Mutual Growth
Mutual growth drives trust-based relationships
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
| Ethics | Environment | Labor and Human rights | Safety and Health | Management system |
|---|---|---|---|---|
|
Transparent management and anti-corruption Avoiding Conflicts of Interest Prevention of unfair trade Prevention of counterfeit parts Compliance with export restrictions Information Security Responsible Material sourcing |
Establish of environmental management system Energy use Greenhouse gas emissions Water resources usage Air pollutants Waste Chemicals |
No discrimination Provision of wages and benefits Working hours management humane treatment Guarantee freedom of association Prohibition of child labor Prohibition of forced labor |
Establish Occupational safety and health system Machine/facility safety management Emergency response Incident management Safety diagnosis Health care |
Company Statement Disclosure Appointment of person in charge Risk Diagnosis/Check Education and communication information management Operation of grievance handling system Management of business partners (sub-partners)Compliance with the Code |
Carbon Neutrality in the Supply Chain
The scope of Kia’s 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 more than 15% of Kia value chain’s total GHG emissions. Kia will encourage carbon reduction of suppliers and achieve carbon neutrality through energy transition of suppliers and application of low-carbon materials in our products.
Action Plan to Reduce Carbon Emissions in the Supply Chain
Kia will establish a carbon emission monitoring system for suppliers and encourage them to reduce carbon emissions. In 2021, Kia established a basic action plan to support our suppliers to reduce their carbon emissions based on the results of a survey of their carbon emissions and reduction plans.
In 2022, we developed and distributed guidelines that our suppliers should follow to promote carbon neutrality. We also operated the supplier carbon Neutrality Council to gather opinions on our carbon neutrality strategy. We have offered suppliers training courses to improve awareness of carbon reduction and enhance working-level capabilities.
This year, Kia and Hyundai joined the CDP Supply Chain and requested domestic suppliers to disclose carbon-related information such as carbon emissions, climate change issues and strategies. To facilitate smooth participation of suppliers in CDP Supply Chain, we provided on/offline training on carbon neutrality overview and emissions calculation. In addition, we are operating various programs such as support for suppliers' carbon reduction facility purchases, energy diagnosis consulting for suppliers' facilities, and offering online systems for calculating carbon emissions.
In the long term, we plan to help our suppliers calculate the carbon footprint of their auto parts and discover potential carbon reduction areas. Ultimately, we will continue multifaceted supporting activities to strengthen our suppliers’ capabilities to carry out carbon emission management and reduction.
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
| - | Unit | 2022 |
|---|---|---|
| Total number of evaluated suppliers | Numbers | 1,704 |
| - No. and ratio of evaluated 1st-tier suppliers* | Numbers(%) | 380(100) |
| - Ratio of evaluated key suppliers | % | 100 |
| No. and ratio of high-risk** suppliers(1st-tier suppliers and 2nd-tier key suppliers are included) | Numbers | 14 |
| - Ratio of high-risk suppliers who agreed to take corrective actions and improvements | % | 100 |
* 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
| - | Unit | 2022 | |
|---|---|---|---|
| Global Partnership Center (GPC) ESG education performance |
No. of suppliers | Numbers | 303 |
| No. of participants | Persons | 1,123 | |