What are the material issues the company has identified?

In its 2022 ESG Report Korean Air identified a range of material issues, such as sound governance, health and safety of passengers, ethical and compliance management, customer privacy protection, employee health and safety. Among these, creating economic value for its stakeholders stands out as a key material issue for Korean Air.

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:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process s 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 Korean Air engages with:

Stakeholder Group	Method of engagement
Customers	·      Website ·      Korean Air Newsroom ·      Newsletter ·      SNS channels ·      Service centre ·      Voice of Customer (VOC) ·      Chatbot ·      NPS (Net Promoter Score) survey
Shareholders/ Investors	·      General meetings of shareholders ·      Corporate briefings, IR meetings ·      Website (disclosures) ·      Operation of IR communication channels (IR e-mail, phone)
Employees	·      Labour-management council ·      On-site visit of Human Resources Division ·      Intranet (communication / employee information system) ·      Newsletter ·      KAL Daily Newsbytes ·      Internal misconduct reporting system ·      Employee grievance management system
Partner companies	·      Portal site for partner companies (Intranet) ·      Production Management Council ·      Workshops and meetings with partner companies
Local communities	·      Website ·      SNS channels
Government/ related organisations	·      Interviews with administrative departments and policy meetings ·      Technical meetings, technical consultation ·      Participation in international organisation meetings

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Korean Air engaged with its stakeholders through interviews and an online survey.

What actions were taken by Korean Air to create economic value for its stakeholders?

In its 2022 ESG Report Korean Air reports that it took the following actions for creating economic value for its stakeholders:

• Creating economic value for employees
• In 2021, Korean Air paid KRW 13,430 (Unit: KRW 100 million) in labour expenses and KRW 3,503 (Unit: KRW 100 million) in welfare expenses.

• Creating economic value for creditors
• In 2021, Korean Air paid KRW 3,637 (Unit: KRW 100 million) in interest expenses.

• Creating economic value for the state
• In 2021, Korean Air paid KRW 1,473 (Unit: KRW 100 million) in corporate income taxes.

• Creating economic value for suppliers
• In 2021, Korean Air paid KRW 16 (Unit: KRW 100 million) in rent expenses, KRW 1,602 (Unit: KRW 100 million) in manufacturing expenses, KRW 18,000 (Unit: KRW 100 million) in fuel expenses and KRW 6,605 (Unit: KRW 100 million) in airport expenses.

• Creating economic value for local communities
• In 2021, Korean Air paid KRW 30 (Unit: KRW 100 million) in donations.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standard addressed in this case is: Disclosure 201-1 Direct economic value generated and distributed

Disclosure 201-1 Direct economic value generated and distributed corresponds to:

• Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
• Targets: 8.1, 8.2
• Sustainable Development Goal (SDG) 9: Industry, Innovation and Infrastructure
• Targets: 9.1, 9.4, 9.5

 

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References:

This case study is based on published information by Korean Air, 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.koreanair.com/content/dam/koreanair/ko/footer/about-us/sustainable-management/report/2022_Korean%20Air%20ESG%20Report_en.pdf

Note to Korean Air: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

What are the material issues the company has identified?

In its 2015 Sustainability Report Korean Air identified a range of material issues, such as governance, the increased importance of the need for talent and the changing demands of customers. Among these, with 23,270,000 passengers and 1.53 million tons of cargo carried per year, flight safety is Korean Air’s top material issue.

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:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

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 Korean Air engages with:

Stakeholder Group

Employees

Central and local governments

Customers

Affiliated companies & subsidiaries

Community

Suppliers

Colleges & research institutes

Non-permanent workers & interns

How stakeholder engagement was made to identify material issues

Korean Air conducted a materiality assessment to understand the varying expectations and interests of its internal and external stake­holders and to identify material sustainability management issues. Issues were prioritized largely based on the materiality assessment standards of the GRI G4 Guidelines and the methodology recom­mended in the ISO 26000 Guidelines.

Relevance was determined based on a survey on employees, an anal­ysis of issues covered in the sustainability reports of other domestic and overseas companies in the industry and media reports over the past 5 years, and in-depth interviews with stakeholders.

Stakeholders were surveyed online in order to prioritize 50 issues identified as relevant to Korean Air. A total of 174 stakeholders responded to the online survey and 25 of the issues were finally selected as material issues. Stakeholders inside and outside Korean Air were most keenly interested in the growing demand for the safety of products and services, increased importance of need for talent, governance and market presence.

What actions were taken by Korean Air to promote flight safety?

In its 2015 Sustainability Report Korean Air set the following targets for promoting flight safety, based on the company’s approach to materiality – on taking action on what matters, where it matters:

• Implementing an advanced safe flight system

Korean Air became the first airline in Korea to acquire a government certification on the regulations and operation of the Safety Manage­ment System (SMS) in 2008. The regulations concerning Korean Air’s SMS include the organization necessary for safety management, re­sponsibility for safety, safety policy and procedures, and compliance with domestic and international requirements and standards.

Safety Management Organization: The safety and security office is under the direct control of the president in charge of the matter and is responsible for creating a company-wide security management system and managing safety systematically. The director in charge of safety and security reports directly to the president so as to ensure that the reporting chan­nel remains independent and free from external interference and that the top management remains fully informed about all safety matters.

Safety Management System: Korean Air takes a three-tiered approach to safety management: ex-post response, ex-ante prevention and prediction. ‘Ex-post respons­es’ involves an investigation of events that have already occurred and an analysis of the causes; ‘ex-ante prevention’ focuses on minimizing the impact of risks by identifying safety threats through safety reports and safety examinations; and ‘prediction’ is based on an analysis of flight data and regular flight monitoring data to keep a close watch on safety. This multi-layered safety management system is a critical component of Korean Air’s safety management efforts.

Safety Promotion Programs: Korean Air operates the Safety Confidential Reporting System (SCRS) and other safety promotion programs in order to minimize the loss of human life and property that could be caused by safety threats and to create a better safety culture.

• Embracing internal and external safety assessments

Korean Air implements different quality assurance programs cus­tomized to its individual business divisions, as part of the broader quality assurance program that governs the entire organization and the company as a whole, with each business division devising and implementing an audit plan each year.

IOSA-Certified Airline: Korean Air became Korea’s first airline to be registered as an IATA IOSA-certified airline in January 2005 by meeting safety standards consisting of over 900 items according to the IATA Operational Safety Audit (IOSA), an international safety audit program developed by the IATA. Korean Air has been re-audited every two years to remain on the IOSA registry.

ISAGO Program: Korean Air joined the IATA-developed ground safety program, Safety Audit for Ground Operations (ISAGO), in April 2009 and is monitor­ing the manufacturers of aircraft and parts supplied to Korean Air under the program. In addition, as a member of the ISAGO Pool Ad­visory Group, Korean Air shares information and works closely with other organizations to standardize international safety practices and to promote the safety of ground handlers around the world and the quality of their operations.

The U.S. Department of Defense Safety Certification: Korean Air has remained certified by the U.S. Department of Defense as a safe airline to use since 2001 by meeting its safety standards under the Airlift Transportation Program. The program assesses the safety of private airlines to determine whether they are safe enough for employees to fly on business trips. The program determines whether or not airlines can provide safe, high-quality and reliable services by conducting a paper review every six months and an on-site inspection every two years.

• Taking preventive actions to better protect Korean Air’s passengers and aircraft

As flight safety and security has emerged as a major concern in the wake of a series of accidents in recent years, Korean Air is taking the follow­ing preventive actions to better protect its passengers and aircraft:

• Collection of security information on all domestic and international destinations and issuance of flight security grades for individual airports on a monthly basis.
• Operation of a close cooperation network by sharing information with branches, relevant departments and national security agencies.
• Analysis of global security trends and data gathered from international security conferences that Korean Air attends and implementation of the latest security measures.
• Provision of regular security training and education for employees and regular monitoring to ensure that security systems are properly working in each area.
• Publication of the emergency response manual; regular checks to ensure that proper safety equipment is available for immediate use when necessary.
• Emergency response training on how to avoid or deal with aircraft hijacking and how to respond upon receiving information about possible security threats.

Which GRI indicators/Standards have been addressed?

The GRI indicator addressed in this case is: G4-PR1: Percentage of significant product and service categories for which health and safety impacts are assessed for improvement and the updated GRI Standard is: Disclosure 416-1 Assessment of the health and safety impacts of product and service categories

 

References:

1) This case study is based on published information by Korean Air, 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 original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Korean Air: With each case study we send out an email to your listed address in request for a comment on this case study. If you have not received such an email please contact us.