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[Material Topic 1] Climate Change Response

Governance

Decision-making Body for the Management and Oversight of Climate-related Risks and Opportunities

To ensure a responsible response to climate change, HL D&I Halla has established the Operating Regulations of the Sustainability Management Committee, which clearly define the Committee’s responsibilities for managing and overseeing climate-related risks and opportunities. As of March 31, 2026, the Sustainability Management Committee under the Board of Directors consists of three outside directors. Based on reports on internal transactions and sustainability-related activities, the Committee independently deliberates and resolves relevant matters. Under Article 3 of the Board of Directors Regulations, the Board has the authority to receive reports and deliberate and resolve matters deemed material by the Committee, including reports and deliberations on internal transactions, investigations into the details of internal transactions, requests for corrective measures, and reports and deliberations on sustainability management activities. In addition, pursuant to Article 10 (Matters for Deliberation), the Board deliberates on major non-financial management matters, including key internal transaction issues and reports on sustainability management activities. Through this framework, HL D&I Halla operates a Board-level management and oversight system for overall sustainability management, including major climate change-related issues.

Composition of the Sustainability Management Committee

As of March 31, 2026
Classification Name Position Initial Appointment Date Expertise
Outside Director Park Gye-hyeon Chairperson March 26, 2024 Legal affairs
Outside Director Jeong Sang-ho Member March 26, 2024 Construction administration
Outside Director Shim Seung-taek Member March 26, 2024 Global consulting and energy

Strengthening Capabilities for the Management and Oversight of Climate Change

HL D&I Halla incorporates expert advice into its environmental strategies through regular consultation and communication with internal and external climate experts to strengthen the Board’s capabilities for managing and overseeing climate change response. The Company also provides regular training on environmental issues, industry benchmarking trends, and global standards, including TCFD and SBTi. Through these efforts, directors serving on the Sustainability Management Committee are equipped with a sufficient understanding of the latest climate response criteria and disclosure standards.

Management’s Role and Oversight

HL D&I Halla has established a climate change governance system consisting of the Board of Directors, management, and working-level organizations to respond effectively to climate change. The roles and responsibilities of each governing body are clearly defined, and the relevant parties communicate organically throughout the process of managing environmental and climate-related issues. The Company also analyzes the effects of climate-related risks and opportunities on corporate management and incorporates the findings into its medium- to long-term policies and strategies. To enhance the effectiveness of these strategies, HL D&I Halla periodically reviews the implementation status of detailed tasks.

Climate Change Response Organization and Roles

Higher-level organizations receive reports from lower-level organizations and exercise oversight authority over them.

Reporting Method and Frequency

Centered on the Green Management Team, the department dedicated to sustainability management, HL D&I Halla periodically reports major matters—including climate-related risks and opportunities, greenhouse gas reduction performance, energy consumption, and ESG and environmental issues—to the Sustainability Management Committee. The Sustainability Management Committee convenes at least once a year and reviews and manages overall climate and environmental issues based on the reported information. It also reports major climate change response activities and ESG strategies to the Board of Directors, supporting the Board’s review and final decision-making on major climate-related matters. When necessary, the Company engages external climate experts to strengthen the expertise and effectiveness of its climate risk management system.

Category Board of Directors Sustainability Management Committee
Reporting Entity Sustainability Management Committee Green Management Team
Reporting Content Company-wide Climate Change Response and Sustainability Management Strategies Overall Sustainability Management and Climate & Environmental Issues
Climate Risk Management System
Reporting Frequency and Timing Whenever a Board Meeting Is Held Ongoing

Approach to Considering Climate-related Risks and Opportunities

HL D&I Halla systematically analyzes the effects of climate-related risks and opportunities on corporate management and incorporates the results into its medium- to long-term strategies and major decision-making processes. Each year, the Company reviews the effects of climate-related risks and opportunities on financial and non-financial performance and identifies key management priorities based on the likelihood and scale of impact. These priorities are reported to the Board of Directors and the Sustainability Management Committee. Major climate change-related matters are periodically reported to and reviewed by the Board and the Sustainability Management Committee. Through this process, the Company ensures that climate-related risks and opportunities are incorporated into management decision-making. Based on this reporting and oversight framework, HL D&I Halla continues to enhance the effectiveness of its climate risk management and greenhouse gas reduction target implementation.

Approach to Considering Climate-related Risks and Opportunities

Category Meeting Date Agenda Item Approval Status Consideration of Climate-related Risks and Opportunities
Board of Directors 2025.02.24 Approval of the 2025 Sustainability Management Promotion Plan Approved Resolved plans to manage climate-related risks and opportunities and environmental impacts, including greenhouse gas emissions, waste, and water usage
2025.02.24 Report on Major Environmental Performance in 2024 Reported Reviewed improvements in environmental performance, including greenhouse gas emissions, energy consumption, water usage, and waste, as well as measures to address climate risks
ESG Committee 2025.08.08 Publication of the Sustainability Report and Report on ESG Performance Reported Reviewed major sustainability management performance, climate change response activities, progress toward greenhouse gas reduction targets, and stakeholder requirements
2025.10.30 Report on Environmental Performance in 2025 Reported Reviewed progress toward greenhouse gas reduction targets, environmental management performance, and future improvement tasks

Management and Oversight of Target Setting and Progress

The Sustainability Management Committee convenes at least twice a year to oversee the climate-related target-setting process and periodically review progress toward those targets. The CEO has responsibility for establishing company-wide environmental targets and commitments and for developing specific implementation plans, including climate change response. To systematically manage progress toward climate change response targets, the Company incorporates relevant performance into the key performance indicators (KPIs) of responsible executives and departments. These KPIs include progress toward environmental targets, absolute greenhouse gas emissions reductions aligned with climate response goals, Board approval of climate transition plans, and reductions in emissions intensity. Annual performance against these indicators is linked to compensation increases, performance evaluations, and promotion decisions. Specifically, 10% of the performance compensation of executives, including the CSO, is linked to climate issue management. In addition, to encourage employee participation in climate change response activities, the Company annually presents the Sustainability Management Excellence Award to employees who demonstrate outstanding climate-related performance in their respective areas. This performance management system promotes employees’ active participation in achieving environmental targets and contributes to strengthening the Company’s climate response capabilities and sustainability management performance.

Key Management Performance Indicators for 2025

Reduction of greenhouse gas emissions aligned with the carbon neutrality target
Strengthened compliance with environmental regulations and advancement of the environmental risk management system
Improvement in ESG ratings and continued leadership in sustainability management

Strategy

Climate Impact Analysis Process

To minimize climate-related risks and maximize opportunities, HL D&I Halla has established a four-step process for identifying climate-related risks and opportunities and analyzing their financial impacts. Through this process, the Company identifies climate-related risks and opportunities and systematically manages major issues that may affect its business by deriving qualitative and quantitative financial impacts for each item.

Climate-related Risk and Opportunity Pool

HL D&I Halla identifies climate-related risk and opportunity factors based on the TCFD recommendations, the characteristics of the construction industry, and cases involving industry peers. Through this process, the Company identified eight physical risks, seven transition risks, and nine opportunity factors that may affect business operations, financial performance, and medium- to long-term management strategies. The Company also conducts climate scenario analyses to assess how risks and opportunities arising from climate change may affect its business strategies and evaluates the physical risk exposure of worksites and projects. In addition, HL D&I Halla reviews the likelihood and scale of impact of the identified risks and opportunities, selects key issues, and establishes corresponding response directions.

Category Type Risk/Opportunity Factor Major Impact Time Horizon
Physical Risk Acute P1~P6 Cold waves, hail/thunderstorms, typhoons, wildfires, floods, torrential rain, and other acute abnormal weather events Construction delays, worksite safety accidents, damage to equipment and materials, site flooding, and increased recovery costs Short- to long-term
Chronic P7 Heatwaves Heat-related illnesses among workers, reduced work efficiency, and increased cooling energy consumption Short- to long-term
P8 Drought Difficulty securing water and increased water resource management costs Medium- to long-term
Transition Risks Policy and Regulation T2~T3 Stricter building energy regulations and expanded carbon- and climate-related compliance requirements Increased costs for regulatory compliance, emissions management, certification, and disclosure response Short- to long-term
Technology T4 Electrification of construction equipment and transition to eco-friendly technologies Increased investment costs for introducing eco-friendly equipment and construction methods Medium- to long-term
Market T5~T7 Growing demand for eco-friendly construction services and low-carbon materials, as well as rising raw material prices and procurement standar Increased costs for procuring low-carbon materials and purchasing materials, and greater supply chain management burdens Short- to long-term
Reputation T8 Growing stakeholder expectations for climate action Potential deterioration in corporate reputation and weakened competitiveness in securing orders in the event of an inadequate climate response Short- to long-term
Opportunities Resource Efficiency O1 Conversion of internal combustion engine vehicles to electric vehicles Reduced fuel costs and greenhouse gas emissions Long-term
O2 Transition to electrified and high-efficiency equipment Reduced fuel consumption and operating costs for worksite equipment Medium- to long-term
O3 Expanded recycling and reuse of materials Reduced material purchasing and waste treatment costs and improved resource circulation performance Medium- to long-term
Energy Source O4 Expanded use of and investment in renewable energy Reduced electricity and fossil fuel purchasing costs and contribution to greenhouse gas reductions Long-term
O5 Expanded application of low-carbon construction technologies Reduced greenhouse gas emissions through the use of low-carbon technologies such as PC construction methods and CCUS Long-term
Market O6 Expansion of financial opportunities through participation in the carbon market Creation of revenue opportunities through the sale of surplus emission allowances and the use of reduction performance Long-term
O7 Expansion of the eco-friendly technology and climate response market Enhanced competitiveness through investment in eco-friendly technologies and entry into new climate-related markets Long-term
Products and Services O8 Expansion of services that improve building energy efficiency Enhanced maintenance services and brand value by responding to demand for improved energy efficiency Long-term
O9 Growing demand for eco-friendly buildings Increased sales of low-carbon and eco-friendly buildings through the application of eco-friendly construction methods and materials Long-term

Climate-related Risk Materiality Assessment

Physical Risk Materiality Assessment Results

HL D&I Halla identified typhoons, floods, wildfires, heatwaves, and droughts as major physical risks through its climate materiality assessment. The assessment found that typhoons and torrential rain represented major risk factors with both a high likelihood of occurrence and high financial impact. Heatwaves and droughts were also identified as major risks that could affect worksite operating efficiency and increase energy consumption.

NO Item Likelihood Impact
P6 Torrential Rain H H
P3 Typhoon H H
P2 Heatwave H M
P4 Drought M H
P1 Cold Wave M M
P5 Flood M M
P7 Hail/Thunderstorms L M
P8 Wildfire L M

Transition Risk Materiality Assessment Results

Through its climate materiality assessment, HL D&I Halla identified rising raw material and resource prices, increasing electricity prices, and stricter building energy regulations as major transition risks.

NO Item Likelihood Materiality
T6 Rising Prices of Raw Materials and Resources H H
T7 Rising Electricity Prices H H
T2 Stricter Low-carbon and Environmental Regulations, Including Building Energy Regulations H M
T8 Negative Stakeholder Opinions and Reputational Risk L M
T4 Increased Costs Associated with the Electrification of Construction Equipment M M
T5 Growing Consumer and Customer Demand for Eco-friendly Construction Services M M
T3 Increased Legal Risks Related to Compliance and Litigation M L

Opportunity Materiality Assessment Results

HL D&I Halla conducted an opportunity materiality assessment to identify business opportunities that may arise in the course of responding to climate change. The assessment identified the transition to electrified and high-efficiency equipment, expanded material reuse, and the conversion of internal combustion engine vehicles to electric vehicles as major opportunity factors. These opportunities are expected to contribute not only to reduced energy consumption and improved operational efficiency, but also to lower carbon emissions and enhanced competitiveness amid growing demand for eco-friendly construction.

NO Item Likelihood Materiality
O2 Transition to Electrified and High-efficiency Equipment H H
O3 Reuse of Materials and Containers M H
O1 Conversion of Internal Combustion Engine Vehicles to Electric Vehicles M M
O9 Growing Consumer Demand for Eco-friendly Buildings M M
O4 Expanded Use of and Investment in Low-carbon and Renewable Energy M M

Climate-related Risk Analysis Period

HL D&I Halla categorizes and manages the impact periods of climate-related risks and opportunities as short-term, within one year; medium-term, one to five years; and long-term, more than five years. Business strategies are developed by reflecting changes in the market environment of each business division. Climate-related risks and opportunities are linked to major decision-making processes by considering their impacts on business operations and financial performance.

Short-term

Within one year

Medium-term

One to five years

Long-term

More than five years

Analysis of Major Physical Risk Impacts

In accordance with the TCFD recommendations, HL D&I Halla conducted a climate scenario-based physical risk exposure assessment to identify the impacts of physical risks arising from climate change on its businesses and strategies. The TCFD recommends using appropriate analytical tools aligned with corporate objectives. Accordingly, HL D&I Halla adopted a climate analytics solution developed by Jupiter Intelligence to conduct a detailed and systematic risk assessment. Based on satellite and ground observation data and climate forecasting models, the solution quantifies the risk levels associated with various climate-related natural disasters, including floods, heatwaves, typhoons, and droughts, and quantitatively estimates their financial impacts. The model uses the CMIP61) climate scenarios included in the IPCC Sixth Assessment Report to analyze long-term physical risks from 2020 to 2100.

Selection of Physical Risk Scenarios

The SSP scenarios were introduced in the IPCC Sixth Assessment Report in 2021 and reflect projected changes in future socioeconomic systems, including the Earth’s radiative forcing, population, the economy, and energy consumption, through 2100. HL D&I Halla assessed the impacts of physical risks using Jupiter Intelligence. The scenarios applied in the tool were SSP1–2.6 at 1.8°C, SSP2–4.5 at 2.7°C, and SSP5–8.5 at 4.4°C.

IPCC2) SSP3) Scenarios

Scenario Description
SSP 1~2.6(1.8°C) Low-emissions scenario Assumes that the use of fossil fuels is minimized through advances in renewable energy technologies and that sustainable economic growth is achieved.
SSP 2~4.5(2.7°C) Intermediate-emissions scenario Assumes an intermediate level of climate change mitigation and socioeconomic development.
SSP 5~8.5(4.4°C) High-emissions scenario Assumes rapid industrial and technological development centered on high fossil fuel consumption and the expansion of indiscriminate development.

1) CMIP6: CMIP6The Sixth Coupled Model Intercomparison Project, a project used in IPCC assessment reports to compare and evaluate global climate models

2) IPCC: Intergovernmental Panel on Climate Change

3) SSP: Shared Socioeconomic Pathways

Analysis of Exposure to Climate-related Disasters

HL D&I Halla conducted a quantitative analysis of eight types of natural disasters that may affect each worksite due to climate change—floods, typhoons, torrential rain, heatwaves, hail and thunderstorms, droughts, wildfires, and cold waves—by applying the SSP5–8.5 scenario, which assumes a temperature increase of 4.4°C. The analysis quantified each worksite’s current exposure to disaster risks based on 2020 and derived change scores reflecting climate change impacts through 2050. The current exposure score and change score were then considered comprehensively to calculate the projected exposure score for 2050. The likelihood of disaster occurrence was analyzed based on climate modeling results. Based on these findings, the Company assessed the current and future risk exposure of each worksite and the drivers of occurrence for each major disaster type. The analysis found that HL D&I Halla’s domestic construction sites and business sites showed the highest current and future exposure to torrential rain, with relatively high exposure identified in all regions. Future drought exposure was also projected to increase in most regions except Seoul. In particular, construction sites in Jeollanam-do showed high current and future flood exposure because they are located near Mokpo NewPort and have a low elevation above sea level.

Key Disaster Exposure Measurement Indicators

1. Acute Hazards

Hazard Indicator Used (Weight by Indicator)
Flood
  • Maximum inundation depth for a 200-year return period (80%)
  • Maximum inundation area for a 200-year return period (20%)
Typhoon
  • Maximum wind speed for a 100-year return period (100%)
Torrential Rain
  • Maximum daily precipitation for a 100-year return period (100%)
Hail/Heavy Snow
  • Annual number of days with the potential occurrence of hail measuring 5 cm (2 inches) or more in diameter (100%)
Wildfire
  • Annual number of wildfire events occurring within 1 km² of a specific location (100%)
Cold Wave
  • Annual number of days with temperatures below 0°C (50%)
  • Annual average Heating Degree Days¹) (50%)

2. Chronic Hazards

Hazard Indicator Used(Weight by Indicator)
Heatwave
  • Annual number of days with temperatures exceeding 35°C: 33%
  • Annual number of days with Wet Bulb Global Temperature²) exceeding 32°C: 33%
  • Annual average Cooling Degree Days³): 33%
Drought
  • Water Stress Index⁴) for the relevant region: 100%

1) Heating Degree Days: An indicator of the energy required for heating to maintain a comfortable indoor temperature, calculated as the sum of the differences between 18°C and the average temperature on days when the annual average temperature is below 18°C.

2) Wet Bulb Global Temperature: A heat stress index that comprehensively considers not only temperature, but also humidity and radiant heat affecting the human body.

3) Cooling Degree Days: An indicator of the energy required for cooling to maintain a comfortable indoor temperature, calculated as the sum of the differences between the average temperature and 18°C on days when the annual average temperature is above 18°C.

4) Water Stress: The ratio of water demand to water supply in a given region. Water supply refers to the sum of the water resources available within the region and the remaining supply from upstream water sources after meeting their own demand.

Results of Climate-related Disaster Exposure Analysis by Business Site

Results of Business Site Analysis1)

1) Average risk exposure results by administrative district based on the region in which each business site is located

Financial Impact Assessment of Physical Risks

To assess the substantive financial impacts of climate change on its business, HL D&I Halla selected five of the eight climate hazards expected to have material financial impacts—floods, typhoons, wildfires, droughts, and heatwaves—and conducted a quantitative analysis. To enhance the accuracy of the assessment, the Company used Jupiter Intelligence, a specialized climate modeling tool, and applied three scenarios ranging from a climate change mitigation scenario to a high-risk scenario: SSP1-2.6, SSP2-4.5, and SSP5-8.5. Based on these scenarios, HL D&I Halla quantitatively estimated Average Annual Loss (AAL) from the short term, beginning in 2025, to the period beyond the long term, extending to 100 years.

Heatwaves, Typhoons, Floods, and Wildfires

Risks of Asset Damage and Business Interruption Typhoons, floods, and wildfires may cause direct physical damage to buildings, facilities, and inventory at business sites. They may also result in additional indirect financial losses due to operational disruptions during the restoration of damaged facilities and recovery from power outages. Based on a comprehensive analysis of asset values and climate data for return periods ranging from 10 to 500 years, including inundation depth and wind speed, Average Annual Loss under SSP5-8.5—the scenario with the highest greenhouse gas emissions—is projected to increase gradually from KRW 1.8 billion in the short term, 25 years, to KRW 2.2 billion beyond the long term, 100 years. In response, HL D&I Halla is advancing its abnormal-weather monitoring system and developing schedule-delay improvement measures and response plans to prevent construction delays and asset damage caused by rapidly changing weather conditions, including typhoons, floods, and wildfires.

(Unit: KRW 100 million)
Category Short-term (25 years) Medium-term (30 years) Long-term (50 years) Beyond Long-term (100 years)
SSP1-2.6
(1.8°C)		 17 18 18 19
SSP2-4.5
(2.7°C)		 18 18 18 19
SSP5-8.5
(4.4°C)		 18 18 19 22

Overview of Financial Impact Analysis for Transition Risks and Opportunities

To systematically analyze transition risks and opportunity factors that may arise from climate change, HL D&I Halla considered a broad range of climate scenarios, from gradual mitigation scenarios to high-risk scenarios involving an intensifying climate crisis. The scenario analysis adopted the latest SSP scenarios presented by the Intergovernmental Panel on Climate Change (IPCC) in its Sixth Assessment Report, along with scenarios developed by the International Energy Agency (IEA) and the Network for Greening the Financial System (NGFS).

Selection of Transition Risk and Opportunity Scenarios

HL D&I Halla used IEA and NGFS scenarios to assess the impacts of climate-related transition risks and opportunity factors. For the analysis of carbon-cost-related risks and opportunities, the Company applied the STEPS, APS, and NZE scenarios presented in the IEA’s World Energy Outlook. For the analysis of impacts arising from rising electricity prices and expanded renewable energy use, the Company applied the NGFS Below 2°C, Delayed Transition, and Net Zero 2050 scenarios. Through this analysis, HL D&I Halla examined how changes in major transition variables, including carbon prices and electricity rates, may affect its business.

IEA1) Scenarios

Scenarios Description
STEPS2) (2.4°C) Assumes that current policy settings remain in place, taking into account policy measures, reduction targets, and plans currently being implemented by major countries.
APS3) (1.7°C) Assumes that governments fully implement their nationally determined contributions and carbon neutrality commitments within the pledged timeframes.
NZE4) (1.4°C) Assumes that the global energy sector achieves net zero emissions by 2050 to limit the temperature increase to 1.5°C or lower by 2100.

1) IEA : International Energy Agency

2) STEPS: Stated Policies Scenario, a scenario that considers policies, confirmed reduction plans, and related measures currently being implemented or established by major countries

3) APS : Announced Pledges Scenario, a scenario assuming the timely implementation of the carbon neutrality targets announced by major countries

4) NZE: Net Zero Emissions by 2050 Scenarios

NGFS5) Scenarios

Scenarios Description
Below 2°C Reduces emissions by 80% from current levels by 2050 and limits the increase in the global average temperature to below 2°C
Delayed Transition Implements stringent emissions reduction policies after 2030
Net Zero 2050 Achieves net zero emissions by 2050 and limits the increase in the global average temperature to below 1.5°C

5) NGFS: Network for Greening the Financial System, an international organization that analyzes the effects of climate change and environmental risks on the financial system

Analysis of Major Transition Risk Impacts

HL D&I Halla conducted a materiality assessment of likelihood and financial impact with internal stakeholders and external experts to identify climate-related transition risks that may affect its business. The assessment identified stronger regulations on products and services, rising prices of raw materials and resources, and rising electricity prices as major transition risks. For certain items, the Company used IEA and NGFS scenarios to quantitatively estimate the financial impacts and closely analyze how climate-related transition risks may affect its business. The financial impacts of these transition risks and opportunities were calculated on a nominal basis without applying a present value discount rate.

Strengthening of Low-carbon and Environmental Regulations, including Zero Energy Building (ZEB) Regulations

As regulations related to eco-friendly and low-carbon buildings continue to strengthen, the expansion of mandatory Zero Energy Building certification and certification reviews for completed buildings under the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis are expected to increase regulatory compliance costs. HL D&I Halla estimated future regulatory compliance costs based on the average annual gross floor area of completed buildings and the actual green building certification review cost per unit area incurred in 2025. The Company also analyzed the financial impact by including additional construction costs per unit area required to comply with the relevant regulations. The analysis found that additional costs arising from stricter building energy regulations were estimated at approximately KRW 28.92 billion in the medium term and KRW 34.53 billion in the long term, with the cumulative financial impact through 2050 projected at approximately KRW 820.8 billion. To respond to strengthened low-carbon environmental regulations in the building sector, HL D&I Halla is expanding the use of high-efficiency equipment and eco-friendly materials and enhancing its design and construction capabilities to meet Zero Energy Building and green building certification standards. The Company also operates an eco-friendly design process that enables energy consumption and carbon emissions to be reviewed in advance from the design stage and actively applies high-insulation and airtight materials and energy-saving construction methods. In addition, HL D&I Halla systematically manages its eco-friendly construction material supply chain and strengthens its environmental monitoring system at each worksite to minimize regulatory compliance costs and operational risks.

(Unit: KRW 100 million)
Category Short-term (2025) Medium-term (2030) Long-term (2050)
Green Building-related Costs - 289.2 345.3
Outstanding Practice

Proactive Response to Mandatory ZEB Grade 5 Requirements

HL D&I Halla is strengthening its market competitiveness by treating increasingly stringent climate regulations, including the mandatory Grade 5 Zero Energy Building requirements effective from June 30, 2025, as a driver of business innovation. The Company selected the B2BL public housing project in the Gunsan Sinyeokse District as its standard model and developed an energy self-sufficiency optimization strategy. This resulted in an optimal economic scenario capable of responding flexibly to energy efficiency standards 1.2 times more stringent than the previous level and to renewable energy installation requirements more than twice as high. Derived through the analysis of approximately 30 simulation cases, the strategy focuses particularly on overcoming the physical limitation of insufficient rooftop space in high-density urban apartment housing. To address this issue, HL D&I Halla independently developed a solar power capacity calculation tool specialized for apartment housing. The Company also advanced the complex regulatory response process into a standardized service process through integrated design logic that automatically reflects insufficient energy generation capacity in the building envelope area (BAPV). HL D&I Halla is incorporating these research outcomes into its company-wide design guidelines to minimize business uncertainty in the carbon neutrality era. Through precise preliminary estimates, the Company will predict construction cost fluctuation risks arising from stricter ZEB standards and demonstrate stable project execution capabilities. It also plans to provide residents with high-performance housing services that reduce maintenance cost burdens through optimized energy design.

Selection of a Standard Building (B2BL, Gunsan Sinyeokse District)

Rising Prices of Raw Materials and Resources

As competition for global resources and suppliers’ carbon cost burdens increase due to climate change and strengthened climate policies, instability in raw material supply and risks of rising construction material prices are expected to intensify. HL D&I Halla is not an entity directly subject to emissions trading scheme allocations. However, the Company estimated the financial impact by considering the possibility that carbon emissions costs incurred by subcontractors may be reflected in product prices and passed through to procurement costs as carbon regulations tighten and free allocation ratios gradually decline. The analysis was conducted on steel products purchased in 2025. The results showed that additional procurement costs attributable to rising steel raw material prices were estimated at a minimum of KRW 0.1 million in the short term, based on IEA scenarios, and were projected to increase to more than KRW 1 million in the medium term. In the long term, by 2050, additional procurement costs are projected at KRW 287 million under the STEPS scenario, KRW 645 million under the APS scenario, and KRW 806 million under the NZE scenario. In the short and medium term, the financial impact on the supply chain is expected to remain limited due to relatively low free allocation ratios and carbon prices. In the long term, however, stronger carbon neutrality policies are expected to drive a significant increase in carbon prices and expand the burden of purchasing emission allowances for steel manufacturers, thereby increasing the impact of raw material price rises. To address raw and subsidiary material price volatility risks that may arise during the low-carbon transition, HL D&I Halla is expanding the application of eco-friendly materials and strengthening its supply chain management system. The Company also systematically manages the value chain of carbon-intensive core raw materials, including steel, and continuously monitors supply chain risks.

Analysis of Major Opportunity Impacts

HL D&I Halla conducted a quantitative analysis of potential financial impacts using industry outlooks and internal data for selected items expected to affect its business through proactive responses to climate-related risks and the transition to a low-carbon society. The Company analyzed the effects of each opportunity factor on its business and financial performance over the short, medium, and long term.

Conversion of Internal Combustion Engine Vehicles to Electric Vehicles

As uncertainty in global oil prices and regulations on internal combustion engine vehicles intensify, the transition to eco-friendly transportation and the electrification of construction equipment are emerging as important transition priorities. To address the cost burden of fossil fuel use and carbon regulatory risks, HL D&I Halla plans to convert 100% of its executive and business vehicles to electric vehicles by 2030. The analysis assumed continued increases in oil prices and fluctuations in electric vehicle charging rates. Financial impacts were calculated by applying actual fuel consumption data for each vehicle based on differences between average domestic fuel prices and electricity rates. The analysis found that the annual fuel cost savings from converting corporate vehicles to electric vehicles would amount to approximately KRW 5 million by 2050. This reflects the higher energy efficiency of electric vehicles and their relatively lower maintenance and operating costs compared with internal combustion engine vehicles.

(Unit: KRW 100 million)
Category Long-term (2050)
Cost Savings from the Conversion of Corporate Vehicles to Electric Vehicles 0.05
Transition to Electrified and High-efficiency Equipment

As the construction industry accelerates its transition to low carbon, the electrification of construction equipment and the expansion of eco-friendly construction technologies are emerging as major business opportunities. HL D&I Halla is promoting the electrification of major construction machinery and equipment used at worksites. By introducing electrified equipment with higher energy efficiency and price competitiveness than internal combustion engine equipment, the Company aims to reduce rental and fuel costs. The financial impact of the transition to electrified construction equipment was calculated based on the rental costs of aerial work platforms operated at construction sites. Annual working days excluding annual leave and holidays and the statutory daily working hours were assumed to represent equipment operating hours, and the resulting cost-saving effects were estimated. The analysis found that the transition to electrified equipment is expected to generate cost savings of approximately KRW 10.4 billion by 2030, the medium term. This reflects improved fuel efficiency and reduced maintenance and operating costs associated with electrified equipment. In conjunction with the expected growth in demand for eco-friendly construction, the transition is also expected to contribute to the wider application of low-carbon construction technologies and a stronger market position.

(Unit: KRW 100 million)
Category Medium-term (2030)
Cost Savings from the Transition to Electrified Construction Equipment 104

Response to Climate-related Risks and Opportunities

Climate-related Target Achievement Plan

HL D&I Halla has set “Establishing Sustainable, Low-carbon, and Eco-friendly Worksites” as a strategic objective and developed a medium- to long-term roadmap to respond to climate change.

Climate Change Response Strategy and Roadmap

Category Advance the climate change response strategy and management system
(~2025)		 Secure leadership in climate change response
(2026~2030)		 Continue advancing climate change leadership and implementation
(2031~2050)
Governance
  • Established an ESG Committee under the Board of Directors (currently the Sustainability Management Committee)
  • Established an ESG consultative body among affiliates
  • Established and operates the Green Management Team, a dedicated ESG organization, and the ESG Working Council
  • Established an environmental performance assessment system
  • Advanced climate change risk governance by developing Board-level climate response management indicators
  • Incorporated ESG items into management KPIs
  • Introduced environmental performance indicators into the KPIs of the CEO and all employees
  • Performed a leading role as a company at the forefront of climate change response
  • Promoted and supported low-carbon and eco-friendly supply chain management
Strategy
  • Establish and maintain an environmental performance assessment system and environmental management certifications to create low-carbon and eco-friendly worksites
  • Establish medium- to long-term greenhouse gas reduction targets and strategies for climate change response and carbon neutrality
  • Include direct emissions (Scopes 1& 2) and supply chain emissions (Scope 3) in the strategy
  • Expand low-carbon and eco-friendly technologies and construction methods
  • Establish SBTi-based reduction targets and strategies
  • Establish and operate a greenhouse gas inventory system for carbon emissions management
  • Develop climate change scenario analysis methodologies
  • Invest in low-carbon and eco-friendly new businesses and expand the business portfolio
  • Implement strategies to strengthen climate resilience and response capabilities based on climate scenario analysis
  • Achieve the status of an environmentally friendly and sustainable company through the implementation of climate response tasks and the monitoring and feedback of greenhouse gas reductions
  • Expand low-carbon and eco-friendly investments
Risk Management
  • Review climate-related transition and physical risks and opportunities in consideration of the characteristics of the construction industry
  • Review risks and opportunities based on climate scenario analysis and establish response plans for high-emissions businesses
  • Introduce a financial impact-based assessment system reflecting climate risks
  • Establish and stabilize a corporate ESG risk assessment system
  • Strengthen company-wide integrated ESG risk management and response systems
Targets and Metrics
  • Measure and disclose greenhouse gas emissions
    • Measure direct emissions (Scopes 1&2) and supply chain emissions (Scope 3)
  • Measure and disclose energy consumption in original units
  • Disclose performance related to environmental management, investments in eco-friendly and new businesses, and green expenditures
  • Expand the scope of Scope 3 measurement and monitor performance
  • Monitor performance related to energy, environmental management and investment, and green expenditures
  • Review progress toward medium- to long-term low-carbon and eco-friendly targets and revise strategies
  • Achieve eco-friendly investment, energy-saving, and greenhouse gas reduction targets
Climate-related Financial Impacts and Response Strategies

HL D&I Halla quantitatively analyzed the potential effects of major climate-related risks and opportunities on its business operations and financial performance. Based on the analysis results, the Company identified the scale of potential financial impacts and corresponding response strategies for each physical risk, transition risk, and opportunity factor and incorporates these findings into its medium- to long-term climate change response strategy.

Physical Risks

Type Potential Financial Impact Response Strategy Short-term Medium- to Long-term Financial Impact
Heatwaves, Typhoons, Floods, and Wildfires Increased asset damage and recovery costs, construction delays, and business interruptions - Advance the abnormal-weather monitoring system
- Establish emergency response plans for each worksite
- Conduct preliminary inspections of areas vulnerable to flooding and heavy rainfall Implement measures to minimize construction delays		 High High Approximately
KRW 1.7–2.2 billion

Transition Risks

Type Potential Financial Impact Response Strategy Short-term Medium-term Long-term Financial Impact
Stricter Low-carbon and Environmental Regulations, including Zero Energy Building Regulations Increased certification and additional construction costs - Strengthen ZEB design capabilities
Expand the application of eco-friendly materials
- Introduce energy-saving construction methods Proactively respond to green building certification requirements		 Medium High Medium-term
KRW 28.92 billion,
Long-term
KRW 34.53 billion
Rising Prices of Raw Materials and Resources Increased procurement costs for core materials, including steel - Expand the application of eco-friendly materials
- Identify low-carbon materials
- Strengthen supply chain monitoring Diversify procurement strategies		 Low High Up to KRW 806 million

Opportunities

Type Potential Financial Benefit Response Strategy Short-term Medium-term Long-term Financial Benefit
Conversion of Internal Combustion Engine Vehicles to Electric Vehicles Reduced fuel costs - Expand the conversion of business vehicles to electric vehicles
- Establish charging infrastructure		 Medium High KRW 5 million
Transition to Electrified and High-efficiency Equipment Reduced fuel and operating costs - Expand the introduction of electrified equipment
- Replace aging equipment, Operate a worksite electrification roadmap		 High High KRW 10.4 billion
Participation in Environmental Initiatives

Since 2025, HL D&I Halla has participated in the Carbon Disclosure Project (CDP), a global initiative, to establish a climate-related disclosure framework and continuously strengthen transparent communication regarding its response to climate change. In the first half of 2026, the Company received an A- Leadership rating in Water Security and a B Management rating in Climate Change, in recognition of the quality of its environmental disclosures and its response capabilities. These results demonstrate the Company’s robust environmental management capabilities. In particular, HL D&I Halla received the Carbon Management Special Award, granted to top-performing first-time respondents in the Climate Change category, gaining external recognition for its climate change management capabilities. Going forward, the Company will continue to advance detailed implementation at worksites, systematic greenhouse gas reduction, and water resource management activities.

Risk Management

Climate-related Risk and Opportunity Management Process

Risk and Opportunity Monitoring

HL D&I Halla identifies, assesses, prioritizes, and continuously monitors climate-related risks and opportunities in accordance with a consistent management process. The Company reports the results of climate risk monitoring and reassessment to the Sustainability Management Committee twice a year. When a high-risk issue that may have a material impact on the Company is identified, HL D&I Halla also operates an immediate reporting system under which the matter is reported to the CEO and relevant division head regardless of the regular reporting schedule.

Risk Reporting System

Internal Carbon Pricing

HL D&I Halla has introduced and operates an Internal Carbon Pricing system to quantitatively incorporate climate risks into its investment decision-making process. When evaluating major new investments, including the introduction of eco-friendly facilities and renewable energy projects, the Company calculates the carbon cost of each project by applying an shadow price to the greenhouse gas emissions expected to be generated. In determining its internal carbon price, HL D&I Halla applies the International Energy Agency’s Announced Pledges Scenario (APS) to reflect the potential strengthening of global carbon regulations and policies. Through this approach, the Company applies more conservative financial criteria to carbon-intensive projects and assesses climate risks in advance during the investment process. The calculated carbon cost is used as a key factor in investment decision-making to review the feasibility of projects with high carbon intensity. Based on this system, HL D&I Halla manages the carbon risks associated with its investment portfolio and strengthens its foundation for achieving carbon neutrality.

Targets and Metrics

Climate-related Targets

HL D&I Halla has established SBTi-based greenhouse gas reduction targets to systematically respond to climate-related risks and opportunities. The Company annually measures and manages Scope 1 and 2 greenhouse gas emissions and energy consumption intensity, and also monitors its holdings of eco-friendly vehicles to reduce Scope 1 emissions through a phased transition to environmentally friendly vehicles. Using 2022 as the base year, HL D&I Halla aims to reduce Scope 1 and 2 emissions by 38.59% and maintain its energy consumption intensity at or below 0.040 between 2026 and 2030, the interim target period. For its vehicle transition target, HL D&I Halla plans to replace half of its headquarters vehicles with eco-friendly vehicles by the interim target period and half of the vehicles at its headquarters and all project sites by 2050. By continuously advancing its carbon reduction and energy-efficiency initiatives, HL D&I Halla ultimately aims to achieve Net Zero by 2050.

Climate Change Management Indicators – Reduction Targets

Indicator Unit Target Type 2025
Performance		 Short-term Target
(Through 2025)		 Medium-term Target
(2026–2030)		 Long-term Target
(2031–2050)
Greenhouse Gas Emissions
(Scope 1 and 2)		 tCO₂eq Absolute Target 15,017 13,227 38.59% Reduction 90.00% Reduction
Energy Consumption Intensity TJ/KRW 100 million Intensity Target 0.017 0.040 0.040 0.035
Number of Eco-friendly Vehicles Vehicles - 11 2 Expand to 50% of vehicles at the head office Expand to 50% of vehicles at the all worksites

*Established in accordance with ISO 14064-1:2018, the Guidelines for Reporting and Certification of Emissions under the Greenhouse Gas Emissions Trading Scheme

Climate Change Management Indicators – Reduction Targets

Greenhouse Gas Reduction Activities

HL D&I Halla has established a greenhouse gas inventory system and systematically manages its greenhouse gas emissions by monitoring them monthly. The management scope extends beyond the Company’s own operations to the entire supply chain, enabling the Company to comprehensively identify emission sources. To reduce greenhouse gas emissions and energy consumption, HL D&I Halla has developed and implemented greenhouse gas reduction action plans for the head office and worksites. It is also promoting a phased transition of business and worksite vehicles and worksite construction equipment to eco-friendly vehicles. In addition, since 2021, the Company has installed solar power generation facilities on the rooftops of all newly completed apartment buildings to support energy self-sufficiency and achieve substantive carbon reductions.

Greenhouse Gas Reduction Measures

Own Operations(Scope 1+2) Value Chain(Scope 3)
  • Introduce renewable energy
  • Electrify construction equipment and improve operating efficiency
  • Establish a low-carbon operating system
  • Introduce eco-friendly and low-carbon technologies and processes
  • Expand the use of low-carbon construction materials, including cement and steel
  • Improve the efficiency of material transportation Introduce eco-friendly design, including passive design and high-efficiency equipment
  • Encourage reductions in carbon emissions after move-in through smart homes and renewable energy systems, including solar and geothermal energy
  • Manage subcontractors’ oil consumption and use

HL D&I Halla’s Greenhouse Gas and Energy Reduction Activities

Head Office Worksites Support for Energy Self-sufficiency
  • Energy-saving Campaign
  • Turn off office lights during lunchtime
  • Maintain appropriate indoor temperatures
    (Summer: 26°C, Winter: 20°C)
  • Switch off electronic devices when leaving the office
  • Introduce computer power-saving programs
  • Transition business vehicles to eco-friendly vehicles
  • Operation of the Greenhouse Gas Inventory System
  • Monitor and manage greenhouse gas emissions at each worksite
  • Prevent Heat Loss from Temporary Site Offices
  • Install rubber gaskets on entrance doors and other openings
  • Installation and Monitoring of Electricity Meters by Subcontractor
  • Replace temporary worksite lighting with LED lighting
  • Operate worksite CCTV systems using solar power
  • Introduce eco-friendly energy and support energy self-sufficiency
  • Install solar power generation facilities at all HL D&I Halla apartment buildings completed since 2021
Development of Eco-friendly Technologies

HL D&I Halla regards achieving carbon neutrality and optimizing energy efficiency as key management priorities and focuses its capabilities on developing eco-friendly construction methods and advanced technologies. By expanding the use of eco-friendly construction materials that consider resource circulation and applying energy-saving solutions throughout the construction process, the Company minimizes the environmental impact of its worksites and maximizes resource efficiency. In particular, HL D&I Halla is leading the creation of sustainable construction environments by proactively introducing low-carbon construction technologies and eco-friendly facilities at worksites. Building on these technological capabilities, the Company will continue to develop technologies that reduce environmental impacts during construction and lower the carbon emissions of buildings during the post-completion use phase.

Eco-friendly Technologies

Small-diameter Steel Pipe Pile Method with Attached Screws Enabling Simultaneous Boring and Installation

Development of an External Insulation Construction Method for Apartment Housing

Modular Heavy-load Noise Reduction and Productivity Improvement Technology

Resource and Energy Technologies

Wastewater Heat Recovery System

Flow-responsive Small Hydroelectric Power Generation System

Environmental Technologies

Real-time Flow-responsive Wastewater Treatment System Linking O.M.I.-type Separator Flotation and Variable-pitch Operation1)

Green Technologies

Micropile Method with Reinforced Bearing Capacity Using Rotatable Stop Files (Stop-file Method)2)

Concrete-filled Steel Composite Girder Method(P-Girder)

Non-incineration Anti-fouling Structure and Four-directional Flow Prevention Support

1) Expires on November 2, 2025

2) Expires on September 14, 2025

Outstanding Practice

Worksite Energy Reduction Activities

HL D&I Halla undertakes various initiatives to reduce energy consumption at construction sites. To improve energy efficiency during concrete curing, the Company manufactures and applies dedicated curing forms made of Thermo Plastic Professional (TPP), a material with excellent thermal insulation performance. This minimizes heat loss and reduces fuel consumption. The Company also installs solar power facilities at worksites and uses them as power sources for major equipment, including CCTV systems, thereby achieving substantive energy savings.

Thermoactive Material-based Dedicated Curing Formwork (Left), Solar-powered CCTV System (Right)

Outstanding Practice

Winter Greenhouse Gas Reduction Measures

Recognizing that greenhouse gas emissions reach their annual peak during the winter season from December to February, HL D&I Halla established and implemented winter greenhouse gas reduction measures. The reduction initiatives focused on two areas: strengthening electricity-use management and improving the efficiency of concrete curing methods. Each worksite was encouraged to implement the measures autonomously based on its operating conditions. In particular, the Company conducted periodic self-inspections in curing areas and temporary offices, where electricity and fuel consumption are concentrated. Going forward, HL D&I Halla will continue to reduce winter greenhouse gas emissions through systematic inspections and management of implementation performance.

Strengthening Electricity-use Management Improving the Efficiency of Concrete Curing Methods
  • Maintain Appropriate Temperatures: Maintain an indoor heating temperature of 20°C Use heating equipment appropriately
  • Review and Apply Low-carbon Curing Methods: Review measures to minimize fuel use, including the use of heating mats, according to worksite conditions
  • Improve Insulation Performance: Minimize the opening of entrance doors, Install rubber gaskets and undertake other heat-loss prevention activities
  • Cut Standby Power: Switch off unused areas when leaving work
  • Prevent Heat Loss: Minimize open areas when installing ceiling insulation to maximize thermal efficiency and prevent fuel loss
Application of Renewable Energy

Solar-powered Traffic Safety Facilities

Solar Power Generation Facilities

Solar Navigation Lights

Performance of Greenhouse Gas and Energy Reduction Activities

Category Details Unit 2023 2024 2025
Installed Solar Power Generation Capacity1) kW 1,506 504 344
Application of Eco-friendly Vehicles to the Environmental Conversion Plan2) Number of Eco-friendly Vehicles2) % 4 40 29
Vehicles 1 8 11
Electrification of Eco-friendly Equipment3) Aerial Work Platforms3) % - 100 88
Vehicles - 153 138

1) Based on apartment housing for which construction and certification have been completed

2) Based on business vehicles, pursuant to the Act on Promotion of Development and Distribution of Environment-friendly Motor Vehicles

3) Established an equipment electrification target in 2023 and began managing equipment electrification in 2024