esg management the sustainable future korea asset

KOREA ASSET MANAGEMENT CORPORATION

ESG CASE PRESENTAION 2021 JEJU PLUS INTERNATIONAL ENVIRONMENT FORUM (Jul. 9, 2021)

CEO Moon Sung Yu

ESG Management

The Sustainable Future KAMCO Dreams of

KAMCO’S ESG STRATEGY DIRECTIONS

ESG MANAGEMENT OF KAMCO’S KEY BUSINESSES

ESG MILESTONE TOWARD KAMCO CENTENNIAL

KAMCO’S ESG STRATEGY DIRECTIONS

①ABOUT KAMCO

② ESG MANAGEMENT

③ ESG CORE VALUE AND KAMCO’S KEY ISSUES

1. About KAMCO 01. KAMCO’S ESG STRATEGY DIRECTIONS

PURPOSE & VISION

KEY FEATURES & ROLES

To contribute to the development of the financial industry and the economy

Purpose

Vision A leading platform that adds stability to the people, vitality to business, and value to national assets

Acquisition & liquidation of insolvent bonds of financial companiesAcquisition of non-performing household loans and weak household credit recovery support Acquisition of corporate assets, weak corporate restructuring supportManagement and development of national/shared propertySettlement of delinquent taxes Management and operation of electronic asset disposal system ‘OnBid’

Household Resilience

Corporate

Reform

Public asset value growth

1. About KAMCO 01. KAMCO’S ESG STRATEGY DIRECTIONS

PURPOSE OF CORPORATION CHANGES

– From shareholder capitalism to stakeholder capitalism

Summary of Statement on the Purpose of a Corporation 2019

Source: 2019 Business Roundtable (BRT)

Delivering value to our customer.

Investing in our employees with fair compensation and

benefits.

Dealing fairly and ethically with our suppliers.

Supporting the communities and protect the environment.

Committing to transparency and engagement with

shareholders.

ESG Management Objective

ESG Promotion System

To create sustainable public service by strengthening socially responsible management based on ESG

2. ESG Management 01. KAMCO’S ESG STRATEGY DIRECTIONS

ESG Management Committee (General)

Social Value Implementation Office (Dedicated)

Field Department (Practical)

Approve strategy & plan / review critical ESG issues / monitor quarterly ESG execution

Strategize & plan / analyze & report critical ESG issues / analyze performance & draw improvement direction / publication of the report

Execute plans / execute investment / report results & draw up improvement measures

Field Department

Social Value Office

ESGC

ESG Core Value and KAMCO’s Key Issues

3. ESG Core Value & KAMCO’s Key Issues 01. KAMCO’S ESG STRATEGY DIRECTIONS

Zero energy building & green retrofit

Increase eco-friendly & efficient ship investment

Green mobility infrastructure

TCFD support declaration and information

disclosure

Manufacture recycling product using Jeju PET

bottles

Climate Change Response

USD 180 million New Ship Finance contract signed

(New Shipbuilding Fund)

13 financial institutions and TCFD declared support

(Source: Yonhap News)



Co-existence & Cooperation

Secure safety for employees, subsidiaries, citizens

Spread culture of respect for human rights

Support shared growth for SMEs

Long-term & tailored social contribution program

Enlarge social equity employment (women,

disabled,

high school graduates)

KAMCO Win-Win Market Full of Laughter

(Shared growth with SMEs)

Hope Replay Family Trip to Jeju (Tailored Social Contribution

Program)

MOU for Shared Growth with IBK

(Dec. 2021)



Ethical & Fair

KAMCO Mutual Respect Day

KAMCO Integrity Week 2021

KAMCO Ethics Letter

Anti-corruption & ethical management

Incorporate ESG into executive performance

Secure balanced expertise of outside directors

Class 1 in anti-corruption policy assessment for 5 years in a rowWinner of Best Institute of Integrity & Ethics Winner of Ethical Management Contest

ESG MANAGEMENT OF KAMCO’S KEY BUSINESSES

① Leading Carbon Neutral Policy through ‘Zero Energy Building & Green Retrofit’

② Strengthening social responsibility investments: ESG bonds, ESG investment

principles

③ ESG Inspection to increase value of companies paying taxes in kind

02. ESG MANAGEMENT OF KAMCO’S KEY BUSINESSES

Leading Carbon Neutral Policy through ‘Zero Energy Building & Green Retrofit’

Background

Low Carbon Policy

KAMCO’s Promotion Direction

Green New Deal Roadmap

Carbon Neutrality declarations rise amid increasing climate change

awareness

Public buildings over 1,000 m² GPA obligated grade 5 in ZEB certification

Item

Green Mobility

①New Building ②Old Building ③Green Infrastructure

(New) ZEB gradeEnergy sufficiency rate

Low Carbon in City

(Retrofit) Energy saving rate

Manage building carbon emissions and increase energy self-sufficiency

Hydro & electric vehicle penetration

Zero energy building Green retrofitting EV charging stations in residential areas

Short (’20-’21)

Grade 5 (Legal)

Over 20%

Over 30%

Medium (’22-’24)

G3 (Upgrade)60-80%

50%

Long (’25-)

G1 (Highest)100%

80%


1. Lead Carbon Neutrality Policy through

‘Zero Energy Building & Green Retrofit’

Minimize Energy

Use

Produce Renewable Energy

Zero Energy

Building

Balanced Regional New Deal Promotion Plan (Oct.’20/MOEF)

Construction of Eco-friendly Zero Energy Public Offices

Promoting a pilot project applying Zero Energy Grade 3, up 2 notches from legal obligation (Sejong National Research Complex 2nd Office)

Sejong National Research Complex II

PASSIVE

Annual Cost

Rating

Consumption

Item

Decrement

Before Legal Criteria

After

Zero Energy G3Zero Energy G5

220 million won

478 million won

93 million won

Efficiency G1

(Better Insulation)

ACTIVE

(PV, Geotherm)


1. Lead Carbon Neutrality Policy through

‘Zero Energy Building & Green Retrofit’

Early launch of Green New Deal & green retrofit of vacant national property to expand supply

Green retrofit certified by saving energy: insulation, windows, heating/cooling system improvement

Cooperation with Busan City: save on retrofit cost, offer 70% rent of the area (Open Dec.’21)

Period: 15 monthsGreatly reduced compared to new (3-5 yrs.)Cost: 70 % from new construction 1.9 billion won in total Energy: 91 KW48% from current use of 176 KW

Green Retrofit to Worn-out Government Buildings

Busan Youth Startup Hub

Busan Youth Startup Hub Plan (Proposal)

(HW) Eco-friendly Retrofit

(SW) Job Creation for Community

Busan Youth Startup Hub Project for National Growth

Operation: Joint council of KAMCO, Busan, &

KOCCA

Post-COVID: Support contact-free, on-tact LAB,

test bed

Digital New Deal: Specialize in 4th Industrial

startup with AI, ICT, etc.


Strengthening social responsibility investments: ESG bonds, ESG investment principles

Bond Type

Create Sustainable Social Value with ESG Bonds of 3 tril. Won by 2030

Social Bond

Purpose Support those with poor credits/liquidity of marginal business/corporate restructuring

Issuance PlanItem 2021 2022 2023 Total

Amount (Unit:0.1bil.won)

Factor Purpose of funding

Fund management Follow-up reportAssessment &

selection

Establish ESG bond management system

Completed a clear and acceptable system that complies with ICMA investment principles

Verification Report Based on Social Bond Principles(2021)


Strengthening social responsibility investments: ESG bonds, ESG investment principles

Necessity for ESG investment principles following bond issuance

Extension to non-financial factors for DIP finance, S&LB, Shipbuilding Fund in assessment for DIP finance, S&LB, Ship Financing by applying Negative + Positive Screening

ESG Investment Principles

Support Corporate Rehab- Limiting application from companies with social scandals

(embezzlement), tax delinquents

S&LB- Penalty for labor-management issues,

lawsuits & disputes, corruption, fuzzy

accounting

ExpandedAssessme

nt Factor

Support Corporate Rehab- Examination of environmental technology: clean technology,

energy efficiency

- Additional points for ESG: in statement

by accounting firm

Ship Financing- Good/Average/Poor depending on IMO

compliance; claims over marine pollution risk, overdue wages


ESG Inspection to increase value of companies paying taxes in kind

Conduct a Study on Introduction of Socially Responsible Investment of In-Kind Tax-Paying Companies

Select key corporates (13) & inspect their ESG - Financial & ESG simultaneously

Draw high performance in responsible investment

ESG DB, upgrade assessment index

Secure CredibilityUtilize study results & SASB* criteria

Tailored OperationImprove criteria centered around listed/large companies to create ESG index applicable to non-listed/small enterprises

*SASB: Sustainability Accounting Standards Board

Introductory

Period

Growth Period

Stable PeriodESG Introduction

(’18) ESG Inspection

(’19) ESG Expansion

(’20-)

Operate Effective Social Responsibility Investment

Raise Value & Sustainability of In-Kind Tax Payers

Induce Social Responsibility Investment by inspecting ESG factors of in-kind tax payers; support long-term growth by removing ESG risk

Improve performance and achieve efficiency with aggressive responsibility investment by signing management agreement

For management structure: recruit specialist For transparency: “appropriate” auditBusiness diversification & improvement in financial statement in first half

ESG Best Case

(XX Inc.)

◎ (DIP) Envr. technology assmnt. (Green Certification)◎ (Ship) Points for compliance with IMO 2020 ◎ (S&LB) Penalty increase failing national criteria

ESG Guidelines for Key Businesses of KAMCO

Item Business Line

Legal Criteria

Environment

Social

Governance

Company Support

Public Developme

ntState-owned

Securities

Company Support

Public Devt.State-owned

Securities

Company Support

State-owned Securities

◎ (Cert) Apply upgraded Zero Energy Building Cert. ◎ (Tech) E tech. introduction from design phase◎ (Infra) Expand PV, EV charger

◎ (RECO) Compliance with E criteria by line

◎ (RECO) Quality cert., supplier support

◎ (RECO) 16: directors’ board, stockholders’ meeting

◎ (DIP) Screen those defaulting and causing scandals◎ (Ship) Evaluate those sued, delaying wage, etc. ◎ (S&LB) Evaluate labor relations, lawsuit, disputes

◎ (DIP) Screen out those embezzling, etc. ◎ (S&LB) Assess corruption, accounting, etc.

◎ (W-W) Fair contract, partner support, safety boost

Grand Prize Winner of ESG Korea

Best Entity in Public Sector

(Jun. 2021)

MILESTONE

TOWARD

KAMCO CENTENNIAL

03. MILESTONE ESG TOWARD KAMCO CENTENNIAL

KAMCO’s ESG Management Mission in 2021

MLT Strategic Goals & Tasks

ESG Guidelines for

KAMCOInternalizeESG Value

5 Strategic Goals15 Strategic Tasks

Separate guidelines for

company support/ public devt./state-owned securities

Strengthen systematic connection between ESG Guidelines for KAMCO and MLT Strategic Goals and Tasks


Zero CorruptionLaw-abiding management

Milestone ESG toward KAMCO Centennial

Expand share growth programRealize ‘People’ first managementSupport employees’ work-life balance Foster future talents by boosting job competence

Expand Carbon-Neutral policy to key businessesPost envr-related financial infoby TCFD RECO Join EV100Join RE100

A Better Place to Live in

ESG Management,

Interest in

A Green Light

To Make the World


.THANK YOU

esg management the sustainable future korea asset

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