Documente Academic
Documente Profesional
Documente Cultură
Economy
25 25 26 Shareholder & Investor General Shareholders Meeting Strengthened Communication 28 28 30 31 Main Business Activities Status of Global Production Improved Product Quality in HMCs Cars Brand Value Enhancement
Environment Management
37 37 40 44 47 47 48 Efforts to Minimize Climate Change Regional Responses Development of Alternative Fuel Vehicles Improving Vehicle Fuel Efficiency Reduction of Gas Emissions Regional Responses Development of Environmentally Friendly Engine Technology 62 55 57 57 50 50 53 Increased Recyclability Improvement of Recyclability Rate Minimizing Use of Harmful Materials Life Cycle Assessment Green Procurement Supporting Environmental Management Systems of Partners Expansion of Environmentally Friendly Product Procurement 68 71 76 80 63 64 Clean Production Coping with Climatic Changes at the Production Fields Resource Circulation Reduction of Pollutant Emissions Environmental Cost Global Research Centers
86 87 88 90 93 95
120 Global Research Centers 122 GRI Index 126 Assurance Report 128 HMC 2007 Sustainability Report Review Opinion 132 Reference Material
Preface
To proactively and transparently disclose its sustainability-related activities to its stakeholders, including its own employees, shareholders, local communities, the government, and a wide array of NGOs, the Hyundai Motor Company(hereinafter HMC) published its Environment Report in 2002, and has been publishing its Sustainability Report on a yearly basis since 2003. This year is no exception. HMC is presenting its 5th Sustainability Report, bringing it one step closer to being a truly global company with outstanding sustainability and leadership that is based on understanding and cooperating with interested parties all across the globe. In 2006 and 2007, HMC has strived to attain sustainability by promoting performance improvements in the economic, environmental, and social aspects that relate to its business activities. Economically, HMC has shown strong growth in the quantities and qualities of its production output. Since 2003, when HMCs export value surpassed $10 billion for the first time, the figure has grown rapidly to exceed $15.3 billion last year. Moreover, the Grandeur, Sonata, and Tucson models have been recognized by the mass media, such as J.D. Power and Consumer Reports, for excellence in quality. Care of the environment has always played an important role in HMCs strategy. HMC took first place, winning the President Award, in the National Environmental Management Contest co-hosted by the Ministry of Commerce, Industry, and Energy and the Ministry of Environment. In particular, Avante has gained a good reputation for its excellent fuel efficiency and is designed to reduce driving costs amidst rocketing fuel prices. Pursuing the betterment of society is of prime importance to HMC. HMC has demonstrated this commitment by developing a vehicle called Easy Move for disabled drivers. Along with the first hybrid electric vehicles developed in Korea, Easy Moves were donated to those in need. Also HMC employees have participated in voluntary activities including flood disaster restoration, farm workforce augmentation during busy seasons, and raising funds to help the under privileged throughout the entire year. By publishing this 2007 Sustainability Report, HMC is looking back at the past years sustainability management performance in order to identify areas for improvement and convene action plans to become a true global leader in providing sustainable mobility to the world.
Writing Guidelines
HMCs 2007 Sustainability Report is based on the most up-to-date G3 GRI(Global Reporting Initiative) guidelines. The strategic objectives of our activities relating to the economic, environmental, and social aspects of HMCs business are shown in the report in accordance with the guidelines given in the G3 version of the GRI report. In many areas, we have tried to add additional content beyond what the guideline requires, and in some instances, have adopted the reporting formats of automotive industry leaders.
2007. 11
Mong-koo Chung
Chairman & CEO
Last years decrease in exchange rates and depressed domestic demand created a particularly difficult business environment. However, HMC established local factories in North America and Europe to react faster to the requests of its main customers worldwide and to enhance its global production and sales system. In 1976 HMC exported its first technology dependent model, the Pony, to Ecuador and has achieved 15 billion dollars in exports in the 30 years since. These achievements have led HMC to be ranked among the Global 100 brands chosen by BusinessWeek for the past 3 years. In addition, its main vehicle models have been recognized for the competitive power of their quality by leading vehicle rating agencies like J.D.Power, raising the reputation of the company and the automobile industry of Korea. In addition to achieving these economic performance goals, HMC has enhanced each internal organization and its strategies to become more sustainable and raise the value of the entire enterprise. We have continuously strived to systematize all interested parties participation in these efforts. Noteably, in 2007, HMC was placed first in the Korean National Environment Management Awards, demonstrating its environmental leadership and national competitive power. We also implemented our specially developed management system to deal with global environment issues systematically and which is linked to HMCs environment committee and enhanced environment management strategy. In addition, to deliver mutual benefit, HMC has enhanced its contribution to society in a variety of areas as part of its mid- to long-term planning. Also, we instituted the Review committee of sustainability reports to reflect opinions of all interested parties for the development of our sustainability report. We intend to develop this further and enhance the power of key stakeholders to contribute to the sustainability of HMC. Even at this moment, about 75,000 employees of HMC all over the world are focusing their abilities and efforts
on the sustainable development of mankind through the intelligent coordination of concerns for the environment, individuals and society. In the future, HMC promises that we will give our best effort to become a leading global enterprise in all aspects of sustainability. To do this we will utilize our rich 40 years of business experience and work in cooperation and with participation of all interested stakeholders worldwide.
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2007 Highlights
1st Place Winner of the National Environmental Management Award
As a prerequisite for survival in the global business arena, environmental-management is of prime importance to every firm that strives to remain competitive. Environmental management not only enhances enterprises competitiveness, but also provides a solid base for the economic growth of the countries in which the firms operate. For these reasons, countries across the globe make every effort possible to support firms engaging in environmental management practices. The Korean Government promotes environmental management practices on a yearly basis by awarding the National Environmental Management Award to domestic companies with outstanding environmental performance. Well-recognized for its environmentally friendly business activities throughout the entire value chain and taking proper care of not only its own product development and clean production phases, but also supplier firms activities, HMC was honored to win the 1st prize in this award; the top award delivered in the name of the President.
Overview of HMC
Since its launch in 1967, HMC has led the automobile industry in Korea. In 1976, HMC exported Koreas first independent technology domestic vehicle, the Pony, to Ecuador and 30 years later, HMC exports 2.5 million high quality vehicles, RVs, and trucks, making it the worlds 6th leading automobile maker. Right now, HMCs employees are investing their abilities and efforts to lead the sustainable growth of HMC to make it the worlds best company. They represent the very spirit of true corporate citizenship and by coordinating concerns for the environment, individuals and society, they are enabling the sustainable growth of HMC. With 40 years of technology leadership and potential acquired during the development of the Korean economy and its domestic automobile industry, HMC is poised to become a truly global company that contributes to the betterment of the world by providing responsible, sustainable vehicles.
Sales performance
(units: number of vehicles)
In overseas countries HMI( India) BHMC(China) HMMA(USA) HAOS(Turkey) 301,590 290,088 236,773 60,870 889,321
In overseas countries HMI(India) BHMC(China) HMMA(USA) HAOS(Turkey) 236,177 290,011 298,980 60,660 885,828
Total
1,618,268
Total
Total
1,611,866
Total
HMCs employees
(units: number of employees)
In foreign countries: 19,781 In Korea: 54,973 Representative production vehicles per global facilities
Country USA China Main Product Type Sonata, Santa Fe Verna, Sonata, Avante XD, Tucson India Turkey Santro, Click, Verna, Sonata Verna, Starex, Lavita
Assets
2004 Won Dollar
Exchange rate (1043.8 Won/$)
Basis
Total annual assets Annual net sales Annual net profit Total liabilities Total capital
Reinforcing the basic for export Proprietary technology development Environment Nov 1991 Developed HMCs first electric automobile Feb 1992 Developed Koreas first domestic low pollution, alcohol-based automobile Oct 1994 Developed HMCs first hydrogen fuel cell automobile Aug 1998 Developed the worlds second solar energy automobile Economy Apr 1991 Advanced into German market Nov 1994 Annual production reached 1,000,000 units May 1995 Launched the Namyang technology institute Sep 1995 Established joint venture plant in Turkey Jul 1997 Established independent plant in Turkey
Technology advancement Development to become a global company Environment Sep 1999 Developed first domestic automobile fuel cell Jun 2000 Participant in the California fuel cell partnership Mar 2001 Launched Santa Fe, the first domestic fuel cell car Aug 2002 Launched 900 environmentally friendly buses globally Jun 2003 Announced global environment management officially automobile industry first Jul 2003 Established Koreas first domestic environmental technology institute Nov 2003 Santa Fe electric vehicle demonstrated exemplary operation Nov 2005 Established environmentally friendly vehicle recycling center Dec 2005 Tucson fuel cell vehicle began operation in America Economy Jan 2000 Opened factory in China with vehicle production capability of 300,000 units Sep 2002 Launched first automatic transmission medium-sized truck in Korea Feb 2003 Completed design center in North America Sep 2003 May 2005 Jul 2005 Oct 2005 Jan 2006 May 2006
Established European technology institute Opened US plant in Alabama Ranked among Global 100 companies Established Technology Institute in the US Selected as one of the best brands in China Grandeur took 1st place in AutoPacifics customer satisfaction inspection Jun 2006 Tucson ranked first in J.D. Powers Initial Quality Index (IQS) Apr 2007 Opened plant in Czech Republic Society Feb 1999 Selected as an official sponsor of the FIFA WorldcupTM Dec 1999 Official sponsor of the EURO 2000 soccer championship Aug 2003 Became a supporter of the worlds largest wheelchair foundation Dec 2003 Provided official automobile of the EURO 2004 soccer championship Jan 2004 Donated ambulances to Iran Feb 2004 Donated wheelchairs to disabled children Oct 2004 Donated ambulance to Africa as a part of health and medical business support Nov 2005 Established professional social service group (specialized in disaster relief) Sep 2006 Developed Easy-Move car
Corporate History
Establishment Advanced technology introduction Dec 1967 Establishment of Hyundai Motor Company Dec 1968 Began production of Cotina Dec 1975 Established automobile factory Development of HMCs own model Building lineup Jan 1976 Began sales of the Pony brand Feb 1984 Established Koreas first domestic automobile road test center Building technology independence Establishing a constituency for export Feb 1985 Established Excel factory with 300,000 units production capability Aug 1989 Total production reached 3,000,000 units Nov 1990 Total sales in America reached 1,000,000 units
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Global Network
Korea plants
Ulsan Plant is a key plant of HMC producing an average of 5,600 cars a day and is also a green plant, with about 500,000 trees planted on site and up-to-date environment protection facilities. Asan Plant produces 300,000 motor cars for export a year. It pays special attention to considerations for workers and environmental protection. It has changed the atmosphere of the factory with bright colors and has installed various work convenience facilities for an optimum working environment. Jeonju Plant produces medium- to large-size buses, trucks and special equipment vehicles over 2.5 tons. It is recognized as the worlds largest commercial vehicle plant in terms of capacity and plant size. It also houses a commercial vehicle research center.
USA plant
HMCs Alabama plant, which has been operating fullscale since May 2005, was recognized with its best quality level ranking - 10th among 60 plants in the USA. in its first year of operation. J.D. Power expressed surprise, stating that Alabama plant of HMC would become a standard for new plants in the world automobile industry.
China plant
As a joint corporation with a local company, HMCs China plant not only has a symbolic meaning as the only car manufacturer in Beijing, the capital city of China, but also has an advantageous head start in the automobile market in China that will become the leading power after the Beijing Olympics in 2008.
India plant
The India plant of HMC is fully equipped, from production facilities to some research facilities, such as an efficiency test facility and road test center. It is an all-round automobile plant that can research and develop products suitable for the Indian market and independently address test, production and sales. In particular, it has rapidly grown to have the second highest market share in India in just two years.
Turkey plant
HMCs Turkey plant, which was established while the company was expanding overseas in earnest in 1997, is a strategic point for advancing into Europe, the Middle East and Africa, as well as the foundation cornerstone of HMCs global management.
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Interview
What does the publication of the 2007 Sustainability Report mean to you? This is HMCs 5th Sustainability Report. In order to proactively and transparently disclose its sustainability-related activities to its stakeholders, including its own employees, shareholders, local communities, the government, and a wide array of NGOs, HMC has been publishing Sustainability Reports every year since 2003. By publishing Sustainability Reports, HMC looks back at its past performance to identify areas in which further improvements can be made. Going through this process, HMC can focus on the causes
The key feature of 2007 Sustainability Report is that it incorporates stakeholder feedback generated from previous sustainability communications and engagements.
of any shortcomings and take necessary corrective actions to move one step closer to becoming a truly environmentally, socially, and economically sound corporation.
Can you tell us what makes the 2007 Sustainability Report different from its predecessors? This years report reflects comments from our stakeholders. It not only features a list of the sustainable management performance, but also delineates the underlying reasons, implications, and future plans in detail. Moreover, the reporting scope of the 2007 Sustainability Report has been expanded to include standards stipulated in the GRI G3 guidelines, which allows us to engage closer with our stakeholders. Moreover, by providing details of the activities that pertain to hot issues, such as climate change and social responsibilities, the new report makes it easier for our stakeholders to precisely understand what we are doing. By making comparisons between our goals and performance, we plan to close any gaps in our sustainability performance, and by doing this, we hope to further enhance the trustworthiness of our sustainability reports and our company.
Can you tell us about the Sustainability Report Review Committee that came into effect this year? HMC recognizes its stakeholders opinions as the most solid basis and starting point for sustainable management. For this reason, we strategically collaborate with our stakeholders by continuously reflecting their ideas and opinions in the solution building process. As a part of this strategy, we formulated a Sustainability Report Review Committee, consisting of domestic and overseas experts in the field of sustainable management and sustainability reporting. The committee has evaluated this years report and has given invaluable advice on ways to make further improvements. We are considering turning to this committee if we face any sustainabilityrelated questions in the future.
What major sustainable management-related accomplishments has HMC made in 2006? We have won the 1st prize in the National Environmental Management Award in 2007 for exhibiting outstanding sustainable management-related performance in 2006. We have reinforced our company-wide system that responds to climate change issues and have made significant technological progress in developing environmentally preferable vehicles. Furthermore, in collaboration with our stakeholders, we have taken part in a wide array of social activities. Finally, cars made by HMC, such as the Grandeur, Sonata, Tucson, and Santa Fe, have been acknowledged as quality leaders by independent quality-rating organizations such as J.D. Power and Consumer Reports.
Enhancing employees awareness and economic growth are considered to be critical preconditions for sustainable growth. What activities are being done in support of these objectives at HMC? HMC has identified 5 major issues that need to be addressed in order to remain competitive in the dynamic business environment: First, process innovation through eliminating inefficiencies; Second, cost reduction through cooperation with supplier firms; Third, productivity enhancement through building mutually beneficial relationships with the labor union; Fourth, sales innovation through enhancing customer satisfaction; Finally, establishing constructive relationships between labor and management based on mutual trust. Successfully coping with these issues will greatly underpin our sustainability and enhance our competitiveness, allowing HMC to become a world-class auto manufacturer.
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Corporate Philosophy
HMC promises to become a corporation that understands the value of sustainability and offers a future vision built on cooperation and harmony with all stakeholders concerned.
Corporate
Philosophy Management
Corporate
Philosophy Management
Environment Ethics
Environment Ethics
Corporate
Corporate
Directors
Directors
Corporate Philosophy
Based on its creative, progressive and challenging spirit, HMC seeks to implement Trust-Based Management, Field Management and Transparent Management, share economic, environmental and social values with all stakeholders, and become a leading global sustainable enterprise which prioritizes the improvement of mankinds quality of life.
Transparent Management
In 2001, HMC drafted and announced a charter of ethics and principles for their implementation. Based on the companys approach to corporate citizenship efforts continue to build a corporate mentality for delivering transparent management. In 2005, the company drafted and distributed guidelines for employees ethical behavior so that individual employees can improve their
these have been revised in order to avoid those problems going forward. In particular, we will take advantage of this opportunity to practice more concrete and material social contributions to realize social harmony and coexistence. Also, we will do our best to make it a positive opportunity in the companys future for sustainability.
Management Philosophy
With the spirit of creative challenge, HMC is doing its part to create a more affluent lifestyle for humanity, and is contributing to the harmony and co-prosperity with its shareholders, customers, employees and other stakeholders in the automobile industry.
Management Policy
Since 2000, HMC has prescribed to Trust-Based Management, Field Management and Transparent Management as its three fundamental management policies. These policies serve as the strategic base for the core management activities pursued by HMC, such as global management, quality management and brand management.
understanding of ethical dilemmas and make ethical decisions in the course of their work. Decisions on main management issues are made by board of directors and approved by shareholders in the general meeting of stockholders. Also, the companys accounting affairs and entire operations are monitored independently by an outside auditor. In 2006, an internal accounting management system was built and upgraded the level of accounting transparency. HMC has continCustomer first management Strengthen risk management
This spirit of creative challenge, which has paved the way for its growth, is the core value at HMC. HMC looks to creativity and innovation to actively respond to changes in the business environment. Based on this philosophy, HMC aims to provide automobiles and related support services to enrich the overall quality of life for both domestic and overseas customers. In addition, HMC has taken steps with shareholders, customers, employees, suppliers, and local communities to build mutual trust.
Trust-Based Management
Starting in 2002, HMC has published its sustainability report every year to provide information on economic, environmental and social performance to all interested parties in Korea and overseas. Also, HMC launched its Investor Relations website in 2004, providing business information, such as, financial data, current stock price and sales records in real time. Through such efforts, HMC is communicating with all interested parties including, shareholders, customers, employees, suppliers and the local community about a variety of issues related to the
ued to develop structural measures to ensure transparent management in keeping with best practice in business management and will continue to strengthen its transparent management systems going forward. Reviews and decisions on key management matters are discussed by the Board of Directors and approved by the shareholders at the general shareholders meeting. With the checks and balances afforded by the Board of Directors, shareholders and outside auditor, HMC will make more transparent and ethical decisions. In 2006, HMC gained unwanted public attention due to lawsuits related to the past financial transactions of some of its executives. Extensive checks have been made to its internal decision-making procedures and where action was needed,
Vision
HMC announced innovation for customers as its 2005 mid-to long-term vision with five core strategies:
Field Management
HMC is enhancing its field management to ensure a fast communication process that facilitates decisions on countermeasures Management Policy
Strengthen emergency management capability
entally preferable ironm env contribute to the de- Crea g h he opl ting din hic lfare of t world e lea ies w nd we cen are an a g tra val ut in log ent a l to ue o no pm th d e o ce o
and implementation of effective working process. To that end, HMC has ensured that employees can report production problems or suggestions without hesitation and these issues are then reflected in changes to R&D and planning. The top management of HMC regularly visits the field directly and shares knowledge gained with other employees. In particular, top managements global field management to the world sales and production offices is building closer relationships with the countries that HMC has advanced into and other new markets. Through this global field management, HMC has established an effective international network, which it is leveraging to improve the competitive power of Korea and raise the position of the nation in international society through various activities, like the 2012 Yeosu World Expo host campaign.
Trust-Based Management
Cr C
e tur ul ation e
n tio
Trust-Based
Management
Trustworthiness Trust-based management-labor, superior subordinates, company-customer relationship Cultivation of field knowledge, raise challenging spirits of field staffs Focus management capacity on the field Management strategy based on the field and promotion of R&D Establishment of the immediate response communication system
Cus t o m e Movin g r
Field
Management
Te c h n i c al I n n o v a ti o n
tec Innova ed ting for advanc ples hno logy c eo entred on p need s and desires
Field Management
Transparent Management
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Gr te ow c ve h l
Transparent
Management
Transparent job specifications Transparency in transaction and fair trade Enhancing the ethics management system
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Corporate
Philosophy Management
Corporate
Philosophy Management
Environment Ethics
Environment Ethics
Corporate
Corporate
Directors
Directors
Environment Management
In 2003, HMC prepared its ideological base on global environment management. It then set its environmental management strategy within the context of the auto industrys value chain and established and implemented an environmental management system. With these global environmental management activities, HMC is taking a leading role as the one of the most progressive companies in Korea. Furthermore, HMC will continue its commitment to environmental responsibility as a global company to achieve sustainability and environmental protection.
promptly respond to global environmental issues with consistency and in keeping with related decision making, established environment management strategy by area, and suggested direction for implementation. In addition, it organized the Environment Committee, with the CEO as its Chairman, providing a clear link to the top decisionmaking organization. In addition, it established an organic, cooperative system for systematic implementation of environmental management strategies by organizing the committee into three strands representing product, production and management.
Environmental Committee
Environmental Philosophy
For the harmony of mankind, the environment and society, HMC respects human value and fulfills its corporate social responsibility through environmental preservation.
Management System
R&D
Purchasing
Production
Customer Service
Society
Environment
environment issues and regulations. Each strand of environmenEstablishing environmental philosophy & policy Declaration of global environment management Establishing environment management strategy Operation of environmental committee Environmental accounting Establishing communication channels with stakeholders Sustainability training of all employees Sustainability report publication
tal management will execute existing strategies effectively by establishing its own processes, including setting clear goals and objectives.
Human
Environmentally friendly design Fuel economy & vehicle emissions Expand Recycling Environmental information system Developing environmentally friendly vehicles Establishing green purchasing system Technical assistance for suppliers Establishing SCEP Logistics optimization
Development of cleaner production system Expending ISO 14001 certification Development of integrated environmental management system Establishment of environment management strategy Green marketing Green service Supporting Customer Service provider for EMS Green sales
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Corporate
Philosophy Management
Corporate
Philosophy Management
Environment Ethics
Environment Ethics
Corporate
Corporate
Directors
Directors
Ethics Management
HMC committed to clean environment activities and enhanced ethical management to ensure mutual benefit based on the mutual trust of all stakeholders, including employees, suppliers, customers, shareholders and the nation. To this end, HMC is supporting various kinds of ethical management programs, including cyber audits, to help employees to make ethical decisions in their work. There is also a committee which participates in the decision making process on main issues.
4) We do not accept any profit from interested parties in relation to our work that may violate our principle of fairness, and strictly reject unfair requests made to employees and by leveraging employees. 5) We protect the sales and operation-related confidential information learned through work, and strictly cast away behaviors and relationships that conflict with the companys
interest. 6) We increase our sense of pride and fulfillment by striving to work with a strong sense of responsibility and make every attempt to contribute to the nation, society and the companys advancement based on infinite self development.
Ethics Charter
1) Contribute to the nation and the society We contribute to the national economy through the continual creation of jobs and trustworthy payment of taxes. We strictly comply with all laws related to the environment, spearheading the effort to protect the environment, and contributing to society through cultural and welfare initiatives. 2) Increase customers and shareholders rights We increase customer rights and value by optimizing products and services, safeguarding customer information, and fulfilling our promise made to customers. We increase management efficiency to ensure that our financial structure is viable, safeguarding and increasing shareholders assets. 3) We respect human rights and cultivation of competent human resources We respect the individual employee as an independent being and have created a sophisticated corporate culture based on mutual trust and understanding, while striving to prevent sexual harassment at work. We actively seek to increase our employees sense of ethics and support them structurally with a long-term view to cultivate them into independent, creative and competent individuals. 4) Establishment of partnership with suppliers We actively support our suppliers with technical knowledge and
Cyber Training
HMC conducts cyber training so that all of its employees can understand the specific details of the Ethical Charter and responsive measures. Through this mechanism, the company enables continuous, repetitive training as well as data sharing and collection on ethics management, encouraging and helping employees to increase their sense of ethics and comply with the regulations.
Cyber Audit Center Operation and Publication of Guidelines for Employees Behavior
Cyber Audit Center
HMCs Auditor Center executes cyber auditing in conjunction with field auditing with a goal of realizing transparent management. In 2006, seven cases were registered, including three cases of corruption or corporate misdeeds, and in keeping with HMCs
internal regulations, three employees were fired or subject to a severe disciplinary measure. The other cases were handled with a discussion with the relative department and the employees in question were required to adjust their behavior. HMC sent an internal notice to the employees about these issues and instituted follow-up training to prevent recurrence.
management guidance to ensure co-prosperity in the long-term by securing competitiveness in the international arena. We deal with the suppliers as equal partners and do not make any unfair demands by leveraging our position. 5) Establishment of transparent management We deal with all tasks in a transparent manner and have established an honest corporate culture that garners trust by maintaining fair trade relationships that guarantee transparent transaction conditions with all business partners and customers. We reject all types of requests from all stakeholders that may infringe upon fairness and objectivity in our operations and do not pursue unlawful profit.
Operation of cyber reporting center Distribution of guidelines for employees ethical behavior Bulletin of ethics management materials and cyber training
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HMC formed and operates a Board of Directors and Audit Committee and an outside Director Candidate Recommendations Committee, which is under the supervision of the Board of Directors. As of June 30, 2007, the Board of Directors is comprised of four internal and five external directors. The Board of Directors makes decisions on matters defined by the laws or articles of incorporation, matters delegated by the general shareholders meeting, and key matters related to the basic guidelines for company operations and work execution. Moreover, it has the authority to supervise matters related to the general shareholders meeting and wider issues on company management and financial affairs. General meetings of the board of directors are held regularly and also when necessary, extraordinary meetings are held. Under the supervision of the Board of Directors the Audit Committee, comprises four external directors, was instigated on June 30, 2007. The Audit Committee is responsible for company finances and audits. It also reviews reports on sales from the executive directors and monitors the companys assets. Matters addressed by the Audit Committee include those related to the general shareholders meeting, to the directors and the Board of Directors, and to audit issues. Also there are internal measures to access management information needed for audit. From June 30, 2007, all candidates for external directorships are recommended by and are under the supervision of the External Director Candidate Recommendations Committee, which includes two internal and two external directors. The limit on remuneration of directors approved in the 2006 general shareholders meeting is 10 Billion Won, and remuneration for internal and external directors for the period between January 1 and December 31, 2006 was 7.249 Billion Won.
Ethics Committee
Our company formed and operates an Ethics Committee with the goal of reviewing transparency of internal transactions and for the pursuit of ethics management. The Ethics Committee consists of five external directors, one member of the executive management team, and two advisors (persons from outside the company) (as of June 30, 2007) The Ethics Committee, a sub-committee of the Board of Directors, reviews transactions between entities as defined by the Laws on Monopoly and Fair Trade and Securities Trading Law, checks execution of fair trade, enacts and revises key policies related to ethics management and contributions to society, and evaluates execution of these issues.
Board of Directors
Ethics Committee
Audit Committee
Status on the shareholders with at least 5% of the company shares (As of June 30, 2007)
Rank 1 2 3 Total Shareholder Hyundai Mobis Hyundai Steel Chung, Mong-koo Shareholding (number of shares) 32,927,828 12,854,195 11,395,859 57,177,882 Percentage shareholding(%) 15.00 5.86 5.19 26.05
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Economy
Shareholder Main
& Investor
Business Activities
Economic growth & continuous creation of profit by extending global production and sales based on sustainable development
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Shareholder Main
& Investor
Shareholder Main
& Investor
Business Activities
Business Activities
Strengthened Communication
In 2006, HMC instituted a program whereby shareholders and prospective investors can meet with management in person, thereby obtaining accurate information on company operations, as part of the Companys efforts to improve IR. Under the program, the Company provided information on its overseas operations to meet the needs of its shareholders. All of these initiatives were launched to earn greater long-term trust from shareholders.
To attain these objectives, the Company is selecting prospective investors, making routine visits to investors, and regularly attending international automobile conferences. In addition to holding investor forums in Korea presenting the results of operations, HMC is sponsoring non-deal roadshows for foreign investors on a regular basis. HMCs major overseas corporations are also holding IR meetings, whereby foreign investors are provided with an opportunity to tour the factory and are informed of the Companys goals in
Domestic IR Activities
HMC is undertaking various IR activities to build long-term trust by explaining the Companys sustainability initiatives to investors. In addition, the Company is holding an investor forum each quarter at which the results of operations are presented for the preceding quarter and investors questions are answered. The Company also holds non-deal roadshows to enhance investor
satisfaction with the information furnished on the results of operations. HMC holds test-drives of new models for investors to experience enhanced competitiveness and improved qualities and also offers tours of production facilities to showcase the Companys outstanding quality and efficiency.
Overseas IR Activities
Through overseas IR activities, HMC is presenting its efforts on global management stability and capability of future growth to foreign investors and also exploring new investors for investor diversification.
global management. In 2006, the Company held an IR meeting while sponsoring the 2006 FIFA World Cup in Germany, creating an opportunity to present HMCs strategies in the European market and to inform foreign investors of its efforts to realize sustainability.
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Shareholder Main
& Investor
Shareholder Main
& Investor
Business Activities
Business Activities
ting edge technologies and production methods at the Alabama plant. HMC plans to continue to expand the plant, eventually making it a global production base with high productivity and flexibility.
Core global base for the EU market- Assan plant in Turkey, Czech Republics Ostrava Plant _ In March
2007, HMC built a high-speed test drive track, the longest in Turkey. The Turkey plant also is adding additional facilities capable of producing up to ten thousand units.
Commencement of production of 600,000 cars- Beijing plant in China and Chennai plant in India _ The Beijing
joint venture plant producing the Verna, Avante XD, EF Sonata, Sonata, and Tucson models, is the only one in that city with the capacity to produce the volumes and diverse range offered by HMC. Beijing HMC is expecting unprecedented growth in Chinas automobile market with the upcoming 2008 Beijing Olympics and 2010 Shanghai Expo. The company has started construction on a second plant and an R&D center to localize production and attain the capacity to produce up to sixty thousand units in an effort to meet growing demand in China.
In April 2007, HMC broke ground on a plant in Czech Republic which will be capable of producing thirty thousand units per year by 2009. The Turkey and Czech Republic plants will become the core bases from which the company will capture the European automobile market, where the consumer is increasingly demanding upscale products. Additionally, there is growing demand for cars in the Eastern European market as a result of the unification of European countries.
As in China, HMC is building a second plant in India capable of producing up to thirty thousand units. Since its entry into the Indian market, HMC has ranked number two in market share. The HMC plant in India is equipped not only with an assembly line, but also performance testing and test-drive facilities. The Indian plant is expected to grow to become a comprehensive vehicle manufacturing base capable of undertaking its own R&D, testing, manufacturing and sales in the Indian market, which has great prospects of becoming a market in which demand for small cars will rapidly increase as a result of the increase in purchasing power of the middle class.
US Alabama Plant
Construction starting ceremony of the 2nd plant and R&D center of HMC Beijing
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Shareholder Main
& Investor
Shareholder Main
& Investor
Business Activities
Business Activities
In the collision test administered by US National Highway Traffic Safety Administration, Grandeur received a rating of Good, while Sonata received the top rating in the rear end collision test. In the safety test, Santa Fe won the Top Safety Pick. As a world leader in quality, HMC is continuously pursuing new product development innovation and quality improvement.
100 global brands for three consecutive years. The brand recognition tests by AutoPacific and Consumer Reports indicate that HMC is taking a firm hold in establishing itself as a global brand. HMC made a declaration in 2005 to attain the stature of a leading global brand and increase its capabilities to enhance brand competitiveness. This has led to the new brand identity Refined & Confident and Drive Your Way brand slogan. The brand is uniformly applied from development of product design to marketing, sales, and service. HMC is poised to lead Koreas industrial competitiveness through brand value enhancement and will be making relentless efforts to attain the stature of a premier brand in the world market, particularly in the US, Europe, and China.
Value Rank
(unit : 100 million dollars)
64 66 68 70 72 74 76 78 80 82 84 86
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Shareholder Main
& Investor
Shareholder Main
& Investor
Business Activities
Business Activities
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Motor Show
The 2006 Detroit Motor Show (1/08 to 1/22/2006) HCD-9(Talus), a cutting edge concept car, developed by the HMC R&D Center in California was showcased, and a total of 19 models including Santa Fe, Tucson, Tiburon, Sonata, and Grandeur XG were exhibited.
Santa Fe was introduced for the first time into the EU market, and a mid-size sporty wagon, a concept car, HED-2(Janus) was shown for the first time at the show. A total of 16 models including Verna, Getz, Matrix, and Atoz Prime were showcased.
A total of 14 models were on display, including HD(Avante) featuring a new technology product, Accent(Verna), Tiburon(Tuscani), Santa Fe, Tucson, Entourage, Sonata, and Azera(Grandeur).
A new Avante model was showcased along with concept cars, HCD-9, HED-2, and NEOS-. A total of 21 models including a diesel Sonata, concept cars for highway, and buses were exhibited. Hybrids and hydrogen cars were also on display.
The new Tuscani was introduced. A futuristic, multi-purpose concept car, HED-1 was showcased. A total of 14 models, including Avante XD, the bestseller in Korea, and Sonata, Tucson, and Equus limousine were also on display.
HMCs EU Design R&D Center developed a concept car, HED-3(Anez). Along with Grandeur VGT, and a Tuscani conversion that were shown in EU for the first time, a total of 17 models including Getz, Accent, Matrix, Sonata, and Tucson were on display.
A five-door Avante XD(Elantra), which is the most popular model in China, was introduced along with the Veracruz model. A total of 13 models produced by Hyundai Motor Beijing were featured, which included Equus limousine, Santa Fe, and Sonata as well as the concept car, HED-3(Anez).
Veracruz, the strategic model for the North American market, was on display. A total of 10 models including Santa Fe, Tucson, Sonata, Grandeur, Entourage, and a concept car, Hellion were exhibited.
The i30 model, a compact size hatchback, strategically produced for EU and HED-4(QarmaQ)), a concept car using new materials, were exhibited. A total of 35 cars with 23 models were on display.
Three concept cars, the HND-3(Veloster) model, developed at the Namyang Design Research Center, a crossover style compact size CUV HED-4(QarmaQ)), and the small, multi-purpose model, HCD10(Hellion), were introduced. A total of 21 finished cars with 10 special features using new technology were introduced.
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Environment Management
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Regional Responses
EU
As part of its policies to reduce CO2 emissions, the EU specifically regulates the amount of CO2 emitted from the use of fossil fuels in motorized vehicles. In the late 1990s the EU entered into voluntary agreements to reduce the level of CO2 emissions with three automobile associations - ACEA*, JAMA* and KAMA* - and made significant progress until 2004, when it achieved its midterm goals. However, since then the EU has concluded that the improvement was not enough, and in February 2007 announced new CO2 reduction regulations requiring that average CO2 emissions of new vehicles sold in the EU member states are to be reduced to 130g/km by the year 2012. states as CO2 reductions regulation became legally binding. HMC made great progress in CO2 reductions in the EU region, reducing average emissions to 166g/km in 2004, and contributed to KAMAs attainment of 168g/km, which outperformed its goal of 170g/km. The 2005 figure went 2g/km down compared to the previous year, resulting in a final outcome of 164g/km. Through exerting sincere efforts to reduce CO 2 by engaging in environmentally friendly vehicle development activities in 2006, HMC expects to take substantial steps towards CO2 reductions. The company plans to continue its CO2 reduction efforts by releasing i30 diesel model that emits 125g/km in 2007 and the new Santro model i10 in 2008. We will do our best to All EU15 Countries were required to reduce CO2 emissions under a voluntary agreement, and this expanded to the EU27 member meet the new CO 2 emission goal; annual fleet average of 130g/km for new vehicles sold from 2012.
As a global citizen, HMC truly cares for environmental preservation and sustainable development. Thus, it is actively implementing environmentally friendly practices, such as developing environmentally friendly vehicles, improving efficiency in conventional cars, and enhancing recyclability.
*ACEA : European Automobile Manufacturers Association *JAMA : Japan Automobile Manufacturers Association *KAMA : Korea Automobile Manufacturers Association
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210 200 190 180 170 160 150 140 130 1996 KAMA (Actual) HMC (Actual) 1998 2000 2002 2004 2006 2008 2010 2012 170g/km (Interim Goal) -21g/km 165g/km(KAMA) 164g/km(HMC) -29% 130 (Target)
KOREA
As concerns about skyrocketing oil prices and devastating impacts of greenhouse gas became pervasive among people, the MOCIE (Ministry of commerce, industry and energy) of Korea established regulations on average automobile fuel efficiency in 2006, setting standards of fuel efficiency according to vehicle class (under or over 1,500cc). The average fuel efficiency of HMCs 2006 fleet in the sub 1,500cc class was 14.3km/l , exceeding the standard of 12.4km/l by 15.5%. Models in the over 1,500cc class achieved 11.2km/l , which exceeded the standard of 9.6km/l by 16.7%. Such results are above the average fuel efficiency of all passenger vehicles sold in Korea in 2006, which was 10.8km/l.
HMC (Objective)
HMC was able to secure the 3rd place in 2006 by improving its fleet average fuel economy to 29.1MPG, which was a 0.4MPG
In particular, diesel models such as Sonata, Avante, and i30 will reduce the fuel cost to consumers in this era of high oil prices, and help HMC demonstrate its level of concern for environmental responsibility.
Model Click(export name:Getz) Accent i30 Atoz Click(export name:Getz) Click(export name:Getz) Lavita(export name:Matrix)
Engine Diesel 1.5 M/T Diesel 1.5 M/T Diesel 1.5 M/T Gasoline 1.1 M/T Gasoline 1.1 M/T Gasoline 1.4 M/T Diesel 1.5 M/T
progress vis-a-vis the previous year. Also HMC came in 6th overall in the AEI (Automotive Environmental Index) which combines the results of surveys carried out by the American consumer evaluation agency JD Power among 67,000 consumers regarding fuel efficiency, level of air pollution, CO2 emission etc., with data from the EPA (Environmental Protection Agency). Of the products manufactured by HMC, the Verna (export name: Accent) and Avante (export name: Elantra) were among the top 30 environmentally friendly vehicles selected. on December 19th, 2007, a regulation regarding the new fuel effi-
14 13 12 11
2004 Achieved number of HMC 13.7 Standard figure 11.6 2005 13.2 11.6 2006 13.0 11.6
Other Countries
Canada _ The Canadian government is moving to establish a
voluntary agreement aimed at reducing greenhouse gas emissions from vehicles, by 5.3 million tons compared to businessas-usual, by 2010. After 2010, the Canadian government plans to introduce fuel efficiency regulations similar to those in the US, in order to further facilitate greenhouse gas emissions reductions. HMC has improved the fuel efficiency of its light trucks from 10.5km/l to 11.2km/l, but the increase in sales of its mid- and large-size vehicles has caused the average fuel efficiency of its passenger cars to drop from 12.3km/l to 13.0km/l. HMC is in the process of reviewing new product development plans in order to meet the reinforced regulations and improve fuel efficiency in the field of passenger vehicles.
USA
As HMC predicts a decrease in its average fleet fuel efficiency due to the expansion of the market for midsize sedans and small size SUVs in the US, it strives to develop vehicles with improved efficiencies. Despite its sales growth in midsize sedans and SUVs,
ciency standards was approved by the U.S. president. The new regulation mandates the CAFE (Corporate Average Fuel Economy) to be raised from currently 25MPG to 35MPG by 2020. This is expected to deliver approximately 40% reduction in CO2 emission from new cars by 2020. HMC faces this as both a lofty
12 11 10
Verna(export name: Accent) and Avante(export name: Elantra) were selected as one of the top 30 environmentally friendly vehicles
9 2004 Achieved number of HMC 10.6 Standard figure 8.8 2005 10.5 8.9 2006 11.2 9.2
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160 kW, 35 MPa compressed hydrogen and a cruising range of 386km per charging. The fuel cell bus has had successful demonstration runs in international events, including the 2006 World Cup in Germany.
streets. The buses traveled a total of 2,400km during the World Cup period, and around 5,000 of the worlds broadcasting personnel rode the bus, experiencing the latest technologies of HMCs. HMC also then hosted the first ever public test drive, with 14 evaluators of COTY (Car Of The Year), and members of the press. The fuel cell electric vehicle - a Tucson model - was judged to be of excellent quality by them.
Test driving the Tucson, powered by hydrogen fuel cell
Status of technology development _ HMC has developed independent technologies for its fuel cell systems, and related core components. HMC has finished the development of an 80kW fuel cell stack, with further R&D lined up to improve its power, durability and freeze-start capability. In addition to this, significant research is ongoing to source parts for automobiles; currently more than 90% of this work is complete. HMC has developed the Tucson and Sportage using HMC proprietary technology. They are equipped with 20 kW-LiPB auxiliary power, a 40 kW/80kW driving motor system, and 35 MPa hydrogen storage fuel tanks. The weight of the empty vehicle is 1,850 kg and it can accelerate from zero to 100km/h in 16.2 seconds, and reach a maximum speed of 150 km/h. In November 2006 HMC developed a hydrogen storage fuel tank with a capacity of 70MPa, so that more fuel could be stored, thereby extending cruising range. HMC recently succeeded in developing a fuel cell bus with a capacity output of
jects, HMC will be in a strong, comptetitive position, well-placed to move to early commercialization by around 2010 and able to fulfill its role as a leader of the fuel cell vehicle field in the global automobile market.
Fuel cell buses were test-driven at the 2006 World Cup in Germany
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Biofuel vehicles
Ethanol vehicles _ With the rising concerns about high oil
prices and global warming, great interest is being shown in the FFV (Flexible Fuel Vehicle), which is compatible of running on either ethanol or gasoline. In response to this HMC is developing an FFV for mass-production in the near future. HMC will commence the production of these vehicles once consumer demand and ethanol supply chains are established.
Europe, where diesel vehicles are prevalent. Currently all diesel models by HMC are certified to run on diesel containing 5% biodiesel. HMC is conducting research activities on diesel engine technology which will enable diesel vehicles by HMC to be compatible with 20-30% mix of biodiesel fuel.
CNG bus
Though CNG (Compressed Natural Gas) is a fossil fuel, it emits less gas and offers comparatively fewer CO 2 emissions comSupplied Vehicles 50 200 220 510 (estimate) 1,530 (estimate)
pared to other kinds of fossil fuel, giving it an advantage in regions where air quality is poor or where CO2 reduction policies are being stringently implemented. HMC has been producing and selling CNG buses in Korea since the year 2000 and has been recognized for its contribution to improving air conditions in cities. Since 2004 HMC has been supplying CNG vehicles to the hauling service providers in the major metropolitan areas in the country. The CNG buses by HMC have been appreciated for excellence in quality and recognized for technological competence. The fact that HMC remained as the number one CNG bus supplier in Korea by reaching a 68.4% (1,773 units out of a total of 2,596) market share proves this. Starting with the export of 10 CNG buses to Peru in August 2006, HMC has expanded exports to Latin American countries and South East Asian countries, a growth market for CNG buses
New Super Aerocity CNG bus
schools). HMC plans to increase the number of vehicles to 1,530 by 2008. HMC has also committed itself to narrowing price differences compared to existing vehicles while achieving a 50% improvement in fuel efficiency and a 30% reduction in tailpipe emissions.
in public transport. As a provider of CNG buses, HMC has indirectly contributed to the improvement of air quality in areas where such vehicles are in operation.
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Improvement of Engine
Avante HD Gasoline 1.6VVT _ The new Avante HD is
equipped with a range of environmentally friendly technologies and specifications, including a light gamma-1.6VVT engine featuring an aluminum cylinder block, new small-sized transmission, a motor-driven power steering system, and silica tires. In spite of its extended size and 10% increase in maximum capacity, the vehicle boasts excellent fuel efficiency: 13.8km/l - 12% higher than the 12.3km/l shown in the previous model.
improvement in engine performance, the line pressure variable control system has been applied to the automatic transmission to form the optimum line pressure for vehicle driving conditions, thus, achieving enhancements in transmission and fuel efficiencies. Despite the larger vehicle size engine displacement, the new Santa Fe increases fuel efficiency by 5% compared to its predecessor.
improving fuel efficiency and reducing CO2 emissions. Realizing Miniaturization and applying multi-speed technologies are of prime importance to improving the efficiency of these automatic transmissions. Through extensive research and development, HMC succeeded in independently developing the next generation downsized automatic transmission, which can be applied to small and middle class vehicles, and the 5-speed automatic transmission for use in mid- and large-size vehicles. HMC also has plans to mass-produce and apply 6-speed and 8-speed automatic transmissions, currently under development.
Starex 10.0
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have been supplied by domestic component manufacturers, contributing to the revitalization and the competitiveness of the domestic components market. This high performance high efficiency automatic transmission is used in the Grandeur (export name: Azera) and has received the IR52 Jang, Young-sil Award in 2006.
IR Jang Young-Sil Award is industrial technology award cosponsored by KOITA (Korea Industrial Technology Association) and Maeil Business Newspaper. It is given in the name of the Minister of Science and Technology. IR stands for Industrial Research, which means research on industrial technology.
Regional Responses
EU
The EU is further strengthening regulations regarding the emission of PM (Particulate Matter) and NOx released from diesel vehicles. Following the adoption of the Euro IV standard since 2005, the Euro V standard is expected to be enforced in EU in
The Elastic Front also reduces the chance of pedestrians being seriously injured upon collision through its triple shock absorption system. The new technologies applied to the concept car QarmaQ will be selectively applied to HMCs new models in the
Next Generation Miniature Automatic Transmission High Efficiency 5-Speed Automatic Transmission
September 2009, which will call for an 80% stricter reduction of PM emissions, and 30% reduction of NOx emissions from diesel
` vehicles vis-a-vis the Euro IV standard. The EU is discussing
enforcing Euro 6 regulations which will mandate an additional 60% reduction in NOx from diesel vehicles compared to Euro V standards. All the HMC vehicles sold in Europe were in compliance with the Euro V requirements since 2006. Moreover, in order to preserve the environment and minimize the business risks in advance, HMC takes early actions by implementing plans to equip its diesel
future.
Lightweighting
Reducing the weight of the vehicle is as important as the improving engine performance for efficiency purposes. HMC is continuing the study of space frame type vehicle bodies and research on bodies through the development of more energy efficient compressors and high-strenght-steel plates with reduced weight, HMC also has reinforced cooperation in research and development activities with overseas institutes and global companies.
models with Diesel Particulate Filters to meet such expected future requirements. These efforts will make it possible for HMC to release vehicles in compliance with Euro V in 2008, which is one year earlier than Euro V enforcement timeline.
Avante (export name: Elantra) 2.0 with beta II engine
USA
The US can be divided into states in which the federal Tier-2 regulations or Californias LEV II regulations are in effect. Californias LEV II and Zero Emission Vehicle regulations are deemed to be
PM
Euro 4
0.025
Development of steel plate _ HMC began the study of production technology for the development of new steel plates in early 2005. In the following year, HMC proceeded to carry out activities that pertain to various designing and crash teststing. HMC conducted a joint research with POSCO from the initial stage of development. As a result, HMC has developed a high strength, light weight steel plate with reduced thickness, whose intensity is twofold compared to the predecessors. The new plates also improved in terms of thickness by about 33%. Currently, HMC is working to commercialize the new plate and will enhance vehicle safety by using it in all production vehicles. The light weight plates will contribute to the reduction of fuel costs and CO2 emissions through lighter weight.
Inside of QarmaQ plastic QarmaQ
the strictest gas emission regulations in the world, and thus, being able to supply vehicles that comply with these regulations
Euro 5 0.15
is considered as a very important challenge for automanufacturers to develop vehicles capable of satisfying these regulations.
0.25
NOx
0.20
Currently, all HMC gasoline vehicles sold in the US satisfy the regional regulations, while diesel engines and related technologies to satisfy Tier-2 and LEV II requirements are under development. HMC is selling the Avante 2.0 (export name: Elantra) equipped with beta II engine that boasts gas emission performances equal to that of SULEVs (Super Ultra Low Emission Vehicles). HMC plans to produce a variety of vehicles with SULEV class emission performance to respond to the ever strengthening tailpipe emissions regulations in the US.
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Global
KOREA
Vehicles that run on gasoline and diesel fuel are subject to separate regulations. Gasoline vehicles are governed by regulation as strict as Low Emission Vehicle II, which is enforced in California in the US for low emission vehicles, while diesel vehicles are emission-controlled by Euro standards enforced in European countries. All HMC vehicles in the market are in compliance with Korean regulations. Some vehicles comply with the Euro IV regulations ahead of the enactment schedule. In 2006 the Ministry of Environment conducted evaluations on tailpipe emissions to classify 39 newly-released vehicles (17 domestic cars and 22 imported cars) into 5 grades. The results showed that all the HMC cars that were evaluated, including the Avante 2.0 CVVT and 1.6 CVVT in the gasoline models, had achieved the top rank of grade 1 or 2.
100,000 mile warranty, HMC applied the silent timing chain, serpentine belt, and high performance electronic control systems to deal with any change of external conditions. The I-4 gamma engine, currently applied to the Avante HD, is scheduled to be equipped in an extended selection of next-generation small and semi-middle sized CUVs(Crossover Utility Vehicles) to help HMC remain competitiveness in the business arena.
torque of 35kg m, a 3kg m improvement over the previous model, thanks to engines electric control unit optimization that
V6 Lambda Engine
In December 2006, the Ministry of Commerce, Industry, and Energy selected the large V6 Lambda engine, developed by HMC, as one of The Top 10 New Korean Technologies of the Year. The HMC large V6 Lambda engine is a gasoline engine applied to new mid- and large-size sedans and SUVs. The new design improves maximum output by 27% and maximum torque by 16% compared to the engine in Equus(export name: Centennial), and applies an Eco type oil filter that has a high recyclability rate.
allows fuel injection at high pressures of up to 1600 bars. Forklifts equipped with the D4DD engine can maintain high torque at low RPM level, enabling the goods to be loaded and unloaded with ease. It also reduces the emission of NOx, PM, and CO, thus improvs the air quality in areas such as factory buildings where forklifts are commonly used. HMC constantly strives to bring advancements in environmentally sound forklift engine technologies and to meet the the Euro III standards ahead of schedule (due in 2008) to expand sales of forklifts in both the domestic and the foreign markets.
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Increased Recyclability
HMC is making great efforts to develop a closed-loop recycling society where discarded resources are recycled and materials are managed over the entire life cycle. In order to do so, HMC is conducting various activities from environmental evaluations conducted at the design stages to end-of-life.
Operation of RAIS-H
In order to comply with the EU regulation for Reduce, Reuse, Recycle (RRR), HMC developed RAIS-H (Recyclability Assessment Information System for Homologation). RAIS-H is an internal, web-based system used to verify the material composition and calculate recyclability rate for newly-
In the future, by using this system the eco-design concepts will be proposed during the design phase, offering an alternative modeling of certain parts using a digital assessment. The HMC DfD CAD system is a worlds first, and DfE (Design for Environment) can be subsequently improved using this system.
developed vehicles in the early stage of the development process. All the recyclability information and analysis results are presented to the designers to improve environmental characteristics of the model. The system is applied to both HMC and Kia models. Benefits are gained by comparing and analyzing all vehicle models, and it can be used as a key database for ecodesign. In 2007, the newly-launched Grand Starex and i30 were evaluated using RAIS-H. The results show that the recyclability rate is
within (EU) regulation limits: over 85% recycling and 95% recoverability rates. HMC will continue complying with every markets
Application proportion
RRR regulations using RAIS-H, and will improve the data quality for application in eco-design process.
Shift earlier
RAIS-H
pounds for use in roof rack components of new vehicles. Through such efforts, a 20% cost reduction for materials can be
low
Conceptual design
Detail design
Preparing production
achieved and the nylon materials, previously buried and burned, can be recycled. The cost for nylon disposal (180,000~220,000 Won/Ton for burning) is expected to be saved. The roof rack developed using method, will be mass-produced and applied to
Development stage
CATIA based Integrated System for DfD CATIA V5 Assembly Application Design for Disassembly Toolbar
Simulation of disassembly
Optimal disassembly path/structural diagram DfD Modular design Examine Fasteners Tool Interference check Modify Fasteners Insert Self-location Calculate DfD score
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Recycling of Rubber Material Scrap generated from Production _ Rubber has been a challenge for recycling due
to its sulfur content. The technological challenge involved with recycling rubber was compounded by low economic benefit associated with the process. Despite, HMC is using its innovative pulverizing treatment for rubber components to create other useful materials for noise-absorption, insulation and weather stripping. A micro powdering technology is used for recycling of the vulcanized rubber scrap. Mass-production of recycled EPDM(Ethylene Propylene Diene Monomer) rubber in bumpers and recyclable fluoride rubber for gaskets will begin in 2009.
Recycling of waste PET bottles _ HMC strives to implement world-class environmental technologies and has developed profitable recycling technologies to give new life to waste PET bottles. The company has constructed a closed-loop recycling system for the collection, crushing, washing, and supply for waste PET bottles, and conducted research of materials recompounding technology. The recycled materials will be used in the window winding motor housing and engine cover materials for automobiles by the end of 2008.
months prior to the date imposed in the (Eu) Directive. Furthermore, none of the four heavy metals (with the exception of those in Annex II) will be used earlier than 2008 before the domestic End-of life vehicle law becomes valid. HMC plans to expand the policy of the global standardization for the four major heavy metals to all regions, regardless of regulation, step-by-step.
Substitute for the lead content in Bearing Shell: 1.7% of lead Bearing Shell lead free Bearing Shell
Setting Global Standard for Prohibition of the Use of the Four Heavy Metals
HMC has significantly reduced the use of four heavy metals (lead, mercury, hexavalent chromium and cadmium) and developed substitutes for them. Heavy metals will have been replaced with
dismantling. 2. All domestic and foreign partners doing business with HMC will make sure that none of the 4 heavy metals are included in any of the materials or parts delivered to HMC . 3. HMC and all partners domestic and foreign will reinforce the response process to regulation regarding the 4 heavy metals and strengthen environmental education of our employees and executives. 4. HMC and all partners domestic and foreign will do their best to cooperate with one another in promoting these global standard guidelines of the 4 heavy metals. 2006. 11. 15 Vice Chairman & CEO Dong-Jin Kim, Ph.D.
ELVs
Materials separation
ASR
Even substitutes for hexavalent chromium for corrosion prevention in chassis bolts, which are permitted for use until June 2008, have been developed and applied in June 2007, a year earlier than required by law. Substitute materials for the lead contained in bearing shells & bushes and the lead in the aluminum alloy for mechanical processing will be applied no later than early 2008: 6
Recycling Process of Rubber Scrap Environment Friendly Closed-loop Recycling System of Waste PET Bottles
Micro Pulverizing
Reclaimed Powder
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Air Quality Control Criteria for New Cars (Ministry of Construction and Transportation, June 2006)
(unit : g/m3)
Regulation Materials
Formaldehyde 250
Benzene 30
Toluene 1,000
Xylene 870
Ethylbenzene 1,600
Styrene 300
LCA for all new vehicles and use the results to reduce environmental impact of our future models. HMC will disclose LCA results to our stakeholders including consumers and use as an environmental communication tool for all stakeholders.
Grand Starex
4 Heavy metal Management Environmental Regulation Monitoring
Newly developed Starex has better engine efficiency and lower emissions compared to comparable models. It shows lower greenhouse gas emissions impacts (down 4.8%), lower acidification impacts (down 18.4%), lower eutrophication potential impacts (down 34.7%). It does however show an increased potential for photochemical oxidant creation (up 0.7%) due to increasing emissions of carbon monoxide, according to LCA analysis results.
Eutrophication potential impacts
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Korea China
USA
i30
The semi-compact hatchback i30 has a lower environmental impact in all categories except acidification impact according to the LCA result compared to comparable models. Overall environmental performance has been improved, with lower greenhouse LCA Result of i30
Already implemented
To be implemented
potential impacts (down 10.1%), lower photochemical oxidant creation (down 9.3%), eutrophication impacts (down 3.3%). As a side effect of using lightweight materials, acidification (up 0.8%) impact increased slightly. We are planning to conduct
Global warming
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use compliant products. In addition, from the year 2008, HMC is also going to measure volatile organic compounds (VOC) emis14,000
1. Global warming: The increase in the average temperature of the Earth's near-surface air and oceans due to the greenhouse effect caused by the accumulation of CO2, methane, CFC, and so on. 2. Acidification impacts:The impacts of human emissions of oxides of sulfur, nitrogen compounds and ammonia that react in the atmosphere to produce acids. It is causing acid rain, respiratory diseases, etc. 3. Photochemical smog: A combination of fog and chemicals such as VOC and NOx that is acted upon by the action of the sun, which forms a variety of secondary products including ozone. 4. Eutrophication potential impacts: An increase in chemical nutrients, typically compounds containing nitrogen or phosphorus, by industrial effluent and sewage spewed into the sea water, which results in excessive plant growth and decay.
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sion amount of components and use only eco-friendly materials that are meeting the strictly enforced threshold. So far HMC has
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Photochemical smog
reduced VOC emissions by 80%. Adhesives and paints that generate most VOCs within a vehicle have been changed from organic solvents to water soluble ones. Low odor and low VOC-
generating ABS and Acetal resins are being tested for future application. Furthermore, since VOCs are generated during the manufacture of parts, we have, with the suppliers cut VOC generation significantly.
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Green Procurement
Supporting Environmental Management Systems of Suppliers
To make each vehicle a total of 20,000 components are needed. To satisfy ever more demanding environmental regulations in the auto sector, the cooperation of suppliers are required. HMC is active in supply chain management and is leading the automobile industry by working with more than 400 1st tier suppliers and over 4,000 2nd and 3rd tier suppliers. On top of 200,000 employees working in 1st tier suppliers, there are approximately 1 million workers working in 2nd tier, 3rd tier and other general suppliers, all of them engaged in some way with HMC. HMC is supporting the environmental management system of suppliers to help improve environmental performance of their products and manufacturing processes. Every year general environmental management training is provided to all 1st tier business suppliers. In addition, HMC has increased the purchase of environmentally friendly products, and has supported suppliers environmentally responsible component developments. Also, by planning green partnership projects with small and medium sized companies, HMC encourages the transfer of 1st tier suppliers environmental management sys100 90 80 70 60 2005 2006 2007.7 End of 2007 63 84 90
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2005
2005. 5. 23 Public relations office of Asan factory 2005. 5. 25 Ulsan community center
2006
2006. 5. 2 Public relations office of Asan factory 2006. 5. 9 Ulsan community center 2006. 5. 11 Public relations office of Guangju factory
Region EU
Prohibited materials Benzo(a)pyreneand other 7 types of materials Perfluorooctanoic acid sodium salt and two other types of materials Trichlorofluoromethane(CFC-11, CFCl3) and another 19 types of materials Nitrofen, its compound and 60 other types of materials
USA
Korea
The law of Harmful chemical material management (materials prohibited/ limited to produce, import, use)
401 473 HMCs sustainability management strategy Current environmental regulation and countermeasure Regulation on heavy metals (Cr+6) and countermeasure The governments environmental policy direction and sustainable management Environmental management strategy of purchase headquarter
390 699 Establish green partnership with small and medium sized companies and the driving strategy Establish green partnership for the sustainable development Trend of international and domestic environmental regulation and the countermeasure Environmental management strategy on purchasing area
Agreement
Conclusion of Environmental Friendly Parts Supply Agreement _ In February 2007, HMC has concluded the
Agreement on Supply of Environmental Friendly Parts with all 1st tier suppliers. This agreement is based on not only the will to practice environmental and ethical management for production, but also the will to become a leading corporation that assumes its due social responsibilities.
Setting an environmental standard _ All component suppliers received a guideline on The Environmental Standard of HMC which specifies environmental requirement for use in components production. The environmental standard can be found at HMCs purchase portal site, Vaatz(http://www.vaatz.com) and it is updated regularly. The guideline states both prohibited and regulated materials; the four most strongly prohibited materials are heavy metals (lead,
As of November 2007 a total of 80 suppliers completed the purchase and 100 suppliers are going to be equipped with heavy metal analyzers by 2008. HMC plans to provide an incentive to those suppliers equipped with the analyzer by accepting self-declared certificates of heavy metal compliance as a valid proof of compliance. This incentive would help suppliers reduce financial burdens while preparing for heavy metal regulation compliance.
Heavy metal contents data (IMDS)
mercury, cadmium, hexavalent chromium) Also included is guidance on use of IMDS in component production, the guideline on RAIS-H (Recyclability Assessment Information System for Homologation) and a guideline of MSDS (Material Safety Data Sheet) management.
partnerships with 40 1 st tier suppliers. With a strong will to expand the program to include all suppliers by 2009.
Signing ceremony for voluntary agreement on green partnership for heavy metal reduction(Oct. 2006) President Choi Jae Kook (Left), Former MOCIE minister Jung Se Gyun (Right)
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Completion of the SCEM (Supply Chain Environmental Management) project _ To respond to global environmental
regulations, HMC is making great efforts to establish joint compliance systems with its suppliers. For example, a SCEM project was started in with 15 component suppliers and hosted by the National Clean production Support Center under the Ministry of Commerce, Industry and Energy. The three years project was successfully completed in June 2006. HMCs SCEM pilot was a multi-party, environmental cooperation project involving government, expert groups, academia, suppliers. In the project, suppliers established environmental management systems, developed environmentally responsible products and prepared the way for clean technologies. They achieved environmental gains such as energy reduction, scrap material reduction as well as extensive cost reductions.
Classification
Period Participants
SCEM
2003. 7~2006. 6 Kyungshin Industrial / Daesung Electric Co., Ltd. Denso PS Corporation / Dong Hee Industrial Co., Ltd. Doowon Climate Control Co., Ltd. Sejong Industrial Co., Ltd. / Shinchang Electrics Inzi Controls / Il Jeong Industrial / Jinhap Kasco / Omron Korea / Kapec / Han Il E Hwa Co., Ltd. Hwaseung R&A
SCEP
2006. 4~2008. 3 Doowon Climate Control Co., Ltd. / Sejong Industrial Co., Ltd. BorgWarner Transmission Systems Korea Inc. Daesung Electric Co., Ltd. / Denso PS Corporation Dong Hee Industrial Co., Ltd. / Han Il E Hwa Co., Ltd. Sam-A Aluminium Co., Ltd. / GE Sensing Korea Ltd. Youngbo Chemical Co., Ltd. / Lotte Aluminium Co., Ltd. / Precision Dongwoo Heat Treating Co., Ltd. / Hanyoung Industrial Co., Ltd. Hyunwoo Co., Ltd. / Chung Woo Co., Ltd. / I.P.L. Co., Ltd. Jungwoo Plastics Co. / Wooju Tech Co., Ltd. / Yooshin Industrial Co. Shindo Precision Corp. / Seo Jin Precision / Bum Yang Co. Sunil Industrial Co., Ltd.
Proceeding SCEP (Supply Chain Eco-Partnership) pilot project _ Based on the performance of SCEM pilot project, HMC is proceeding with a two-year SCEP pilot project to transfer environmental management to secondary and tertiary suppliers. This began in April 2006. In the first year of the project, three primary suppliers and nine secondary suppliers suppliers participated in the project. In the second year of the project (starting April 2007), the number of members expanded to seven primary suppliers and 17 secondary suppliers.
Introducing of best practice _ Doowon Climate Control wins the Prime Ministers prize in the National Environmental Management Award
SCEM / SCEP Doowon Climate Control has been providing climate control systems to HMC and participating in HMCs green partnership project since 2003. In June 2007, the company won the Prime Ministers prize in the National Environmental Management Award, for their excellent achievement in green partnership program. Based on the success of the SCEM project, Doowon Climate Control decided to participate in the SCEP Project with Sam-A Aluminum, Lotte Aluminum, GE Sensing Korea, and Youngbo Chemical and has been showing a great leadership.
SCEM
SCEP
Primary suppliers
Establishing green partnerships Expanding Expanding environmental network management secondary and tertiary suppliers
Secondary, tertiary suppliers Doowon Climate Control winning the Prime Minister Award in Green Partnership, Korean Environment Management Award
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Global
Clean Production
Expansion of Environmentally Friendly Product Procurement
In order to pursue sustainable growth, HMC has been leading proliferation of an environmentally friendly production and customer culture.
Clean production refers to a production structure that concurrently satisfies both economic and environmental priorities by reducing the generation of polluting substances by best practical environmental technology, processes and systems throughout production. In order to facilitate such a system HMC is applying LCA (Life Cycle Assessment) and DfE (Design for Environment) early in the design stage of a product and is reinforcing cooperative activities with other partner companies to minimize environmental impacts in parts production and supply stages. HMC launched internal and external activities directed to reduce greenhouse gas emissions from production. The company defined targets for greenhouse gas emissions reduction and uses integrated energy management systems, environmentally friendly energy sources and facility improvements. In its external activities, it has been participating in a greenhouse gas inventory project and industrial collaborations with the Ministry of Commerce, Industry and Energy, the Ministry of Environment, KAMA (Korea Automobile Manufacturers Association) and Korea Energy Management Corporation.
In 2006, Eco label products, in particular, expanded by five-fold compared to green procurement items in 2005, and the purchase sum increased by 1.7 billion (15.3%). In 2007, we plan to increase the total sum of green procurement purchases by 349.8 billion (31.1%) compared to that of 2006.
*Exchange Rate :
1,004.00Won/$ (12. 30. 2005) 929.00Won/$ (12. 28. 2006) 924.00Won/$ ( 6. 29. 2007)
Painting
VOC/Stench, Waste water
Energy:1,403,390 CO2ton Water resouces:13,801,278 ton Raw materials:364,590 ton Chemical substances:2,478 ton
Molding Forging Noise Molding sand waste/Dust/Stench Engine maunfacturing/Assembly Waste oil Waste water
1,618,268
Number of
Engines: 2,2,42,340
*The 2005 data for Good Recycled label products and Reduced Toxic substance label products is not calcuated.
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Global
Meanwhile, HMC is trying to identify the ultimate solution to global warming through energy use reductions and organize its production facility maintenance and production technology departments, which design and install production facilities and Energy TF. Energy TF has a meeting every quarter and selects energy saving solutions. Each team offers their opinion and after discussion, the optimum energy reduction plan is decided.
System improvement _ HMC is promoting energy use reduction activities in an effort to improve the fundamental structure of energy use, by using high-efficiency equipment. HMC is also working towards efficient-energy enhancements by introducing an energy recovery system, which collects and recycles heat generated from coating factories, and by installing control systems to manage fluctuating uses. HMC is reducing the use of electricity by replacing substandard electromotors and by improving energy waste losses through hourly consumption monitoring and targets. For energy reduction at material (component) factories, HMC is making efforts in energy efficiency and improvement by replacing old inefficient smelting furnaces. To manufacture an automobile engine, a molding process is required which reforms melted cast iron and aluminum to a desired shape. Material plants are factories which manufacture engine parts, such as cylinder blocks, using this molding process. Such processes involve the use of smelting furnaces that consume high amounts of energy. Therefore, this is one of more urgent areas where system improvements for the reduction of energy use are necessary. HMC recently changed its parallel resonance smelting furnaces to serial resonance ones, so power input is independent of the volume of fuel inputted in the smelting furnace. Serial resonance smelting furnaces need short melting times, so the heat loss can be minimized. Also, power usage per ton has decreased by 5.7% compared to the previous year, reaching 640kWh/ton, melting capacity has been increased from 4ton/hr to 6ton/hr, so the energy reduction effect has been maximized.
Up
To achieve this, HMC is evaluating the conversion to low-energy transport, loading efficiency, shipping routes, ECO-Drive guidelines in procurement, production, sales, export, and distribution.
the same levels of packaging material used in 2005 until 2012. To reduce packaging material use, HMC will start simplifying packaging, changing packaging materials, reviewing environmentally friendly material usage and expanding recyclable pallet use beginning in 2008. As the first step in the project, CO2 emissions will be calculated beginning in 2008 and a reduction plan will be determined. The
Establishment of environmentally friendly logistics system _ In seeking to reduce greenhouse gas emissions and
lessen our dependence on fossil fuels, governments and enterEnergy Utilization
(unit: 1,000 GJ) (unit: GJ/100 million won)
second step is to expand the subject of the plan to overseas logistics area. Hereafter, HMC will continue its environmentally friendly activities in the logistics area for the reduction of packaging material use and CO2 emissions. Meanwhile, HMC will identify other business areas in which to reduce CO2 and will establish a plan for solving such challenging environmental problems.
prises from major nations are focusing not only on developing new products but also on improving the distribution system to minimize energy consumption in transportation. In its distribution activity, HMC is preparing to construct an envi80
60,000 50,000 40,000 30,000 20,000 10,000 2001 Energy consumption per sales Energy consumption 106 24,860 2002 108 27,759 2003 109 28,999 2004 101 32,300 2005 106 36,523 2006 97 35,702
130
ronmentally friendly system to reduce packaging use and CO2 emissions through improved logistics performance.
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Global
By sharing detail on failed cases, in particular, such as the uncertainty of improvement and trial and error projects, the industry is promoting joint benefits among its member companies.
Material Balance
HMC manufactures automobiles and engines using a variety of raw materials and energy in seven manufacturing factories around the world. As illustrated in the national material balance below, in 2006, HMC used 1.4 million tons CO2 domestically. Also a total of 13 million tons of water resources were supplied from outside, and 580,000 tons were recycled and reused in the manufacturing plants. The quantities of raw materials including vehicle steering plates
External Activity
CO 2 inventory _ HMC has organized a climate change
response team with MOCIE & KAMA and has led CO2 emission reductions in the domestic automobile business. In 2006, HMC worked with KAMA to establish a CO2 inventory in the domestic automobile industry and has developed guidelines on calculating the CO2 emissions of automobile companies. In the guideline, direct and indirect emissions figures are separated for efficient greenhouse gas emission control by HMC business sites. HMC followed national GHG inventory guidance in all operations at Ulsan, Asan, and Jeonju, as well as those within research facilities and A/S centers. The total sum of GHG inventory from national HMC establishments conforming to the guideline is 1,404,379 tons of CO2. The total quantity of energy consumption applicable to direct emissions including LNG, gasoline, light oil, LPG, and kerosene is 497,305 tons, and the electricity consumption of indirect emissions is 907,074 tons. By building CO2 inventories, the exact discharge portion of hydrofluorocarbon and CO2 emissions from welding rods can be calculated, so continuous CO2 reduction activities, like potential reduction rate analysis, will proceed. Also, based on the CO2 inventory of domestic business facilities, the range of CO2 emissions calculations will be extended to overseas production plants beginning in 2008.
In put Indirect emissions (electricity) Total 1,404,379 Direct emissions
and aluminum and chemical substances consumed totalled 364,590 tons and 2,478 tons, respectively, and were used in the manufacture of 1,618,268 automobiles and 2,242,340 engines in HMCs plants worldwide. Meanwhile, 844 tons of air pollutants and 129 tons of water pollutants were generated. Also, among 199,469 tons of waste generated, 156,895 tons (78%) were recycled and reused in various processes.
Classfication LNG LPG Kerosene Gasoline Light oil CO2 for welding HFC SF6
Emissions 472,359 903 3,607 2,304 7,958 421 9,414 338 907,074
Figures 1,403,390 tons CO2 13,801,278 ton 364,590 ton 2,478 ton 844 ton 129 ton 586,188 ton 1,618,268 (Number of cars) 2,242,340 (Number of engines) 199,469 ton (Recycled: 156,895 ton)
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Global
Resource Circulation
HMC decreased the use of resources in its production factories and increased the recycling rate, minimizing the volume of waste to increase process efficiency. Also, for the recycling of waste, various activities are on going, such as recycling technology for paint waste sludge, VOD fuel technology and re-use strategies for molding sand waste.
Also, initiatives for decreasing sludge, which is produced during sewage treatment, and re-use technology for molding sand continue to be areas under development. As a result of these efforts, in 2006, the waste produced was 223,242 tons and about 78% was recycled.
Waste Reduction
The types of waste produced in automobile factories includes paint waste, thinner waste, packaging material, such as, vinyl, paper, and lumber and molding sand waste used to produce engines. Since 2004, HMC has been collecting metal scrap and waste, which is managed separately from waste. HMC is striving to decrease its waste generation rates and improve its recycling rate by reusing packaging material and increasing waste storage efficiency.
Recycled: 78.3
60
600,000
2 1
40
400,000
20
200,000
10,000
2001
Waste per sales Total wastes Designated wates
2001 47 11,058
2002 44 11,280
2003 45 11,975
2004 45 14,447
2005 43 14,798
2006 46 16,852
1,254
600,000 734
1,177
400,000
304,634
2005
2006
2001
2002
2003
2004
2005
2006
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Efforts
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Global
HMC has built pump systems and pipes to use surface water as a complementary water supply to the industrial water disposal center. HMC operates 100% self sufficient water supply systems and also sewage and waste water is treated through discharging prevention systems and is used as industrial water later. The disturbed mass balance problem was also solved by using surface water, and it also reduced the cost significantly.
Air Pollutants
Air pollutants consist mainly of volatile organic compounds (VOCs), paint particles from painting procedures and dust in material plants that produce cast iron products. HMC set internal standards 10-30% higher than legal standards and minimized the production of air pollution material. In 2006, air pollution material has decreased 26.7% compared to the previous year and recorded 844tons reduction through process efficiency and clean energy use. The Ulsan factory has changed its cast iron procedure to a light alloy procedure and as a result, the emissions of air pollution material have decreased.
Electro-coating rinse water recycling system _ In vehicle painting, several steps of coating and cleaning procedures are needed. In cleaning procedures, to reduce the water resource usage and waste water production, HMC is investing significant effort. The second painting factory of Ulsan established a rinsewater recycling facility to reduce production of electro-coating rinsing water used in cleaning procedures. These efforts led to lower concentration of waste water and more recovery of electrocoat paints. Moreover, waste water generation was 33% less, down to 100l/min. from 150l/min.
investments to reduce the quantity of pollutant emissions. To process high-concentration, refractory wastes that may be too difficult to process in the existing disposal facilities, HMC is using efficiency and toxicity assessments of microbe treatments and making efforts in pollutant reduction through waste paint and sludge reduction.
mg/sm3
120
Hydrogen chloride (HCl) Aeration tank 5,200m2 Carbon monoxide (CO) Nitrogen oxide (NOx)
1.2 50 30
*Due to the introduction of clean production processes in early 2006, the existing process (cupola) was shut down.
Sand filter
1,500 1,162 Micro filter 1st Reverse 2nd Reverse osmosis membrane osmosis membrane Producing water 1,800m2/d Outsourced Treatment 2001 Industrial water feed tank 4,000m2 2002 Evaporator Vaccum dryer Mechanical vapor Recompression system & Crystallizer Centrifugal seperator 1,000 1,160
1,363
500
2003
2004
2005
2006
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Global
Water Pollutants
Waste water is mainly produced from vehicle cleaning and paint dust collection procedures in paint plants, engine gear parts manufacturing as well as sewage effluent from company bathrooms. The Asan and India plants have introduced zero discharge systems and are run as clean production factories with no waste water generation. HMC is currently installing and running unified sewage/waste water disposal systems in all manufacturing factories; the Ulsan factory runs seven disposal units that process waste water, two unified sewage/waste water disposal units, and one waste water disposal system. HMC has set a goal of 10-50% improvement above legal regulations as its company standard regarding water pollutants. Contaminants are divided into several classifications for management: biochemical oxygen demand, chemical oxygen demand, suspended solids and mineral oil. In 2006, Korean water pollution substance emissions totaled 129 tons, down 33% compared to 2005. By treating the sewage water generated from private residences, leased apartments, and the dormitory of the Ulsan factory at the sewage treatment plant rather than at the factory, water pollution substances based on BOD, COD, SS, and n-H were much less than in 2005. Water Pollutant Management Standard
(unit : mg/l)
VOCs are essential in vehicle production, but due to their negative environmental and health effects VOCs emissions are regulated by law. In 2006, the domestic production of VOCs was 8,077 tons and the recovery rate of organic solvent was 37%. Until 2006, about 4% of solvent in electrodeposited coatings were applied in a lump, but by the beginning of 2007, it was applied separately at 10% and 4%.
25,000 20,000 15,000 10,000 5,000 2001 VOC generation peracar VOC generation 8.4 12,767 2002 7.7 13,135 2003 8.1 13,278 2004 5.9 9,956 2005 6.1 10,289 2006 5.0 8,077
10 6 2
Yearly Recovery Status of Organic Solvent (Domestic) Yearly Quantity of Water Pollutants Generated(Domestic)
(unit : ton) (unit: 1,000 ton) (unit : %)
5,000 205 187 184 154 129 Recovery rate of organic solvent 2001 2002 2003 2004 2005 2006 Amount of recovered organic solvent 193
40 30 20
3,000
1,000 2001 27 2,321 2002 34 3,336 2003 29 2,685 2004 31 3,002 2005 37 3,705 2006 37 3,439
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Global
12,000 10,000 8,000 6,000 4,000 2,000 2001 2002 7,426 9,350
10,062
2,828
2,191
2,478
2003
2004
2005
2006
HMC
Set MSDS standard & provide feedback
HMC is also implementing a methodical management system for hazardous materials generated inside the factories and reduction technology for a cleaner work environment.
Clean Air
Purchasing
Check compliance
Sites
Provide MSDS to users, Educate
Currently, HMC is developing assessment techniques for measuring and estimating the harmfulness of chemical substances, and is constructing pre-assessment and precautionary systems
*MSDS( Material Safety Data Sheets)
Oven Gas
for hazardous materials. HMC also is implementing various research initiatives to establish an atmosphere management process inside and outside its manufacturing processes by building reduction technology for hazardous materials generated during the manufacturing processes, developing a model of pollutants in the atmosphere, and conVOC, Stench Oxidation CO2, H2O
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Environmental Cost
HMC calculates the environmental costs of three domestic plants (Ulsan, Asan, and Jeonju) and breaks them down into five items stated below every year. Major environmental costs are broken down into the direct cost of environmental pollution reduction that is associated directly with environmental facilities and equipment, the indirect cost of environmental pollution reduction that is spent for environmental education for employees and environmental activities, the environment risk management cost for legal compliance, disposal and recycling for consigned waste treatment and waste recycling, and lastly, the social environmental activity cost for local environmental campaigns and green area management. The environmental cost in 2006 was KRW 39.6 billion, and the recycling profit derived from disposing wastes totaled KRW 2.6 billion.
Ulsan Plant
The Ulsan factory, composed of five independent factories and equipment on a campus of 5,220,000m2, with annual production capacity of 1,620,000 vehicles, is the main operation of HMC. HMC has upheld its investments and efforts in environmental management activities and is recognized by the government and regional communities as an environmentally outstanding enterprise. At the 11th Annual Environment Day Commemoration and Green Ulsan21 One-Mind-for-the-Environment Event in 2006, the Ulsan factory was awarded official commendation from the mayor of Ulsan. The factory was recognized for its participation, from 2003 to 2005, in an Environmental Mileage System and Natural Environment Preservation Project enforced by the city of Ulsan for environmental management. Also in 2005, the Ulsan plant was awarded an Ulsan Environmental Management Award, which is considered the most preeminent award jointly given by the Public Prosecutions Administration and City Hall of Ulsan. The Ulsan factory will continue to push forward to establish itself as an environmental friendly global plant.
Korea, where the protection of the environment was surpassed by the priority of motivating the development of national economy during industrialization, by approaching the ecological damage with basic solutions, such as expansion of biological diversity. As the primary chapter of this initiative, HMC initiated the Sericinus montela Restoration Project in 2005. The project began its restoration activities in March 2005 and has progressed with the goal of fashioning and permanently preserving natural habitats in six locations across the Ulsan district until the end of 2007. To this effect, the Ulsan plant of HMC has been promoting numerous projects and events including cultivation of feed plants (Aristolochia contorta Bunge), Sericinus montela releasing events, holding eco-school, and more. Currently, most of the restoration procedures have been completed, enabling observation of Sericinus montelas in a number of locations, including the ecoparks at Taehwa River(2 zones), Cheokgwa Stream zone, Moonsu Sports Park, Huiya Dam zone, and Daegok region.
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On the other hand, the Ulsan Plant which successfully promoted the restoration project for Sericinus montelas, commenced its Sericinus Montela Gray Restoration Process secondary stage of project in 2007, restoration of the natural ecology of the Taehwa River. In this stage, the Korean Rose Bitterlings (Slender bitterlings) and Freshwater Chinese Mitten Crabs will be restored during the three years from 2007 to 2009,
1st year Massive plantation of feeding plants (Mar. 05~Mar. 06) 2nd year Relocation and development of feeding plants (Apr. 06 ~ Dec. 06) 3rd year Population of sericinus montela gray (Jan. 07~Dec. 07) 4th year Assessment of sustainability of the habitat (Jul. 07~Apr. 08)
and Pontia daplidices will be restored by 2010. For smooth development of the project, HMC will be in charge of the restoration techniques and all incurred costs, and the city of Ulsan has agreed to provide policy-oriented support, such as offering the land. If these organisms are restored, other creatures will be restored by symbiosis and design, significantly improving the diversity of species of the Taehwa River.
Pontia Daplidice
swamp to protect the natural environment. The conference of the parties to the Ramsa Convention will be held in Korea in 2008; these efforts are imported with an accordingly significant meaning.
Taewha-dong zone B
Moonsu park
Sericinus montela can be seen throughout the year except winter. Their movements are supple as they fly over the plains or grass land as if they are sliding. They seem to have extremely docile dispositions, similar to the national characteristics of our people, hence it had been discussed by butterfly experts to name them as our national butterfly.
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Global
Japan
Technical Research Center, New Electronic Technology Exhibition
In November 2006, for the first time the Japan technical center held a seminar on new technologies in electronics along with an electronics exhibition at the Namyang research center. Developing prototype products relevant to the seminar themes and having them presented by the developers in the exhibition, the researchers at the Namyang research center were given the opportunity of personally experience, raising interest and understanding of the electronics field. The new technologies in the exhibition were mostly visual and detection systems such as electronic frontal display clusters using wide and large TFT panels, and pedestrian detection systems that warn or control the driver and vehicle by detecting pedestrian/obstacles through imaging process.
environment, and proactive environmental technologies. These conferences consisted of the relevant areas such as overseas corporations and research centers, domestic planning, factories, purchasing and research centers. In the first conference held at the Europe technical center in May 2006, discussion was made on the current issues such as responding to major environmental issues, enhancing brand image, and remanufacturing projects. The issues such as methods of disclosing environmental information, the global environmental standards on hazardous materials and establishing the responding process to the standards were discussed at the 2nd conference held at the Namyang research center in November. Also, HMC hosted an environmental forum to facilitate prompt sharing of the information newly set forth at the environmental conferences and consultation with external specialists in responding the environmental issues. The environmental forum was a great success with the participation of around 250 local and international environmental specialists in discussing biofuels
which is drawing great interest as alternative fuels for vehicle along with skyrocketing price of oil. Approximately 130 partici-
pants including employees of over 50 partner companies agreed with the fact that environmental issues were no longer limited to certain ecosystem, but greatly affecting corporate activities and daily life of mankind. HMC is enhancing the employees understanding of the numerous environmental issues such as climate change, alternative fuels, and depletion of natural resources. To
Design Center, The state of the art concept car HED-4(QarmaQ)-Developed jointly with GE Plastics The QarmaQ, a futuristic concept car that overcomes the boundaries of common sense in terms of product design and external appearance
The QarmaQ, revealed at the 2007 Geneva motor show, is a state of the art concept car utilizing new materials developed jointly by the Europe design center and GE Plastics. The vehicle is special as it adopted more than 30 state of the art technologies on new material, which made it more economic and environmentally friendly as significant portions of the vehicle can be recycled upon dismantling. Also the use of various state of the art materials resulted in more than 60kg weight reduction, significant improvement of fuel consumption and greenhouse gas emission, which is the harmony of futuristic design and new technologies. Various feature of GEs high technology material
stage of producing the prototype vehicle and it conducted tests at different stages of development taking into consideration of US road conditions. Also, to guarantee the highest level of quality, the mass production was prepared from the test production stage under the close cooperation of the Alabama factory and Asan factory.
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Global
facilitate systematic responses to ever strengthening global environmental regulations, it is establishing global environmental standards on the current environmental regulations covering different regions and countries. In the future, to establish the integrated framework for the response of the global network including Korea, HMC also plans to expand the conferences and the workshops where global representatives can share their best practice freely. The Eco Technology Research Team aims to enhance the environmentally friendly qualities of automobiles to help eliminate environmental impacts and conducts various research and development projects for environmental technologies to help create a sustainable mobility. They depart from the passive way of thinking - of simply decreasing the amount pollutants created and conduct research with an active state of mind and a will to prevent pollution proactively throughout the entire life cycle of the automobile, from cradle to grave (planning, design, production, transportation, use, disposal).
The main tasks of the team consist of minimizing pollution in all stages of automobile production and use in response to global environmental regulations, and leading the field of automobile-related environmental technologies. The team conducts, for example, LCA (Life Cycle Assessment) to help development of environmentally friendly vehicles, cleaner production technologies, technologies related to climate change, and recycling technologies for parts and materials.
INTERVIEW
We got off to a shaky start but by the end the whole group was playing the Janggu Korean Drum in decent harmony, and the fact that we were all from different cultures seemed unimportant. Ironically, the activity made everyone feel more like a family! -Mark Ohashi Engineer Manager, Vehicle Evaluation, Body Trim (HATCI)Evaluating the Environmental Assessments of Vehicles At the Vehicle Dismantling Lab
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The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
Core
Companion
Customer-First Social
Customers
Regional community
Employees
product service
, tion ca du y, e re lar welfa sa
n ma hu urces o res
pro fit
co m p on en ts
Government
HMC is striving to promote the values of sustainability through organic harmony and cooperation with all stakeholders.
capital, asset
Suppliers
85
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
Core
Core
Companion
Companion
Customer-First Social
Customer-First Social
Employee Status
Number of Employees
As of December 2006, there were 74,760 employees working at key business sites of HMC, Korean and overseas combined. HMC is striving to create employment every year and contribute to stabilizing employment, in Korea and internationally.
Expanding and encouraging womens social participation _ The ratio of female employees to the total workforce
at HMC in Korea is at 4%, with 2,236 female employees as of 2007. HMC is stepping up its effort to hire more women, and to establish structured initiatives that will improve their working conditions. Likewise, the company offers women daily leave every month, 90-day pre-/post-natal leave, and a childcare center (HMC Childrens Center at the Ulsan Plant).
tion, compensation and promotion based on their individual performance is carried out transparently and fairly according to the internal evaluation criteria and regulations. All types of discriminatory practices in human resources management are prohibited.
corporate culture and strengthen our network, HMC hosted the Hyundai Convention from September to October 2006, inviting international dealers to network with each other. The participants
54,440 54,973
51,597
53,218
spent five days in Seoul, sharing their companies mid- and longterm business strategies with one another. They also provided with the opportunity to experience and understand Korean culture, through a trip to Jeju Island and a number of other destina-
2001
2002
2003
2004
2005
2006
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The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
Core
Core
Companion
Companion
Customer-First Social
Customer-First Social
employees can receive advice on ethical judgments they may be required to make during work. In addition, the HMC operates a Sexual Harassment Consulting Center to comply with the regulations that prohibit sexual harassment in the workplace, provided by Equal Employment Law, and to create a healthy and viable working environment. At the same time, the company provides training in the prevention of sexual harassment to all employees.
Systematic Management
Realizing disaster-free plant operation through preventive education and pre-evaluation _ HMC conducts a
variety of training programs to share information pertaining to the environment, safety and health with employees and to increase awareness. The Ulsan Plant operates a hotline and the 24-hour monitoring center to respond to accidents, such as in-house fires and other disasters, as immediately as possible, thereby minimizing loss and damage. In March 2006, HMC conducted a safety campaign at the front gates of its five plants to promote safety
safety day campaign, actively engaging in efforts to conduct various training programs that help employees effectively prevent and respond to all types of accidents, and fires. Through such endeavors, HMC is actively seeking ways to minimize losses in human resources and productivity.
of respective nations.
awareness among employees. HMCs Asan plant reduces risk through its working environment assessments conducted twice per year, establishes and implements safety inspections by setting up monthly safety themes aimed at ensuring a disaster-free plant, and focuses on securing the safety of workers and eliminating hazard factors at the worksite. The Asan Plant also implements autonomous safety management activities and special
training on industrial safety in order to provide opportunities for employees to obtain relevant information and develop their expertise on a given task. In 2006, Jeonju Plant held a monthly
3.0
2.0
1.0
i-ESH system
National average, Manufacturing sector HMC standard information waste management environment objectives toxic material management training on the environment air management emergency procedures soil management environment examination partners water purity inspection general environment standard information hazardous work safety objectives partners facilities emergency procedures process safety information accident/ industrial disaster
2002 1.22
2003 1.42
2004 1.28
2005 1.28
2006 1.14
1.06
2.20
2.86
1.64
1.74
Environ me nt
t emen nag Ma
Safe ty M a
t men ge na
Classification HMC employees Insurance Non-insurance Subtotal common management environmental management safety management health (sanitation) management Partners Insurance Non-insurance Subtotal Total
88
tion ma or nf
Heal th M a
standard information training on health (sanitation) emissions facilities equipment management work environment measurement protection zone information musculoskeletal system information on health (sanitation) hazard chemical substance
t men ge na
i-ESH SYSTEM
Statis tic sI
89
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
Core
Core
Companion
Companion
Customer-First Social
Customer-First Social
management system, HMC is spurring the development of professional human resources, dedicating its efforts to establishing a global standard of talents and disseminating such standards. In order to develop comprehensive management capability and strengthen the expertise of its human resources, HMC is operating a specialized global expert course, targeting specific areas of production, including the HR organization, R&D and so forth. In 2006, such areas of production management, marketing and financial accounting were added to the global expert course, further specifying the target areas and significantly increasing the number of students. To aid establishment of the global management system, training systems in overseas branches and HR development strategies have also been improved.
Classification Post-treatment management status by disease type Hyperlipemia High blood pressure Diabetes Liver related disease Statistics No. of cases Accumulated number of people New Consultations
HMC is poised to grow into a world-class automaker, driven by the outstanding performance of its highly qualified employees from diverse backgrounds. This is made possible by the varied and appropriate training opportunities offered by the corporation that foster individual capacities and is driven by the continuous efforts made by each employee. To identify and foster competent human resources who will develop into future growth engines,
1,517 392
1,609 530
2,296 378
1,945 260
7,080 1,489
HMC is carrying out a number of activities pertinent to the principles formulated for human resource development, which are: dissemination of organizational culture, vitalization of global education, reinforcement of education for management leaders and area experts, and the establishment of a capacity-oriented edu-
cational course.
As its global management accelerates, HMC is providing education at headquarters and local sites to the employees hired in international branches, helping them understand HMCs corporate culture and spirit. Also, in Korea, the HRD (Human Resource Development) seminar was held to facilitate information exchange through the formation of human networks and to reinforce expertise and competence in area group education (HRD). During the year, four HRD seminars were held to share the best practice cases of the motor group and to expand on-site application of these cases.
Core Capacity Training A common module that synthesizes five core capacities + In-depth / specialized modules for each rank
Common Modules
Spirit ing ng
In-depth Modules
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Like automobiles, in which more than 20,000 parts must play their roles without even the slightest
Core Competency
Manager
passi on
error, HMC can accomplish its mission only when talented individuals in their various departments such as engineering, production, marketing, and design carry out their role precisely. HMC employees achieve their goal by not giving up when faced with adversities, but by overcoming them through cooperation with partners.
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pensable employee capacities as core capacity, leadership capacity, and job capacity; differentiated training programs are developed for each rank and level. Meanwhile, department heads evaluate the capacity level of individuals, separate from the performance evaluation conducted every year. The results of the evaluation are shared with each employee during consultation, so that he or she can develop their own self-development plan (IDP). HMC provides a variety of in-house and outsourced education programs to employees to help them improve any lack of capacity identified.
During the job fairs, senior staff members who graduated from international universities provided the students with in-depth counseling and advice related to their employment.
a mentor system in 2006, so that senior employees can help new employees adapt more quickly and easily to the organization. Education on social contribution is designed to let new employees take the initiative in developing and implementing action
of employees subject to application of the collective agreement concluded in 2007 is 93.3% (43,987 union members out of 55,976 total employees). HMC will strictly observe the agreement. Should critical changes be made by management that may affect the status of employment, such as expansion of business, merger and acquisition, or plant transfer, HMC will notify the labor union
Building Trust
Establishing a Culture of Trust and Mutual Profit between Management and the Union
HMC wants to relieve the anxiety between labor and management, which may derive from the unique characteristics of the
90 days prior to such changes. HMC will continuously make efforts to create a culture between labor and management that is reliable and mutually beneficial.
auto industry, and to motivate employees to produce the worlds best quality automobiles. In this effort, HMC is striving to realize a site-oriented management approach based on trust and understanding with employees. During 2006-2007, HMC has been making efforts to achieve a productive labor-management relationship and to stabilize site management by actualizing vigorous worksite culture and family-oriented personnel management. These efforts have finally come to fruition, and in 2007, labor and
management reached an agreement without suffering a casually repeated dispute by each yielding a step and committing themselves to improving product quality and promoting sales. The ratio
Exhibitions
CAP meeting (1,000 participants to date) R&D on competitors vehicles new technology exhibitions exhibitions on outstanding inventions award for employees holding patents (55 people) CAD competition competition on the presentation of research papers
Presentations
Production and Development HQs - competition for new Rank-and-File employees presentation on their reports (120 people) Commercial Project Division - Presentation on 6 Sigma Process
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ings, encouraging those who were involved in the efforts to vitalize corporate culture and improve work efficiency. During the meeting 100 employees, including those with outstanding performance or facilitators, were awarded and further committed themselves to continual participation and inter-departmental cooperation. In 2007, the CAP meeting was tentatively extended to induce the participation of Product Strategy Headquarters in an attempt to increase work efficiency through cooperation among different headquarters. Through the CAP meetings, the R&D Headquarters will continue to strive to improve productivity and its creative performance.
individual suggestions, 18 billion won through task team activities, and in total, 91 billion won during the year 2006. Individual suggestions amounted to approximately 472,264 cases and among them, 461,472 cases were adopted, showing a high adoption rate (97.7%). Also, the number of suggestion has increased by 6.8% from the year 2005. Cost reductions increased by 22% and the number of suggestions made per person increased by 7.3%, from 8.2 cases to 8.8 cases. For task team activity, the number of improved themes was 2,156 cases, up by 6.4% from 2005, while the cost reduction improved by 0.8%.
Employee Welfare
Remuneration _ HMC operates both the legal employee benefits program provided under Korean law and an additional corporate remuneration package. The legal benefits include health insurance, industrial disaster insurance, and unemployment insurance, whereas HMCs extra-provisional remuneration package offers support grants for employee societies, weekend farms, and operation of a four-season recreational facility for HMC employees. HMC is also implementing various remuneration packages in international business sites, corresponding to the pertaining laws, customs, and regional characteristics.
Increased company-wide awareness on security _ To Inviting ideas and acting to improve the working environment _ To increase individual and corporate pride,
share knowledge and strategy, realize mutual respect among employees, and create a joyful work atmosphere, HMC invites various ideas and rewards the outstanding ones. As a part of ongoing product quality improvement activity, HMC pursues a corporate level suggestion-and-improvement movement. As a result, performance is improving, while the cost is falling. In production plants, the worksite-oriented ideas and suggestions are recorded in the immediate improvement notes dispersed throughout the site. This site-management innovation activity immediately acts on the problem and provides feedback as an immediate improvement system. In this way, HMC is dedicating efforts to build trust with the site workers by activating on-site improvements and establishing a problem-solving structure of discussion and organization. become a world-leading corporation, HMC classifies and manages all of its information assets based on their level of importance. To protect core competence, the confidential sales data is analyzed for threats and vulnerabilities in each part (management, physical, and technical areas) for an effective countermeasure. These efforts are aimed at preventing an accident, rather than to follow up on accidents. Also, in order to maintain employee awareness on security, team security manager education and department security manager workshops are held twice per year. Furthermore, through security campaigns such as, security awareness films and security slogan invitations, we are doing our best to create a security mind in every employee.
identity of the home makers and to ensure self-development of the employee spouses. The training is conducted for three days, four hours per day, and comprises of three Making a Happy Home stages. The third stage, Training on emotions of the husband and wife, is attended by both the husband and wife. The training serves for the participants to recall the importance of the family. Beginning in 2006, programs were extended to employ-
A United Family
Formulation of Educational Programs for Families
Aware of the importance of employees families and homes, HMC has prepared a family program that involves the participation of all family members and facilitates the communication of their love to one another. To create another competitive edge and to form a unified relationship between the families and the company, HMC is implementing varied educational programs for spouses and children.
ees fathers. Starting in June, true father school was held for 8 weeks on every Thursday.
Classification
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center for the children of international laborers, and in the 5th Rainbow Festival for Immigrant Children, hosted on Childrens Day, to encourage and educate for a world free from prejudice and stereotypes. The service group is also selectively participating in various programs of culture, education and environmental awareness.
Cultural Center
ple who need social aid, helping neighbors in need and promoting their will to help themselves, and practicing not a temporary, but a continuous social service the corps committed to acting out of true love for their neighbors.
fairy tales, violin, ballet and musicals for children of employees. Casual exhibitions and presentations are also held, so that the whole family can share and enjoy the skills developed and refined at the Center.
Art Events
pride for HMC and are aided in designing their college education and future life.
and Making friends with dad through art which were offered to the employees of the Gyeong-in region in 2006, offer many resourceful programs, such as reviewing artwork as valuable assets, education on the art theory, appreciating modern art, and case studies on synergism for corporate management by leveraging on the creativity aspect of art. While appreciating the artwork, employees can extend their conversation with their family members, and emotionally inspire their children. In this way, such events are playing vital roles in creating and maintaining harmony among family members.
and events inviting employee families. In addition, recreational facilities are operated during the summer season to offer enjoyable vacations for family members.
access the employee childrens school via the internet. From elementary, middle, and high school curriculum to economics classes and childrens English, the school operates a diverse range of educational programs for the children of HMC employees.
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Previous members BorgWarner Transmission Systems Korea Inc., HEESUNG CATALYSTS, NANYANG INDUSTRY SEJONG INDUSTRIAL Co.,Ltd., HAN IL E HWA CO.,LTD. KYUNGSHIN INDUSTRIAL, Sewon ECS
Mutual Cooperation Program Operating Supplier Support Programs for the Highest Product Quality
As part of its cooperative plans with small and medium-sized companies, HMC announced an innovative mutual cooperation plan in April 2006, at a total cost of 15,000 billion won until 2010, focused on R&D and quality improvement among partners. Various plans are included in this program for continuous implementation, including cash payments to small and medium sized suppliers, quality technical support to primary, secondary and tertiary suppliers, seminars, organization of partnership cooperation teams, operation of quality technology service corps, operation of a performance sharing system, joint entrance into overseas market, and support on winning overseas contracts, as well as hosting seminars for the improvement of partners competitive power, and educational support. HMC will continually and actively build a strong partnership with its business suppliers while continuously endeavoring to improve product quality and reduce cost through such means of joint technology development, thereby contributing to its image as a global enterprise and to profitability.
YURA, SEJUNG, SEOJIN INDUSTRIAL SUNGWOO HITECH, KEFICO Joined in the second half of 2006 5 Star Quality Club Emblem
Operation of the Korea Automotive Parts Industry Promotion Team _ In November, 2006, in collaboration with
the Foundation of Korea Automobile Parts Industry Promotion (KAPKOREA), HMC established the Korea Automotive Parts Industry Promotion Team as part of the expanded program for mutual growth and cooperation with large-, medium-, and smallsized enterprises. The group is dedicated to providing partners with strategic support in enhancing basic management capacities and securing global competencies. The Korea Automotive Parts Industry Promotion Team aims to strengthen the practical performance capabilities of the suppliers in promoting their competence, rather than simply enhancing product quality. To do so, HMC is organizing a support team of approximately 20 former executives, with an abundance of management expertise, for a service term of two years, and deploying them as advisers to companies in need of such support. The advisers work with partners for at least three months, assuming responsibility for the provision of advisory support on all aspects of management,
HMCs Companionship
including technological support, quality instructions, export support and managerial support. All costs incurred within the duration of the advisory services are borne by the foundation, so that
the suppliers can concentrate their resources on enhancing management capabilities of the company, free from burdens. HMC is planning to actively support mutual growth of the partners by contributing another 5.5 billion Won, in addition to the previous contribution of 3.5 billion Won made to KAPKOREA. All costs incurred within duration of the advisory services are currently
being evaluated to ensure they prescribe the correct path for mutual growth with large, medium, and small enterprises and provide a strategic growth and cooperation plan for the long term survival of suppliers, rather than solving simple pending issues such as quality. The activities also utilize the know-how of former executives, who are valuable social assets.
The Joint Technology Exhibition of Suppliers held on the 1st R&D Suppliers Tech Day
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their employees, who have relatively fewer training opportunities. HMC provided suppliers with support for in-house training with lecture rooms, lecturers, and contents in 2006, but training also has been extended to secondary suppliers for improvement in quality and productivity. As its entrance into the global market is gaining momentum, HMC is also promoting the training of overseas suppliers and language training of their employees.
tions, and reports on corruption of HMC employees, the company is pursuing mutual growth with its suppliers.
quality of supplied parts, HMC is operating quality and technology service corps, whereby, in an effort to increase the competitive power of secondary suppliers, a member of the technical committee is dispatched to the partner company. Every month, seminars of major business sectors and intensive education on quality system are provided to suppliers, inducing a favorable response.
Performance sharing system _ HMC has been implementing a performance sharing system since the 1990s. Cost reduction is promoted through VE (Value Engineering) proposals or localization of parts import, without a reduction in product or service values. By sharing such practices with its suppliers in a preagreed manner, HMC seeks to find a mutual Win-Win strategy.
Meanwhile, from August to October in 2006, HMC held the management innovation seminar for secondary supplier CEOs to increase the competitive power of secondary suppliers, which have less capital power and technological advantages. This seminar, intended to substantially enhance the quality and management mentality of secondary suppliers, attracted the participation of 2,500 representative directors from supplier companies, with an
average of 250 per cycle during the 2 months. In June 2006, the discussion on mutual cooperation with secondary suppliers was held to collect the concerns and opinions of secondary suppliers, while strengthening already substantial support and continuously expanding cooperation. In the future, HMC plans to seek further opportunities to substantially with the sometimes less-preferred secondary suppliers, and thereby secure their competitive edge.
Secure quality in parts of new vehicles Improved quality of suppliers Secure parts quality globally
Transparent purchasing
Increased transparency in transactions Establishing Ethical management
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Customer-First Management
In the opening ceremony of the year 2007, HMC upgraded the companys mid- to long-term development strategy from the previous innovation for customers, to Customer-First Management. Customerfirst management' embraces HMCs firm conviction that all of its management activities will be in line with the customer-oriented value innovations and pursuant to continuous growth in the auto industrys era of unlimited competition. HMC, while developing a powerful service system, is realizing customer happiness and moving beyond customer satisfaction, through reinforced customer-oriented marketing and in-house-centered Customer Satisfaction training.
Customer Satisfaction
Overseas sales account for more than 70% of HMCs total sales. To measure the satisfaction level of customers distributed globally, HMC has developed the Hyundai Global Satisfaction Index program to frequently check the concerns and requests of customers in some 40 countries. Since 2003, HMC has been operating the Hyundai Academy Program, conducting education on the customer response process. Also, through the global dealer development program, HMC is fostering competent dealers who will elevate customer satisfaction through sales and maintenance services.
International Market
HMCs efforts dedicated to customer satisfaction are producing a fruitful outcome throughout the world. In 2006, a HMC study on customer satisfaction in Europe (including the UK) revealed that HMC ranks among the top car makers in customer satisfaction. At the same time, in India and China, HMC achieved higher customer satisfaction levels than other international competitors.
HMC
CS Conductor CS Training
Impress customers Customers happiness Brand image enhancement Greater Customer satisfaction
The overseas marketing team, in order to practice CustomerFirst Marketing, has established and been operating CRM programs in the Indian and Chinese markets, offering customers convenience by periodically notifying individuals of routine checkup periods and subject parts. Also, by offering various cultural events and discount benefits, HMC is increasing the satisfaction of global customers in a more direct manner. In the future, HMC is planning to expand these CRM programs to the European market.
opinions of AutoProsumers were extensively considered during the naming processes for Veracruz and i30, launched in 2006 and 2007, respectively. HMC is continuously reaching out to collect customers opinions and to apply them to products and services. For example, customers preferences were analyzed and reflected in the development of i30.
Korean Market
'Good Information Service' becomes available _ In
2006, HMC started customized information services to potential customers planning to purchase automobiles through its corporate website. Customers who apply for good information receive a product catalogue and automobile purchase guidebook during the first month. From the second month and on, Useful Tips on Automobile Purchasing, which contains sales terms and conditions, events, and test drive critiques, is provided.
BLU Membership
In the 2006 Customer Satisfaction Index conducted by KMAC, HMC held the top ranking in small-sized vehicles and RVs. The research period was from May to August of 2006 and customers who had owned and used their automobiles for less than 3 years participated in this research. In the research, HMC assumed the top ranking in small-sized vehicles for 13 consecutive years and RVs for 3 consecutive years, reconfirming its success in Customer-First Management. Meanwhile, HMC ranked first in small-sized vehicles and RVs in the 2006 National Customer
Satisfaction Index, displaying its strong will to satisfy customers. NCSI is the representative customer satisfaction index of Korea undertaken on 200 companies in 37 industries. Customers directly evaluate the quality each companys products and services. In the future, HMC will continue to re-organize its system toward the customers perspective and place utmost priority on
*KCSI : Korean Customer Satisfaction Index *NCSI : National Customer Satisfaction Index
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customers in order to build the foundation of a CS-culture corporation. Meanwhile, by strengthening its customer-oriented activities, HMC will increase its value to customers, secure a leading position in the competitive market, and create a favorable cycle that will connect to corporate growth. HMC plans multilateral efforts and attempts to increase the level of customer satisfaction.
that enables the car to actively detect dangerous situations and prevent accidents prior to occurrence. In the past, HMC had only concentrated on airbag, seat belt and safe chassis systems, which are defensive and passive. That kind of system is just used to minimizing the damage, rather than prevent accidents. To provide a better driving environment, HMC is applying extensive ASV technologies (Smart Cruise Control, Lane Departure Warning and
The result of this analysis is used to predict how the damage level changes depending on the characteristics of the collision or the safety equipment and improve the safety of the passengers.
Institute for Highway Safety selected Santa Fe as the 2007 Top Safety Pick among SUVs and officially announced the result to customers. Meanwhile, in Korea, Santa Fe also received the highest score among all SUV vehicles in a safety test led by the Ministry of Construction and Transportation. In April 2006, Grandeur (export name : Azera) also received a GOOD mark, the highest grade achievable, in the head-on crash simulation test conducted by the Insurance Institute for Highway Safety.
Customer Safety
HMC develops automobiles considering the safety of not only the drivers and passengers but also of pedestrians. To improve reliability, HMC designs a safe vehicle from the first step by using super computer simulation, which considers various collision situations. And through Car-to-Car collision testing, which closely mimics real situations, we are able to sell the safest cars, which pass safety inspections with ease. In addition, HMC is striving to develop ASV (Advanced Safety Vehicle) or ISV (Intelligent Safety Vehicle). ASV vehicles self-detect dangerous situations and prevent drivers, passengers and pedestrians from being involved in accidents.
Collision Damage Mitigation, etc.) to its new cars. And HMC makes full use of internal electronic control skills and IT technologies which are the best available in the world.
Collision safety _ To obtain the best collision safety performance, omni-directional safety chassis systems disperse collision energy. This system is the result of several rounds of simulation. And HMC applies up-to-date collision safety systems, such as Side Curtain Airbags, which reduce head injuries when a car impacts from the side and prevent passengers from moving and other materials from coming into the vehicle. Other collision stability systems include Dual Pretensioner, which strengthens the binding power of passengers, and an Active Head Rest system that
to human bodies. By operating the computer simulation program, the safety level of the passengers can be evaluated after analyzing the deformation of auto body and the sensor figures of the dummies. Therefore, HMC is conducting an integrated collision test which analyzes the car, dummies, and the protection equipment all together in order to predict the collision effects more accurately.
decreases head and neck injury through the automatic upward movement of the headrest when the back of the car is hit.
Collision Preventive Safety Collision Avoidance Pre-Crash Safety Collision Safety Rescue
Grandeur (export name: Azera) achieved the top rating of Good in headon crash tests conducted by IIHS
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The symbol expresses our desire to race ahead towards a wider world and a better future, together with the community and society. The circle that the two people draw together by joining their arms symbolizes HMC as a moving wheel, and the world itself. Moreover, it represents the will to compensate the trust of the society with greater respect, just like the continuous rotation of a circle. The two people walking together stand for co-existence with nature and neighbors, for sustainable growth. Moving ahead by taking steps forward in unison represents the will of HMC to strive towards a sustainable future, to help neighbors in need, whatever our commercial commitments. Blue signifies the world with social harmony, resulting from our social contribution activities, in a transparent world where hope thrives and strengthens the blueprint of the future we dream of.
Moving the World Together is the slogan that expresses HMCs philosophy which aims to contribute to society. It has the following meaning:
untary participation of its employees, HMC continues to engage in activities that help marginalized members of society and relief activities that aid recovery from natural disasters.
Reflecting the characteristics of an automaker, while expressing the will to continuously change Propagating HMCs social contribution philosophy and aiming for internationalization of social activity efforts Emphasizing the partnership that balances with society, under the acting philosophy of a world citizen
Maturation (2009 ~ )
Focused projects
Volunteerism
Local development
projects
Overseas development
projects
Easy Move In-depth progress of global social contribution projects Development of the image of a respected company Safe Move Social welfare subscription project
Social welfare Education and academics Culture and sports International exchanges
Execution of activities for giving back to the society by each business site Pursuit of environment business by each business site
in respective business sites Organizing and activating volunteer service groups Selecting focal areas of social contribution Building global social contribution system and initiating projects
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pany plans to invest in research and development while cooperating with government and civil groups to carry out diverse initiatives according to local conditions.
Project Details Electronic wheel chair for physically challenged people Artificial limbs and special shoes for physically challenged people Support for the livelihood of physically challenged people Convenient mobility facilities for institutions for physically challenged people Braille information device for visually challenged people Plant field trip
HQs 16 groups
A/S 25 groups
Continuous volunteer service rendered every month based on the one-on-one alliance with social welfare institutions in their respective regions
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Education/Academics
Young Hyundai _ Young Hyundai, which combines the terms
young (university students) and Hyundai (of HMC) is the community site for the university students, operated by HMC. It aims to help raise awareness of the importance of the automobile industry and the diverse aspects of HMC to the university students: the future leaders and potential customers of HMC. In 2006, 50 students were selected in the 5th annual event of Be Global Friends with Hyundai- China, shown on the homepage of Young Hyundai, and participated in a trip to the Chinese cultural-historical region. They experienced a cultural exchange with students of Beijing university and visited a Beijing-Hyundai train. They saw good examples of both HMC and Chinese culture.
vices.
2005 2006
Culture
Organizational Chart of Volunteer Service Groups: The One Company per Village movement, loving and caring for the rural areas
ported for extra-curricular activities in schools in order to develop the students emotionally and strengthen their bonding. Funding is granted for activities such as folk music, photography, calligraphy, and reading. As a part of the cultural excursion, a visit to
HMC employees at the one company per village movement
HMC
Seoul offers the chance to experience various cultural opportunities. Through the 3-day visit the children have the opportunity to visit the aquarium, theme park, broadcasting station and the HMC headquarters. The HMC visit is operated in parallel allowing
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Domestic Sales
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Wish Granting
for the wish granting event. By granting the wishes that will bring happiness to all students, we are giving them hope. At the same
Helping farmers during harvest Increase income by pioneering into new sales channels Increase the quality of life at farming communities Provide opportunity to experience culture Equal Development in Urban and Rural Area
Provide opportunity to experience life in the farming communities Provide opportunity to refresh Satisfy the need for diverse volunteer works Improve health with environmentally friendly farm products
time, a toll-free 24/7 counseling hotline is operated to provide counsel for the problems and worries these students may face.
University students at the 5th annual Be Global Friends with Hyundai- China event
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Industry-academic cooperation for securing qualified employees _ In June of 2007, HMC established the HyundaiKia Collaborative Research Center in the next generation automobile research center of Seoul National University, and made an agreement with Seoul National University to invest 1.7 billion Won for joint research over 5 years. HKCRC would in particular focus on the research and development of core power train technology to cope with enhanced regulation on fuel efficiency and ventilation. Also, exchange of HR and physical resources with Namyang research institute and Seoul National University will be actively promoted. Since 2003, in an effort to obtain qualified candidates in the R&D area HMC has managed research scholarships and made cooperative agreements with several universities for HR and physical resources. HMC has donated vehicles to universities for use in their research and supported the growth of professional automobile experts.
Agreement ceremony for industry-academic collaborative joint research
2003(5th)
1,218 people 643 teams
2004(6th)
2,500 people 890 teams 1,700 people 569 teams
2005(7 th)
2,920 people 732 teams 2,344 people 586 teams
2006(8th)
3,028 people 758 teams 2,076 people 519 teams
Culture/Sports
H.art _ HMC launched a new creative brand called H.art in April
2007 to engage in cultural and artistic activities in a more effective and continuous manner. H.art is the only brand in Korea specialized from corporate culture marketing. All types of cultural and art activities (Hyundai Motor Art) will be implemented under the H.art brand in the future.
H-art Exhibition of 'Combine HMC and Modern Art'
People accepted
a new theme, participants could suggest their ideas by film, animation, simulation, etc. The title of the contest was also changed from university student design contest to futuristic automobile technology contest, in order to induce participation of students from various majors. Through the contest, HMC has supported the production of 20 works, presented the finished works on the 11th of October, and awarded scholarships totaling 100 million Won to the winners.
University and graduate students participate in the futuristic automobile technology contest
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national team. Since 1999, the company has generously support soccer in Korea.
Jeonbuk
the Tiburon Relay vehicle. From 2000 to 2003, the company participated in the World Relay Championship, the top event for production cars, using a reconditioned Verna. HMC promotes its technological know-how and reliability to the world by participating in such world-class events.
Hyundai Motors Soccer Team, runner-up in the 2002 Asian Winners Cup (champion of the Western league), continues to promote the image of its parent company, an official sponsor for the 2002 Korea-Japan World Cup, EURO 2002, and 2006 Germany World Cup. It also has served to promote Korean soccer worldwide. Meanwhile, HMC is leading an effort to cultivate promising play and to expand the presence of soccer in Korea by operating soccer clubs for young children to ensure advance-
Support for heating costs at care centers during winter and donation of books _ Since 2005, HMC has provided subsidies to pay for the heating cost of 15 care centers managed by the Council for immigrant foreign workers. As a humanitarian gesture to migrant workers who await deportation, HMC has supplied books in languages familiar them at nine care centers. In May 2006, the Hwasung immigration office held a fund-raising event for social welfare and provided 10,000 books to the main foreign workers shelters in Hwasung and Cheungju.
Speed Festival
sored by leading companies such as HMC, Hyundai Mobis, Shell Korea and Kumho Tire, supporters of motor sports. At the event in 2006, 80 players participated for 25,000 spectators. The event has made a major contribution to the popularization of motor
e-FIFA
and offline and, in and out of the soccer stadium, as an official sponsor for the 2006 Germany World Cup. The company opened the Hyundai Fan Corner at www.FIFAworldcup.com, the official World Cup website, to introduce a variety of events. Moreover, the company enjoyed PR via Internet by organizing official FIFA online soccer game for online marketing.
sport. For the first time in the history of the racing in Korea, the Festival players made an exchange visit with Spains Cats CRDi Cup participants, contributing to the expansion of the domestic motor sports industry. Meanwhile, HMC invited 45 children from the Yangyang orphanage to the event and provided them with hospitality, souvenirs and the chance to get in a racing car.
of Korean archery, HMC has supported the advancement of the archery in Korea for more than 25 years since the establishment of the Korea Archery Association. The company is interested in the science and technology of archery. As a result, sport science organizations have introduced archery training and training analy-
sis, as well as sport science equipment developed with R&D. In 1985 the company established the Seoul International Archery Competition, a first class international tournament. The company continues to improve the quality of Korean archery.
International Exchanges
Medical fee support for foreign workers _ As a means of
contributing to global society, HMC provides free medical checkups for foreign laborers through the Migrant Workers Health
An amateur
Association in Korea and medical recoupment association, which helps laborers who do not get proper medical care.
skiing / snowboard tournament hosted by HMC has become the largest in Korea with the participation of 1,480 people in January of 2006. The tournament has been credited with opening up a
to the advancement of the Korean soccer community by serving as the official sponsor for the Korea Football Association and the
Speed Festival
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Customer-First Social
engage in industry-academic cooperative programs that support academic curriculum closely linked to the industry and practical training.
League Soccer) and fellows at WUSA(Womens United Soccer Association). There were a lot of interesting things to see and hard training was offered to participants.
Employees provide food, toys, daily consumables and gift certificates to the family members adopted through this program.
Hyundai Torches
cutting edge production facilities at its plants to the general public, so that they can tour the plants. Now the HMC plant is the flagship place to visit in Alabama. 'Public tours' are conducted three times per week, and interested parties as well as the general public are invited to the plant.
raising event organized by the American Cancer Society. HMA employees participate in this event in person by purchasing daffodils and Pooh teddy bears. Proceeds from the sales are used for charity. In addition, employees folded paper daffodils baked bread and cookies to sell to raise funds.
enables a bright future, HAOS started the 'Hyundai Torches', a large scale scholarship fund begun in 2004. Students with outstanding academic performance, yet who cannot continue their education due to family financial difficulty, are selected to receive scholarships. Today, many students are opening up a brighter future by entering the university through this program.
Clothes Collection
Hope on Wheels
organization which provides clothes to job seekers and helps them to develop their abilities. HMA holds clothes collection events 2-3 times a year and deliver a clothes and accessories donated. Also there is a special program called Cinderella for Life, that provides dresses, shoes and bags to teenagers, who are in an economically difficult environment or have a family to support, to make their graduation party a special event.
Humanity through which HMC employees build houses for people in need. From the construction of the foundation to a complete house, HMMA employees, family members and friends are showing their love by participating in this worthy voluntary activity.
support for research to discover the basic root causes of the cancers that affect children. As part of this effort, HMA has established the Hope On Wheels program and has been donating to the Boston Farber Cancer Institute since 1998 through the Jimmy Fund. Presently, HMA donates over 8 Million USD to hos-
vehicles that offer special features for physically challenged people, and operates diverse assistance programs to help the physically challenged in Turkey. In addition, vehicles with special devices are donated to social welfare groups to facilitate mobility of the physically challenged, and research on diverse convenience devices is conducted to serve as the feet of physically disabled people in Turkey.
As a partner of
pitals in all parts of the US, helping children who are fighting cancer.
Montgomery, HMMA is working hard with the local Chamber of Commerce and industry of Montgomery, in conjunction with many business and public leaders in the area, to promote growth of the local economy through public education, the enhancement of competitive power and a spirit of embracing diversity. HMC is contributing to the development of Montgomery through regular donations and the direct participation of employees in activities.
Association periodically visits the HMA to conduct 'campaign for blood donation'. Many HMA employees participate in the blood drives and the collected blood is then used for emergency situations or for other treatment purposes. In the future, continual campaigns for blood donation will be conducted to contribute to society by helping those in need.
viding computer education that most schools in its region cannot offer. Thus, the company has donated 52 computers to three schools in Tuzla and support for the IT devices that the schools need. In addition, the company also provides desks, chairs and other accessories needed for the effective use of computers. Going forward, HAOS will continue to invest in education in
who helped him to beat his own illness. 'SFH' has developed into a charity program in which thousands participate nationwide. It collects funds through participation fees for the Camp of Hope, clinic and walking event as well as company sponsorships. In 2006, SFH hosted a joint event with the Hyundai Cup, in which 1,000 children participated with famous players in MLS (Major
ment of the automobile industry in Alabama and cultivates outstanding industrial workers by donating Sonatas for use in training in the vehicle technology education programs at junior highs, high schools and colleges in Alabama. The donated vehicles are used for practical training, while the company continues to
Adopt-A-Family
Turkey.
is a regional charity organization that helps marginalized people in the region who spend the year-end on their own due to economically challenging family life. 'Share Our Selves' sponsors families of limited economic means through the adoption of the families by HMC employees and their family members.
116
117
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
The
Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management
Core
Core
Companion
Companion
Customer-First Social
Customer-First Social
EU sales corporation (HME) _ Business to Support the Middle Schools of South Africa
The HME Agency in Germany allocates EUR 2 for every car sold to sponsor Harry Gwala Junior High located in South Africa. In addition, the company has increased safety in the classrooms of schools located in dangerous areas by signing contracts with security companies. Moreover, the company has invited the choirs from the schools to the EU for performances, contributing to the artistic and cultural experiences of the students as well.
Business Scholarships
Educational Support
many more Indian students can benefit from education, and it is conducting industry-academic cooperative activities in a structured manner. In particular, the company has established a technology training program in the Assam region, located at the Northeastern part of India, to provide materials needed for conducting research on vehicles, as well as education and job placement opportunities for students in underdeveloped regions. Moreover, the company has formed alliances with specific universities, as a part of the industry-academic cooperation system, to operate internships and cultivate outstanding human resources through scholarship. In addition, the company has established vehicle training centers in key cities to cultivate A/S
port business' so that students who dream of becoming engineers can gain the necessary technical knowledge by using the latest practical training tools.
vehicles to the city of Beijing to help eliminate SARS, and, early on, provided medical and technology personnel to fight the disease. Going forth, BHMC will continue to expand activities that contribute to society, so that it can play the role of a good corporate citizen.
HME was highly commended by soccer fans during the 2006 Germany World Cup for hosting popular events. About 18 million people gathered together at the plazas in 12 cities where the World Cup was being held, and HMC showcased impressive soccer shows and high end entertainment programs.
personnel.
nity activities' is a program formed to increase the sense of community among regional residents, and its main focus is on modernizing regions that are marginalized and updating outdated facilities based on regional community development plans and
Rescue Activities
society. In 2006, HMGC donated various tools to the Joyanggu Donation Management Center, including six used PCs, one TV, one fax and one banknote counter. In 2005, the company donated 100,000 USD to the Korean school in Beijing to assist with its construction efforts.
help in the case of earthquakes, surges, floods and other natural calamities that take place in India. HMI has formed groups of medical volunteers to treat injured people and to control communicable disease and vaccinate for prevention. Moreover, the company has dispatched teams of technicians to fix and check vehicles damaged from the surge, free of charge. The company also has supplied money, clothes and blankets.
resources. Regions located in the vicinity of the company are targeted to provide medical support, support for education facilities, transportation safety campaigns, environment enhancement activities and so forth in a structured manner.
Book Fair,' which is one of the largest such events in the world. During the five-day event, some 300,000 visitors and reporters from 81 nations visited. HMC donated 30 Grandeur, Sonata, and Trajet cars as official duty vehicles for the use of the steering committee. Through this international event, 'Frankfurt Book Fair', HMC has publicized the Korean culture to the people of the world and Korea itself, as the events official sponsor.
In 2006, HMGC
planted 400 Oriental Arbor Vitae trees at the mountain located near Beijing, and HMGC plans to continue to planting trees to
tic activities serve as a program to vitalize cultural interchanges between Korea and India through the promotion of mutual understanding. While publicizing the Korean culture in India, HMI also supports Indias cultural and arts performances. Diverse programs are offered to Indians, such as Korean language class, showcasing Korean movies, Korean cooking class, Taekwondo class, and performances by traditional Korean artists to help form a cultural consensus with the Indians.
Inko Centre, a center for cultural interchange between Korea and India
BHMC donated 108 engines to major 37 universities in China for research purposes
118
119
Domestic Facilities
Headquarters Address : 231, Yangjae-dong, Seocho-gu, Seoul, 137-938, Korea Phone : +82-2-3464-1114 Kye-Dong Office (Domestic Business Division) Address : 140-2, Kye-dong, Chongro-gu, Seoul, 110-793, Korea Phone : +82-2-746-1114 Ulsan Plant Address : 700 Yangjong-dong, Buk-gu, Ulsan, 683-791, Korea Phone : +82-52-280-2114 Asan Plant Address : 123 Kumsong-ri, Inju-myun, Asan-si, Chungchungnam-do, 336-830, Korea Phone : +82-41-530-5114
Overseas Facilities
Asia Beijing Representative Office, KRCN Co.,Ltd Address : 507, GAOLAN BLDG, 32 LIANGMA BRIDGE ROAD, CHAOYANG, BEIJING, CHINA Phone : +86-10-6464-3514 Beijing Hyundai Motor Company (JV) Address : ROOM 601,MILLENNIUM TOWER NO.38 XIAOYUN ROAD,CHAOYANG DISTRICT, Beijing China(POST BOX NO.100027) Phone : +86-10-8453-9888 Hyundai Motor Beijing Office Address : ROOM 701,MILLENNIUM TOWER NO.38 XIAOYUN ROAD,CHAOYANG DISTRICT, Beijing China(POST BOX NO.100027) Phone : +86-10-8453-9666 Beijing Hyundai Motor Company (JV) Hyundai Indonesia Motor Address : JL. SULTAN ISKANDAR MUDA NO 81, ARTERI PONDOK INDAH LT. 2 JAKARTA SELATAN 12240, INDONESIA Phone : +62-21-729-3338 Hyundai Motor Vietnam (HMV) Address : 467 Nguyen Van Linh Str., long Bien Dist., Ha Noi, Viet Nam Phone : +84-4-875-7227 or +84-4-827-2540 Hyundai Motor Company & Kia Motor Corporation Shanghai Office Address : SHANGHAI OFFICE A-F1, 13, FAR EAST INTERNATIONAL PLAZA, NO. 319, XIANXIA RD, SHANGHAI 200051,CHINA Phone : +86-21-6235-0033 Hyundai Asia Resources Inc. Hyundai Motor Japan (HMJ) Address : 18F. Shin-Kasumigaseki Bldg. 3-3-2 Kasumigaseki Chiyoda-Ku, Tokyo Phone : +81-3-3504-8921 Mongolia Hyundai-Kia Auto Co., Ltd. Hyundai Motor Japan R&D Center Address : -2-2 NISHINOHARA INZAI-CITY,CHIBA, JAPAN #270-1334 Phone : +81-476-47-6332 Hyundai Motor India Address : A-30, Mohan Co-Operative Industrial Area, Phase-1 Mathura Road, NEW DELHI 110-044, India Phone : +91-11-695-9110 Hyundai Motor India (HMI) Address : IRRUNKATTUKOTTAI, NH-4 SRIPERUMBUDUR CHENGAI-MGR DT., TAMIL NADU 602-105, INDIA Phone : +91-11-5159-9920 Address : Bayangol Duureg 5 Horoo Peace, Auenue Street 13, UB, MONGOLIA Phone : +976-1-631971 Address : 2272 PASONG TAMO EXTENSION, MAKATI CITY,1200 PHILIPPINES Phone : +632-819-1120 Hyundai Hong Kong Company Ltd Address : Shop B, G/Fl., H&S Building, 36 Leighton Road, Causeway Bay, Hong kong Phone : +852-3428-8257 Address : Northside of Shuanghi Dajie, Westside of Shuntong Road, Shunyi District, Linhe Industrial Development Zone,Beijing, Peoples Republic of China Phone : +86-10-8949-8117 Hyundai Motor SDN. BHD. Address : NO.40, JALAN PEMBERITA U1/49 TEMASYA INDUSTRIAL PARK SEKSYEN U1, 40150 SHAN ALAM SELANGOR DARUL EHSAN Phone : +603-5569-4770 Oriental-Hyundai SDN. BHD. Address : WISMA KAH MOTOR, NO 566, BATU 3 1/2 JALAN IPOH, 51200 KUALA LUMPUR Phone : +603-6259-1888/2888 +603-6252-9621 Hyundai Motor Asia Representative Office Address : Level 5, Wisma Hong Leong, 18 Jalan Perak, 50450, Kuala Lumpur, Malaysia Phone : +60-3-2713-8383
Overseas Facilities
America Hyundai Motor America (HMA) Address : 10550 Talbert Avenue, P.O.Box 20850, fountain Valley,CA 92728 0850, USA Phone : +1-888-965-8282 Hyundai Motor Manufacturing Alabama Address : 7515 HALCYON SUMMIT DR. MONTGOMERY ALABAMA 36117, U.S.A Phone : +1-334-387-8100 Europe / Africa Hyundai America Technical Center. Inc Address : 5075 VENTURE DR. ANN ARBOR ,MI 48108, U.S.A.(MICHIGAN) Phone : +1-734-213-3302 Hyundai & Kia Motors Design & Technical Center(Irvine) Address : 81 BUNSEN IRVINE. CA 92608,U.S.A(California) Phone : +1-949-585-7015 Hyundai Washington Office Address : 1660 L Street, NW, Suite 201 Washington, DC 20036 U.S.A. Phone : +1-202-296-5550 Hyundai Motor Company Poland Hyundai Detroit Office Address : 26200 TOWN CENTER DRIVE SUITE 345 NOVI,MI 48375, U.S.A. Phone : +1-248-468-2414(ext-101) Hyundai Motor Hungary HMC Chicago Br. Address : 411 KINGSTON COURT MT. PROSPECT CHICAGO, IL60056 U.S.A. Phone : +1-847-655-0146 Hyundai Motor Company Latin America & Caribbean Operations Address : 9250 NW 25th Street Miami, FL 33172 U. S. A. Phone : +1-305-470-8001 Hyundai Auto Canada(HAC) Address : 75 Frontenac Drive, Markham, Ontario L3R 6H2, Canada Phone : +1-905-948-6712 MMC Automotriz S.A. Address : Zona Industrial los Montones,Barcelona, Eslado Anzoategui,Apartado Postal 151, Venezuela Phone : +58-281-276-2222 Hyundai Assan Otomotive Sanayive Ticaret A.S. Address : E-5 KARAYOLU 32KM 81700 TUZLA ISTANBUL, TURKEY Phone : +90-216-581-0012 Hyundai Comtrans Address : 107113, Russia, Moscow, Sokolnichesky val, bld. 1A Phone : +7 495 730-55-88 Hyundai Motor CIS Address : 127410, Moscow, Altufievskoe shosse, 31/1 Phone : (495) - 788-62-67 Address : H-1114 Budapest, Bartok Bela ut 47. Phone : +36 1 887 5700 Address : Natpoll Bldg. No. 30, 4, Migdalowa Street,02-796 Warsaw,Poland Phone : +48-22-645-1625 Hyundai Motor Europe Technical Center GmbH Address : Marie-Curie-Strasse 2, 65428 Russelsheim, Germany Phone : +49-6142-7899-622 Hyundai Auto Norge AS Address : Ensjoveien 12D, 0605 OSLO, NORWAY Phone : +47-22-70-6154 Hyundai Motor Company Australia Address : 8 Baywater Dr. Homebush Bay, NSW 2127 Phone : +61-2-9763-3571 Hyundai Automotive Distributors Australia PTY Ltd. Address : Harbourside Business Park Unit 1, 8 Baywater Drive HOMEBUSH BAY NSW 2127 Phone : +612 9763-3333 Oceania Hyundai Motor Europe GmbH Address : Marie-Curie-Strasse 2, 65428 Russelsheim, Germany Phone : 49-6142-7899-360 Hyundai Automotive South Africa (Pty) Ltd. Address : 138 Van Riebeeck Avenue, Edenvale 1600. Suite 274, Private Bag X10016, Edenvale 1610 Johannesburg, South Africa Phone : +27 11 372 0800 Hyundai Motor Argentina S.A. Address : Av. Panamericana 3611 (Puente San Lorenzo)1686-Olivos. Prov. Buenos Aires Argentina Phone : +5411-4799-3882 Hyundai Motor Company (Africa & Middle East Regional Headquarters) Address : #2903, API WORLD TOWER SHEIKH ZAYED ROAD, P.O BOX 34406 DUBAI, U.A.E. Phone : +971-4-332-6667 Hyundai CAOA do Brasil Address : Av. Ibirapuera, 2822 - Moema, CEP 04028 - 002, Sao Paulo, Brazil Phone : +55-11-5538-1138 Hyundai CAR (UK) Ltd. Address : ST. JOHN'S COURT,EASTON STREET, HIGH WYCOMBE,BUCKS, HP11 1JX,THE UNITED KINGDOM Phone : +44 1 494 42 8600
Jeonju Plant Address : 800 Yongam-ri, Bongdong-eup, Wanjugun, Jeollabuk-do, 565-902, Korea Phone : +82-63-260-5114 Hyundai & Kia Corporate R&D Division Address : 772-1, Changduk-dong, Hwaseong-si, Gyeonggi-do, 445-706, Korea Phone : +82-31-368-5114 Hyundai & Kia Eco Technology Research Institute Address : 104, Mabuk-dong, Giheun-gu, Yongin-si, Gyeonggi-do, 446-912, Korea Phone : +82-31-899-3057
120
121
GRI Index
GRI Index
( Reported, Partly reported, - Not reported)
Governance 4.9 Procedures of the highest governance body for overseeing the organizations identification and management of economic, environmental, and social performance 4.10 4, 5, 13 8 8, 9 10~11, 120~121 Commitments 4.11 to external initiatives 8, 120 10~11 4.13 4.12 Processes for evaluating the highest governance bodys own performance, particularly with respect to economic, environmental, and social performance Explanation of whether and how the precautionary approach or principle is addressed by the organization Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses Memberships in associations (such as industry associations) and/ or national/international advocacy organizations in which the organization 23 9, 30 Stakeholder Engagement 4.14 4.15 4.16 8 28, 29 4.17 List of stakeholder groups engaged by the organization Basis for identification and selection of stakeholders with whom to engage Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group 85 85 86~88, 98, 99, 37 00 16, 17, 89
See 'Board of Directors and Organization' in Business Report
GRI Indicator Strategy and Analysis 1.2 Organizational Profile 2.1 2.2 2.3 1.1 Statement from the most senior decisionmaker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy Description of key impacts, risks, and opportunities Name of the organization Primary brands, products, and/or services Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures 2.4 2.5 Location of organizations headquarters Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report 2.6 2.7 Nature of ownership and legal form Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries) 2.8 2.9 Scale of the reporting organization Significant changes during the reporting period regarding size, structure, or ownership 2.10 Report Parameters Report Profile 3.1 3.2 3.3 3.4 Report Scope and 3.5 3.6 3.7 Awards received in the reporting period Reporting period for information provided Date of most recent previous report Reporting cycle Contact point for questions regarding the report or its contents Process for defining report content Boundary of the report State any specific limitations on the scope or boundary of the report
Page 3
Remark
Comment
Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics
7, 32, 33 00 00 00 133 00 00 00
Some data on environmental and social performance is related to domestic sites only and the limitations are specified in the relevant charts and graphs
and concerns, including through its reporting Economic Management 5.1 Approach Economic Performance EC1 Core Direct economic value generated and distributed, including revenues, operating 8, 25, 109, 110 costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments EC2 Core Financial implications and other risks and opportunities for the organizations activities due to climate change EC3 EC4 Core Core Coverage of the organizations defined benefit plan obligations Significant financial assistance received from government
See the appendix 2-10,reserve for retirement allowances in the Audit Report See the appendix 15, income taxes and deferred tax assets (liabilities) in the audit Report for the amount of tax credit for corporate income
16, 17
See the appendix 24, calculation of added value in the Audit Report
37~49
Boundary
3.8
Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.
Market 00
By utilizing external experts, the credibility of measuring the data on environmental performance is improved
EC5
Add
Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation
3.9
Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.
Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation
29, 100
3.10
Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement
No restated information
EC7
Core
Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation
86~88
3.11
Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.
67
Reporting boundaries of some environmental performance data has changed. The changes are specifed in appendices.
EC8
Core
Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement
106~119
3.12
122~125
EC9 126, 127 Environmental 22, 23 22 Management 5.2 Approach Materials EN1 EN2 22 Energy EN3 EN4 EN5 17 EN6
Add
Understanding and describing significant indirect economic impacts, including the extent of impacts Management Approach and Performance Indicators
3.13
Policy and current practice with regard to seeking external assurance for the report.
18, 19
Governance, Commitments,
Governance
4.1 4.2
Governance structure of the organization Indicate whether the Chair of the highest governance body is also an executive officer
Materials used by weight or volume Percentage of materials used that are recycled input materials Direct energy consumption by primary energy source Indirect energy consumption by primary source Energy saved due to conservation and efficiency improvements Initiatives to provide energy-efficient or renewable energy based products
For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members
4.4
Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body
4.5
Linkage between compensation for members of the highest governance body, senior managers, and executives
Initiatives to reduce indirect energy consumption and reductions achieved Total water withdrawal by source Water sources significantly affected by withdrawal of water Percentage and total volume of water recycled and reused Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas
4.6
Processes in place for the highest governance body to ensure conflicts of interest are avoided
EN10 Add
See'Board of Directors and Organization' in Business Report
4.7
Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organizations strategy on economic, environmental, and social topics
Biodiversity
EN11 Core
Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas Habitats protected or restored
77~79
4.8
Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation
77~79
122
123
GRI Index
GRI Indicator Biodiversity EN14 Add Strategies, current actions, and future plans for managing impacts on biodiversity EN15 Add Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk Emissions, Effluents, and Waste EN16 Core EN17 Core EN18 Add EN19 Core EN20 Core EN21 Core EN22 Core EN23 Core EN24 Add Total direct and indirect greenhouse gas emissions by weight Other relevant indirect greenhouse gas emissions by weight Initiatives to reduce greenhouse gas emissions and reductions achieved Emissions of ozone-depleting substances by weight NOx, SOx, and other significant air emissions by type and weight Total water discharge by quality and destination Total weight of waste by type and disposal method Total number and volume of significant spills Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally EN25 Add Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organizations discharges of water and runoff Products and Services EN27 Core EN26 Core Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation Percentage of products sold and their packaging materials that are reclaimed by categor Compliance EN28 Core Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations Transport EN29 Add Significant environmental impacts of transporting products and other goods and materials used for the organizations operations, and transporting members of the workforce Overall Society EN30 Add Total environmental protection expenditures and investments by type Management Approach and Performance Indicators
Page 77~79
Remark
Comment Investment HR3 Add Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained HR4 Core Total number of incidents of discrimination and actions taken 87
No incident of discrimination
87
and Procurement 77~79 Practices Non65~66 65~66 37~46 74 71, 73 72 68 N/A N/A
Discrimination Freedom of association and collective bargaining Child Labor HR6 Core Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor Forced and Compulsory Labor Security HR8 Add HR7 Core Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor Percentage of security personnel trained in the organizations policies or 94 88 88 HR5 Core Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights 88
77~79
procedures concerning aspects of human rights that are relevant to operations Total number of incidents of violations involving rights of indigenous people and actions taken SO1 Core Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, 106~119 Data not collected
37~62, 80~83
Society
Community
50~53, 56, 68
including entering, operating, and exiting SO2 Core Percentage and total number of business units analyzed for risks related to corruption SO3 Core Percentage of employees trained in organizations anti-corruption policies and procedures SO4 Core Public Policy SO5 Core Actions taken in response to incidents of corruption Public policy positions and participation in public policy development and lobbying SO6 Add Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country No political contribution is made
20, 21
21
65, 66
21 59~62
86, 87
Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations
See the appendix 18, Contingency and Commitment in the Audit Report
Total number and rate of employee turnover by age group, gender, and region Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations
See the appendix 18, Contingency and Commitment in the Audit Report
Labor/
LA4
Core Core
Percentage of employees covered by collective bargaining agreements Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.
93 93
Product Responsibility
PR1
Core
Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures
102~105
Add
Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.
88
PR2
Add
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes
21, 104
Core
Rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated fatalities by region.
89
PR3
Core
Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements
102~105
LA8
Core
Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.
89, 90
PR4 Add
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling,
21, 104
Add
Health and safety topics covered in formal agreements with trade unions Average hours of training per year per employee by employee category Programs for skills management and lifelong learning that support the
89, 90 92 90~92
by type of outcomes Practices related to customer satisfaction, including results of surveys measuring customer satisfaction Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship 30, 32, 33, 102, 103 21
continued employability of employees and assist them in managing career endings. LA12 Add Percentage of employees receiving regular performance and career development reviews. Diversity and Equal Opportunity LA14 Core Human Rights Investment and Procurement Practices HR2 Core HR1 Core LA13 Core Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. Ratio of basic salary of men to women by employee category Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken 58 ` See the appendix VII-2, status of employment in the Business Report Human rights protection screening is a basic requirement for overseas investments According to the Environmental Friendly Parts Supply Agreement, screening on human rights is conducted
92
PR7
Add
21, 104
voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes Customer Privacy Compliance PR9 Core PR8 Add Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services
See the appendix 18, Contingency and Commitment in the Audit Report
20, 21
124
125
Assurance Report
Assurance Report
To the readers of the Hyundai Motor Company 2007 Sustainability Report
INTRODUCTION
We have been engaged by HMC to review specified information in the Hyundai Motor Company 2007 Sustainability Report (further referred to as The Report). The Report, including the identification of material issues, is the responsibility of the company's management. Our responsibility is to issue an Assurance Report in relation to the scope described below.
Sales and Net income on page 8, 25 Assets, Liabilities, and Shareholders eguity on page 8, 25 Dividend per common share, Dividend paid-out, Net income per share on page 25
Based on the above, the data on financial performance, as specified above are properly derived from the 2006 Non-Consolidated Financial Statements of HMC, for which the independent auditors issued an unqualified audit opinion dated January 26, 2007.
Specific Sections
For the information in the sections of The Report, as specified above under Context and scope we conducted: a media and internet search in relation to HMC to obtain insight into the relevant sustainability aspects in the reporting period; a review of the systems and processes used to generate this information; a review of internal documentation and intranet sources; interviews with staff in order to assess the information included in the specific sections.
COMMENTARY
Without affecting the conclusions presented above, we would like to draw readers attention to the following:
We come to conclusion that a thorough attention is required for standardization of data generation, aggregation and reporting scheme due to variety of the site as well as each business unit of HMC. On top of that, we recommend that the function of Environmental Management Strategy Planning Team should be empowered to efficiently drive corporate sustainability management. Furthermore, we think that HMC should strengthen engagement systems with various stakeholders.
the assurance team members possess the specific knowledge, skills and professional competencies needed to understand and review the information in The Report, and that they comply with the requirements of the IFAC Code of Ethics for Professional Accountants to ensure their independence; when providing limited assurance, which is a lower level than reasonable assurance, a negative form of conclusion is used.
We have discussed our observations as well as reporting process beyond the scope of our contract with HMC management and found them receptive to our comments. November 2007
There are no generally accepted standards for reporting sustainability performance. HMC applies its own internal sustainability performance reporting criteria, in addition to using the G3 Sustainability Reporting Guidelines of the Global Reporting Initiative.
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Corporate governance should be built around the principles of rationality, efficiency, and transparency. Strong leadership, though necessary for long-term growth, can be a risk if there is no mechanism of check and balance. According to the report, HMC corporate governance seems to lack the mechanism of check and balance. Efforts to improve and report this issue should be made. For instance, the company needs to set up a system to ensure independent selection and nomination of outside directors to its BOD.
Environment
HMC is indeed making a lot of investments in climate change and air pollution reduction, while actively introducing environmental management, i.e. green procurement and clean production. However, the report could have been more complete if it included comprehensive analysis on how the current programs contributed to CO2 reduction and air pollution. As a global leader, we expect HMC to be engaged in more proactive environment programs, going beyond merely reacting to laws and regulations, by setting up CO2 reduction targets and implementing a mid-to-long-term plan against air pollution. In addition, information on environmental management can be summarized for balance with other areas. Details can be made available via HMC website for interested readers, as many other global companies do.
The committee reviewed the draft and the final report between September and November 2007. A total of four committee meetings were held, one of which was attended by the international members. This provided HMC an opportunity to respond to the committee members comments by making changes to the report where possible. The committee members convey opinions in individual capacities and do not represent the perspectives of their organizations.
Society
We appreciate HMC efforts to set a long-term vision and systematically implement social contribution. However, the company will benefit further by exploring social programs that fit better with the nature of the industry from a strategic perspective.
Notably, the 2007 report features candid interviews with the CEO and allocates a separate section on its climate change efforts. This shows that HMC is evolving toward building a corporate-wide sustainable management strategy. The HMC report team has also made endeavors to reflect as diverse opinions as possible from the committee. Some inputs, where immediate actions could not be taken by HMC, were approached from a long-term perspective.
Meanwhile, the report only briefly and superficially mentions labor issues. The HMC labor disputes for the past few years have been hurting corporate reliability and brand value. Building constructive and co-prosperous labor relations are one of the key concerns of the many stakeholders including investors and therefore, the company is advised to include its basic direction and full commitment to implement trust building plans, to the extent that the plans dont breach the HMC position of No Labor No Pay. This is part of the fiduciary obligations for the stakeholders.
However, to fully honor its commitment to sustainable management, HMC is well advised to pay more attention to specific and detailed actions, to focus on its key sustainability issues, and to better link the key issues with the management. In particular, not only HMC strengths and performances but also its shortcomings and improvement plans should be described to obtain higher level of trust from the stakeholders.
The report introduces general management philosophy of the company as a starting point of sustainable management. However, the management philosophy items, i.e. convenient car life, environmental management, socially responsible management, ethical management, and transparent management, are not all clearly aligned to sustainability. We, thus, recommend HMC, in the long-term, to reestablish its management philosophy that embraces and harmonizes these concepts.
technologies will be key leverage points under the threats of high oil prices and climate change.
However, despite such strengths, the lack of corporate governance transparency and the repetition of unconstructive labor strikes every year are amplifying uncertainties for the company. Moreover, the report fails to include clear strategies and positions about these potential threats. The statement, HMC has aligned its internal decision- making and relevant standards to prevent recurrence of law-
HMC endeavored, in its report, to include the GRI G3 indicators as well as information on key performance indicators, thereby providing a wide range of data on key issues. However, the report is not clear in terms of prioritization of the issues according to the principle of materiality contained in the G3 guidelines. It thus leaves room for improvement for the company to build a systematic process of selecting material issues based on company and stakeholder priorities and to link it with the reporting scope. This would help readers identify which are the key issues for HMC to address.
suits involving its executives and will make sure to pursue substantial social contribution. We will make best efforts to turn this into a positive opportunity for sustainability is too broad and abstract. HMC, in this regard, is advised to express basic direction, principles, and long-term roadmap for these issues, if unable to offer short-term solutions.
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In addition, HMC is yet to establish and implement clear vision and strategies for commercialization of alternative fuel vehicles, such as hybrid engines and hydrogen cars, and energy efficient vehicles. Meanwhile, by improving the transparency of corporate governance and building productive labor relations, HMC will be able to realize full potential in the market.
Byoung-Doo Lee, Vice Chairman/Ph.D, Horwath Choongjung Consulting Corp. HMC has been publishing sustainability report for over four years now. The report embraces many of the G3 indicators and the concept of materiality. However, it only includes, as the companys major economic activities, overseas operations, brand empowerment, and new car quality improvement. Renewed understanding and changes are required here. In addition, the report needs to explain, through concrete indicators, how environmental and social performances contributed to economic performance.
Stakeholder Engagement
The fact that the report systematically defines stakeholders and describes their relationships with the company is good evidence that the HMC understands the report as an important tool for stakeholder communication. However, the report can be improved by showing specific examples of stakeholder engagement activities, the resulting outcomes as well as the companys actions in response to stakeholder expectations, taking a systematic and robust approach. Jason Perks, Sd3 Ltd., Founding Director I commend HMC on its progress in managing and reporting on its economic, environmental and social performance over the past four years. HMC has become a truly international company, and its future growth is focused on global markets. The company is already showing world-class performance in many areas, including fuel efficiency, quality and customer feedback. There are some impressive commitments from the CEO and I look forward to seeing this develop into a world-class sustainability strategy addressing
Conclusion
The committee highly appreciates HMC for preparing sustainability reports and for voluntarily operating an external review committee, for the first time in Korea. Such attempt is expected to enhance the status of HMC as a global leader and to have significant implications to other companies, publishing or planning to publish sustainability reports in the future. The review opinion was prepared for further development of HMC and the committee is delighted at this opportunity to help HMC improve its sustainability performance. Lastly, the committee looks forward to a positive reflection of its opinions in the short and long term sustainability strategies of the company and future reports.
not just the immediate tough issues such as fuel economy, governance and labor issues, but wider challenges such as sustainable mobility.
Alan Knight, AccountAbility, Head of Standards In the future, stakeholders will be looking to Hyundai to refine and expand their commitment to the environment and society in ways that will not materially impact their current record of success. What this means in practice is a focus on and investment in the next generation of transportation. This will be the generation that takes the economically viable step away from fossil fuel powered vehicles. This is not a leap of faith, but the leap of leadership.
Quotation from
Byong-Hun AHN, Professor of KAIST Graduate School of Management, Director of KAIST CSR Research Center HMC is experiencing growing pains, but it is already leading the industry in the areas of fuel efficiency, environment technology, and green partnership with its vendors. Further progress in corporate governance transparency and labor relations will certainly make it a truly global leading auto company and this, in itself, will be the biggest contribution to society.
Young-Woo Park, President, Business Institute of Sustainable Development, KCCI This report helped me understand, in general, HMC activities and programs. I was especially impressed by the companys efforts and contribution to sustainability via environment-friendly management and production. However, HMC, a local and global leader, can improve further in terms of better matching its activities with the corporate vision and management philosophy and of leading the sustainability issues rather than merely complying with the regulations.
Byong-Hun AHN Young-Woo Park Il-Chung Kim Byoung-Doo Lee Jason Perks Alan Knight
Il-Chung Kim, Professor of Department of International Trade, Dean of Office of International Programs and Education, Dongguk Univ. HMC continues to invest more in environment preservation, but such is not fully reflected in its management philosophy or annual management objectives. HMC brand value will be further enhanced if and when the CEO recognizes child asthma patients, victims of air pollution, as his stakeholders and commits himself to environment protection throughout all management activities.
President, Business Institute of Sustainable Development, KCCI Professor of Department of International Trade, Dongguk Univ. Vice Chairman/Ph.D, Horwath Choongjung Consulting Corp. Sd3 Ltd., Founding Director AccountAbility, Head of Standards
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Reference Material
Reference Material
Published Report
2002 Environment Report 2002/2003 Sustainability report 2003/2004 Sustainability report 2005 Sustainability report 2006 Sustainability report
2002 2002/2003 2003/2004 2005 2006
Others
Business report PR report Society contribution white paper Others
Service
www.bluemembers.co.kr www.globalserviceway.com
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