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Sustainable Supply Chain

Supply Chain Management System

HL D&I Halla has advanced its Supply Chain Sustainability Management Policy and Code of Conduct for Subcontractors to prevent unfair trade practices and unfair competition and to foster a transparent industrial ecosystem. All of the Company’s sustainability management principles are disclosed transparently on its official website and serve as guidelines for ethical business conduct at every point of contact with subcontractors. To ensure effective supply chain management, the Company faithfully complies with the four key practices of the Korea Fair Trade Commission and incorporates them into its internal operational guidelines. At the subcontractor selection and bidding stages, ESG competency assessment results, including environmental and safety assessments, are given the highest priority. Strict risk filtering is applied by restricting companies that fail to meet the required standards from participating in bids. When concluding contracts, subcontractors are required to submit written pledges to comply with the Code of Conduct, as well as safety and health and ethics agreements. Through these measures, HL D&I Halla systematically supports subcontractors in voluntarily participating in ESG management and establishing safe working environments.

Supply Chain Sustainability Management Policy Code of Conduct for Subcontractors

Supply Chain Management Process

Step 1

Subcontractor Selection and Assessment

  • ESG assessments, including environmental and safety assessments, are conducted when selecting subcontractors.
  • Safety and health agreements and ethics agreements are submitted during bidding.
  • Fair Trade Agreement
Step 2

Subcontractor Management and Support

  • Expanded ESG safety assessments
  • Sustainability management consulting support
  • ESG training support
Step 3

Subcontractor Capacity Building

  • Customized consulting support for establishing ESG management systems
  • Financial support through the Shared Growth Investment Resources
  • Operation of shared growth programs
  • Subcontractor training twice a year

Subcontractor Selection and Status

Subcontractor Selection and Management

HL D&I Halla operates a regular registration system for competent subcontractors holding the required specialized construction licenses to respond flexibly to changes in business plans and the construction environment and to secure competitiveness in quality and cost. The Company’s subcontractor registration and management system goes beyond maintaining transactional relationships and aims to secure optimal bidding competitiveness based on a robust pool of subcontractors. In accordance with internal regulations, HL D&I Halla conducts annual assessments of all subcontractors and closely reviews their ESG capabilities, including environmental and safety performance, from the bidding stage. Strict standards are applied to companies that fall short of internal requirements, receive low scores in site assessments, or are responsible for misconduct or serious negligence. Such companies may be restricted from participating in bids or have their registration revoked, thereby preventing supply chain risks at the source. To ensure the substantive sustainability of its subcontractors, HL D&I Halla requires key subcontractors to submit safety and health and ethics agreements. The Company also provides various benefits, including awards and preferential treatment, to highly rated subcontractors, thereby fostering a virtuous cycle of shared growth.

Supply Chain Management Process

Subcontractor Status

Category Unit 2023 2024 2025
Total Number of Subcontractors Companies 1,058 1,048 1,101
Number of Tier 1 Key Subcontractors Companies 43 48 46
Number of Subcontractors Subject to ESG Activity Assessments1) Companies 171 235 555
Ratio of Subcontractors Subject to ESG Activity Assessments2) % 16.2 22.4 50.4

1) Calculated by combining subcontractor safety assessments and subcontractor ESG assessments

2) Number of subcontractors subject to ESG activity assessments / Total number of subcontractors

Key Performance

Invitation Event for Excellent Subcontractors

HL D&I Halla operates a morning meeting with the representatives of excellent subcontractors to strengthen relationships with its subcontractors and reflect the voices of construction sites in management. The event is attended by the CEO and other key executives, who engage directly with the representatives of high-performing subcontractors and share a vision for shared growth. The meeting goes beyond formal encouragement and provides an opportunity for candid dialogue between the CEO and subcontractors, enabling the Company to listen to operational challenges without barriers and jointly identify practical measures to strengthen cooperation. Following the 2025 event, HL D&I Halla held another meeting in the first half of 2026 for 15 subcontractors experiencing difficulties, including 10 from the outsourcing sector, three from the procurement sector, and two from the safety sector. The event provided opportunities for recognition, encouragement, and communication. Through this direct communication channel led by top management, HL D&I Halla will proactively address subcontractors’ concerns and establish a sustainable supply chain ecosystem based on mutual trust.

Subcontractor Sustainability Assessment

HL D&I Halla conducts annual ESG assessments of its subcontractors to ensure supply chain sustainability and proactively manage potential risks. In 2025, the Company advanced its assessment criteria based on the global Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) and assessed a total of 13 companies. The assessment consisted of ten key areas, including ESG management, biodiversity, human rights management, local communities, and other material topics, enabling a multifaceted evaluation of supply chain performance. Customized questions reflecting the characteristics of each industry and work type were assigned to ensure the fairness and relevance of the assessment. Based on the results of this systematic analysis, HL D&I Halla plans to provide customized training and consulting to subcontractors with identified risks and continue working with its partners to raise and standardize ESG capabilities throughout the supply chain.

1) Voluntary SME Sustainability Reporting Standard

Subcontractor ESG Self-Assessment Items

Area Assessment Element Detailed Assessment Items
Management ESG Management ESG information disclosure
Environment Environmental Management Environmental risks, environmental policies, implementation of environmental management, greenhouse gas reduction activities, water and wastewater management, waste management, and air pollutant management
Biodiversity Biodiversity policy
Eco-friendly Products and Services Performance in obtaining certifications for eco-friendly products and services
Social Human Rights and Labor Human rights and labor risks, human rights and labor standards and policies, management of working conditions, and improvement of the working environment
Talent Management Diversity, employee capacity building, and employee engagement
Safety and Health Safety and health risks, safety and health policies, disaster prevention activities, and occupational accidents
Subcontractor Management Code of conduct for subcontractors and integration of ESG into supply chain management
Local Communities Management of impacts on local communities
Governance Ethical Management Ethical risks, code of ethics, and ethics monitoring

Shared Growth Activities

Support for Subcontractors

Based on strong mutual trust with its subcontractors, HL D&I Halla undertakes comprehensive shared growth activities to foster a healthy and transparent industrial ecosystem. Recognizing that stronger ESG management capabilities among subcontractors are directly linked to HL D&I Halla’s core competitiveness, the Company focuses on establishing long-term partnerships that extend beyond short-term support. Based on fair business practices, HL D&I Halla operates a broad range of practical support programs to enhance the managerial stability of its subcontractors. In particular, the Company has established the Shared Growth Cooperation Fund to provide financial and funding support, thereby alleviating subcontractors’ financial burdens. It also provides customized sustainability management consulting linked to the results of subcontractor ESG assessments to improve the effectiveness of supply chain risk management. This represents HL D&I Halla’s differentiated shared growth model, designed to help subcontractors build the independent capacity to identify and improve ESG risks. As a result of these efforts, the Company received the Highest rating in the Korea Fair Trade Commission’s 2024 Agreement Implementation Assessment and was presented with a commendation from the Chairperson of the Korea Fair Trade Commission. It also received an Excellent rating in the Shared Growth Index assessment, earning external recognition for its contributions. HL D&I Halla will continue to enhance sustainability across its supply chain and lead the development of a healthy construction ecosystem in which the Company and its subcontractors grow together.

Performance of Shared Growth Support for Subcontractors

Sustainability Management Consulting

9 companies Subcontractors Supported
KRW 16 million Support Expenses

Shared Growth Support Activities for Subcontractors

Financial and Funding Support Support for Excellent Subcontractors Technical Support and Protection Management and Growth Support
  • Early payment of subcontracting fees
  • Price Indexation System
  • Additional assumption of stamp tax expenses
  • Selection and rewards for excellent subcontractors
  • Reduction of contract performance guarantees
  • Expanded opportunities to participate in bidding
  • Shortened payment terms
  • Joint R&D and support for green technology certification
  • Financial support for pilot production and purchase commitments
  • Direct contracting for specialized work with companies holding construction technology patents and new technologies
  • Labor cost support programs
  • Monitoring of the payment process and improvement of payment terms
  • ESG management training and consulting support
Financial and Funding Support

HL D&I Halla operates a variety of financial support programs to ease subcontractors’ funding burdens and strengthen their substantive financial stability. To facilitate smooth cash flow, the Company pays subcontracting fees earlier than the statutory payment deadline and takes the lead in providing early cash payments, including settling at least 50% of progress payments in cash within one month. In particular, HL D&I Halla fundamentally prevents financial losses incurred by subcontractors by compensating for interest expenses arising from early payment. The Company also actively operates the Price Indexation System, which reflects actual cost increases, to share risks caused by changes in the external business environment, including increases in raw material prices and labor costs, and thereby substantially reduce the cost burden on its partners. In addition, to reduce legal expenses borne by subcontractors when contracts are concluded, HL D&I Halla increased the Company’s share of stamp tax expenses by 20 percentage points from the existing level, with the Company now bearing 70% of the total. Based on the belief that the financial soundness of subcontractors is directly linked to the Company’s competitiveness, HL D&I Halla will continue to expand practical and meaningful financial support measures.

2025 Performance

355 subcontractors Cost-saving benefits provided through stamp tax support
Approximately KRW 29 million Cost-saving benefits provided through stamp tax support
Support for Excellent Subcontractors

HL D&I Halla selects excellent subcontractors each year through a fair assessment process and builds sound partnerships by providing substantive financial and business benefits. Selected companies receive benefits that reduce the burden of project execution, including a 50% reduction in contract performance guarantees and expanded opportunities to participate in bidding. In particular, to promote the importance of safety management, the Company provides progressive incentives to subcontractors with outstanding safety management performance, including shortening payment terms by 30 days. Through these measures, HL D&I Halla encourages the voluntary establishment of a worker protection culture among subcontractors.

2025 Performance

103 contracts Contracts receiving reductions in performance guarantees
KRW 500 million Rewards
Technical Support and Protection

HL D&I Halla undertakes comprehensive efforts to protect subcontractors’ valuable intellectual property and establish a mutually beneficial technology ecosystem. When entering into any subcontract, the Company requires the execution of a Confidentiality and Technology Protection Pledge, thereby preventing technology leakage at the source and fostering a fair business environment. In 2025, HL D&I Halla entered into subcontracting agreements with small and medium-sized subcontractors possessing outstanding patented technologies, supporting the development of stable sales channels so that their proprietary technical capabilities could translate into tangible sales growth. The Company also actively promotes the joint development of new technologies and patent registration with its subcontractors. Through these efforts, HL D&I Halla is establishing a virtuous cycle of shared growth that enhances its own construction competitiveness while increasing the value of subcontractors’ technological assets.

2025 Performance

12 contracts Negotiated contracts with subcontractors possessing new technologies and patents
KRW 16 million Technology contest and awards
KRW 154 million Support for joint R&D
Key Performance

Technology Contest: A Platform for Construction Innovation Developed with Subcontractors

HL D&I Halla successfully held its 6th Technology Contest to identify outstanding technologies developed by subcontractors and lead innovation in construction-site safety and quality. A total of 63 innovative technologies were submitted by 54 subcontractors. The assessment considered not only technological completeness and originality, but also ESG factors, including safety and social value, as key evaluation criteria. As a result, the two technologies jointly received Excellence Awards: C-TECH Solution’s multilingual safety training solution, “SAFETY,” which addresses communication challenges with foreign workers, and Access Nine’s component-specific lifeline system, which innovatively enhances fundamental site safety. HL D&I Halla will actively introduce the selected outstanding technologies at sites under its premium residential brand EFETE, thereby strengthening brand competitiveness and working with subcontractors to raise technological standards across the construction ecosystem.

Management and Growth Support

HL D&I Halla implements practical shared growth measures to support the managerial stability of subcontractors facing difficulties amid the downturn in the construction industry. The Company provides direct financial assistance totaling KRW 500 million annually through the Shared Growth Cooperation Fund to subcontractors that have made significant contributions to the Company but are facing temporary financial risks, thereby sharing the burden of overcoming business challenges. Beyond simple financial support, the Company actively assists subcontractors in opening new sales channels and strengthening their self-sustaining capabilities, including by forming consortiums with subcontractors to jointly participate in public-sector bidding. HL D&I Halla will continue to identify multifaceted shared growth programs to establish a resilient supply chain ecosystem capable of withstanding future crises.

2025 Performance

KRW 500 million Shared Growth Cooperation Fund

Shared Growth Training for Subcontractors

HL D&I Halla conducted the 2025 Shared Growth Training for Subcontractors for key subcontractors to establish a stable management foundation and strengthen their ESG capabilities. The program consisted of a highly practical curriculum designed to help subcontractors respond proactively to the rapidly changing construction industry environment. The training shared measures for preventing safety accidents, the construction industry’s highest-priority value, and provided differentiated programs such as education on gift and inheritance tax-saving strategies to support sustainable succession of management rights, as well as guidance on the Price Indexation System to establish a fair trade environment. Sessions designed to enhance understanding of ESG management also provided an opportunity to raise sustainability standards across the entire supply chain. HL D&I Halla will continue to eliminate blind spots in training and strengthen customized support that contributes to substantive growth, thereby establishing a healthy ecosystem for shared growth.

Shared Growth Training Topics for Subcontractors

Training Topic Instructor
Safety accident cases and preventive measures Safety Management Team
Major defect cases and preventive measures CS Team
Understanding ESG management Green Management Team
Meetings and consultations by work category Outsourcing and Procurement Team
Gift and inheritance consulting Megainfo
Guidance on the Price Indexation System Shared Growth Team

Shared Growth Training for Subcontractors in the First Half of 2025

Participants: 126 key subcontractors in the construction, civil engineering, electrical, and facility sectors

Survey participants: 116 subcontractors
Overall training satisfaction: 90% or higher
(combined “Satisfied” and “Very Satisfied” responses)

Training to Enhance Awareness among Relevant Departments

HL D&I Halla conducted training on the Price Indexation System for relevant departments to substantially share the burden on subcontractors arising from fluctuations in the prices of major raw materials and to establish a transparent business environment. The training was planned based on the Standard Price Indexation Agreement Guidebook distributed by the Korea Fair Trade Commission. In addition to sharing legal compliance requirements, the program strengthened practical response capabilities by reviewing various case studies tailored to the characteristics of relevant departments responsible for procurement, contracts, and subcontractor management. To enhance the effectiveness of the system, HL D&I Halla also distributed guidance materials on the Price Indexation System when concluding all subcontracts and provided related instructions. The Company will continue to promptly communicate the latest regulatory developments, strengthen employees’ compliance awareness, and foster a healthy supply chain ecosystem in which subcontractors are guaranteed fair compensation.

Advanced Practical Training Topics for the Price Indexation System

Training Topic Detailed Training Content
Systematic Understanding of the System Sharing practical guidance on the scope of application of the Price Indexation System and the criteria for determining major raw materials, based on the Fair Transactions in Subcontracting Act and the Mutually Beneficial Cooperation Act
Case-Based Practical Application Improving employees’ calculation and application capabilities through detailed simulations, including formulas for adjusting subcontracting fees in response to fluctuations in exchange rates and market prices of major materials and methods of reflecting indexation ratios when progress payments are made
Proactive Risk Management Raising awareness of regulatory compliance by sharing mandatory provisions to be included when concluding indexed contracts and sanctions applicable to individual violations, including administrative fines and penalty points for unfair practices

Training on the Price Indexation System for Relevant Departments

Communication Activities with Subcontractors

Diversification of Communication Channels

HL D&I Halla operates various grievance-handling channels to promptly receive and resolve subcontractors’ concerns. Through the Cyber Reporting Center and the grievance center within the electronic procurement system, the Company receives reports of unethical conduct and other concerns at all times and supports prompt investigations and fair dispute-resolution procedures for submitted matters. Furthermore, HL D&I Halla is expanding its communication channels beyond online platforms to strengthen site-centered communication. In 2025, the Company provided regular training to a total of 128 subcontractors, conducted in-depth discussions and surveys with responsible personnel by work category, and frequently held subcontractor invitation events organized not only by the supervising department but also by individual business divisions and project managers to directly listen to operational concerns. As a result of these efforts, HL D&I Halla demonstrated top-tier shared growth capabilities in the 2025 SME Perception Survey announced by the Shared Growth Committee, ranking sixth in the construction industry for the reasonable adjustment of subcontracting prices and fifth for the absence of unfair demands or pressure. HL D&I Halla will continue to strengthen preventive monitoring to eliminate the root causes of grievances and maintain a transparent partnership, building on its record of zero disputes in 2025.

Subcontractor Grievance-Handling Process

Grievance Handling System

Subcontractor Grievance-Handling Channels

HL D&I Halla Subcontractor Portal

HL Group Integrity Management Website