60 G4-EN19 Reduction of greenhouse gas (GHG) emissions 60 GRI G4 Specifc Standards Disclosures Fully Reported Partially Reported Not Reported Samsung C&T Corporation 70 Category Sub- category Aspect Core Indicators Contents Reporting Level Page External Assurance Reason for Omission Environ- mental Effluents and Waste DMA Generic DMA 33 G4-EN23 Total weight of waste by type and disposal method 60 Supplier Environ- mental Assess- ment DMA Aspect-specific DMA 51 G4-EN32 Percentage of new suppliers that were screened using environmental criteria 60 G4-EN33 Significant actual and potential negative environmental impacts in the supply chain and actions taken 51-53 Social Labor Prac- tices and Decent Work Employ- ment DMA Aspect-specific DMA 45 G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region 60, 61 G4-LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation 46 G4-LA3 Return to work and retention rates after parental leave, by gender 60 Occu- pational Health and Safety DMA Aspect-specific DMA 41 G4-LA6 Type of injury and rates of injury, occupational diseases, lost days and absenteeism, and total number of work-related fatalities, by region and by gender 60 Training and Edu- cation DMA Generic DMA 45 G4-LA9 Average hours of training per year per employee by gender, and by employee category 61 Diversity and Equal Opportu- nity DMA Generic DMA 45 G4-LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity 61 Supplier Assess- ment for Labor Practices DMA Aspect-specific DMA 51-53 G4-LA14 Percentage of new suppliers that were screened using labor practices criteria 61 G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken 51-53 Society Local Commu- nities DMA Aspect-specific DMA 55 G4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs 56, 57 G4-SO2 Operations with significant actual and potential negative impacts on local communities
36, 37, 39,
56, 57 Anti-cor- ruption DMA Aspect-specific DMA 29 G4-SO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified 30 G4-SO4 Communication and training on anti-corruption poli- cies and procedures 31 Anti-com- petitive Behavior DMA Aspect-specific DMA 29 Com- pliance DMA Aspect-specific DMA 29 G4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations - Specified through the business report Overview Sustainable Business Our Key Sustainability Priorities Appendix 71 Contact Information for Inquiries Samsung C&T Corporation 14, Seocho-daero 74-gil, Seocho-Gu, Seoul, South Korea 137-956 Tel +82-2-2145-2062 Email csr.sr@samsung.com D e s i g n e d