Business Ethics
We pursue a sound corporate culture based on ethical decision-making
Ethical Norms
SK hynix has established Ethics Mission based on SKMS (SK Management System), which is the foundation of SK's corporate management. The Code of Ethics serves as a criterion for appropriate behavior and value judgment that all members should adhere to. It also has formulated Ethics Action Guide which present specific behavioral principles and posted them on the company's website and intranet. This is done to support stakeholders and members in understanding and practicing ethical management by considering them as norms for decision-making and actions in business processes.
Furthermore, recognizing the need for providing standards for judgement and execution in various conflict situations that leaders may encounter during their job performance, whose decision-making and actions have a significant impact, SK hynix has established the ‘SK hynix Leader's Guide on Ethical Management Practices FAQ’, and encourages leaders to take the initiative by complying with it.
Scope of application for Ethical Norms
- The above Ethical Norms apply to companies (including domestic and foreign investment companies with management rights) and employees (including part-time employees whose status corresponds to permanent employees and contract workers).
- Employees have an obligation and responsibility to comply with Ethical Norms and stakeholders are also encouraged to practice this regulation.
Ethical Management
Framework
To ensure effective implementation of ethical management practices, SK hynix operates an ethical management system consisting of three stages: ①Prevent (prevention), ②Detect (monitoring and detection), and ③Respond (post-measures and prevention of recurrence).
- Prevent
- Ethical Practice Pledge / Ethical Practice Survey (Individual + Organization) → Training
- Detect
- Reporting Channel → Regular and ad hoc Inspection → Respond-Disciplinary Action / Regular and ad hoc Inspection ← Ongoing Monitoring
- Respond
- Disciplinary Action → Post-measures (Dissemination/Training + System Improvement) / Post-measures (Dissemination/Training + System Improvement) → Reflect on ‘Prevent’
SK hynix has a department dedicated to ethical management under the direct supervision of the CEO, which operates the Ethical Management Framework.
Prevent (Prevention)
SK hynix operates various systems and training programs, such as ethical practice pledges and ethical practice surveys, to prevent violations of laws or unethical behavior by the company itself and its members while performing their duties, and to raise the level of ethical practice.
Pledge
In order to recognize and understand the importance and necessity of ethical management, and to solidify its commitment to ethical practices, all domestic and overseas members along with business partners (hereinafter referred to as BPs) participate in the "Ethical Practice Pledge" every year. In 2023, 38,851 members (98.4% pledge rate) and 979 Business Partners participated in the pledge.
Survey
The company conducts an annual "Ethical Practice Survey" targeting all members to assess the changes in their perception of the level of ethical practices and to effectively improve the ethical practice system.
Communication
The company is running various forms of communication programs, such as [UKDE] (a useful knowledge database on ethical management). This program explains various ethical conflict situations, such as dual employment/concurrent positions and conflicts of interest, which are frequently asked by members, through company regulations and real-life examples.
Training
Every year, the company conducts online-based basic ethics training for all members at domestic and overseas business sites, including permanent, contract, and dispatched workers. Additionally, organizational leaders hold in-depth training sessions in the form of case studies and interactive discussions to enhance the ethical decision-making capabilities and execution skills of the members.
Detect (Monitoring and Detection)
In addition to conducting regular or ad hoc inspections of domestic and overseas business units and operations through a department dedicated to ethical management, SK hynix also gradually reinforces monitoring activities on manageable risks to enable effective detection of misconduct through the operation of reporting and counseling channels.
Reporting and Counseling
Reports of unfair demands or irregularities by SK hynix employees or consultations on ethics related grievances relating to SK hynix employees can be made through various channels such as website, phone, email, mail and etc.
Investigation Targets (Examples)
- Unfair practices and bullying towards BPs, such as accepting bribes/entertainment, personal demands, equity investments, unfair instructions, verbal abuse/physical violence
- Lack of respect for individual dignity among members, including verbal abuse, physical violence, sexual harassment, and workplace harassment
- Job-related conflicts of interest, such as neglect of duty, monetary lending between members, insider trading using internal information, transactions with related parties
- Improper handling of work, including false reporting, manipulation of performance, unethical sales practices, improper use of company funds/assets, and unauthorized disclosure of information.
- Non-compliance with environmental/safety/health/quality regulations, leakage of customer/technical information, etc.
Exceptions to Investigation
- Cases related to simple customer complaints or personal privacy issues that the company cannot intervene in.
- Simple dissatisfaction with personnel evaluations, welfare-related complaints, non-payment of wages by BPs, etc.
In accordance with the whistleblower protection regulations, the identity of the whistleblower and the content of the reporting will be kept confidential (anonymous reporting is possible), and thorough supervision will be conducted to ensure that no disadvantages arise from reporting, with post-monitoring implemented for at least a year. Since 2023, we have been operating the system by expanding the scope of reports and targets of follow-up monitoring.
Self-Refinement System
The company conducts self-assessments of management-targeted risks for key areas such as purchasing, personnel, costs, and investments on an annual basis. The Ethics Management Department classifies items that require inspection for each business area and creates checklists, which are then used for self-assessment by the operational departments themselves or in collaboration with the Ethics Management organization. The determination of whether improper handling has occurred is based on data extracted from each business system.
Audit and Diagnostics
SK hynix conducts audits and diagnoses on all of its domestic and overseas business sites as well as subsidiaries, at least once every three years, to check compliance with all regulations and procedures, adequacy and efficiency of work processes, and detect unethical behaviors. It divides the company-wide work into seven areas and 23 sectors to conduct risk assessment in each sector, and the scope of diagnosis is set around the high risk areas. Audit and diagnostic results are regularly reported to the CEO and the Audit Committee(Dual Reporting). In 2023, a total of six business reports were reported and in 2024, it is conducting diagnoses on overseas sites and all subsidiaries.
[Audit and Diagnostics Status]
| Area | 2021 | 2022 | 2022 |
|---|---|---|---|
| R&D | O | O | |
| Production | O | O | O |
| Quality Control | O | ||
| Marketing/Sales | O | ||
| Management Support | O | O | O |
| Overseas Business Site | O | ||
| Subsidiary | O | O |
Respond (Post-measures and Prevention of Recurrence)
Regarding any matters that need to be rectified such as the unethical and inefficient issues, which are identified during the ‘Detect’ stage, the company takes immediate corrective actions or collaborates with relevant departments to devise a means to improve them. The company also diligently monitors the progress of implementation on a regular basis to prevent the recurrence of risks.
For significant unethical behaviors such as false reporting, bribery, sexual misconduct, and harassment, we strictly respond without tolerance according to the Principle of Zero Tolerance, regardless of the individual's position. In particular, the company is strengthening the imposition of managerial responsibility for corrupt practices on leaders who should set an example.
Furthermore, if any BPs are involved in misconduct, they will undergo a review process conducted by the BP Sanctions Committee. Based on our criteria, they may be subject to sanctions such as restrictions on transaction volume, contract termination, or restrictions on access to our business premises.