###### Governance Story, Beyond the Global Standard
SKC is rapidly transforming its business model as well as its governance structure. In March 2021, we announced the Governance Innovation Plan with the goal of innovating our governance above the global standard and announced the Governance Charter that incorporated the innovation plan with the resolution of the Board of Directors. In 2022, we appointed an outside director as chairman of the Board, further strengthening the Board's independence.
Establishing Three Committees Under the Board of Directors According to the Governance Innovation Plan, SKC has established three committees under the Board of Directors - the Related Party Transactions Committee, the HR Committee, and the ESG Committee. Now we have four committees, including the existing Audit Committee, and each committee is chaired by an outside director, reinforcing the independent decision-making structure. The ESG Committee deliberates in advance on SKC's mid- to long-term strategies, ESG promotion strategies, large-scale investment projects, and annual management plans. It leads the sustainable management initiative by reviewing the direction of ESG management and monitoring its implementation status regularly. The Related Party Transactions Committee strictly deliberates on transactions and investments with related parties, including controlling shareholders, with only outside directors participating. It also inspects the transaction process with the related parties and suggests opinions. The HR Committee recommends candidates for outside directors, which the Outside Director Candidate Recommendation Committee previously
check. For this, it has the authority to evaluate/ compensate internal directors, including the CEO, and the power to recommend the CEO. To enhance the transparency in management and prepare for various crises, the Audit Committee performs comprehensive risk management and supervision, breaking away from just accounting audits. It also conducts additional non-financial audits, such as compliance monitoring with only outside directors, and it has the power to appoint external auditors and the right to agree to appoint and dismiss internal auditing executives.
SKC Governance
Appointing an Outside Director as the Chairman of the Board of Directors In March 2022, SKC appointed an outside direcror Park Young-seok as the chairman of the Board of Directors with a resolution of the Board. With an outside director serving as chairman, we can further guarantee the independence of the Board. To reinforce the Board's independence, SKC is also considering gradually increasing the proportion of outside directors and appointing additional female directors. In addition, we will introduce the Board Skill Matrix to further strengthen the professionalism of the appointment of directors. Based on this, we plan to specify the necessary competencies of the Board of Directors so that it can contribute to achieving SKC's Financial Story goals."
"Recommendation CDP Connection Details\n\na �Describe the board's C1.1, C1.1a, C1.1b To reinforce the board's supervision over ESG issues, including climate change response, SKC established the ESG Committee in March\noversight of climate- 2021 with the aim to improve the Board of Directors and confirmed it through the general shareholders' and the Board of Directors'\nmeetings. The directions of SKC's governance improvement are 1) strengthening the role and independence of the board centered\naround outside directors and 2) enhancing the board's contribution to ESG management value creation. In line with these directions, we\ncreated the ESG Committee under the Board of Directors, which reviews in advance the ESG promotion strategies, including risks and\nopportunities associated with climate change, mid- to long-term strategies, business plans, and large-scale investment plans, as well as\nperforms stakeholder communication, guidance, and supervision.\nThe ESG Committee is composed of four outside directors, including an environmental expert and the CEO, one other non-executive\ndirector to advance expertise and independence by appointing a outside director as a director. The ESG Committee mainly discusses\nclimate change issues reviewing and guiding strategies major action plans, management strategies risks, and annual budgets. Moreover,\nit includes target setting and monitoring of major capital expenditures, acquisitions, and stock sales in the target to achieve climaterelated issues and monitoring mechanisms and tables such items in the regular meetings. The deliberation results are integrated into the\nannual budget for climate change and the performance indicators, and they seek cooperative measures through the regular performance\nannouncement. In 2021, SKC's GHG Net Zero plan was reported to the ESG Committee twice for review and guidance.\nThe Audit Committee, which is composed of only outside directors for independence, is responsible for existing auditing duties on\naccounting and business as well as reviewing non-financial risks and suggestions for improvement in areas of safety, health and\nenvironment (SHE), information security, and compliance (anti-corruption, compliance monitoring, recruitment transparency).\n\nb �Describe management's C1.2 SKC's management systematically responds to risks and opportunities associated with climate change through the Internal ESG Promotion\nrole in assessing and Committee. The committee consists of the CEO, C-Level and subsidiary management. It seeks to maintain a balanced perspective on issues\nby actively accepting the opinions of external ESG experts (ESG Advisory Board*) such as the Climate Change Center. The primary role of the\nmanaging climate Internal ESG Promotion Committee is to create practical results by establishing a companywide ESG management system. In this process, it\nrelated risks and monitors the performance considering ESG scenarios of climate change and derives improvement tasks.\nopportunities� Since 2021, SKC has been using the SVMS** to develop and monitor 43 ESG performance indicators, including GHG emissions, energy\nconsumption, renewable energy usage, climate change response, environmental pollution prevention, waste generation, waste recycling,\nair pollutants discharge, water consumption, water recycling, and water pollutant discharge. These indicators are compared to the\nperformance of companies in the same industry and reported to the CEO quarterly. They are also reflected in the KPI, which becomes\nthe basis for the CEO's evaluation and compensation. In particular, to achieve Net Zero GHG in 2040, we set an additional annual GHG\nemissions target and reflected it in the management evaluation, thereby further reinforcing the role of management in evaluating and\nmanaging risks and opportunities associated with climate change.\n\n- An advisory organization on SKC's ESG management system and strategy, it is composed of the secretary-general of the Climate Change Center, the CEO of the Impact Fund, and an outside director who is a governance expert.\n\n** SVMS (Social Value Management System) is a system that selects, measures, and manages SK's core ESG risks and opportunities, including those related to climate change.