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SK Hynix

Health and safety management

Christine Chow,
31 October 2016
EOSSocial

SK Hynix is a South Korean manufacturer of semiconductors for dynamic random access memory (DRAM) and flash memory chips. It is the world's second-largest memory chipmaker and the world's fifth-largest semiconductor company.

Background
We initiated our engagement with the company in 2014 due to concerns about its health and safety management following reports in the media suggesting a link between leukaemia in its employees and toxic chemicals at its plants. In March 2015, 13 workers were sent to hospital following a gas leak. A month later, three contractor workers died of suffocation after nitrogen gas leaked.

What we did
We urged the company to go beyond the creation of a support group for the affected workers and look at implementing a more comprehensive strategy to identify and address health and safety risks, including the provision of appropriate training and support for all staff and contractors. We also asked the company to disclose the results of an investigation into the causes of multiple gas leaks. The management team acknowledged gaps in the former Environmental, Safety and Health team and went on to introduce significant changes. As a result, the new Safety, Health and Environment (SHE) Office was established, which reports directly to the CEO. Other major improvements initiated by the company included additional supervision for high risks tasks, targeted risk-focused training for staff for each different type of onsite work, the extension of training and medical cover to contractors, support services paid for by the company and provided by third party experts to contractors, as well as the creation of a new system designed to reflect the health and safety record of the contractors. However, we still recommended that the performance evaluation of key staff should reflect the company’s safety records. In October 2016, we visited the headquarters with client representatives from two European pension funds, familiarised ourselves with the SHE monitoring centre and SK Hynix’ experiential centre, which aims to raise awareness among the local community and schools of health and safety. On site, we also witnessed a supervisor monitoring the handling of chemical products with the appropriate care.

SK Hynix HQ client trip Oct 2016SK Hynix HQ client trip 2 Oct 2016

Results
In response to our request to improve the prevention of and remedial actions after accidents, the company shared its detailed five-year plan covering 2016 to 2020, designed to enhance the existing safety measures and raise awareness in a more long-term and holistic manner. The company also developed a new health education programme focused on potential occupational diseases, as well as the general health of all employees by monitoring their stress levels, alcohol intake, smoking habits and weight. In addition, the company introduced an emergency identification system that ensures that all staff are in possession of an identification pass with a button that sends out emergency signals when they are trapped or in danger. Encouragingly, the key performance indicators of division heads now also include health and safety. We will continue our engagement with the company to encourage further measures in relation to health and safety management.

 

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Christine Chow Dr Christine Chow is responsible for the financial services, technology and extractive sectors in Asia ex-Japan. She has 19 years of experience in portfolio management, research and investment consulting. Christine's PhD thesis on shareholder engagement for responsible investment was short-listed for a UN award in Sweden for industry relevance and academic excellence. She is an adjunct associate professor in the Department of Finance at the Hong Kong University of Science and Technology. She is a governor of the London School of Economics and a member of the university’s investment committee. She was also a member of the greater China committee of the Hong Kong Retirement Funds Association between 2014-2016. Christine has worked at a number of multinational corporations such as Merrill Lynch, Schroders and Hewitt. In the 1990s, she was responsible for establishing strategic partnerships in fund management for the Schroders Group, especially in Mainland China. Christine is a graduate of the London School of Economics and the University of Melbourne. She also completed an executive education course on financial engineering at Stanford University.
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Engagement objective:

Social & Ethical: Health and safety management for workers and contractors