Climate Action : Sustainable Management : SK Rent-a-Car

SK Rent-a-Car makes efforts to proactively address risks that could pose a threat to our company due to climate change, and expand opportunities

SK Rent-a-Car manages climate risks that could impact the company in the short, medium, and long term to proactively address risks that could pose a threat to our company due to climate change and expand opportunities.

Management of Climate Risks and Opportunities

Transition Risk

Item	Green management risk factor	Duration	Risk	Opportunity
Market Change	Change in the mobility ecosystem	Long term	Limit in ICEV production	Response to future green mobility
	Increase in EV demands	Long term	Decrease in the number of ICEV rental car customers	Enhancement in corporate value by activated EV sales
	Increase in convenience needs for EV usage	Long term	Increase in costs for developing infrastructure and service	Potential to use as BM innovation tool
	Lack of information in EV lifecycle	Long term	Losses from disposal due to asset value instability	Provision of optimized services through battery management information collection and analysis
Law and Policy	Mandatory purchase system for eco-friendly vehicles	Mid term	Decline in social evaluation for noncompliance	Enhancement of implementation capability for achieving EV100
	Emissions trading scheme	Long term	Potential for increased emission in transportation sector due to improved the level of measurement of traffic emissions	Expansion of business using reduction measurement technology through EVs
	Expansion of renewable energy transition	Mid term	Increase in cost for facility investment and purchasing green energy	Achievement of Net Zero by using renewable energy
	Expansion of environment related disclosure	Short term	Increase in environmental information management cost, penalties, and decline in valuation for non-compliance	Strengthening environmental management capability and stakeholder communication

Physical Risk

Item	Green management risk factor	Duration	Risk	Opportunity
Natural Disaster	Extreme weather events such as typhoons, floods, and heavy snow	Short term	Human and material damages resulting from traffic accidents	Minimization of damages by providing preventive activity information, and customer value enhancements
Natural Disaster		Short term	Asset loss such as facilities and vehicles	Improvement of operating environment by proactive response according to the prevention manual

TCFD
(Task Force on Climate-Related Financial Disclosures)

SK Rent-a-Car actively participated in responding to climate change in accordance with the international community’s demands. We identified the actual and potential financial impact of climate change, and established strategic direction and management system. In order to strengthen communication with stakeholders, we will transparently disclose the current status of climate change response based on TCFD recommendations.


Category	Recommended Disclosures and Response
Governance	a. Describe the organization’s processes for identifying and assessing climate-related risks Board of Directors Reviewed and discussed the impact of climate change on SK Rent-a-Car business operations Previous deliberation on the company’s management plans and strategies, based on long-term sustainability including risks and opportunities related to climate change Entitled to previous deliberation on major investment decisions
Governance	b. Describe management’s role in assessing and managing climaterelated risks and opportunities Reflected the BM innovation plan and GHG reduction targets, in response to climate change, in the organization’s KPI, which is the business performance evaluation standard The Board of Directors receives reports on each organization’s plans along with greenhouse gas emission reduction targets and performance Climate-related issues and matters regarding climate change reported to the top management; the performances and results reported to the Board of Directors for multi-layered verification [ESG Team] : Responsible for building and managing the climate action and eco-friendly management database, establishing company-wide ESG management strategies and goals, and supporting and supervising the implementation of those goals for each organization
Strategy	a. Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term Medium to long-term risk : Transition from internal combustion engine(ICE) vehicles to nonpolluting vehicles 100% conversion to zero-emission vehicles by 2030; joined the Ministry of Environment’s 2030 Nonpolluting Vehicle Conversion 100 and the EV100 initiative Aimed at constructing SK Rent-a-Car’s Jeju EV Park, the largest EV-exclusive complex in Korea, to be completed by 2040, and opened the ECO LOUNGE, a multi-purpose EV cultural space, in December 2022 Adopted emissions trading and expanded conversion to renewable energy Short-term risk : Human/physical damages and asset losses owing to abnormal weather conditions identified as physical risks Damages caused by climate-related physical phenomena like typhoons can impact sales, operation costs, productivity and insurance premiums (In the event of an accident, we have a maximum compensation limit of approximately KRW 42.2 billion(KRW 41.1 billion for property damage insurance and KRW 1.1 billion for machinery insurance).)
	b. Describe the impact of climaterelated risks and opportunities on the organization’s businesses, strategy, and financial planning Analyzed the financial risks of carbon taxes and increases in carbon prices from a medium/long-term perspective and integrated such risk factors in financial plans Applied related risks and opportunities as criteria for investment decisions, engaged in a test bed project to secure carbon credits using our fleet of vehicles, and explored measures to expand our eco-friendly business Issued the first green bond worth KRW98 billion in 2021, submitted a Vehicle Fuel and GHG Emission Reduction Plan and raised KRW 24 billion with certification by the Ministry of Environment in 2022
	c. Describe the resilience of the organization’s strategy, taking into consideration different climaterelated scenarios, including a 2°C or lower scenario Announced Net-Zero, which is a level that further strengthens the nationally determined contributions(NDC), as its business goal Set annual GHG reduction targets based on SBTi and participated in the EV100 initiative to convert all our fleet to nonpolluting vehicles
Risk Management	a. Describe the organization’s processes for identifying and assessing climate-related risks Disclosed the details of the impact of climate change-related risks and opportunities on the company at the website and through the sustainability report ESG Team : Measured GHG emissions of all our business sites and Car Life Service (Formerly SK Rent-a-Car Service) by category. Information included in Scope 3 of disclosures of emissions from vehicles used by customers ISO 14001 certification : Acquired ISO certification in 2007 for the first time in the industry for green management policy and climate change response system and maintained it through post-examination and renewals
	b. Describe the organization’s processes for managing climaterelated risks [ESG Team] : Integrated risk management related to climate change(taking actions for transition risks and preventive measures for physical risks), and shared information with related organizations and supported such actions and measures [Customer Value Innovation Division] : Provides safety instructions and send notifications to all customers upon perceived risks of accidents, including natural disasters based on available data Established a weather management system called Weather Aria using the Korean Meteorological Administration’s API as well as systems such as automated weather notifications
	c. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management [Each business site] : Monitors and manages energy consumption at each site, including offices, distribution centers and sales centers in operation every month [ESG Team] : Collected data reported to management and reflected in the organization’s risk management system [SHE Center] : Operates an emergency decision-making system that involves the CEO and all major position holders. Results and matters requiring improvement of activities are reported to the CEO and the BOD as part of compliance.
Metrics and Targets	a. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process Manages environmental data such as GHG emissions, emissions by category, energy consumption and renewable energy production as key indicators Analyzes the impact of climate change-related factors on the environment, society and financials with reference to indicators of external agencies(including TCFD recommendations, S&P CSA(Corporate Sustainability Assessment) and SASB standards) Reflecting GHG emissions reduction targets of each organization’s KPIs : After setting targets compared to previous year’s usage and establishing net zero management plans, the ESG Committee reviews these goals.
	b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas emissions, and the related risks The annual GHG emissions data disclosed at ESG Data of our website and Nonfinancial Performance Data in our sustainability report appendix
	c. Describe the targets used by the organization to manage climaterelated risks and opportunities and performance against targets Net-Zero & 2030 EV100 Seeks to convert the whole fleet into eco-friendly vehicles by 2030(purchased 5,000 units in 2021 and 7,000 units in 2022 throughout the country, and 1,000 units specifically in the Jeju region) Emitted 895,188 tCO₂eq of GHG in 2022 and plans to reduce emissions by 4.2% every year(included GHG reduction as one of the KPIs for each organization)

TCFD Detail Download

Medium to Long-Term Environmental Goals & Roadmap

SK Rent-a-Car set annual GHG reduction targets to achieve Net Zero and improves its implementation capabilities by measuring GHG emissions every month and examining our reduction plans. In addition, we joined the Science Based Targets initiative(SBTi) to gain stakeholders trust in Net Zero scenarios, submitted our targets and obtained the approval in September 2023
Since 2021, we have joined the Ministry of Environment’s “K-EV100” initiative and the Climate Group’s “EV100” initiative, presenting a EV transition roadmap and publicly disclosing its progress.

Net-Zero Scenario(Unit : 1,000tCO₂-eq)

Target company : SK Rent-a-Car, Car Life Service (Formerly SK Rent-a-Car Service)
Applied the SBTi 1.5ºC scenario(Baseline : 2021)
Emissions reduction pathways based on Scope 1 and 2 emissions(Scope 3 excluded)

2030 EV100 Roadmap

The ratio of EVs = Electric vehicles(electric-motored and hydrogen-fueled cars)/total vehicles
Same as K-EV100 standards

Climate Action