Mutual Growth

Supply Chain ESG Management

Kia reflects ESG factors in its supplier management and purchasing policies. In particular, for safety issues, violations of the Code of Ethics, and acts that impede shared growth, which are key elements of ESG, penalties(e.g. exclusion of bidding) are given through an internal deliberation to encourage suppliers to pay more attention.

In 2022, overseas parts makers are also included in the supply chain ESG evaluation target so that Kia is managing the ESG levels of all global parts makers transacting with Kia. A group of companies that require intensive management, such as core partners and high-risk partners, are managed separately.

In addition, the ‘Supplier Code of Conduct' was developed by reflecting domestic and foreign laws and regulations, the OECD Due-diligence Guideline, the Responsible Business Alliance, and major initiatives in the automobile industry(e.g. Drive Sustainability). The ‘Supplier Code of Conduct’ is shared with all global suppliers and used for accurate supply chain ESG diagnosis and improvement.

Kia will continue to carry out supply chain ESG evaluation and strive for improvement. In addition, we will expand support for Suppliers to protect human rights and strengthen ethical management.

Kia Supplier Code of Conduct

Purpose

Kia has enacted ‘Supplier Code of Conduct’ to establish a sustainable supply chain. This Code of Conduct strictly complies with the laws and regulations applicable to corporate management activities for all business partners, while requiring its partners to have the best operating practices in the field of ethical, environmental, labor/human rights, safety/health, and management systems. Kia expects that its partners will not only grow into a company that is respected by society, but also provide an opportunity for mutual growth by complying with this Code of Conduct.

Target

Applies to all business partners that provide goods and services to Kia or have entered into contracts for other transactions. All suppliers subject to this Code of Conduct may recommend that their entire supply chain, including business partners(i.e. sub-partners), comply with this Code of Conduct.

Main Components

Supplier Code of Conduct (PDF)

Carbon Neutrality in the Supply Chain

The scope of our 2045 carbon neutrality target includes our supply chain such as tier-1 suppliers and raw material suppliers. Estimated GHG emissions of our supply chain is about 15% of total GHG emissions generated throughout the life cycle of Kia’s products. We aim to achieve carbon neutrality by 2045, following a reduction of more than 10% to be achieved by 2030 through the energy transition of key suppliers, and a reduction more than 55% by 2040 by extending these efforts to include raw material suppliers.

Action Plan to Reduce Carbon Emissions in the Supply Chain

In 2021, Kia established a basic action plan to support its suppliers’ efforts to reduce their carbon emissions based on the results of a survey of their carbon emissions and reduction plans.

In 2022, we offered them training to improve awareness of carbon reduction and enhance working-level capabilities, while publishing and distributing an implementation guide that they must follow to promote carbon neutrality.

In the second half of 2022, we plan to specify the carbon reduction criteria and targets that will apply to suppliers and operate various support programs to contribute to their carbon reduction efforts through the construction or expansion of smart factories. In particular, the results of the 2021 supplier carbon emission survey show that the top 46 carbon emitters in the production of tires, aluminum wheels, and batteries, etc. account for 70%of the total supply chain emissions. We will induce them to pursue carbon reduction while helping them to establish their own carbon neutrality management system.

Supply Chain Management System

* Exporting a knock-down (KD) kit containing the parts needed to assemble a product in the respective local market

To establish a systematic supply chain, Kia is implementing supply chain management policies such as quality, delivery, technology, win-win cooperation, safety management, quarantine, and eco-friendliness, and conducts supply chain evaluation to diagnose and respond to supply chain risks in advance. In particular, we are operating an evaluation process. Based on ESG issues, self-assessment(assessment done by suppliers themselves and pilot evaluation were conducted to establish an evaluation system.
The supply chain ESG management is operated for all suppliers, and we select critical suppliers and high-risk suppliers in consideration of the importance of technology and industry to promote prioritized improvement. Self-assessment is conducted for tier 1 suppliers, and written/on-site evaluations are conducted for high-risk suppliers to monitor and manage matters for improvement raised as a result of the evaluation.

Composition of Supplier ESG Evaluation Indicators

Contingency Plans

For each emergency situation, Kia has a contingency system for supply, logistics, and production stages. Through supply chain diversification, Kia is prepared to mitigate or prevent production losses resulting from parts supply issues due to natural disasters and so on.
Generally, our parts procurement for each part is done from at least 3 or more suppliers, although it may vary according to the technical and physical characteristics of the parts.
In case imported parts are required urgently, Kia also has a flexible logistics systems that enables us to interchange between shipping and air transport at any time.
In all domestic manufacturing plants, there are buffer lines at each major sector so that a sudden stop in a production process will not affect other processes or to minimize its affect.
Each of the buffer lines have additional production capacity and storage space for at least half an hour's worth of production. Therefore, even if an accident occurs, the effect to the pre/post processes can be minimized.

Supply Chain Sustainability Goals

Supply Chain Assessment & Correction Status

Supply Chain ESG evaluation Roadmap

Supplier Support Program (2021)

Kia continuously supports its suppliers through technology coaching, management consulting, training, and seminars.

Status of Payments for Goods & Services