Coway's highest decision-making body is the Board of Directors. Within the Board, there is an ESG Committee where all decisions relating to sustainability management, including climate change adaptation, are taken.
In particular, climate change adaptation is discussed by the Environment Sub- consultative group within the ESG Consultative Group. This sub-consultative group includes the head of the organization and the person responsible for climate change adaptation at each department/division.
The strategy for the climate change adaptation is led by the IR team and the Environmental Safety and Certification team of the TQA division, and other departments included in working groups to carry out tasks related to risk and opportunity areas. The results of the tasks and action plans are shared and reported to the ESG consultative group four times a year. Some of the climate change adaptation tasks presented at the last ESG Consultative Group have been placed on the agenda of the ESG Committee and the final decision has been made by the Board of Directors.
Supervision and Decision-Making Structure of the Board
Climate change adaptation will impact all industries and create various business risks and opportunities in the future. Due to the impact of climate change adaptation on the economy, there has been growing demand from stakeholders for the disclosure of climate change adaptation-related information. Although Coway has not declared its support for the Task Force on Climate-related Financial Disclosures (TCFD), the company plans to gradually disclose its advanced strategy to address the climate change adaptation risks Coway may face, in line with recommendations from the TCFD disclosure framework (governance, strategy, risk management, indicators and reduction targets). This will enable investors to better understand Coway's climate change adaptation and contribute towards transitioning to a carbon neutrality society.
Coway has conducted a scenario analysis of Coway's climate change adaptation based on the Nationally Determined Contribution (NDC) and the IPCC's Fifth Assessment Report and made assessments. In addition, Coway will gradually update scenario analysis in light of the recent IPCC Sixth Assessment Report and disclose its strategy for addressing climate change adaptation based on the results of the scenario analysis in accordance with the TCFD framework.
Coway categorizes risks from climate change adaptation into physical and transition risks. Physical risks include the impacts of extreme weather, such as droughts and floods, and global warming. Transition risks include changes in policy, in the supply chain and market demand in the process of transitioning to a carbon neutrality society.
Coway is reviewing the risks from climate change adaptation on a scenario basis, focusing on business impacts, and establishing strategies to address potential impacts and financial impacts from short-term, mid-term, and long-term perspectives.
As a result of analyzing the impacts of acute and chronic risks caused by climate change adaptation, the impacts of physical risks including typhoons, heavy rains, floods, forest fires, and heat waves. Accordingly, for risks with medium- to long-term impacts, such as heavy rains and floods, it was confirmed that it is necessary to establish and operate a disaster management process including disaster recovery in the event of a natural disaster, and to operate risk assessment to identify, evaluate, and eliminate risk factors in the workplace to prevent major disasters in terms of safety and health management.
Risk Classification
Risk
Planning Period
2025
2030
2050
Physical Risks
Acute
Typhoons
Heavy rain and flooding
Wildfires
Heat waves
Chronic
Precipitation changes
Temperature changes
Water shortages
Rising sea level
Type
Period
Factors
Potential Impacts
Financial Impacts
How to address risks and realize opportunities
Risk
Physical Risks
Short-term (~2024)
Possible occurrence of another pandemic (Covid-19)
Reduced employee productivity due to infection from specific diseases
Decreased sales due to reduced activity, such as staying at home
Low
Implement national response strategies
Mid/long term (2025-2050)
Extreme weather events such as droughts, floods, heat waves, and heavy snowfall
Medium
Establish climate change adaptation strategies (for each scenario) and continuously monitor and prepare for climate change adaptation-related information
Damage to business sites due to natural disasters
Increased follow-up costs for damage to business sites
Medium
Establish detailed response processes for relocating production, inspections, and closures of business sites
material/component supply issues
Decreased productivity due to supply chain damage
Medium
Establish detailed response processes, including supply chain diversification and alternatives
Issues when moving for product installation/management
Decreased corporate image and reputation due to delayed after-sales service
Medium
Establish processes for informing customers about installation/management delays and develop and release self-managing products
Outages caused by oversupply due to increased heating and cooling power usage
Operational gaps in business sites due to power supply disruptions
Decreased revenue due to delivery delays
Medium
Establish response processes, such as plans for utilizing renewable and stored energy
Extreme weather events exacerbate water scarcity
Medium
Establish climate change adaptation strategies (for each scenario) and continuously monitor and prepare for climate change adaptation-related information
Strengthened national water management policies
Increased costs for water and industrial water usage/disposal
Medium
Secure facilities for water reuse and recycling and establish related processes
Increased conflict between community members over the development and use of water resources, including groundwater.
Increased conflicts with local residents over water development due to water scarcity
Medium
Establish a stakeholder consultation process
Increased regulations and disclosure obligations on carbon emissions
Increased costs for energy transition to achieve carbon reduction goals
Medium
Actively perform reduction scenarios and conduct monitoring related to regulations
Transition Risks
Short-term (~2024)
Enhanced regulations on resource circulation
Increased costs for product development and adoption of circular products
Medium
Redefine product development processes to align with regulations
Enhanced regulations on raw materials/components, including conflict minerals
Increased costs for introducing management systems and monitoring processes to verify the use of conflict minerals in raw materials/components
Low
Establish advanced supply chain management processes to practice ESG management
Growing demand for low-carbon and environmentally friendly products and services
Decreased revenue and corporate image/reputation due to delays in developing and providing eco-friendly products and services that meet consumer demands
Medium
Plan and launch products that reflect consumer needs in line with trends
ESG management practices demanded from stakeholders
Decreased corporate image and reputation due to inadequate response to trends and stakeholder demands
Low
Establish proactive strategies, plans, and goals that align with trends
Mid/long term (2025-2050)
Enhanced regulations on substances that contribute to global warming
Cost increases
Low
Explore and apply innovative and alternative technologies
Introduction of new sustainability reporting standards and enhanced disclosure obligations
Increased costs for producing/verifying sustainability reports to comply with disclosure standards
Increased confusion due to discrepancies between voluntary and mandatory disclosure deadlines
Medium
Monitor and internalize proactive disclosure guidelines to prepare for mandatory disclosures
Exposure to disclosure violations and lawsuits
Increased litigation costs
Medium
Comply with disclosure standards
Climate change adaptation can be a risk factor, but it can also play a strategic opportunity in ways such as transforming businesses. Coway has analyzed the impact of climate change adaptation opportunities. We intend to contribute towards improving resource circulation by establishing a waste recovery and recycling system and a resource cycle ecosystem. We also expect to reduce operating costs, including the cost of purchasing energy, meet renewable energy conversion targets to achieve carbon neutrality, and ensure competitiveness in a carbon neutrality industrial structure.
Categorizing Opportunities
Opportunities
Planning Period
2025
2030
2050
Market
Covid-19 mitigation
Launch and expand self-management products/services
Resource Efficiency
Increase the percentage of energy- and resource-efficient operating technologies and products.
Market
Extreme weather events increase the frequency of extreme droughts, yellow dust, and fine dust.
Policy
Apply greenhouse gas emission/reduction technologies
Market
Build an ecosystem to recover and recycle waste products for resource circulation
Energy MIX
Reduce greenhouse gas emissions by phasing in renewable energy and meeting targets
Type
Period
Factors
Potential Impacts
Financial Impacts
How to address risks and realize opportunities
Opportunity
Market
Short-term (~2024)
Covid-19 mitigation
Increased productivity due to workers being able to actively participate in production activities
Medium
Perform business-as-usual activities to keep the business sustainable
Launch and expand self-management products/services
Cost reduction through the ability to deal with risk (unavailability of in-home service)
Increase in revenue by launching products that meet the demand for non-contact services
Medium
Respond to product after-sales service in the event of extreme weather such as heat waves, heavy snow, floods, etc.
Resource Efficiency
Mid-term (2025-2030)
Increase the percentage of energy- and resource-efficient operating technologies and products
Reduce operating costs through increased energy efficiency
Increase in revenue as demand for green goods and services grows
Enhanced corporate image and reputation
High
Obtain environmental marks/carbon footprint/low carbon certification
Sell green, renewable power/Secure REC
Market
Mid/long term (2025-2050)
Increase in the frequency of extreme drought, yellow dust, and fine dust due to extreme weather events
Increase in sales of our products as water pollution causes an unstable supply of drinking water and the number of days with high levels of yellow dust and fine dust increases
High
Expand market and increase demand for water/air purifier products
Policy
Apply greenhouse gas emission/reduction technologies
Improve corporate image and reputation
Medium
Improve credibility by advancing and internalizing green products and technologies
Market
Build an ecosystem to recover and recycle waste products for resource circulation
Expand revenue streams by entering new markets
Diversify the business portfolio to drive sustainable growth
Medium
Actively explore new eco-friendly business plans for extended value chains in downstream industries
Energy MIX
Reduce greenhouse gas emissions by phasing in renewable energy and meeting targets
Reduce costs and increase revenue with increased efficiency and productivity
Medium
Achieve Net Zero to improve the business environment and generate profitability
Coway is developing a detailed strategy to promote climate adaptation, incorporating resilience into organizational strategies across the company and moving away from the company's past site-focused climate change adaptation.
Coway's climate change adaptation risk management is conducted as a business risk management process to respond to changes in the external business environment. In climate change adaptation risk management, the IR Team of ESG division leads the entire process and operates/manages each process (monitoring, risk analysis, task submission, reporting, and management).
Climate change adaptation risks identified through this process will be reported periodically to the ESG Consultative Group. The financial and non-financial impacts of climate change adaptation that are assessed to be material risks will be reported to the ESG Committee and the Board of Directors.
Climate Change Adaptation Risk Management Process
Monitoring climate change adaptation regulations/trends
IR Team ESG Section Legal / External Relations Team, Environmental Safety Certification Team
Analyzing internal risks related to climate change adaptation
IR Team ESG Section Legal / External Relations Team Environmental Safety Certification Team
Identifying prioritized response actions
IR Team ESG Section
Reporting and implementing response strategies
IR Team ESG Section ESG Committee – the Board of Directors
Task management
IR Team ESG Section
We aim to join the national effort to fight the climate crisis and reduce carbon emissions in half by 2030 to achieve carbon neutrality by 2050. To this end, Coway has decided to invest in renewable energy such as building solar power plants and transition to low-carbon energy as a climate adaptation scenario-based promotion strategy. We will continue to invest in solar installations and expand our power plant operations, which will help us meet our 2030 and 2050 carbon emission reduction targets.
We have anticipated climate change adaptation scenarios related to our products and decided to develop new and alternative technologies as a promotion strategy based on climate adaptation scenarios and expand their application. Specifically, by 2025, we will expand the application of refrigerant-free refrigeration technology for our domestically supplied products, confirm the replacement of existing refrigerants with eco-friendly refrigerants as a strategy based on climate adaptation scenarios, and invest in new and alternative technologies to achieve our greenhouse gas emission reduction targets.
Additionally, we plan to predict climate adaptation scenarios related to areas connected to Coway's business (supply chain/affiliates, logistics, service managers, and leased buildings) and apply detailed implementation strategies.
Recently, the government announced a “plan to expand the use of eco-friendly vehicles” as part of its strategy to achieve the 2050 NDC target. The “Act on the Promotion of the Development and Distribution of Environment-Friendly Automobiles” was enacted to require private sector companies with a large number of vehicles to set a target for the purchase of green vehicles each year when purchasing or leasing new vehicles, and to verify that the target is being met through performance checks.
As Coway falls under Enforcement Decree No. 5 of the Act (Disclosure Group), Coway is establishing purchase/lease targets for mid- to long-term eco-friendly vehicle conversion for business vehicles. We will report our annual performance on this through our management organization, the Korea Energy Agency.
Coway will therefore progressively disseminate climate adaptation scenarios and implementation strategies that minimize the impact of climate change adaptation across its relevant business areas and take the lead in climate change adaptation on a global scale.
The financial and non-financial risks posed by climate change adaptation are driving major changes in industrial activities worldwide and demand a transition to a carbon neutrality global community. In line with these changes, Coway has established mid-to-long-term goals to reduce carbon emissions and actively participate in addressing climate change adaptation. We also voluntarily undergo a third-party verification of our carbon emissions every year.
Coway recognized the impact of climate change adaptation on business activities and developed a carbon emissions inventory management system in 2009. A year later, we set the carbon emissions reduction target to be achieved by 2020 and met the target. Based on the IPCC special report on the impacts of global warming of 1.5 °C above pre-industrial levels published in 2018, we have set our new mid- and long-term targets for carbon emissions by 2030, 2040, and 2050 (mid- and long- term). We are also preparing a climate change adaptation plan to achieve carbon neutrality by 2050. We will continue making investments in renewable energy and achieve energy efficiency in the workplace to reduce carbon emissions across all Coway factories.
Coway has quantified and disclosed detailed mid- and long-term carbon emissions reduction targets. The mid-term target is a 50% reduction in carbon emissions by 2030 based on carbon emissions in 2020, followed by a 75% reduction by 2040, and a 100% reduction by 2050.
Coway is committed to fulfilling its goals for reducing carbon emissions and energy consumption in each factory. Above all, we are replacing part of the energy we use in the factories with solar energy and building a renewable energy network, joining efforts to reduce carbon emissions at the national level. We have been operating solar power plants that utilize the facilities available in manufacturing plants, logistics centers, and other relevant bodies to offset carbon emissions. We will continue working hard to achieve carbon neutrality by participating in third-party Power Purchase Agreements (PPAs) and achieving carbon neutrality throughout the supply chain, among others.
Category
Unit
2017
2018
2019
2020
2021
2022 target
2022 performance
2023 target
2030 target
2050 target
Scope1
tCO₂eq
630
676
640
601
877
-
832
-
-
-
Scope2
tCO₂eq
5,162
5,349
5,224
5,134
5,822
-
5,995
-
-
-
Total
tCO₂eq
5,792
6,025
5,864
5,735
6,699
6,221
6,827 1)
5,860 2)
2,868
0
Unit
tCO₂eq/KRW 100 million
0.250
0.252
0.232
0.221
0.238
-
0.243
-
-
0
Year
Scope
SCOPE 1
SCOPE 2
Total emissions
Stationary Combustion
Mobile Combustion
Other Greenhouse Gases
Indirect Emissions
2022
Total
649
177
5
5,995
6,827
2022
Seoul Head Office
247
118
0
395
761
2022
Environmental Technology Institute
0
23
0
1,707
1,730
2022
Logistics Center (Yugu)
0
0
0
711
711
2022
Solar power plant
0
0
0
1
1
2022
Yugu Factory
385
34
5
2,059
2,484
2022
Incheon Factory
9
0
0
877
886
2022
Pocheon Factory
9
2
0
245
255
Coway currently measures and discloses carbon emissions in the Scope 3 area of employee commuter buses. However, as the global trend of disclosing information in all Scope 3 areas continues, Coway is gradually unfurling a response plan. By 2025, we plan to establish a system to monitor and manage carbon emissions in all Scope 3 areas (leased buildings, outsourced logistics operations, employee travel, affiliates (subsidiaries), and suppliers).
The most important strategy for achieving Coway's mid- to long-term carbon emission reduction goals is the transition towards and investments in renewable energy (solar power). Coway relies on electricity for most of its energy sources and plans to offset our carbon emissions by building a renewable energy (solar) power generation facility to cover the increase in energy usage due to continued business growth.
Coway has been investing in the construction of solar power plants since 2020 to transition to renewable energy, with the goal of reducing carbon emissions by 50% by 2030 and reaching zero by 2050. Solar power plant No. 001 began generating electricity in September 2022, and solar power plant No. 002 began generating electricity at the end of March 2023. In addition, more solar power facilities are needed to meet the goal of reducing carbon emissions by 50% by 2030. The investment plan is to sequentially build solar power generation facilities that are approximately 800~1000kwh in scale by 2030. However, the construction of additional solar power plants may change from time to time due to the need to secure investment conditions such as available funding, buildable land, and permits/approvals. But we will make every effort to achieve the goal of reducing carbon emissions by 50% by 2030 by proactively securing funding and land.
Coway has been continuously introducing new and renewable energy, starting with the construction of a solar power plant facility at the Pocheon Plant in 2013. As of 2022, Coway produces and operates renewable energy through solar power generation facilities at the Yugu Plant (58 MWh), Incheon Plant (50 MWh), Pocheon Plant (45 MWh), and distribution center (65 MWh). In addition, Coway secured 228 MWh (342 REC) of electricity generation through a separate solar power plant, Solar Power Plant No. 001. The three factories and distribution centers (excluding solar power plant No. 001) generated and consumed about 218 MWh of electricity in 2022, reducing greenhouse gas emissions by about 100 tons. The Energy Storage System (ESS) introduced at the Yugu Plant has reduced peak loads and contributed to the distribution of energy usage.
Category
Unit
2022
Yugu Plant
Total production
446
Self-Consumption
218
58
Incheon Plant
50
Pocheon Plant
45
Logistics Center (Yugu)
65
Solar Power Plant No. 001
REC secured
228
(342 REC when applying a weight of 1.5)
228