Collaborative Partnership l Social l Hyosung Group

Collaborative
Partnership

Collaborative Partnership with Businesses
across the Value chain and Communities

Hyosung’s mission is ‘Enhance and enrich the quality of life for humanity with its leading technology and management capability.’ Accomplishing this objective requires robust cooperation with our stakeholders, such as suppliers, customers, and local communities. In this regard, Hyosung aims to establish a system of mutual development and positive cycles with its stakeholders.

Collaborative Partnership Strategies

Collaborative Partnership with Suppliers

Hyosung has established the supplier code of conduct to facilitate sustainable supply chain. Annually, when engaging in fair trade agreements, we secure a commitment from suppliers to adhere to the code of conduct. We perform regular evaluation of the suppliers and check their compliance through assessments by experts.
To address adverse impacts found through the assessment and remove risk factors, Hyosung establishes plans and reviews them through the Collaborative Partnership Deliberation Committee prior to their implementation. We conduct site inspection to check the improvement and manage follow-up actions.

Collaborative Partnership with SME Customers

Hyosung supports continuous growth of the SME clients by utilizing eco-friendly materials and technologies. We assist them producing and launching eco-friendly material items, as well as exhibiting and selling those at exhibitions and festivals.
Hyosung is also developing plans to support SME clients taking appropriate actions and conducting activities in the areas of climate change and biodiversity conservation.

Collaborative Partnership with Local Communities

Hyosung has established and operates strategies for collaborative partnership with local communities to address adverse effects on local communities where our business sites are located, and to facilitate their growth and development. Additionally, we are involved in the resolution of issues in biologically significant regions.

Collaborative Partnership Governance

Collaborative Partnership Deliberation Committee Operation

Hyosung operates the monthly Collaborative Partnership Deliberation Committee to review and address matters in need of improvement as a result of risk assessment related to suppliers, customers and local communities of each operation company since June 2023.

Collaborative Partnership Process

Collaborative Partnership with Businesses across the Value chain and Communities

Signing and Supporting Fair Trade Agreements with Prominent Suppliers

Hyosung signs fair trade agreement with prominent suppliers selected through supplier screening each year, requiring their commitment to the supplier code of conduct. The agreement details compliance with the fair trade regulations and support measures such as the monetary payment, etc. for collaborative partnership. In particular, we contribute to improving supplier's cash flow by paying for the items within 10 days after transactions.
Support for Sustainability Education and Consulting

Hyosung provides consulting and guidebook for suppliers as well as conduct job-specific training by area to achieve favorable outcomes in sustainable management. Also, through supplier assessment, we identify their weaknesses and provide guidance on improvement measures.
Development Support for Eco-friendly and Advanced Materials Application

Hyosung provides support for its SME clients to utilize advanced materials such as recycled fibers, aramid, and airbag fabric in developing products. Additionally, we assisted with brand development, homepage renewal, and promotional events.
Workplace Improvement Support for In-house Sub-Contractors

Hyosung supported in-house sub-contractors by improving the factory lighting, installing cooling and heating equipments, and facilitating resting areas to provide their workers with pleasant working environment.
Providing Testing Equipment for Quality Improvement

Hyosung assisted suppliers by supplying advanced testing equipment, including voltage quality testers, abrasive wear testing machine, and ultrasonic acoustic cameras to improve the accuracy of the product quality testing.
Support for Business PC Upgrade

Hyosung supported in-house subcontractors by upgrading sets of equipment, including desktops for high-performance design, business laptops, and wide monitors to improve the operational efficiency. We aim to minimize waste resources and contribute to circular economy.
Other Support Activities for Suppliers
- Energy Conservation Consulting and Facility Installation
- Providing Safety Equipment
- Risk Assessment Consulting
- Marine Forest Conservation Activities
  Hyosung collaborated with the Korea Fisheries Resources Agency and local governments to transplant seagrass seedlings, known for their high carbon absorption capacity. The Korea Fisheries Resources Agency analyzed the ecological environment before and three years after the creation of the seagrass forest, confirming that the number of benthic organisms increased by 2.5 times, the number of species by 1.5 times, and the species diversity index by 1.2 times, demonstrating the effectiveness of seagrass forest in ensuring the health of the marine ecosystem.
- Feeding and Providing Medical Support for Winter Migratory Birds
  Hyosung conducted feeding activities for endangered migratory species around the Hwapocheon Wetland region, such as whooper swans and vultures in collaboration with Gimhae City. Additionally, Hyosung supported the treatment and release of the rescued eagle before its starvation to death. We plan on continuing the feeding and medical support of winter migratory birds.
- Support for Eco-friendly Products for Locals and Social Welfare Facilities
  Eco-friendly products were supplied by Hyosung to community centers, schools, mother and child protection centers, and local children's centers in Haman, Gumi, and Wanju regions. Polyketone meal trays, solar power generation equipment, apparel and purses made from recycled fabrics, carbon fiber hiking poles, carbon fiber floor heating, and eco-friendly furniture were among the products.

Fair Trade

Four-pillar
plan of action
for fair trade

Contract negotiation
procedure
Partner selection and
operation procedures
Written document issuance and
preservation practices
Installation of internal
deliberation committee and
operation procedures

Establishment of fair trade order

Hyosung fosters a culture of fair trade with its partners and implements and enforces the Fair Trade Commission-recommended company rules. The company regulations stipulate four fundamental procedures: contract signing, the selection and operation of partners, the establishment and operation of an internal deliberation committee, and the issuance and preservation of documents. By announcing guidelines for the prohibition of retaliatory acts, such as unilateral trade restrictions or suspensions, we hope to lay the groundwork for equitable partnerships and reasonable and transparent trade relationships.
Fair trade and social responsibility

Hyosung complies with the Fair Trade Commission's standard subcontract agreement and applies it to contracts. Clauses guaranteeing the physical and intellectual property rights of partners and the transfer of ownership of objects are included in standard subcontracting agreements, and we are committed to defending both types of property rights.
Compliance Program

Hyosung introduced the Compliance Program (CP), which is conducted by companies themselves to comply with fair trade laws, in September 2006 in an effort to foster a desirable fair trade culture. On June 1, 2018, the date of division, each business company inherited and introduced the plan. The Legal Compliance Team is responsible for the daily operation of the CP and strives to minimize fair trade-related risks through activities such as familiarizing all employees with the program's operating guidelines, fair trade training, and monitoring. The program's CP manager is a compliance officer appointed by the Board of Directors, and the Compliance Program Handbook, where employees can review program operation guidelines, is updated annually to assist employees in complying with fair trade laws and regulations despite changes in ethics-related laws and regulations and the environment.
Disclosure of fair trade principles to partners

Hyosung has enacted the "Partner Code of Conduct" so that Hyosung and its partners can pursue sustainable growth and earn the public's trust. This facilitates the formation of transparent and fair trade relationships and the promotion of social responsibility standards to all of our partners. In addition, by publishing this code on the website, we announce our intention to fulfill it as a social promise, not as a contract with our partners.

Supply Chain Sustainability Management

Enhancement of partner
registration and evaluation
Hyosung strives to establish transparent and equitable criteria for selecting partners. The company's shared growth website clearly outlines the mandatory and recommended criteria for bidding participation, and anyone is free to apply for partner registration via the electronic procurement system. We also review the registrations of all new partners before allowing them to participate in the bidding for supply chain risk management. In addition to traditional criteria such as quality, delivery, price, and management performance, indicators for compliance with legal requirements for environment and safety, human rights, and labor are used as evaluation criteria when registering a new partner.
Hyosung's partner selection procedure
- Recruitment
- Review for
  partner selection
- Selection
  (bidding-contract)
- Initiation of
  transaction
  (order-receipt)
Hyosung conducts re-evaluations of existing partners and takes unique follow-up actions based on the evaluation outcomes.
Evaluation criteria and scoring

Checklist

Scoring

Management evaluation

50

Human rights issues

30

Environmental and
safety assessments

20

Measures based on supply and assessment
Over 90 : Priority given to the contract, exempt from reevaluation the following year

Over 80 : Priority given to the contract

Over 70 : Maintain transaction

Over 60 : Warning and guidance, special review within three months

Under 60 : Stop transaction
Excellent Partner Award

Hyosung recognizes excellent alliances with a special plaque and prize money for the 'Proud Hyosung Person of the Year'. It helps alliances to understand the purpose of shared growth and be motivated.
Pledge to abide by the Partner
Code of Conduct for shared
growth

Hyosung and its partners complete the "Pledge of Compliance with the Partner Code of Conduct" so that they can fulfill their social responsibilities and become companies trusted by the public. Hyosung drafted the Pledge reflecting international standards such as the Universal Declaration of Human Rights, the Ten Principles of the United Nations Global Compact, the core conventions presented by the International Labor Organization (ILO), and the OECD guidelines. It specifies in detail four compliance requirements: corporate operation, respect for the human rights of employees of partners, establishment of a safe workplace, and environmental management responsibility.
Pledge of Compliance with
the Partner Code of Conduct
Establishment of
an emergency scenario and
response manual for supply
chain continuity

Hyosung has established scenario training and response manuals for the delivery of all products supplied to customers, thereby enabling systematic response to emergency situations. Such emergencies include labor shortages caused by strikes, transportation accidents, environmental incidents, and cyberattacks. By conducting simulation drills to determine the state and extent of damages, causes, recovery, and mitigating measures due to emergencies, Hyosung derives issues and improvement plans for each stage of response based on the enacted scenario. In addition, such simulation drills ensure the accuracy of the scenario-specific response outcomes.

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