Case study: How Hankook Tire & Technology promotes sustainability across its supply chain
Established as Korea’s first tire maker in 1941, Hankook Tire & Technology has a sales network that spans China, Europe, the Americas, Asia-Pacific, and the Middle East & Africa as well as Korea where its Headquarters are located, to deliver products that cater to local customer needs. Hankook Tire & Technology is committed to establishing an ESG (environmental, social and governance) system within its supply chain to promote integrated CSR management and has also paved the way to pursue shared growth with suppliers, through its supplier support programmes.
This case study is based on the 2019/20 CSR Report by Hankook Tire & Technology, prepared in accordance with the GRI Standards, that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Hankook Tire & Technology conducts regular CSR assessments on its suppliers to improve sustainability along the entire supply chain Tweet This!, while offering policy support for suppliers to build long-term competitiveness and ensure sustainable growth in so doing. In order to promote sustainability across its supply chain Hankook Tire & Technology took action to:
- select suppliers considering CSR elements
- expand on-site CSR audits
- extend the scope of supplier ESG management
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With this case study you will see:
- Which are the most important impacts (material issues) Hankook Tire & Technology has identified;
- How Hankook Tire & Technology proceeded with stakeholder engagement, and
- What actions were taken by Hankook Tire & Technology to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2019/20 CSR Report Hankook Tire & Technology identified a range of material issues, such as expanding R&D investments and reinforcing capabilities, establishing quality management and strengthening customer satisfaction activities, developing a sustainability management system and expanding communication, reducing GHG & air pollutants emissions. Among these, promoting sustainability across its supply chain stands out as a key material issue for Hankook Tire & Technology.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Hankook Tire & Technology engages with:
To identify and prioritise material topics Hankook Tire & Technology engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Shareholders & Investors
| · BOD · General shareholder meeting · Overseas conferences · IR events |
| Customers (car makers, general customers and dealers)
| · Technology exchanges, exhibition and fairs · Sustainability assessments · Dealer discussion meetings · Customer satisfaction centre |
| Employees
| · Labour-management council · Discussion meetings and grievance mechanisms · Organisational immersion surveys · Intranet · Internal idea suggestion system · Proactive Concert |
| Local Communities
| · Discussion meetings with locals · Discussion meetings with local public offices and NGOs · Compile complaints from local communities |
| Suppliers
| · Regular supplier assessments, quality and CSR training · Partner’s Day · Purchasing portal (HePS) |
What actions were taken by Hankook Tire & Technology to promote sustainability across its supply chain?
In its 2019/20 CSR Report Hankook Tire & Technology reports that it took the following actions for promoting sustainability across its supply chain:
- Selecting suppliers considering CSR elements
- As Hankook Tire & Technology recognises that suppliers who fulfill their social responsibility and practice sustainability management are essential in achieving sustainable growth for all, it considers CSR factors in its supplier assessment even from the selection phase. Since 2019, Hankook Tire & Technology has distributed ‘sustainability guidelines for suppliers’ in signing supplier contracts to recognise these guidelines as mandatory requirements in doing business with it. In 2020, Hankook Tire & Technology created a platform within its electronic purchasing system to collect suppliers’ e-signatures on compliance with these guidelines. The rate of e-signatures amounted to 65% in 2020, and Hankook Tire & Technology aims to reach 100% by 2030.
- Expanding on-site CSR audits
- Hankook Tire & Technology is extending the scope of its on-site supplier CSR assessments from raw material suppliers to equipment suppliers. In making such assessments, Hankook Tire & Technology reviews audit outcomes and sets improvement plans in cooperation with the CSR Team. Hankook Tire & Technology also reviews the appropriateness of self-directed CSR assessments and identifies the necessary improvements to evaluate suppliers’ sustainability. Major corrective action plans identified in 2019 included the creation of anonymous grievance/whistleblowing channels for identity protection, the establishment of an in-house code of ethics and its dissemination among employees, and regular firefighting drills.
- Extending the scope of supplier ESG management
- Hankook Tire & Technology established its ESG system within the supply chain for integrated CSR management. In particular, Hankook Tire & Technology continues to manage critical suppliers chosen for the significance of the items they supply, and endeavours to extend the scope of this management to its tier 2 suppliers. In 2019, Hankook Tire & Technology added tier 2 items in its supplier CSR assessment to ensure that each tier 1 supplier specifies five critical tier 2 suppliers. CSR assessments are also made on critical tier 2 suppliers and reviews are conducted to make sure that they were requested to improve their performance on human rights & labour, ethics, health & safety, environment, and climate change management. Hankook Tire & Technology also set a goal of reaching 100% in identifying its critical tier 2 suppliers by 2030.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 414-1 New suppliers that were screened using social criteria
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
This case study is based on published information by Hankook Tire & Technology, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:
https://www.hankooktire.com/global/files/sustainability/csr_reports/CSR_Report_2019-20_English_1.pdf
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