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ESG Factbook
Strategy
Kumho Tire manages its supply chain with consideration for environmental, social, and economic sustainability. We are fostering a mutually beneficial relationship with our suppliers, by applying supply chain policies that reflect international standards and guidelines, such as the Supplier Code of Conduct, Sustainable Natural Rubber Policy, and Conflict Minerals Policy.
Supply Chain Sustainability Policy
Kumho Tire has established Supply Chain Sustainability Policy that align with global standards, including the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, to implement responsible supply chain management more systematically. Key supply chain issues are overseen by the ESG Committee and the ESG Management Committee, with the Purchasing Division responsible for policy implementation and performance management. We strive to build a responsible supply chain by proactively managing potential human rights and environmental risks within the supply chain.
🔗Supply Chain Sustainability Policy
Strengthening Supplier Code of Conduct
Kumho Tire and its suppliers are expected to mutually adhere to the Code of Conduct, ensuring responsible business activities and growing together. In 2023, to enhance supply chain ESG management, Kumho Tire revised the Supplier Code of Conduct to include detailed items such as discrimination, women’s rights, climate crisis response, grievance handling, and conflict minerals, obtaining agreements from a total of 163 suppliers.
Target
Kumho Tire aims to advance its supply chain ESG management system by strengthening management indicators and standards. In 2024, we plan to improve various aspects related to supply chain management, including training, evaluation targets, survey content, and monitoring.
| Category | 2024 Goals |
| Pre-Education | - Providing online education on key topics such as greenhouse gases, deforestation, and conflict minerals - Defining additional data collection items - Revising and distributing the Supplier Code of Conduct |
Evaluation Target | - Document Review: Setting management standards for items such as equipment and raw materials - On-Site Evaluation: Conducting due diligence on high-risk suppliers and providing capacity-building consulting for small and medium-sized suppliers |
Survey Contents | - Basic Evaluation: Human rights and labor, environment, ethics and governance, product and service responsibility - Additional Survey: Greenhouse gases, deforestation, human rights risks, conflict minerals, hazardous chemicals, etc. |
| Improvement Monitoring | - Monitoring high-risk identified suppliers - Requiring high-risk entities related to human rights and the environment to submit improvement plans - Deriving major improvement tasks and implementation plans for companies subject to on-site consulting |
Assessment
Supply Chain Assessment
In 2023, Kumho Tire conducted regular assessments for a total of 83 suppliers (44 raw material suppliers, 39 equipment and materials suppliers). Since 2022, ESG items have been added to the regular evaluation criteria to raise awareness and share the need for ESG management among suppliers.
Additionally, since 2023, we have been conducting additional supply chain ESG assessments, and in 2024, we are selecting priority suppliers for assessment based on the ESG management pool. The analysis of ESG risks by country revealed that companies in some of the 17 countries where suppliers are located require careful monitoring and attention regarding human rights, ethics, and governance. Going forward, we aim to build mutually beneficial relationships by providing feedback and support for necessary improvements through regular assessments, working together with suppliers to achieve joint growth through ESG risk management.
ESG Evaluation Process
Our supply chain ESG evaluation is based on international guidelines such as the OECD Guidelines for Multinational Enterprises, ILO Conventions, ISO 26000, TCFD, and SASB, forming indicators to assess risks related to ethics and governance, environment, product and service responsibility, and human rights and labor. Kumho Tire conducts online and on-site evaluations to identify and systematically manages ESG risks within the supply chain. Based on the diagnostic results, we identify high-risk suppliers, establish improvement tasks, and monitor improvements for each supplier.
Supply Chain ESG Evaluation Results
Kumho Tire conducted ESG evaluations on 202 key domestic and international suppliers, completing evaluations for 159 suppliers. Online document evaluations were conducted on four areas: human rights and labor, environment, ethics and governance, and product and service responsibility. Based on the evaluation results, risks and improvement points for each category were identified. Additionally, among the companies that participated in the document evaluations, 10 that requested consulting and 4 that were deemed to need improvement were selected. Onsite inspections were conducted for these 14 companies in collaboration with a third-party agency. In-depth interviews with responsible persons were conducted to understand each company’s ESG management needs. Based on the actual status of internal management system operations, key improvement points were identified and implementation plans were proposed. Most suppliers were found to require proactive improvement and enhancement in the environment sector, and continuous performance management in the human rights, labor, and ethics sectors. To address this, improvement tasks tailored to the status of each company were identified, and support was provided through consulting to help suppliers establish a Code of Conduct and disclose ESG performance externally, thereby practically enhancing their ESG management levels.
Supplier ESG Evaluation Metrics
| Environment | · Greenhouse gas emissions and reduction activities (enhanced) - Environmental management system, environmental risks - Management of indicators for greenhouse gases, water and wastewater, waste, and air quality |
|---|---|
Product and Service Responsibility | · Conflict minerals management · Items regulated by the EU Deforestation Regulation, mercury and mercury compounds · Persistent organic pollutants, etc. (new) |
Ethics and Governance | · Ethical risks and ethical management · ESG management and information disclosure · Governance, etc. |
Human Rights and Labor | · Human rights / labor risks and practices · Safety and health risks and workplace safety · Human rights / labor in the supply chain, etc. |
Improvement Tasks by Supplier Characteristics
Company Characteristics | Improvement Tasks |
Large-Scale Companies | · Establish and share a Supplier Code of Conduct based on human rights and labor, and request compliance · Encourage the CEO or top decision-maker to publicly express commitment to ESG management · Manage performance on key ESG factors · Publicly disclose and update ESG management performance annually |
Companies Needing Key Supplier ESG Management | · Establish a Supplier Code of Conduct · Share the Supplier Code of Conduct with suppliers and business suppliers and request compliance · Incorporate suppliers’ ESG factors in purchasing and procurement decision-making processes |
Companies with High ESG Commitment and Needs | · Promote regular discussions of ESG-related risks, opportunities, and performance at the C-level · Utilize consulting and advisory services from external professional organizations and provide ESG education to employees · Publicly disclose and update ESG management performance annually · Obtain third-party verification for disclosed ESG information |
Supply Chain ESG Management Status
| Category | Unit | 2023 | |
|---|---|---|---|
| Total Suppliers | Companies | 794 | |
| Raw Materials | Companies | 115 | |
| Equipment | Companies | 679 | |
| Signed Supplier Code of Conduct | Companies | 163 | |
Suppliers Subject to Supply Chain ESG Evaluation | Companies | 202 | |
| Purchase Amount Ratio of Evaluated Suppliers | % | 96 | |
| Evaluation completed | Companies(%) | 159(79%) | |
| Core Suppliers (Tier 1) | Good | Companies | 33 |
| Risky | Companies | 5 | |
| Total | Companies | 38 | |
| Suppliers (Tier 2) | Good | Companies | 104 |
| Risky | Companies | 17 | |
| Total | Companies | 121 | |
Percentage of Suppliers with High Sustainability Risk (Tier 1, 2) | Companies(%) | 22(13.8%) | |
| Suppliers Undergoing On-Site Evaluation | Companies | 14 | |
| Suppliers Improved Through Corrective Actions | Companies | 14 | |
| Suppliers Participating in Training Programs | Companies | 81 | |
Performance
Supply Chain Communication and Support
Supplier Communication
Kumho Tire operates the supplier portal system (KPOS) to facilitate smooth communication and business coordination with suppliers. Through this system, suppliers receive comprehensive management of the purchasing process, education and guidance on fair trade-related campaigns, ESG, and safety and health management evaluations. In 2024, Kumho Tire initiated faceto- face supplier meetings to strengthen communication with suppliers. A total of 76 companies attended the meetings, where they exchanged information, improved mutual understanding of transactions, and provided feedback on any inconveniences or areas needing improvement in their dealings with us. We plan to select improvement activities as KPIs and actively implement them, while also pursuing ways to gather more feedback and expand exchanges in the future.
Support for Supplier ESG Management
Kumho Tire operates various programs to support supplier ESG management. Kumho Tire has introduced ‘ESG Pick,’ a weekly update sharing ESG issues and related materials with suppliers, to regularly share the latest trends. Additionally, Kumho Tire provides ESG management training on topics such as supply chain management, conflict minerals, and Life Cycle Assessment (LCA), and supports greenhouse gas calculations for suppliers participating in LCA.
Strengthening Dealer Solidarity
In 2023, Kumho Tire hosted the ‘Kumho Members Day’ event at the Daejeon ICC Hotel, inviting dealer owners from across the country. The event, themed ‘One Team Spirit – One Team, One Goal,’ was attended by over 420 Tire Pro and KTS dealers and employees, providing a platform for communication. We shared the 2022 business performance and the 2023 management policy, and presented plaques of appreciation to over 80 dealers who contributed to sales growth.
Support for Enhancing Dealer Capabilities
To build a mutually respectful and growth-oriented partnership with our key suppliers, the nationwide dealers, Kumho Tire provides various training programs for dealer owners and employees. Kumho Tire conducted Sales Force training and special training sessions covering the basics of tires and overall sales techniques.
Performance of Sales Force and Special Training
| Training Courses | Unit | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Sales Force | Persons | 66 | 107 | 132 |
| Special Training | Persons | 1,914 | 2,372 | 2,781 |
| Total | Persons | 1,980 | 2,479 | 2,913 |
Responsible Raw Material Management
Sustainable Natural Rubber Policy
Kumho Tire manages the risks within the natural rubber supply chain in accordance with its Sustainable Natural Rubber Policy. This policy reflects the guidelines of the Global Platform for Sustainable Natural Rubber (GPSNR) and applies to all stakeholders in the value chain, from small farms to rubber manufacturing companies. It includes compliance with regional and national laws on human rights, labor, and environment, as well as efforts to conserve ecosystems and minimize environmental impacts. In particular, to recognize and protect the rights of indigenous peoples and local communities in accordance with the UN Declaration on the Rights of Indigenous Peoples (UNDRIP), we follow the FPIC (Free, Prior, and Informed Consent) methodology and GPSNR guidance.
🔗Sustainable Natural Rubber Policy
GPSNR Disclosure Compliance
Kumho Tire is complying with the GPSNR RR (Reporting Requirement) to provide accurate information to stakeholders. Kumho Tire annually discloses our performance in managing ESG risks across the natural rubber supply chain, including human rights, anti corruption, forest protection, stakeholder engagement, and management system establishment, on the GPSNR website. We will continue to transparently disclose information about our ESG management within the natural rubber supply chain.
Conflict Minerals Policy
Kumho Tire is establishing a Conflict Minerals Policy that aligns with international standards such as the OECD Due Diligence Guidance, the EU Conflict Minerals Regulation, and the U.S. Dodd-Frank Act to participate in responsible raw material sourcing. Kumho Tire prohibits the use of minerals unethically mined in conflict areas and strives to prevent human rights abuses and environmental destruction in the raw material procurement process.
Conflict Minerals Management System
Kumho Tire collaborates across relevant departments following the conflict minerals management process. The Purchasing Team leads the establishment and revision of the Conflict Minerals Policy, and checks and manages risks related to conflict minerals with suppliers. They also collaborate with the R&D Center to develop alternative raw materials and review the inclusion of conflict minerals in products. The ESG Team supports conflict minerals management as part of supplier ESG support and company-wide ESG risk management. We require suppliers to submit the CMRT(Conflict Minerals Reporting Template) annually to understand the use of conflict minerals and manage risks proactively. Additionally, Kumho Tire uses the EMRT (Extended Minerals Reporting Template) to manage responsible minerals such as cobalt and natural mica. Through CMRT and EMRT checks, Kumho Tire sources raw materials from smelters that comply with the RMAP.
* RMAP (Responsible Mineral Assurance Process): A due diligence and assurance program for conflict-free smelters managed by the Responsible Minerals Initiative (RMI).