Double Materiality Assessment
Through the Double Materiality Assessment, Coway systematically identifies ESG issues that are material to its business operations and stakeholders, and uses the results to determine the key topics and overall structure of its Sustainability Report. Based on the double materiality methodology proposed by the European Sustainability Reporting Standards (ESRS), Coway conducted an assessment that considers both the impact of its business on society and the environment and the financial impact of the external environment on its business. Coway also proactively identifies mid- to long-term risks and opportunities requiring management, and uses the results to develop ESG strategic initiatives and monitor their execution.
Concept of the Double Materiality Assessment
Double Materiality Assessment Process
For the Double Materiality Assessment, Coway first analyzed its business model and entire value chain. It then built a universe of potential material issues that reflect industry characteristics. Coway prioritized ESG issues from a value chain perspective. This drew on global disclosure and rating standards. It also drew on benchmarking analyses of peers and leading companies. This approach enhanced the relevance and completeness of the issues subject to assessment. For each identified issue, Coway distinguished between environmental and social impacts and financial impacts. This allowed it to systematically map influencing factors as well as risks and opportunities. Coway strengthened its survey and review procedures by reflecting the professional expertise and practical experience of its employees. This further enhanced the objectivity and professionalism of the assessment results. Finally, Coway consolidated the assessment outcomes and selected its material issues. It strengthened the linkage with its decision-making framework through management review and a Board of Directors resolution.
Double Materiality Assessment Process
Materiality Assessment Results
Based on Coway's value chain and industry characteristics, a universe of (potential) material issues comprising 12 issues was prioritized through the Double Materiality Assessment, and 6 material issues were selected by applying threshold criteria. The assessment results show two key shifts. Issues centered on internal management, such as employee working conditions and ethics and compliance, have become less prominent. This reflects the fact that related systems have taken root. In contrast, issues related to consumers and the supply chain have grown in significance. This shift reflects the expanded impact on Coway at its points of contact with external stakeholders. Information security & data privacy, in particular, has emerged as an area requiring proactive risk management. Major data breach incidents have increased in recent years. This has heightened social sensitivity around the issue. Climate change and energy, resource circulation, and consumer-related issues are core issues structurally embedded in Coway's business model. Coway has confirmed these as priorities for continuous management from a long-term, strategic perspective, beyond short-term measures.
Materiality Assessment Matrix
Environmental and Social Impacts by Material Issue
High Impact ●●●
Medium Impact ●●○
Low Impact ●○○
| Pillar | Issue | Environmental and Social Impact | Reporting Section | |||
|---|---|---|---|---|---|---|
| Value Chain | Impact | Type | Impact Level | |||
| E | Climate Change/ Energy |
Across the value chain |
|
Negative/Actual | ●●● |
Climate Change Response
|
| Across the value chain |
|
Positive/Actual | ●●● | |||
| Sustainable Raw Materials | Upstream, Own Operations |
|
Negative/Potential | ●●○ | Resource Circulation and Waste
|
|
| Resource Circulation | Downstream |
|
Negative/Potential | ●●○ |
Resource Circulation and Waste
|
|
| Downstream |
|
Positive/Actual | ●●○ | |||
| S | Information Security & Data Privacy | Downstream |
|
Negative/Potential | ●●● |
Information Security & Data Privacy
|
| Downstream |
|
Positive/Actual | ●●○ | |||
| Consumer Safety | Downstream |
|
Negative/Potential | ●●○ | Customer-Centric Management
|
|
| Supply Chain Management | Downstream |
|
Positive/Potential | ●●○ | Supply Chain Management
|
|
Financial Risks and Opportunities by Material Issue
High Impact ●●●
Medium Impact ●●○
Low Impact ●○○
| Pillar | Issue | Financial Impact | Reporting Section | |||
|---|---|---|---|---|---|---|
| Value Chain | Value Chain | Type | Impact Level | |||
| E | Climate Change/ Energy |
Own Operations |
|
Risk | ●●● | Climate Change Response
|
| Upstream, Own Operations |
|
Risk | ●●● | |||
| Own Operations |
|
Risk | ●●● | |||
| Sustainable Raw Materials | Upstream |
|
Opportunity | ●●○ | Resource Circulation and Waste
|
|
| Upstream |
|
Risk | ●●○ | |||
| Resource Circulation | Downstream |
|
Opportunity | ●●○ | Resource Circulation and Waste
|
|
| S | Information Security & Data Privacy | Own Operations, Downstream |
|
Risk | ●●● | Information Security & Data Privacy
|
| Consumer Safety | Own Operations, Downstream |
|
Risk | ●●● | Customer-Centric Management
|
|
| Supply Chain Management | Upstream |
|
Risk | ●●○ | Supply Chain Management
|
|
Material Issue Management
Analysis of Material Issues for Corporate Value Creation
- Climate Change/Energy
- Sustainable Raw
Materials - Resource
Circulation - Information
Security & Data
Privacy - Consumer
Safety - Supply Chain
Management
Risk and Oppor-tunity Fact-ors
- Damage to worksite assets and production disruption from extreme weather such as heavy rain and flooding
- Higher heating and cooling demand from abnormal weather, leading to higher energy costs
- Escalating operating expenses from the expansion of the emissions trading scheme and carbon taxes
- Reduced electricity costs achieved through the transition to renewable energy and energy efficiency improvements
- Tightening environmental regulations surrounding the use of fossil fuel-based raw materials
- Risk of reduced competitiveness for eco-friendly products in the event of failing to adopt circular materials
- Growing market preference and demand for products incorporating sustainable and eco-friendly materials
- Rising waste disposal costs combined with stricter regulatory constraints on landfilling and incineration
- Environmental fees if product recovery and recycling systems are inadequate
- Reduced raw material procurement costs through the remanufacturing and recycling of recovered rental products
- Exposure to severe financial compensations, regulatory sanctions, and the critical loss of customer trust in the event of a data breach
- Brand damage from large-scale recalls and damages claims in the event of product defects
- Negative impact on consumer safety and health from safety incidents caused by products that fail to meet safety standards
- Reputational damage to Coway and supply disruption in the event of partner-related environmental pollution or human rights violations
- Violations of global regulations and trade restrictions associated with the use of conflict minerals
Busin-ess Case
- Carbon costs from energy use at production plants and logistics centers, as well as fuel use by in-home care service vehicles, affect profitability
- Plastics account for a high share of major products such as water purifiers and air purifiers, making the stability of raw material sourcing and environmental impact material to the business
- Lower dependence on raw material procurement and stronger eco-friendly product competitiveness through a closed-loop system that converts in-house recovered plastics into recycled materials
- The rental business model is well-suited to resource circulation as it has a structured product recovery process
- The refurbishment program has been in place since 2007, and the closed-loop system established in 2024 has further reinforced the circular economy model
- Through rental services, Coway holds large volumes of customer information, with real-time usage data collection growing as the use of IoT products such as smart water purifiers expands
- Water, air, and hygiene-related products have a sensitive impact on consumer health
- Continuous safety inspections through in-home care services enhance customer satisfaction
- Safety incidents may reduce new contract acquisition and impact revenue
- ESG risks at partners can affect Coway's production continuity and brand image
- With a high proportion of SME partners, supply chain stability requires support for strengthening their ESG capabilities
Busin-ess Impact
Cost
Cost
Cost
Risk
Risk
Risk
Respo-nse Strat-egy
- Expanding renewable energy: installing solar power facilities at worksites and securing renewable energy certificates
- Transitioning service vehicles to EVs
- Replacing aging equipment and conducting maintenance
- Transitioning to eco-friendly refrigerants: phased switch to low-GWP refrigerants
- Expanding the use of circular raw materials:
participating in the Ministry of Environment’s circular utilization assessment, and applying PCR resins to bidets, water purifiers, and other products - Operating the closed-loop system: shredding and pelletizing plastics from recovered products for reuse as raw materials in new products
- Expanding product models that incorporate circular raw materials
- Refurbishment program: replacing components in returned and display products for resale
- Used filter upcycling program: collecting used water purifier filters and recycling them into materials for tool bags, automobile bumpers, and other items
- Applying circular design principles from the product planning stage
- Advancing the information protection management system: maintaining and renewing ISMS-P, ISO27001/27701 certifications
- Preventive activities: regular monitoring including security reviews at the system planning stage, drills against malicious emails, and security inspections of subcontractors
- Establishing an incident response framework
- Strengthening company-wide training and awareness
- Applying internal verification standards that exceed legal requirements at the product design and manufacturing stages
- Conducting safety training for service managers during product installation and verifying compliance with installation guidelines
- Managing consumer safety through 24/7 chatbots, IoCare+ app smart diagnostics, and customer care instructional videos
- Building in-house testing infrastructure
- Conflict mineral management: reviewing CMRT reports, recommending the transition to RMAP-certified smelters, and signing non-use commitments
- Conducting partner assessments
- Fair trade compliance: holding monthly review committees and operating a dispute resolution body
Mid-
to Long-Term Plan
to Long-Term Plan
- Reducing Scope 1 and Scope 2 emissions
- 50% reduction by 2033 compared to 2023 (base year)
- Achieving Net Zero by 2050
- Expanding the product portfolio applying circular raw materials
- Maintaining a 100% waste recycling/resource recovery rate
- Advancing company-wide information protection and personal data management processes
- Establishing a globally integrated security management system
- Advancing the UX of the product self-management guide
- Expanding the supply chain scope subject to non-use of conflict minerals
Key Perfor-mance
- Renewable energy use ratio: 2.9%
- Eco-friendly vehicles ownership ratio: 4%
- Eco-friendly refrigerant use ratio: 96% achieved
- Use of 2,030 tons of recycled ABS material (127% of the target)
- Attained a 17% share of recycled plastics relative to total plastic consumption
- Certified under the Circularity Assessment for seven bidet models and one water purifier model
- 90% reduction rate in environmental fees maintained
- 100% waste recycling/resource recovery rate achieved
- Maintained a product recyclability rate of 75% or higher per unit
- ISMS-P certification, ISO27001:2022, and ISO27701:2019 certifications maintained
- Information protection investment: KRW 3.49 billion (4.6% of IT budget)
- Medical device GMP certification (BEREX medical device massage set/core set product groups, Therasol product group)
- ISO9001:2015 certification maintained
- Number of RMAP-conformant (3TG) smelters: 383
- Legal violations of the Subcontracting Act: 0 cases
- Completed ESG assessment of tier-1 significant partners (35 companies via document review, 5 via on-site assessment)
KPI
- GHG emissions
- Energy consumption
- Renewable energy use
- Establishment of recycled resin management infrastructure
- Development of eco-friendly/recycled components and expansion of product applications
- Maintenance of information protection certifications
(ISMS-P, ISO27001:2022, ISO27701:2019)
- Acquisition of product safety certifications
- Number of Subcontracting Act violations
Material Issue Analysis from an External Stakeholder Perspective
| Issue | External Impact Factors (Coverage, %) |
Stakeholders | Impact on External Stakeholders | Output Metric | Impact Metric |
|---|---|---|---|---|---|
| Climate Change/ Energy |
|
|
|
|
|
| Sustainable Raw Materials |
|
|
|
|
|
| Resource Circulation |
|
|
|
|
|
| Information Security & Data Privacy |
|
|
|
|
|
| Consumer Safety |
|
|
|
|
|
| Supply Chain Management |
|
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