Mutual Growth

Management of Supply Chain Sustainability

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.

* Overseas suppliers : imported parts company + companies that do business with overseas factories
** Proportion of purchases from 1st-tier critical suppliers in total purchases from total 1st-tier suppliers

Supply Chain Management System

Kia's supply chain ESG management is conducted for all suppliers, and we select core suppliers and high-risk suppliers to make priority improvements in consideration of the importance of technology and industry. For systematic evaluation and diagnosis of supply chain ESG, we conduct ESG on-line(written) evaluation for all tier 1 and core tier 2,3 suppliers and conduct due diligence(on-site) for suppliers who are suspected to be at risk. Regarding the risk of confirmation, we request implementation and monitor the progress of improvement.

Supply Chain Sustainability Goals

ESG Evaluation of Supply Chain

Kia identifies risks that are expected to occur or are actually occurring in the supply chain. As of 2022, there are 47 key 1st-tier suppliers selected through the pre-identification process, and 24 key 2nd-tier suppliers.

During this process, we identify and manage risks by country where our suppliers are located, business type, supplied part, and raw and subsidiary material. To this end, we use materials disclosed by each country’s government and research organizations as well as various media and social network materials.

Kia managed to complete risk evalutioon on 1,704 suppliers(100%) as targeted in 2022. In-depth on-site ESG risk evaluations are conducted by ESG consulting and diagnosis and due diligence experts, in close collaboration with Kia's Procurement department.

The evaluation results are utilized to enhance supply chain risk management and support strengthening ESG implementation. Moreover, we advise suppliers to establish systematic safety and health management and environmental management systems by obtaining relevant certifications such as ISO 45001 and ISO 14001. We also manage the ISO certification acquisition rate among primary suppliers.

Results of Supply Chain ESG Evaluation in 2022

* Based on domestic suppliers
** Suppliers with significant actual / potential negative impact classified as high-risk suppliers

Support for ESG in Partner Companies (2022)

Kia offers information on its ESG programs for partner companies, such as the programs’ procedures and requirements with the objective of enabling small and medium-sized or medium-sized partner companies to enhance their capacity to cope with the global ESG environment and regulations. We also provide consulting for them to establish ESG management systems. In addition, we provide training for Kia’s internal staff who are responsible for this matter on the significance of ESG programs for partner companies, such as CDP Supply Chain as well as support items.

Program Support Achievement