2011 Samsung Engineering SR Eng1

Creative engineering Solution Provider

2011SamSung engineering SuStainability RepoRt

CONTENTS CEO MessageCorporate GovernanceApproach to Sustainability

Business for sustainaBility Growth Strategy Core CompetenceProject Highlight Shaybah NGL Project S-Oil Onsan Refinery Expansion Project Suji Respia

Commitment to sustainaBilityEthics & ComplianceEnvironment, Health & SafetyEmployees & WorkplaceSupply ChainLocal Community

PerformanCe summary Economic, Environmental and Social PerformanceGRI Index

aPPenDiX

02

10

22

60

71About this RepoRt

This report is Samsung Engineering’s first sustainability report. It was written to present Samsung Engineering’s commitment to enhancing economic, environmental and social value and achievements comprehensively in accordance with the Global Reporting Initiative (GRI) G3.1 guidelines.

Reporting period | This report covers Samsung Engineering’s performance and activities from January through December 2011, and if necessary to provide time-series trends, the data of the two most recent fiscal years (from January 2010 through December 2011) were utilized. As for some issues of significance, relevant data reported until April 2012 is included in this report.

Reporting boundary and scope | We aim to report all aspects of Samsung Engineering’s domestic and overseas business areas (including project sites) in principle, but in cases where data collection was not possible, the specific scope of the data was stated. We set a principle of not including subsidiaries and suppliers within our reporting boundaries, while some of their activities are reported with additional statements. The reporting boundaries and scope were based on recommendations of the GRI guidelines.

To ensure the objectivity and transparency of the content, we commissioned a third party without vested interests in the company to verify the accounts herein (Independent Assurance Statement p.76 - p.77). Samsung Engineering will continue to publish the Sustainability Report to share our sustainability management activities and performance as well as future goals with our stakeholders.

We are a force with no boundaries, rising above client expectations while creating a visionary future

Creative Engineering Solution Provider

[Vision 2020] USD 40 billion in revenue & USD 50 billion in order

Continuous ChallengeGlobal CitizenshipCreative Convergence

Creating and pursuing future value for clients through engineering excellence

sLoGAN

VisioN

CoRe VALue

MissioN

Business areas Key fiGures• hydrocarbon

• Non-hydrocarbon

Refinery

power

Gas

Metallurgy

petrochemicals

industrial Facility

hydrocarbon upstream

Water treatment

New Orders (KRW billion)

10,117 9,03211,789

2009 2010 2011

4,035 5,312

9,298

2009 2010 2011

Revenue (KRW billion) Order Backlogs (KRW billion)

13,95517,151

20,385

2009 2010 2011

Hydrocarbon Non-Hydrocarbon

· CDU/VDU · Heavy Oil Upgrading· Aromatics, HDS

· Gas Processing· LNG (Liquefaction, Terminal)

· Ethylene· EO/EG· Fine Chemicals

· Offshore Platforms· FPSO (FLNG)

· PDH· Polymers· Fertilizers

· Pipeline· GOSP

· Thermal (Coal-IGCC, Oil/Gas Fired)

· Steel Mills· Non-Ferrous Plants (Aluminum, Copper, Nickel)

· IT Facilities · Industrial Manufacturing Facilities· Pharmaceutical

· Sewage Treatment· Wastewater Treatment

· Desalination· Ultra-Pure Reuse· O&M

01

euroPe

03

asia

04

ameriCas

02

miDDle east/nortH afriCa

head office (Seoul, Korea)

Samsung Engineering has achieved outstanding performance records globally for petrochemical, refinery, gas and other hydrocarbon plant projects. Moreover, we are seeing tangible results in providing services for industrial and environmental projects as well as power plant, metallurgy and other new business opportunities. We are involved in several projects of various scales around the globe spanning from the Middle East, Asia, and Americas to Europe.

Business area & MAjOR TRACK RECORD

asia

iNDiA• IOC_FCC/DHDT Plant, LAB Plant, EG Plant• IPCL_C2/C3 Plant, LLDPE/HDPE Plant• IISCO_Steel Plant• ONGC_OPal DFCU/AU Plant MALAYsiA• PCSB_Sabah Oil & Gas Termical Project

thAiLAND• TTM_GSP-1 Plant• PTT_GSP-5 Plant, GSP-6 Plant, ESP Plant• TOC_EO/EG Plant• MOC_Cracker Plant

VietNAM• INTEL_A9 T9 ATM Plant• PMPC_PVC Plant• PETROVIETNAM_Fertilizer Plant and CO2 Recovery Plant

ChiNA• HANKOOK TIRE_PCR/TBR Plant• SAMSUNG ELECTRONICS_LCD Module Line• SAMSUNG SDI_Tianjin LED Plant, Tianjin Battery Cell Line• AIR LIQUIDE_HYCO Plant• SAMSUNG ELECTRON-MECHANICS_ MLCC Line

KoReA• SAMSUNG MOBILE DISPLAY_SMD A2 Project• KR_Seoul Maintenance Workshop Phase II Project• YONGIN CITY_Sewage Treatment Plants BTO Project• SEOUL CITY_2002 Korea-Japan World Cup Main Stadium

ameriCas

MeXiCo• PEMEX_Salamanca Refinery Plant, Tula Refinery Plant,

Minatitlan Refinery Plant• POSCO_CGL Utility Plant• CFE_Manzanillo LNG Terminal Project, Norte II Power Plant tRiNiDAD & tobAGo• PETROTRIN_CCR Refinery Plant, Ultra Low Sulphur Diesel Unit,

T&T ULSD

usA• SASL_SAS CU Ultrapure Water System• Dow-Mitsui Chlor-Alkali LLC_Dow Chlorine Manufacturing

Facility (Falcon)

euroPe

huNGARY• HANKOOK TIRE_PCR/TBR Plant• SAMSUNG SDI_PDP No. 4 Module Plant

sLoVAKiA• SAMSUNG ELECTRONICS_LCD Module Line• HANSOL_LCD Parts Plant

miDDle east / nortH afriCa

uAe• BOROUGE_2 OCU Plant• HCSEZ_ICAD IWT Plant• FERTIL_2 AMMONIA/Urea Project• TAKREER_RRE Package #3 Offsites & Utilites Project• ADNOC_Shah Gas Development Package #4 U & O Project• ADNOC & Borealis J/V Borouge_3 PO (Polyolefin) Plant Borouge_3 LDPE Plant

bAhRAiN• BAPCO_Lube Base Oil Plant• SULB_Steel Mill Project• MOW_Muharraq Sewage Treatment Plant

ALGeRiA• SONATRACH_Skikda Refinery Plant

sAuDi ARAbiA• SABIC_Gas ASU Plant• SAMCO_Acrylic Acid Plant• SPC_PDH/PP Plant• APPC_PDH/PP Plant• TASNEE_Ethylene Plant• SHARK_EG Plant• IBN ZAHR_PP Plant, OCT Plant• MA'ADEN_ Ammonia Plant, Aluminum Complex• KAYAN_PP Plant, Amines Plant• SAUDI ARAMCO_DHT Plant• SATORP_Jubail Export Refinery Package #3 and #4 Plant• SAUDI ARAMCO_Shaybah NGL (Natural Gas Liquid) Project

Wasit Cogen. Project• SAUDI ARAMCO_CO2 Capture & Injection Plant• SOCC_SOCC. Aluminum Alkyls Project

Founded

Countries

Workforce

197030

7,620(As of the end of 2011)

“ Our sustainability is founded on the basis of transparency, respect for the people and environment and the growth of our partners. For us, it is our way of creating value for stakeholders.”

Dear Valued stakeholders:

Samsung Engineering is a total engineering solution provider that generates

future value for clients through plant construction. Our service encompasses

feasibility studies, project financing, engineering, procurement, construction,

commissioning, and operation & maintenance, and we are making rapid

inroads into the global market. We boast outstanding capabilities to manage

the risks of cost, quality, and project scheduling as well as an extensive track

record and superb workforce. We have maintained an average annual growth of

more than 30%, breaking our records for new orders and sales every year since

2005. Currently we are engaged in projects in more than 30 countries, and our

workforce hails from 34 different nations.

Amidst a changing global market environment, Samsung Engineering faces

numerous new risks as well as opportunities. While we must address the work

safety issues, we must also respond to growing public interest in environmental

and ecological matters. At the same time, overseas projects represent an ever-

greater share of our business portfolio, requiring us to bolster our ties with local

communities around the world, and the scope of our responsibilities toward our

business partners continues to grow. Samsung Engineering will preemptively

address issues that arise in the global business environment.

innovating and Growing as a Global top-tier

In 2011, Samsung Engineering achieved a record KRW 11.8 trillion in new orders

and KRW 9.3 trillion in sales. We broke into the Iraqi and Qatari markets and are

expanding our business into Central Asia, starting with Uzbekistan. We won the

package deal, four units in one complex, for the Shaybah Natural Gas Liquid

Project from Saudi Aramco, the Saudi Arabian state-run oil company. Meanwhile,

we broke into the field of hydrocarbon upstream plant in 2010 by winning

our first order for the GOSP (Gas Oil Separation Plant), and we bolstered our

involvement in this area by winning a series of additional orders for these plants.

For non-hydrocarbon plants, Samsung Engineering has received a steady stream

of orders for facilities for power generation, metal processing, industrial uses

and water treatment in Latin America, namely Mexico and Trinidad & Tobago as

well as in the Middle East. Our perennial strength has been in petrochemicals,

and we are now leveraging that strength to deepen our involvement in LNG

processing, offshore platforms and other upstream areas, staying in step with

the increasing demand for energy over the long term. We will also lay the

groundwork for sustainable growth by diversifying into a multi-core business

portfolio that encompasses power, metallurgy, and industrial plants. Furthermore,

we will strengthen our position as a global engineering company which grows

with clients by responding to changes preemptively through systematic risk

management, stronger human resources development and upgraded business

operation.

Growing with transparency and Responsibility

Samsung Engineering will pay closer attention to stakeholders and fulfill all

corporate social responsibilities. We are operating an ongoing compliance which

is the integrated and regular system for legal risk management. This program

includes a compliance support system and training our employees on ethics and

legal compliance. In the process, we will cultivate an organizational culture in

which every employee voluntarily complies with all related rules and regulations.

Also, we will constantly monitor major legal risks and implement a fair trade system

based on a corporate culture that stresses clean business practices at all times.

Generating shared Value for human and the environment

The leading sources of competitiveness in the engineering industry are individual

skills and the organizational strength to bring those skills together most

effectively. Samsung Engineering practices equitable personnel management

for organizational transparency. We are also encouraging self-motivated learning

and fostering specialization so that our employees can focus on shared goals

while exhibiting their individual skills freely on the global stage. The diversity

of our employees' backgrounds will enable us to establish an organizational

culture that serves as the wellspring for creative and innovative ideas. In addition,

we remain committed to helping address global environmental issues such

as climate change mitigation, bio-diversity protection, and water scarcity

prevention. We are also concerned about raising awareness of future generation

on the environment. Our competencies regarding environmental protection

continue to improve. Samsung Engineering is at the forefront of the market for

carbon dioxide recovery, desulfurization, and water treatment facilities. We are

leveraging our environment-friendly engineering capabilities to reduce energy

consumption, and we practice environment-friendly procurement and supply.

The environmental management at our construction sites is thorough as well.

Growing in tandem with society

As companies grow, so does their effect on society and the environment, which

means ever-greater corporate social responsibilities. Importantly, Samsung

Engineering, a global player, is constantly searching for ways to grow together

with stakeholders, and to improve the value being provided to business partners,

local communities, governments and others. We have created jobs for local

communities and helped local companies to grow. We continue to strengthen

our global sourcing network by strictly engaging in fair trading practices and

win-win partnerships. In 2011, we established SNTV (Samsung Naffora Techno

Valley) in Saudi Arabia as a multi-functional office that contributes to the regional

economy and society. Our business is engineering, and we are expanding CSR

programs that are true to our knowledge-based profession. These include

establishing libraries to help people learn in the countries where we do business,

and offering classes on the environment to children.

Samsung Engineering is committed to improving the transparency of our

operations, and we are ready to listen to you, our stakeholders. I ask for your

continued support and interest.

Sincerely,

President & CEO Ki-seok park

Ceo messaGe

02 03SAMSUNG ENGINEERINGSUSTAINABILITY REPORTCEO MESSAGE

We will protect the rights of shareholders and other stakeholders by building advanced corporate governance and engaging in responsible management.

independence of the BoD and Protection of stakeholder rights

The by-laws of the BOD guarantee outside directors of Samsung Engineering the right to make decisions independently from

the influence of the company, the top management and shareholders. The by-laws are in compliance with legal provisions

regarding the appointment and disqualification of outside directors as described in the Commercial Act of Korea Article 382 (3)

and Article 542-8 (2).

Audit Committee | The Audit Committee is responsible for appointing accounting, performance and external auditors. The

members of the Audit Committee are selected at the general shareholders’ meeting. The list of candidates for the Committee

members is announced publically before the day of a meeting so that shareholders can make an informed decision on

appointing Committee members. The Audit Committee is run by three outside directors to help to ensure the transparency of

Samsung Engineering’s management practices.

Management Committee | The Management Committee deliberates and decides on matters, and reports to the BOD as

authorized by the BOD resolutions, by-laws or operation rules in order to facilitate quick and smooth decision-making on

management issues.

outside Director Recommendation Committee | The role of the Outside Director Recommendation Committee is to help

to ensure that outside directors are able to make decisions without being influenced by the top management or dominant

shareholders. To this end, the Committee, consisting of two inside and three outside directors, nominates outside director

candidates and they are approved and appointed by the resolution of the general shareholders’ meeting. Candidates for

outside directors are selected among those with extensive knowledge and experience in business administration and relevant

technologies, ensuring that the outside directors have expertise in making effective and reasonable decisions regarding all

aspects of the sustainability management. Those who are major shareholders of or in a special relationship with the company,

however, are restricted from being appointed outside directors in order to prevent conflicts of interests in the BOD.

the Composition and roles of the BoD

boD Composition | The Board of Directors (BOD) of Samsung Engineering aims to increase the efficiency and transparency of

management practices, and strengthen the financial soundness of the company. The Samsung Engineering President & CEO

serves concurrently as the chairperson of the board according to the BOD rules. The BOD consists of three inside and four outside

directors. Inside director candidates are recommended by the BOD or shareholders, while outside directors are nominated by the

Outside Director Recommendation Committee.

boD Meetings | The board of directors held eight directors’ meetings in 2011, including those regularly scheduled, with a

100 percent average attendance rate for both outside and inside directors. We assist outside directors in the performance of

their duties in many aspects by ensuring that they have timely access to management information necessary for accurate

understanding of the company’s status. We also provide them with a reasonable level of compensation for expenses incurred

while carrying out their duties.

performance evaluation and Compensation | Compensations for BOD directors and company executives are differentiated

according to the results of regular business target reviews and performance evaluations. The limit of the compensation is annually

approved by resolution at the general shareholders’ meeting. In 2011, KRW 5.95 billion was paid as the remuneration for the BOD,

and the 2012 compensation limit was set at KRW 11 billion.

04 05SAMSUNG ENGINEERINGSUSTAINABILITY REPORT

CorPorate GoVernanCe

• Samsung Engineering BOD members*

Percentage of outside directors in the BOD

No. of BOD meetings held in 2011

Average BOD meeting attendance rate

No. of external positionsassumed by outside directors100%

57%

No more than two

8

2011 Governance Key Figures

Vice President of External Relations, Hannam University

Ji-Jong Chang Outside Director

Professor of Business Administration, Kwangwoon University

sang-hoon Kim Outside Director

Head of Business Support Division

byoung-Mook Kim Inside Director

Professor of Systems Management Engineering, Sungkyunkwan University

Wan-seon shin Outside Director

Head of Outsourcing Management Unit

byung-bok sohn Inside Director

Tax Attorney, Law Firm Kim & Chang

Cheol-Min Kim Outside Director

Ki-seok park BOD Chairman

President & CEO

* The status of the BOD is as of May 2012.

• The Composition and Roles of Committees under the BOD

Function Composition* Directors*

Management Committee

Outside Director Recommendation

Committee

AuditCommittee

Deliberate upon and resolve general matters on

the management of the company

3 outside directors

3 inside directors 4 outside directors

Deliberate and decide on major management issues 3 inside directors

Recommend outside director candidates

2 inside directors 3 outside directors

Cheol-Min Kim, Wan-Seon Shin, Sang-Hoon Kim

Ki-Seok Park, Byung-Bok Sohn, Byoung-Mook Kim

Ki-Seok Park, Byung-Bok Sohn, Cheol-Min Kim, Wan-Seon Shin, Sang-Hoon Kim

Appoint accounting, performance, and external

auditors

boD

* The composition and members of the BOD are as of May 2012.

CORPORATEGOVERNANCE

We are aware of the importance of corporate social responsibility. Samsung Engineering will continue to create shared value with all stakeholders, through sustainability management.


the structure for sustainability management

Approaches to sustainability Management | Our approaches to sustainability management cover the three directions of

responsible growth, respect for people and the environment, and reliable partnership under the CSR slogan of “Leading the

Way, Building the Future.” The directions are further divided into six priority areas (Corporate Governance, Ethics & Compliance,

Environment, Health & Safety, Employees & Workplace, Supply Chain, and Local Community). We will continue to take a

systematic approach to sustainability management. We will pursue transparent and responsible growth, respect human and

the environment, and accompany our partners.

CsR office | Samsung Engineering established the CSR Office in 2011 to take diverse stakeholder opinions into account

when making business management decisions. The CSR Office identifies sustainability management issues, performs relevant

enterprise-level activities in cooperation with business and supporting units, and reports the results to top management. Other

functions of the office include raising employee awareness about sustainability management, and building communication

channels and sharing information with external stakeholders. The establishment of the CSR Office is the first step for making

organizational governance activities more systematic and sustainability management more practical. This represents our efforts

to recognize our genuine social responsibilities and make them happen.

aPProaCH to sustainaBility

• Organizations for sustainability Management

Ceo

CSR Office (under the Financial

Support Division)

• Business Unit: Energy·Hydrocarbon·

Power Business Unit• Risk Management: Project Support Dept., Quality Management Dept.

• Corporate Governance: Business Management Dept., Human Resource Management Dept., Accounting & Tax Dept.

• Ethics & Compliance: Compliance Dept., Legal Dept., Audit Dept.

• Environment, Health & Safety: HSE Dept.

• Employees & Workplace: Human Resource Management Dept.

• Supply Chain: Outsourcing Planning Dept., Construction Planning Dept., Energy·Hydrocarbon·I&I Engineering Support Dept.

• Local Community: Global Operation Support Dept., Human Resource Management Dept., PR/IR Dept.

stakeholder engagement

Classification of stakeholders and priorities | We divide stakeholders into two categories: business and non-business

stakeholders. The clients, employees and suppliers fall into the category of business stakeholders, while non-business stakeholders

include shareholders, investors, local communities near project sites, future generations, non-governmental organizations and

government agencies.

materiality test

Approaches to Materiality test | Samsung Engineering defines materiality as “key expectations from the long-term perspective

held by stakeholders who are directly or indirectly related to Samsung Engineering’s business.” We identified potential issues and

made the issue pool by interviewing employees and considering ISO 26000, OECD Guidelines for Multinational Enterprises and

other global standards as well as issues faced by other entities in the same industry. Then, we surveyed stakeholders to determine

the materiality of such issues. We identified major issues through the engagement of stakeholders and evaluated their materiality

in terms of (1) their business impacts and internal strategic priorities, and (2) the social pressures and the influences of relevant

stakeholders. The AA1000 Stakeholder Engagement Standard was applied to the test method.

• Structures for Sustainability Management

CONCERNED AREAS Supply Chain

Local Community

Ethics & Compliance

Corporate Governance

Environment, Health & Safety

Employees & Workplace

RESPONSIBLE GROWTHRESPECT FOR PEOPLE AND

THE ENVIRONMENT RELIABLE

PARTNERSHIP

“Leading the Way, Building the Future”

Creative Engineering Solution ProviderVISION

DIRECTIONS

CSR SLOGAN

• Materiality Test Process

step 03

Definitions ofSamsung Engineering’s

key issues

step 01 step 02

Global standards

Domestic and overseas business

trends in the industry

Internal interviews

• Identify the pool of issues concerning sustainability management

• The surveyed: employees, clients, suppliers and other stakeholders

• Content: collect opinions from each stakeholder group about relevant issues in terms of the current status of Samsung Engineering and future directions

• Analyze the business impacts and internal strategic priorities

• Analyze the social pressures and the influences of relevant stakeholders

• Determine key issues

▶ Developing the issue pool ▶ surveying stakeholders ▶ selecting key issues

2011 Stakeholder Engagement

Survey

Employees

Clients

Suppliers

Other stakeholders*

APPROACH TO SUSTAINABILITY

• Major Stakeholders of Samsung Engineering and Communication Channels

• IRC (Industrial Relations Council)• Employees satisfaction survey• Intranet• Company newsletter, Campaigns• Regular meetings

• Operation of associations with design companies, vendors and subcontractors in Korea

• Operation of SEGA system for both domestic and overseas vendors

• Operation of GPN system for overseas subcontractors

• FSI (Family Satisfaction Index) surveys• Meetings, training and support

• General shareholders’ meeting• IR activities• Public announcements • Business updates report

busiNess stAKehoLDeR

No

N-busiNess stAKehoLDeR

EmployeesClients

Shareholders

Suppliers

Local Community

• The client portal • Sales and marketing channels of each business unit

• PSI (Plant Satisfaction Index) surveys • HSE satisfaction surveys

• Environmental education program, 'Kumpooh' and 'Eco-generation'

• Environmental campaigns • Development of environmental technology

• Official Website• Press kits• Operation of global offices• Training regional specialists and market investigation

• Social contributions to local communities

Envi

ronm

ent

* Other stakeholders include journalists, analysts, investors, the people from credit-rating agencies, government and NGOs who are familiar with Samsung Engineering as well as its shareholders.


stakeholder engagement survey | We organized the 2011 Samsung Stakeholder Engagement Survey starting from January to

February 2012 in order to identify the expectations of stakeholders. The questionnaires of the survey were developed in 21 areas

to include issues defined by global standards and faced by other companies in the industry. The survey was conducted on the

four groups of stakeholders (employees, clients, suppliers and other stakeholders). We consulted each stakeholder group to obtain

their opinions about the current status of Samsung Engineering and future development directions with regard to sustainability

management.

Key issues Defined by samsung engineering | We identified the level of stakeholder interests in key issues and evaluated their

influences to our businesses through the stakeholder survey. The findings served as the basis for creating the materiality matrix.

The materiality test identified upholding ethical practices and securing compliance, health & safety, talent development, and

contributions to local economies as the issues of significance.

[Health & Safety]Do you think that the company is providing employees and project participants with proper field safety and health programs?

Yes

No

I don’t know

64.7%11.9%

23.4%

[Human Resource Management]What do you think are the priorities to strengthen the competencies of human resources?

Strengthened education and training opportunities Practical performance evaluation Improved employee welfareHigher salaries and incentives Employment of experienced employees

27.2%

40.3%

5.4%

16.9%

10.2%

[Local Community] In which areas do you think the company should make more efforts for local communities with our business footprint?

Social contributions through local employment and purchases Investment in infrastructure and education opportunities in local communities Expanded welfare and benefits for local employeesCloser relationship with local stakeholders Project-based social contributions

[Win-Win Cooperation] What aspects of support and cooperation do you think are needed to build the long-term structure for mutually beneficial relationships with suppliers?

Cooperative system for engaging in sales activities and winning new orders Financial incentivesSystem for closer communication Support for HR development and trainingTechnological cooperation

38.5%

4.1%

23.0%

18.9%

15.5%

39.7%

8.4%

22.1%

17.3%

12.6%

• Key Findings of the Stakeholder Engagement Survey

[The Level of Sustainability Management] How would you describe Samsung Engineering’s current sustainability management level?

Very low

Relatively low

Moderate

Relatively high

Very high 12.0%

44.0%

36.0%

8.0%

0.0%

[Climate Change Response]How do you think the company should respond to climate change issues that have emerged as global concerns?

The company should refrain from taking actions as much as possible

It is sufficient for the company to engage in defensive actions

The company needs to engage in voluntary actions

The company should show leadership preemptively

The company should consider potential business opportunities 38.5%

42.8%

11.2%

7.4%

0.1%

[Environmental issues] What are the areas that you think the company should concentrate more resources on?

Execute projects focused on eco-friendliness Raise the environmental efficiency of design and logistics Strengthen the management of construction sitesDevelop eco-friendlier technologies Show leadership in dealing with macro-level environmental issues

37.1%

28.7%

8.0%9.4%

16.8%

• 2011 Stakeholder Survey

Jan. 9 ~ 23(for about 2 weeks)

Feb. 17~Mar. 2 (for about 2 weeks)

Feb. 6 ~ 20 (for about 2 weeks)

Jan. 11 ~ 25 (for about 2 weeks)

• Domestic: about 6,000 people

• Overseas: about 1,000 people

• Participation rates: 29.7%

• 57 clients (domestic and overseas)


• Domestic: 430 people

• Overseas: 308 people


• 282 people (domestic and overseas)


• Evaluation of the current status and determination of future directions: Awareness, the progress of sustainability management, strategic relevance, and priorities in internal resource allocation

• Common expectations: Ethics & compliance, environment, response to climate change, social contributions, and relationship with local communities

• Health & Safety

• HR development

• Working conditions (discrimination)

• Project execution capabilities

• Project environment management

• Health & Safety

• Fair operations (contract practices)

• Health & Safety

• Win-win cooperation

• Corporate governance

• Future growth potential

Employees Clients Suppliers Non-business stakeholders (external)

Survey period

Surveyed

Common items

Specific items

APPROACH TO SUSTAINABILITY

• The Results of the 2011 Materiality Test

Business impacts and internal strategic priorities

Social pressures and the influences of relevant stakeholders

▶ potential issues

▶ Key issues

• Education for future generations

• Technology transfer

• Inspection of human rights conditions

• Health and safety of local communities

• Upholding ethical practices and securing compliance (p.25)

• Occupational health and safety (p.35)

• HR development (p.39)

• Working conditions and employee welfare (p.42)

• Corruption prevention (p.26)

• Strengthening the global network of suppliers (p.47)

• Laying the groundwork (p.12)

• Project quality and risk management (p.14)

• Contributions to local economies (p.52) – local employment and purchases

• Raising environmental efficiency (p.30)

• Eco-friendlier projects (p.21)

• Responses to macro-environmental issues (p.33) - Climate change, biodiversity, water shortage

• Project-based social contributions (p.56)• Win-win cooperation with suppliers (p.49)

Business forsustainaBility We aim to be an enterprise that grows sustainably through management strategies from the long-term perspective and responsible project execution in the changing market environment.

14Core Competence

• Project management capabilities • Systematic risk management • Constant quality control

16Project Highlight

• Shaybah NGL Project• S-Oil Onsan Refinery Expansion Project

• Suji Respia

12Growth strategy

• Diversify business portfolio • Diversify markets• Upgrade project execution capabilities

• Strengthen human resources

building the Foundation for sustainable Growth by Diversifying business portfolio

To break down the revenue structure, hydrocarbon-

related projects (refinery,gas, and petrochemical

plants) account for 64% of Samsung Engineering’s total

revenues, while power plants, metallurgy, industrial

facilities, water treatment and other non-hydrocarbon-

related areas hold the remaining 36%. The company is

focusing on the diversification of the business portfolio

by advancing into new project areas to have flexible

responsiveness to the recent move toward ever-larger

project size and complexity. We are expanding the

offshore business from the long-term perspective, as

the energy market structure is expected to change

and demand for energy is projected to remain robust.

Meanwhile, we are also providing clients with genuine

added value through exceptional engineering services

that meet the needs and requirements of clients in

the eight project areas of refinery, gas, petrochemicals,

power, metallurgy, water treatment, and industrial facility

plants.

hydrocarbon – Advancing into the offshore plant

segment by Leveraging the World’s top-class

onshore expertise

Refinery∙Gas∙petrochemicals | Samsung Engineering

showed improved capabilities and limitless potential in

the chemical engineering area, to include hydrocarbon

plants, oil refineries and gas processing plants, in

2011. Our unrivaled stature in the hydrocarbon area

was reconfirmed when we won the Shaybah NGL

project from Saudi Aramco, the Saudi Arabia state-

run oil company. In 2012, we are poised to strengthen

our market dominance in these traditional mainstay

segments and to diversify our geographic market

regions by advancing into Iraq and Kuwait as well as

Russia and Indonesia, which play a significant role in the

global energy market.

hydrocarbon upstream | We have continued to build

a solid track record in the upstream hydrocarbon area,

which we entered in 2010. We are further improving our

expertise in Gas Oil Separation Plant (GOSP), winning

orders for the Shaybah NGL project in Saudi Arabia, the

Banyu project in Indonesia, and West Qurna project in Iraq.

We will focus on securing project execution capabilities and human resources that can be compared to those of other global players as well as diversifying business and client portfolios.

Growth strategy

12 13BUSINESS FOR SUSTAINABILITY

SAMSUNG ENGINEERINGSUSTAINABILITY REPORT

FeasibilityStudy

Engineering

Procurement

Construction

Commissioning

Operation & Maintenance

We will build an integrated project portfolio in the hydrocarbon

plant industry by accumulating technological competence in

hydrocarbon upstream projects such as LNG plants or offshore

facilities and expanding the business value chain.

Non-hydrocarbon - promoting Multi-core business by Leveraging

Superior Project Management and Engineering Capabilities

power plants | In the non-hydrocarbon area, we are focusing

our resources on power plant projects as a new growth business.

The market volume of the power plant infrastructure business

is expected to increase by more than $100 billion annually, as

the global economy expands, urbanization and industrialization

progress and the quality of life generally improves. We advanced

into privately-funded power plant projects in Latin America in

2010 when we signed a contract for a combined-cycle gas thermal

power plant in Mexico. The Mexican project was to construct

combined-cycle thermal power plants, where gas turbines are

run to generate electricity in the first stage and the byproducts

(flue gas) are then used as a heat source to run steam turbines in

the second stage. Such a system helps to raise the heat efficiency

and lower greenhouse gases at the same time. We aim to position

ourselves as a major player in the power plant industry as we are in

the hydrocarbon industry by accelerating efforts to advance into

the Middle East and other geographical regions.

Metallurgy∙industrial Facility∙Water treatment | We have

maintained comparative advantages in the water treatment

segment (sewage & wastewater treatment, water purification)

and the steel mills. In 2011, we worked to diversify our non-ferrous

product portfolio and to expand our presence in the desalination

plant segment. The focus of our water treatment unit has been

on the domestic market, but we are about to expand overseas

by leveraging the solid track record achieved domestically. In the

metallurgy segment, we will continue to build on our success in

non-ferrous processing plant projects as we successfully execute the

Aluminum Rolling Mill project in Saudi Arabia. Our industrial facility

unit will strengthen capabilities through constant investment.

expanding our Client base through Market Diversification

The significant changes observed in the EPC market include the

diversification of geographical markets in line with the economic

growth of emerging markets and resource-rich countries. In

the hydrocarbon upstream businesses, an increasing number

of orders for the GOSP (Gas Oil Separation Plant) projects were

placed mainly by clients in Algeria, Libya and other North African

countries in 2011. Meanwhile, the Asian region was assessed to

have great potential for the offshore plant segment. In addition,

we expect shale gas-related business opportunities will surge, as

technologies recently developed in the US make the shale gas-

related business economically viable. As for the petrochemical

plants, where we enjoy comparative advantages, the Latin

American market is growing with great economic growth

potential.

Against this backdrop, we first advanced into Iraq and Qatar

to expand our footprint in the Middle Eastern market. The

national oil company of Qatar became our client for the first

time. Furthermore, we managed to establish a foothold in the

Central Asian market by signing contracts for gas processing and

polymer plant projects in Uzbekistan. We were also awarded

contracts from the US Exxon Mobile and Russian Lukoil which

are global major oil companies. In 2012, we will strengthen our

existing market dominance in the Middle East and advance into

unexplored markets as early as possible. To this end, we will

identify alternative markets or establish more concrete entrance

strategies, analyzing the different features of individual countries

in detail. This will allow us to establish practical and country-

specific roadmaps for advancing into new markets and to

diversify our geographical markets.

Upgrade of Project Execution Capabilities

Project order receipt is not the end but just the starting point.

Carefully managed projects will, upon completion, bring

opportunities to allow us to generate strong profits going

forward and win future contracts. We eliminate factors that may

act as obstacles in billion-dollar projects by managing potential

risks and conducting detailed simulation in terms of schedule,

quality, costs and all other aspects. Moreover, we are committed

to eliminating inefficiencies and optimizing the utilization of

materials and people by organizing seamless cooperation among

design, procurement, construction and other functions.

strengthening human Resource Competence and building an innovation and Creativity focused Corporate Culture

We believe that in the engineering field competitiveness stems

largely from the competencies of individuals as well as from the

ability to bring those skills together. Thus, our goal has been to

ensure all employees are equipped with the capabilities to work

globally, encouraging them to develop themselves and become

experts in their respective areas of responsibility. Moreover, we work

to ensure that the distinctive diversity of our workforce facilitates

the generation of creative and innovative ideas. To this end, we

are building a cooperative working atmosphere through constant

communication and fostering a corporate culture that enables

every employee to accomplish his or her duties regardless of

gender, age, nationality, level of experience and other factors.

• Business Process


Project Management Capabilities

In the engineering field, core competencies depend on

the capabilities to manage projects as well as on expertise

in design, procurement and construction work. We are

committed to building an effective project management

system and applying it to executing projects.

Project Management | We have secured distinctive

competitiveness by running an integrated project

management system that oversees all project processes.

At the initial stages of a project, knowledge-management-

based risk analysis and systematized scheduling methods

are applied to predict project results and manage relevant

risks. Moreover, our global sourcing and supply chain

management systems allow us to respond flexibly to

changes in the international market conditions and

project schedules.

Project Schedule Management | Project completion

ahead of schedule is one of the top priorities for us while

executing a project. We share information about ongoing

projects with our clients and suppliers on a real-time

basis through the Project Portal. The portal system keeps

them informed about the project progress and allows us

to manage the projects efficiently. These efforts towards

maximizing clients' value have earned us a growing

number of new orders.

systematic Risk Management

Almost all of our projects are conducted on a turnkey basis,

where we perform everything from engineering design

and procurement to construction and commissioning. As

such, we are managing risks through a multifaceted risk

management system and processes.

Market Assessment and Analysis | The risk management

processes at the marketing stage include (1) region

selection, (2) preliminary research, (3) primary enterprise-

level report, (4) on-site research, (5) establishment of action

plans and (6) secondary enterprise-level report. We make

checklists based on the result from preliminary and on-

site research and manage them. The Global Marketing

Intelligence System (GMIS) is in operation as an information

sharing platform that contains data on markets, products,

clients, competitors, licensors, proposed recommendations,

and our capabilities as well as the results of major meetings.

We conduct regular Plant Satisfaction Index (PSI) surveys to solve clients' complaints and improve our business processes, and the results are managed as

PSI. The Quality Management department is responsible for surveying the clients of important projects for their satisfaction at each stage of engineering/

procurement, construction and handover. The department identifies and analyzes the major problems of a project and shares them with the person in charge

of the project.

Its integrated research and data retrieval functions guarantee us to

share the information easily.

proposal Risk Management | We follow preset processes when

submitting a project proposal to a client. Before finalizing a price

offer, we review the observance of the proposal procedures,

and the appropriateness of project schedule, exchange rates,

contract terms and price estimates through a checklist.

Project Risk Management | Once a project begins, we first hold

a workshop to identify potential risks that may emerge during

the project execution. Then we analyze and assess those risks by

using a systemic risk-mapping method, and perform various risk

management strategies to maintain, reduce, transfer or avoid risks.

Continuous Quality Control

Quality Management system | Samsung Engineering’s quality

management system was designed to meet all requirements of

ISO 9001:2008/KS Q ISO 9001:2009. All of our organizations and

employees clearly grasp the system and quality control policy, and

they are determined to meet their responsibilities for the proper

implementation of the policy. The quality targets include (1) improving

client satisfaction on project execution, (2) attaining continuous

improvement of work processes, and (3) improving project work

quality. The quality management system is designed to promote the

continuous improvement of business performance, and the operations

of the system are documented and managed constantly.

CopQ Management | Improving project quality is crucial for

achieving sustainability because the failure of quality control

eventually results in cost increases. As such, we implemented the Cost

of Poor Quality (COPQ) management program in 2011, a cost-side

approach to quality issues at the enterprise level, to minimize cost

increases resulting from project management failures. The program

helps us define and categorize potential quality-related costs, and

find possible solutions to deal with specific issues.

Quality issue Management | We are conducting internal and

external audits for our projects in accordance with the quality

management system. These quality audits are performed in various

formats such as jointly with clients, exclusively in-house or through

a third party. They allow us to identify and correct significant

problems, helping to reduce client concerns. In addition, we

used the categories of quality-related costs to establish concrete

action plans to prevent the recurrence of problems. A quality

issue management system was also established to ensure the

continuous management and correction of those problems in the

future.

HandoverEngineering/Procurement Construction

�> offering Responsible services: plant satisfaction index (psi) survey

BUSINESS FOR SUSTAINABILITY

• Detailed design capabilities

• Client communication

• Client requests feedback

• Procurement capabilities

• Human capabilities

• Organization management ability

• Quality control ability

• Responsiveness to clients

• Project execution capabilities

• Project site management capabilities

• Quality control capabilities

• Document management

• Problem-solving

• Environment and safety

• Responses to client complaints

• Supplier management

• Communication among different

types of projects

• Plant delivery processes

• Document management

• Technological training

• Commissioning

• Technological guidance

improvement

• Maintenance plans

• Support for project completion

• Responses to client complaints

We will build the structure for sustainable growth through systematic risk and quality management, and outstanding project management capabilities.

Core Competence

Aspects

PSI execution phase

execution of the World’s First Lump-sum turnkey Contract for a Massive Gas Complex

Shaybah is the largest oilfield developed anywhere

in the world during the last two decades. It is

located in the Rub Al Khali desert, also known as the

Dead Desert, near UAE. The client Saudi Aramco

is operating oil well extractors and pipes as well as

gas oil separation plants (GOSP) and other types

of gas processing & oil refinery facilities in this area.

The Shaybah project site consists of the main NGL

section and four GOSP sections.

What it takes to complete this project successfully is

an integrated management strategy at the early EPC

stages as well as an interface management strategy

to monitor the separate site areas effectively. As

such, we are committed to completing this project

with excellence because this will demonstrate our

capabilities in executing lump-sum turnkey, multi-

package projects. We began this project with the

strategies focusing on implementation of innovative

procurement systems and specific execution plans.

We approach the project with goals of securing

transportation safety, ensuring the unfavorable

environmental conditions do not result in lower

productivity, shortening the construction schedule

and preventing accidents of any kind.

Contribution to Local economies through transactions with Local suppliers and employment of Local Residents

Samsung Engineering has a long relationship with

Saudi Arabia. We have carried out a total of 20

projects, worth more than KRW 10 trillion, in Saudi

Arabia since 2001, when we received the first order

in this country. Since we established a local office in

1999, we have developed relationships with local

communities by employing local residents and

building close partnerships with local businesses.

We established the Samsung Naffora Techno Valley

(SNTV), which serves as a regional headquarters

focused on facilitating investment in local

infrastructure projects, in 2011. SNTV has allowed

us to secure a quality local supplier base and raise

our construction cost competitiveness. This will also

result in an increased number of subcontracts to

local suppliers, thereby boosting local economies.

The gas and oil industry of Saudi Arabia accounts

for about 85~90% of the government’s income and

about 90% of the country’s total export. Given such

a high dependency and the fact that almost all oil

and gas plant projects are massive, the execution

of relevant projects creates huge employment

opportunities in this country. The Saudi Arabian

government obliges a foreign contractor to employ

a certain number of Saudi Arabians, a policy

called Saudization*. We endorse the policy and

do everything possible to contribute to the local

economy. The Shaybah NGL project is planned to

employ the maximum number of 11,700 people and

the daily average number of 6,700 people through

the construction period. We also employed 20 Saudi

Arabian nationals from the beginning of the project

in order to train them as senior engineers.


pRoJeCt hiGhLiGht

Value Creation by Leveraging Integrated Project Execution Capabilities

Samsung Engineering signed a USD 2.8 billion contract for the Shaybah Natural Gas Liquid (NGL) project in Saudi Arabia in April 2011. The project was the first time ever that all the packages in one gas complex were awarded to a single company on a lump-sum turnkey basis. This was also the first time for Saudi Aramco to award a multi-package contract for gas separation plants and gas oil separation plants to a single engineering company. Samsung Engineering has completed a total of 24 projects in Saudi Arabia since entering the market in 2001 by carrying out the SPC PDH/PP project. About half of the projects were ordered by Saudi Aramco, the national oil company of Saudi Arabia. Our projects are in step with the Saudi government’s determination to cultivate an EPC contractor on its own, contribute to the growth of the Saudi Arabian economy and maintain a close partnership with the client for long-term, sustainable growth.

* Saudization: The national policy of Saudi Arabia that encourages the employment of Saudi nationals and the usage of local equipment to a certain extent in businesses run by foreign enterprises. Companies that fail to comply with Saudization regulations are restricted from participating in Saudi Arabia.

sustainability obtained through thorough Project Environmental Management

Our primary principle in executing projects

is thorough environmental protection and

management. In the Shaybah NGL project, we not

only comply with Saudi Aramco's environmental

standards but have also voluntarily adopted an

aggressive environment & safety management

policy to minimize environmental impact. Relevant

systems and procedures have been established

to monitor the implementation of these initiatives

and correct problems.

The client, Saudi Aramco, requires us to follow

their environmental regulations and the results

from the Environmental Impact Assessment (EIA).

They comprehensively define all possible areas in

which the project may have an impact: air quality,

biodiversity, archeological relics, soil quality, road

traffic, water collection and solid waste. As such, we

established and are committed to implementing

the Construction Environment Management Plan

(CEMP) that includes ways to mitigate key findings

from the EIA and other potential concerns.

From an engineering service provider to a Local Community Member

Samsung Engineering completed the construction

of Samsung Naffora Techno Valley (SNTV) in May

2011 at the Jubail Industrial Complex of Saudi

Arabia. It took 21 months and $100 million to build

the regional headquarters, which has the total

floor space of 38,000 m2 and 50,000 m2. The SNTV

consists of an office wing, training center, residential

wing and employee welfare center. As such, it will

provide us with capabilities to perform all EPC

processes independently. Moreover, the facility will

help us with hiring and employee training as well as

with social contribution activities. The training center

is divided into the Engineering Center and Safety

Training Center, where local engineers are provided

with design and safety training opportunities.

“The SNTV is our second regional headquarters for

managing operations in Saudi Arabia, the largest

geographical market for Samsung Engineering,”

said President & CEO Ki-Seok Park. “The completion

of the SNTV represents our commitment to

emerging as an economic, social and cultural

partner of Saudi Arabia, not just as a business

partner.”

The SNTV will be donated to the Al-Jubail community.

The opening of the compound will help us position

ourselves as the “Great Company” that contributes to

the development of local communities.


We will secure sustainability through environmental management while executing projects and contribute to the development of local communities.

shaybah nGl Project

Client Saudi Aramco

Location Shaybah, Saudi Arabia

period March 2011 - July 2014

shaybah

➊ Signing Ceremony for Shaybah NGL Project in April 2011 ➋ Site View ➌ Site Camp

➋➊

➌

• Order volume: USD 2.8 billion

• Execution period: 41 months (Construction period: 33 months)

• No. of local staff for construction period: Maximum 11,700

Daily average 6,700

iNteRVieW


18 19

Challenges of the World’s Largest Para-xylene Plant Project

The No. 2 Aromatic Complex in Onsan, Korea

has the world’s largest para-xylene plant. Annual

output capacity has been raised to 900,000 tons

of para-xylene and to 300,000 tons of benzene.

Para-xylene is produced from naphtha feedstock

and used to produce polyester, PET (Poly Ethylene

Terephthalate) and food packing materials.

Benzene is a feedstock for making polymers,

plastics, surfactants, drugs and dyes. The products

produced in the expanded facilities will be sold

on the global market, increasing Korea’s annual

export by more than USD 2 billion.

Project execution was determined to be extremely

difficult because it was basically an expansion of

existing facilities to establish the world’s largest

annual production capacity. Moreover, the

complex is located on a site reclaimed from the

sea, and the allotted period was just 32 months.

To overcome these challenges, we designed

tall pipe racks and structural steel, used to make

the structural framework of the plant, so that

major equipment can be installed among them.

In addition, we adopted the modularization

method, where almost all installations were

pre-fabricated offsite, and then moved to and

assembled onsite. In addition, we established

and implemented strategies to accelerate

construction, including engineering and schedule

management, adjustment of priorities depending

on constructability, focused delivery management

of long lead equipments, and commissioning-

centered project execution.

Project Execution in a Special Environmental Countermeasure Area

Another challenge faced by this project was the

status of the Ulsan-Onsan area. The plant is located

in Onsan, where industrial complexes and various

heavy industrial and non-ferrous metal operations

are placed. The industrial complex had resulted in

relatively higher levels of pollutants such as SO2,

NO2, O3, CO, PM10 in the area than in other regions.

Thus, the government designated it as a special

environmental countermeasure zone, subject to

stricter environmental air quality standards, in 1986.

We had to come up with measures to curb NOx

and SOx emissions to meet the tight environmental

standards from the design phase.

We set preventive environmental protection

and voluntary green management as our core

business values under the principle of focusing

on the prevention of environmental accidents.

We implemented the denitr i f ication and

desulfurization facilities to reduce SOx and NOx

emissions. We installed air pollution prevention

equipment that has emission standards stricter

than legal regulations, and even processed rainfall

at the project site by installing a special water

treatment system (Process Clean Sewer System).

Creating Client Value through outstanding technological Competitiveness

Korean refiner S-Oil invested KRW 1.3 trillion in the construction of the No. 2 Aromatic Complex, which will more than double the company’s capacity for petrochemical products. The commissioning of the project was completed and the plant began regular production in April 2011, two months ahead of schedule. Samsung Engineering was awarded the contract for the plant expansion project, as we were recognized for our outstanding hydrocarbon project execution capabilities. We started the project in September 2008, and completed the plant in 32 months. The environmental protection and safety remained the top priority from start to finish. The principle can be detailed as (1) meeting economic responsibilities by contributing to the success of the client through perfect project execution, (2) minimizing environmental impact by strictly observing the client’s as well as our own environmental regulations, (3) minimizing the number of work accidents through methodical safety management practices, and (4) making social contributions by procuring and hiring locally.

“ At first, I was worried about whether Samsung Engineering could draw a design that can accom-

modate all necessary facilities at this limited site as well as complete this project properly. The al-

located time for this project was rather short, too. To make matters worse, unusual extreme weather

events such as frequent torrential rains and unprecedented heavy snowfall became further obsta-

cles that the employees had to overcome. However, Samsung Engineering addressed all of these

challenges, met the delivery date and satisfied the quality requirements. The completion of this

project on schedule helped us to secure growth momentum as a global market leader.”

(Duck-Soon Lim, Project Manager of S-Oil Corporation)

We also installed photovoltaic power generators

with a combined capacity of up to 20 kW a day. The

electricity generated by the solar panels is used for

outdoor lighting and lights in the control room.

Project Site Management Based on the health & safety Management system

We adopted the Plan-Do-Check-Act (PDCA)

method for the management of health, safety

and the environment for construction projects.

The PDCA method consists of four steps: (1)

identifying risk factors, (2) establishing targets and

detailed action plans through risk assessment, (3)

determining specific roles and responsibilities for

organizations, and (4) managing actual projects

by training employees, preparing for possible

emergencies, responding to actual accidents and

engaging in effective communication efforts.

For the S-Oil Onsan project, we established risk

management plan for each phase of work before

construction. For example, we used equipment

modules and assembled them before installation

so as to manage risks related to limited working

spaces. We also conducted simulation tests to

manage seasonal risks such as bad weather and

extreme weather events.

We continuously monitored the safety-related

risks and carried out constant performance

assessments for the analysis and management

of these risks. Efforts were also made to correct

inadequate practices and to prevent the

recurrence of the same accidents. These safety

management activities enabled us to exceed the

client’s expectations.


onsan

s-oil onsan refinery expansion Project

Client S-Oil Corporation

Location Onsan, Korea

period September 2008 - April 2011

• Order volume: USD 1 billion

• Execution period: 32 months (Construction period: 22 months)

• No. of local staff for construction period: Maximum 4,200

Daily average 2,300

eco-friendlier sewage treatment Center with a Green park

Local residents tend to avoid sewage treatment

facilities, as they emit odors and release

wastewater. In Suji Respia, however, the sewage

treatment units are all placed underground

and any odor is completely contained through

deodorization and air purification systems.

Moreover, a leisure complex is built on the

premises, to include a sports center, art hall,

soccer stadium, running track and park for the

public to use. While the conventional sewage

treatment plant is an object of public displeasure,

Suji Respia has become the first of its kind that is

well received by local residents. The International

Water Association (IWA) recognized this design

idea and gave Samsung Engineering the 2008

Project Innovation Award for this project in the

Design category of the East Asia/ Pacific region.

Yongin, one of the most important satellite cities

in the Seoul Metropolitan Area, has a rapidly

growing population, and the city’s sewage

treatment needs have consequently seen a sharp

rise. This project was privately funded on a Build-

Transfer-Operate (BTO) basis under the Act on

Public-Private Partnerships in Infrastructure. The

contractor is tasked with opening twelve new

sewage treatment facilities and serving as the

single operator of Yongin’s 15 facilities, including

two existing sewage treatment facilities and

one night soil dump. This was the single largest

privately funded project in Korea and the 15

facilities are processing 252,530 m3 of sewage

a day, which accounts for over 80% of the total

sewage generated in Yongin.

environmental protection through Advanced Water treatment technologies

Out of the twelve facilities that will be constructed,

four units located near the Han River basin feature

advanced water treatment functions to meet the

requirements defined by the government’s Total

Water Pollution Load Management System, which

is aimed at protecting the environmental water

quality and preventing water pollution. The four

facilities are equipped with membrane bioreactor

(MBR) systems, functioning in an eco-friendlier

way. Moreover, they were designed to feature an

advanced water treatment technology by adopting

Samsung Engineering’s patented total phosphorus

treatment technology (PADDOⓇ : Pre-anoxic,

Anaerobic, dPAO, Denitrifying, Oxic)) to reduce

pollution and the use of treatment chemicals.

In addition, Suji Respia provides Tancheon and

Seongbokcheon, streams flowing into the Han

River drainage system, with 30,000 tons of water a

day each to prevent them from drying up.

We will continue to seek out ways to improve

the environment and the quality of life for local

residents through our engineering technologies as

we did in Suji Respia.


20 21

sewage treatment Facilities Combined with a Leisure Complex

Samsung Engineering has operated a privately funded project to integrate the management of 15 Sewage treatment facilities in the city of Yongin since 2010. Suji Respia is a noteworthy project that features eco-friendliness by turning a facility once shunned into place where residents want to come and relax. We will contribute to solving water shortages by utilizing our advanced technologies and preventing streams from drying up.

responses to Climate Change by Building Plants with reduced GHG emissions


suji respia

Client Yongin City

Location Yongin, Korea

period December 2005 - June 2010

Yongin

• Operation of 15 water treatment facilities with a combined daily capacity of 250,000 tons

• Application of advanced water treatment technologies

• Prevention of the drying-up of nearby streams

Samsung Engineering is poised to tackle rising environmental issues such as climate change and water shortages and to capture new market

opportunities by developing and obtaining eco-friendlier technologies and engaging in relevant projects. The projects described below show the

plant projects to which our CO2 recovery and SF6 decomposition technologies are applied in order to reduce GHG emissions.

pVFCCo Co2 Recovery Project

Client: PVFCCo

Location: Baria-Vungtau Province, Vietnam

Period: January 2009 - January 2011

A petrochemical plant consumes fuel and generates a huge amount of CO2. Part of the

greenhouse gases is reused or recycled to produce urea and methanol after CO2 recovery

processes. The PVFCCo CO2 Recovery project demonstrates Samsung Engineering’s CO2

recovery technologies, which capture carbon dioxide in combustion gas of a plant’s

ammonia processes and use it as a base material in urea production.

PVFCCo is a Vietnamese company that produces fertilizers, liquid ammonia, industrial gases

and other petrochemical materials. PVFCCo has contributed to laying the groundwork for

Vietnam’s petrochemical industry and to growing the economy since it was established in

2003. We were awarded contracts for technological support, quality assurance and project

execution for the PVFCCo project, and we completed the project within the 24-month

project schedule. It is expected that the project will reduce CO2 emissions by 87,600 tCO2

annually as the plant processes 240 tCO2 per day.

LCD sF6 Decomposition Facilities and CDM service

Client: Samsung Electronics Co., Ltd.

Location: Asan, Korea

Period: September 2009 - December 2015

The LCD SF6 Decomposition project of Samsung Electronics is aimed at reducing the

emissions of SF6, a perfluorinated compound (PFC) generated from LCD fabrication processes,

by decomposing the gas through a high temperature catalytic process. The LCD Industries

Association proposed a voluntary target to limit the emissions of process greenhouse gases

within three million tons from all member manufactures combined by 2010. In step with the

initiative, Samsung Electronics set a target of halving GHG emissions by 2013 compared to the

2008 level.

This project was certified as a UN Clean Development Mechanism (CDM) in 2010. The

reduction facilities were completed and are now in operation. A UN agency is monitoring

reductions in CO2 emissions resulting from the facilities. The monitoring process will be

finished in mid-2012 and the reduction in CO2 will be certified as carbon credits that are

tradable in carbon exchanges in Europe and other regions.

Special Page

Commitment tosustainaBility

28environment, health & safety

• Strengthening eco-friendly engineering, procurement and construction management practices

• Improving and enhancing the HSE system

• Raising awareness about safety and the environment

38employees & Workplace

• Improving development and training programs for employees

• Providing fair and competitive rewards based on job performance

• Building a corporate culture for effective communication and cooperation

46supply Chain

• Strengthening our global partnership network

• Establishing fair purchasing practices

• Promoting "shared growth" and communication

50Local Community

• Systematic management of global offices

• Expanding local purchasing and employment

• Expanding contributions to local communities

ethics & Compliance

• Preventing legal risks • Running a regular legal risk management system

• Promoting a corporate culture focusing on employee ethics and compliance

24

We are assessing the impacts of our businesses thoroughly in all of the economic, environmental and social aspects, and are committed to meeting the responsibilities as a corporate citizen.

etHiCs & ComPlianCeCoMMitMeNt to sustAiNAbiLitY

DisCLosuRe oN MANAGeMeNt AppRoACh

MANAGeMeNt pRiNCipLes

Samsung Engineering has implemented the Compliance Program, a permanent initiative for the integrated management

of legal risks, helping to ensure that our business practices are conducted in compliance with laws and regulations. The

program allows us to build a systematic compliance support structure, ensuring that the management and employees

voluntarily abide by relevant rules and regulations and manage legal risks.

oRGANizAtioNs iN ChARGe

• Compliance • Legal • Audit

GoALs

COMMITMENT TO SUSTAINABILITY

Preventing legal risks


24 25

the Compliance Program for ethical and legal management Practices

We ensure that the management and employees manage legal risks properly and voluntarily abide by relevant rules and regulations through implementing the Compliance Program.

operations of the Compliance program

Today, legal governance for sustainability management is not

just a matter of corporate ethics but also directly associated

with corporate survival. In 2011, we developed a systematic

compliance program and established the Compliance Committee

and an organization dedicated to legal governance to respond

to stricter external regulations and ensure our business activities

are conducted in compliance with laws. As such, we will abide by

local laws and regulations in countries with our business footprint,

meeting our social responsibilities as a global player and continuing

to promote legal governance.

Organizations and operational structure | The Compliance

Committee, the highest decision-making body in the Compliance

Program, deliberates upon and resolves major matters regarding

the company’s compliance management policy and the operation

of relevant structures.

The Chief Compliance Officer (CCO) is primarily responsible for

supervising Samsung Engineering’s compliance management

practices and the Compliance Program. The CCO, who is appointed

by the resolution of the Board of Directors, sets the standards

for the company’s compliance policy and practices, and holds

responsibility for awarding best practices and correcting violations.

The Compliance Department is established under the Compliance

Committee and guarantees independence. The department is

responsible for planning and implementing compliance initiatives

as well as supporting the Committee and the CCO. Enterprise-

level departments and business units have their own Compliance

Officers (COs) and Compliance Managers (CMs) in charge of legal

risk-related activities.

• Organization in charge of Securing Compliance

* CO: Compliance Officer / CM: Compliance Manager

CCO (Chief Compliance Officer)

The Chief of the Compliance Department

The Compliance Committee

Enterprise-levelCO/CM

Business UnitCO/CM

Foreign BasesCO/CM

Fairtrade

Corruption prevention

Environment & safety

Industrial relations,

protection of information

Support for the

observance of laws,

monitoring

Ceo

• Compliance Mission and Vision

build the platform for sustainable growth by establishing an integratedcompliance management system at the enterprise level

prevention and regular management system for key legal risks

build systematic, integrated compliance response systems

encourage the top management and employees to adopt a compliance-oriented mindset

VISION ▶

MISSION ▶

GOALS ▶

FeedbackSetting guidelines Education & Training

• Select key tasks • Establish operational standards and

manuals

• Share the importance of compliance with the top management and employees

• Raise awareness about compliance and routinize compliance practices

• Review and monitor • Establish improvement plans

Running a regular legal risk management

system

Promoting a corporate culture focusing on

employee ethics and compliance


Compliance Guidelines

We selected legal risks that have huge potential impacts on our

businesses but are now inappropriately managed as key tasks.

We established employee guidelines about the compliance

risks and strengthened training programs customized by duty

and rank. We are also improving compliance processes and

managing relevant risks by receiving reviews and feedback. The

details of key tasks are described below:

Fair trade | Employees are not allowed to be involved in unfair

transactions and unlawful collusion and to ask someone to

provide improper influence. Our people shall not submit a

bid based on false information, but rather shall adhere to fair

contracting and subcontracting practices at all times.

Corruption prevention | Our employees in any case do

not conduct inappropriate acts such as receiving money,

entertainment or any service for undue benefits. They are

not allowed to offer nor receive rebates or to be involved in

doubtful transactions.

information protection | We do not unlawfully obtain or

reveal information that is designated as legally protected trade

secrets or proprietary by the company or a third party. Our

people follow information security best practices and relevant

corporate rules in performing their duties and do not abuse

the resources, intellectual property or facilities of the company.

industrial Relations and Corporate Culture | We follow

domestic and overseas labor laws in our business operations.

We prohibit discrimination based on gender, race, nationality,

religion and other factors. Sexual harassment is not be

tolerated in any case. We strictly prohibit employees from

leaking employment information to those in business relations

or to those who are not approved to receive such information.

environment and safety | We understand and observe

our OHS rules as well as the environmental, safety and

administrative laws and regulations of countries where we

operate. We implement measures to prevent industrial and

environmental accidents and do not release environmental

pollutants.

In addition to setting the guidelines in these five areas,

Samsung Engineering’s Compliance Program obliges

employees to abide by in-house rules and regulations such as

accounting standards and procedures, accountability to report

corporate management, and the code of conduct and the

code of ethics to promote employees’ integrity.

Constant Communication efforts

Samsung Engineering has continued to communicate with

and educate employees about the company’s compliance

management pledge through in-house broadcasts and official

memorandums, encouraging them to engage in compliance

management practices proactively. In 2011, each employee

spent an average of 128.5 hours on compliance training

sessions. The subjects of the training included points that

employees should bear in mind concerning legal compliance,

relevant laws and regulations, fair trade and corruption

prevention.

• Samsung Engineering Compliance Training Program in 2011

Session title Content and objective Target Date

Understanding of the Compliance Program

• Education on compliance and the company’s action plans• Outline of the Compliance Program, global trends, relevant organizations at Samsung Engineering

• Urging the top management to take leading roles in compliance activities preemptively

Executives,Team chiefs

March

Fair Trade and Corruption Prevention

• Education on the ban on collusion, corruption prevention activities, international laws and rules, and violation case studies

• Compliance with Samsung Engineering guidelines and processes• Control of legal risks that may occur with regard to the relationship with clients and suppliers

Executives,Managers in

charge of sales

July,September

(twice)

Compliance with the Fair Subcontract Transaction Act

• Outline of the Compliance Program, corruption prevention activities, the Fair Subcontract Transaction Act, major concerns for transactions with suppliers, etc.

• Raising working-level employees’ awareness about compliance through actual visits to ongoing project sites and solving problems through early detection of potential legal issues

Employees on major project sites at home and abroad

May - November(36 times)

26 27

• Ethics & Compliance Environment, Health & Safety Employees & Workplace Supply Chain Local Community

CoMMitMeNt to sustAiNAbiLitY

• Standards and Guidelines for Ethics and Compliance Management

Principlesand

Standards

• Samsung Business Principles

• Code of Ethics

• Code of Conduct

Guidelines

• Operational standards for compliance-related activities

• Guidelines on major legal risks

• Definitions of wrongful practices for employees

• Compliance Processes

▶ Setting guidelines and improving systems: the boundary system, dos & don’ts

▶ Reporting to the top management and feedback

▶ Issuing warnings and drawing solutions for correction

▶ Evaluation and disciplinary actions

Guidelines

training/education

Corrections/Feedback

Fair trade

Corruption prevention

Labor relations and corporate culture

Environment & safety

Information protection

Monitoring and Feedback

If defining and responding to compliance risks is the first step

of legal risk management, continuous monitoring of defined

risks is both the goal and starting point towards the correction

of the problems.

We have established a compliance monitoring system that

enables the Compliance Department, the Compliance Officer,

and Compliance Manager of each functional and business

unit, and the relevant departments to review one another’s

compliance activities. We have also conducted regular

audits for subsidiaries and project sites at home and abroad.

These initiatives help to raise employees’ awareness about

compliance activities.

Compliance Management system | We are running the

Compliance Management System in order to support

employees to take part in compliance activities. The

basic items of the system include the introduction to the

Compliance Program, regulations and manuals, Q&A board,

recent compliance trends, recent compliance issues, education

sessions and support for whistleblowers.

ethical Management Website | We operate an online

homepage on corporate ethics in order to build a corporate

culture emphasizing integrity. The standards and the Code of

Conduct toward fair and transparent management practices

are suggested on the page. Employees can report a violation

of corporate ethics on this site.

Compliance management declaration ceremony in April 2011


Compliance management pledge in April 2011

2011 ethics & Compliance Key Figures

We have been involved in continuous communication efforts to raise

employees' awareness and understanding about the company’s

ethics and compliance management and to educate them on core

corporate values.

• Offline training sessions

• Online training sessions

No. of participants 4,045 people

Total hours for training on ethics and compliance 1,828 hours

No. of participants 1,475 people

Total training sessions

Corruption prevention Compliance

34

4,373 hours

3,043 people

92

4,367 people

Corruption prevention Compliance

Green management applied to all Project Processes

We have established green management strategies that are applicable to all processes, ranging from engineering and procurement to construction. Our green management performance index helps the entire organization to engage in green management practices.

Green Management strategies

As environmental issues have attracted global attention, we face

ever-greater demands for standardizing green management

systems and disclosing environmental information. Clients present

diversified environmental requirements from the project bidding

stage to include environmental waste disposal and the protection

of the native plant species around project sites. In the assessment

of credit ratings and corporate performance, environmental

disclosure requirements have become stricter. Moreover, we now

have a growing internal need to understand local environmental

laws and regulations in countries where Samsung Engineering

operates, as our geographical markets have been diversified and

project scales continue to expand.

Against this backdrop, Samsung Engineering established strategic

directions for environmental action plans to attain higher

environmental performance. Our green management strategies

reflect various initiatives such as the reduction of raw material use,

adherence to environmental laws and regulations, and training

programs to help promote green management, realize eco-

friendlier project sites and spread the “Eco-Culture.”

Green Management system

We incorporated green management initiatives into the existing

environmental management system in early 2011 to establish

the enterprise-level green management structure and we

obtained the Green Management System certificate in November

2011. This is an integrated certification based on the ISO 14001

Environmental Management System standards and incorporates

the International Standard for GHG Emissions (ISO 14064) and

the environmental requirements in the Guidance on Social

Responsibility (ISO 26000).

eRs | The manager of each project conducts a self-assessment

of environmental capabilities through the Environmental Rating

System (ERS). The ERS consists of performance evaluation

items with regard to project site environmental management

in the three categories of legal regulations, site environmental

management and the environmental management system.

seis | Environmental information of Samsung Engineering’s

domestic and overseas project sites are collected monthly

through the Sustainable Environmental Initiative System (SEIS), the

internal management system. SEIS consists of three systems, (1)

the Environmental Management System (EMS), which establishes

environmental plans, manages project sites, and monitors

environmental performance based on ISO 14001, (2) the GHG

Management System (GMS) designed to collect data on GHG

emissions, and (3) Green Performance Indicators (GPI), which is a

module for analyzing green management performance.


We have set promoting green management, realizing eco-friendly project sites and promulgating a “culture of eco-

awareness” as our main environmental strategies, and have established a management system for low-carbon and green

growth. Under our “people-first” principles, we ensure that the health and safety of our employees and project staff remain

a top priority. We will continue to practice proper safety and environmental management throughout every business

process, encompassing the engineering, procurement and construction stages.

oRGANizAtioN iN ChARGe

• HSE • Outsourcing Planning

GoALs


Green management system certification in November 2011

• Green Management Strategies

Keyaction plans

Lead global green management trends

and achieve corporate sustainability

Prevent environmental

accidents and meet corporate social responsibilities

Raise environmental awareness and

share core values

Strategic direction

Promote green management

Realize eco-friendly project sites

Spread the “Eco-Culture”

Key themes

Reduce raw material consumption,

Make logistics eco-friendly,

Develop eco-friendly products,

Practice green procurement

Obey environmental laws and regulations,

Preserve water resources,

Reduce waste,Protect biodiversity

Give environmental

training by position,

Build “Eco-Partnerships” with

suppliers



enVironment, HealtH & safetyCoMMitMeNt to sustAiNAbiLitY

* Environmental data was collected from all project sites in principle. Some sites, however, were excluded from the data collection scope in accordance with Samsung Engineering’s internal directives if they were deemed to have negligible environmental impacts given the project characteristics and size.

Strengthening eco-friendly engineering, procurement

and construction management practices

Improving and enhancing the HSE

system

Raising awareness about safety and the

environment


30 31

CAse

eco-friendly engineering Design

Eco-friendliness is built in during the design stage. We provided eco-friendlier

designs for Samsung Corning Precision Materials Project in 2011. The office and

plant buildings feature various ideas for higher energy efficiency and greater

eco-friendliness. The operation of air conditioning systems can be controlled

by individual offices, while ceiling-mounted air intake vents reduce heat from

lighting. Energy losses from the HAVC system were minimized by adopting

the flow control unit. Moreover, energy efficiency certified appliances, water-

saving shutoff valves and remote-controlled individual lighting systems were

put in, helping the client minimize resource use. Photovoltaic modules were

also installed to use the renewable energy source in the plant buildings.

• Eco-friendly/green purchase

• Optimize logistics• Environmental

assessment for suppliers

• Establish the construction environmental management plan

• Consider resource usage, pollutant releases, and biodiversity protection

• Monitor environmental pollutants in real-time

• Optimize the use of energy, water and chemicals

• Raise energy efficiency • Reduce pollutants• Apply eco-friendly

construction methods

engineering procurement Construction operation

• Identify environmental issues

• Analyze environmental needs

• Establish plans to reduce environmental impacts and identify key performance indicators

• Attaining Environmental Efficiency in All Business Processes

established the standards for air pollutant emissions and air

quality pollution prevention facilities. These standards and

facilities are applied to domestic and overseas construction

sites to protect the health of employees and local residents

alike. People are posted at the entrance of every project site to

supervise vehicle and wheel washing processes. All vehicles that

carry cargoes with dust scattering must be covered. Dustproof

covers are also put on materials piled in the open air and on

slopes at construction sites.

soil | Plant construction projects potentially affect the environment

because soil is used in abundance. Possible impacts include

upsetting the ecological balance, damaging local plant species

and polluting the soil. We consider the environmental impacts

of excavation and reclamation work based on engineering and

project site environmental management plans established prior to

the kick-off of the actual project.

Waste and Hazardous Materials | We engage in a

multifaceted effort to minimize waste generation during our

business activities. Thorough management steps are also

in place for hazardous materials to cover storage, vehicle

transportation, pipe transportation, vehicle maintenance and

vehicle refueling.

use of recycled steel in 2011

120,000 tonUnit: Ton

15,000

2009

60,000

2010

120,000

2011

�>�use of Recycled Materials

The use of recycled structural steel in plant construction is over 95% of the total amount. (Only qualified recycled structural steel is used in the aspects of strength, tensile force and hardness.)

We established and distributed the following environmental guide-

lines and manuals to provide the standard guidance for all environ-

mental processes in 2011:

• Environmental management handbook

• Construction environmental management guides

• Site environmental management guidelines

2011 environmental Gudelines

Resources and energy | We use the ISO 14001 system to

monitor resource and energy consumption at all construction

sites to respond to domestic and overseas regulations and

reduce costs. The consumption of key resources directly affects

the overall cost of a project.

Water Resources | We divide construction water sources into

tap water, surface water, underground water and reused water,

managing each category appropriately. Almost every site uses

tap water, and water collection has never been reported as

affecting the surrounding environment. We collect rainwater

and underground water that comes to the surface during

excavation work. The collected water is used in sprinkling

systems or when washing off onsite areas, thereby reducing

overall water consumption.

Air Quality | We consider the possibility of air quality pollution

in all of our business processes starting from engineering,

procurement and construction to commissioning. We

Attaining environmental efficiency in the engineering and procurement processes

We work hard to meet social responsibilities in relation to the

use of resources and energy, possible environmental impacts,

GHG emissions and other environmental issues in the basic and

detailed engineering, and procurement processes. We are also

providing safe and reliable products and services.

Low-emission engineering | Our project designs are drawn

to reduce resource use, waste generation, air and water quality

pollution and noise by adopting optimized and up-to-date

technologies. In the basic engineering stage, we provide clients

with alternative designs that contain facilities to minimize

environmental pollution and treatment systems for releasing

effluent properly and we encourage clients to accept the

alternative designs.

Value engineering | Value engineering refers to a method

for reducing costs by optimizing designs for higher efficiency.

Design optimization provides environmental benefits such as

reduced energy and resource use as well as cost saving. We

pursue eco-friendly design through the value engineering

methodology.

Green purchase and supplier Assessment | As a corporate

consumer, we endorse green procurement and encourage the

use of green products. We are helping to promote sustainable

consumption practices and responding to the government’s

environmental policies by purchasing green products under

the Procurement Procedure for Eco-friendly Materials. By

doing so, we are helping to mitigate the negative impact of

our business activities on people and the environment and to

use limited resources most efficiently, thereby maintaining the

quality of life and the environment in general.

Project Site Environmental Management in the Construction process

Samsung Engineering manages project sites in the most eco-

friendly way possible to minimize the impact on resources,

energy, water, air, soil and ecosystems.


• Casebook of Q&As on construction environment

• Casebook of project best practices/failures

• Casebook of environmental regulation violations

samsung Corning precisionMaterials Project

Ethics & Compliance• Environment, Health & Safety Employees & Workplace Supply Chain Local Community



Category2010 2011 2012 Target

Index Data Index Data Target*

(1) Operational Performance Index (OPI)

Energy Usage Amount** 72.0 GJ/KRW billion 382,435 GJ 110.8 GJ/KRW billion 1,030,151 GJ YOY 2.5 %↓

GHG Emissions** 5.9 tCO2e/KRW billion 31,199 tCO2e 8.7 tCO2e/KRW billion 80,713 tCO2e YOY 2.5 %↓

Water Usage 8.3 ton/KRW 100 million 438,265 ton 7.6 ton/KRW 100 million 711,290 ton YOY 2.5 %↓

Waste Generation 5.2 ton/KRW 100 million 274,490 ton 5.2 ton/KRW 100 million 482,219 ton YOY 5.0 %↓

Waste Recycling Rate 37.2 % 59,354 ton 34 % 111,654 ton 35 %

(2) Management Performance Index (MPI)

MRO N/A - 23.1 % KRW 85.9 million 25 %

Green Product Investment Rate 56 % KRW 9.9 billion 54 % KRW 11.2 billion -

Green Product*** Rate 58.8 % Environment level 80.1 points 38.7 % Environment level

78.4 points 50 %

Training N/A - 0.76 hr/person 5,792 hr 0.85 hr/person

* Target is based on the performance index (intensity)

** Energy usage amount and GHG emissions are based on the emission of Scope 1 and Scope 2.

*** Green product rate = (The number of green projects) X 100 / (the number of projects subject to assessment) Green products: Projects that received 80 or higher points in the Green/Environmental Inspection Assessment

Green Management performance

performance Management | We set up our own Green

Management Performance Index based on the standards

stipulated in KSI 7001. The index is used when diagnosing

environmental impact during engineering, procurement and

construction, and performance is monitored regularly.

The Green Management Performance Index covers two areas:

operational performance and management performance.

Operational performance is evaluated on a monthly basis

by project. It is calculated as intensity per revenue, allowing

us to compare the results among construction sites and

chronologically. We conduct monthly, quarterly and yearly

performance assessments at the enterprise level and set

improvement targets to improve green management

performance steadily.

Action plans | We categorize business units according to

function such as engineering, procurement, construction and

support to analyze the requirements for each part and identify

green management issues. The issues are prioritized in the green

management plan according to importance. Each task includes

detailed action plans to achieve targets related to problem

areas, scheduling and people in charge.


2010 2011

Direct emissions (Scope 1, tCO2e) 23,342 67,824

Indirect emissions (Scope 2, tCO2e) 7,857 12,889

Total 31,199 80,713

CO2 intensity (tCO2e/KRW billion) 5.9 8.7

Other emissions (Scope 3, tCO2e)* 1,742,941 1,894,948

- Subcontractors (Construction equipments) 62,974 198,480

- Environmental facilities* 1,679,967 1,696,468

• GHG Emissions

* Environmental facilities include sewage and waste water treatment plant and waste incineration plant.

responses to Climate Change, Water scarcity, threatened Biodiversity and other macro-environmental issues

We understand macro-level environmental issues such as climate change and biodiversity, and our entire organization will strive to tackle the related challenges.

Reponses to Climate Change

Samsung Engineering annually assesses climate change-related

risks and opportunities for major functions of business under the

“Green Management Planning Guidelines.” Significant risks and

opportunities are addressed with individual action plans.

strategies to tackle Climate Change | Acquiring the

technologies of carbon capture & storage (CCS) and integrated

gasification combined cycle (IGCC) are short-term strategies for

us to meet international climate change pacts and environmental

regulations. Our long-term strategy calls for developing new

markets and technologies to address changes in the global

business environment caused by climate change.

Greenhouse Gas Management system | Our greenhouse

gas inventory was established to serve as a basis to respond

to climate change. We began collecting our GHG emissions at

domestic construction sites in 2007, and expanded the coverage

to overseas sites in 2008. The system went online in 2009. The

GHG management system receives data by emission source.

When the type and amount of energy sources are entered, GHG

emissions are automatically calculated using the appropriate

methods.

GHG emissions by direct sources in 2011*

12,548

Headquarters

68,165

Project sites

Offices

Vehicles

Unit: tCO2e

* GHG emissions by direct sources include the emissions of Scope 1 and Scope 2.

• Greenhouse Gas Emissions by Country*

Saudi Arabia

UAE

Korea

Algeria

India

Trinidad and Tobago

Bahrain

Mexico

Malaysia

China

Hungary

657

585

352

281

242

100

25

13,475

17,141

20,943

26,912

* GHG emissions by country include the emissions of Scope 1 and Scope 2.

Unit: tCO2e



CASE

34 35

Reponses to Water scarcity

Samsung Engineering is a total water treatment solution

provider, ranging from wastewater and sewage treatment

to deionization and desalination. We develop sewage and

industrial water reuse technologies to help address increased

water usage and subsequent water shortages in the future.

We respond to water shortages and new regulations on

total pollutant loads by developing technologies to reduce

industrial water consumption and wastewater generation.

Moreover, we strive to diversify into desalination plants

by leveraging our extensive expertise and experience in

deionization and membrane technologies.

Recycling Waste Water | The current water supply capacity

is now insufficient for satisfying water demand from the

semiconductor, LCD and other electronics industries because

water quality has generally deteriorated while the industries

have grown. Thus, the need to secure alternative water

sources continues to grow. We developed a waste water reuse

technology (SEMBRⓇ+R/O), and more than 15 million tons

of water are now reused annually, helping to solve the water

shortage in these industries. In addition, solid-advanced

oxidation process (S-AOP) technology has enabled us to

process 25 million tons of low waste-density water produced

in the AMOLED processes and reuse it as process water.

biodiversity protection

Keen attention has been paid to biodiversity protection along

with climate change since 2010. The International Union for

Conservation of Nature and Natural Resources (IUCN) said in a

UN report that 17,291 endangered species are at serious risk.

To protect wildlife, Samsung Engineering strictly fulfills the

reporting requirement prior to the start of construction, and

all relevant protection guidelines are followed during project

execution.

ecology Management procedure | We conducted

biodiversity protection activities under our in-house Ecology

Management Procedure in 2011. The procedure provides

practical advice applicable to construction sites for protecting

biodiversity, including the identification of factors affecting

biodiversity, prioritization of issues, and selection of projection

methods.


• Protecting Wild Forests - Mangrove Protection

Greenpeace and other environment organizations expressed significant concerns over this project and the Mexican government made

the protection of mangrove trees, a habitat for hundreds species of fauna and flora, a precondition for project execution. We met this

requirement by devising measures to reduce environmental impacts and took great care to protect the mangroves around the lake.

• Protecting Wild Animals - Fauna Rescue

We captured and relocated wild animals in the site before the kick-off of project execution, as mandated by Mexican wildlife protection

regulations.

Biodiversity Protection - Manzanillo LNG Terminal Project, Mexico

• Rescue live animals trapped in fences.

• Conduct pre-inspection before demolition

• Avoid all kinds of activities hazardous to wild animals

Mangroves in preserved sites Limit access to protect forest Capture and relocate wild alligators Fauna rescue team activities

Domestic Overseas

75.0

2008

50.8

2008

88.6

2009

62.5

2009

87.9

2010

66.7

2010

83.4

2011

70.6

2011

* Safety management levels of domestic and overseas subcontractors are evaluated in the six-grade scheme (A, B, C+, C, D, E). The graph shows the percentage of subcontractors that have received the grade B or higher.

Subcontractor safety training 341sessions

Subcontractor -Samsung Engineering HSE Departmentjoint safety inspection 7times

Subcontractor CEO meetings and best practice presentations 32 companies joined

On-site monitoring and audits

141on-site monitorings 81 audits

Samsung Engineering regularly evaluates safety levels of domestic and overseas subcontractors. We are committed to improving

the safety of subcontractors through training, monitoring and inspection activities.

Subcontractor safety level assessment result* (Unit: %)

* Fauna Rescue Instructions

• Do not collect, hunt and trade in wild animals

• Do not use barbed-wire fences for excavation work

• Secure animal trails by propping up fences with sticks after work

2011 subcontractor safety Key Figures


Health and safety as Key indicators for sustainable Business

We set challenging safety and health targets at the enterprise level. We promise to remove factors threatening the safety and health of employees and achieve accident-free sites.

safety and health program

Our Safety and Health Program is carried out to guarantee the

safety for our employees and subcontracted workers and to

achieve higher performance in safety management at every level

of our businesses.

safety Management system | The Samsung Engineering safety

management system complies with OHSAS 18001. Our safety

and health program not only complies with related regulations

but also requires the full participation of business partners and

subcontractors as well as our employees. The program aims

at establishing rigorous safety and health targets every year,

eliminating hazards that may threaten employees' health and

safety, and improving the level of health and safety consistently.

preliminary Risk Management | Samsung Engineering

conducts preliminary construction meetings and risk assessments

to identify the most efficient work methods for dangerous work

and manage risks prior to actual construction. Risk assessment

meetings are attended by Samsung Engineering’s construction

and safety managers as well as by their counterparts from

subcontractors. The discussions also serve as small pre-construction

meetings on dangerous work. We are building an advanced safety

management system by simulating all projects and monitoring the

simulation results to improve performance.



36 37

training and Awareness Reinforcement

training and Communication | For the successful

implementation of the safety and environmental

management system, Samsung Engineering’s HSE

Department provides employees with information and

training programs so that they can clearly understand and

act in accordance with HSE principles. Publishing in-house

newsletters, organizing campaigns and issuing cautions on

safety risks are some examples. In addition, training sessions

are held regularly. We also participate in relevant associations

such as the working-level council among construction

companies.

Training on safety and environmental issues was provided

through the safety training matrix in 2011. The classes

covered more than 20 subjects such as “Personal Protective

Equipment” and “Fall Prevention,” targeting the specific

duties of the trainees. A total of 2,681 employees attended

the regularly scheduled safety and environment training

programs consisting of five basic and two selective sessions

held at the headquarters or through online. The four courses

for suppliers were attended by 377 people.

external Activities | We are a member of various safety-

related associations and councils that are also represented

by other domestic engineering and construction companies.

Samsung Engineering chairs the Construction Safety Manager

Association (CSMA), and participates in the Construction

Safety Officer Association, KOSHA 18001 Association, and

the Council of HSE Managers at Samsung Group’s four

construction companies. The CSMA held the Construction

Safety Forum, the Safety and Health Week initiative, the Safety

and Health Manager's Night program and other safety and

environment related activities.

safety talk | We organized the Safety Talk Program, an in-

house campaign to raise awareness on safety, in 2011. The

program was designed to encourage employees to participate

in the efforts to become a global leader in industrial safety. The

program required employees to attend a five-minute Safety

Talk before key official meetings and meetings with clients,

except intra-department meetings. The Safety Talk program

raised employees’ awareness of the importance of safety and

served as a platform to share safety training packages.


* Information is based on performance recorded in 2011. (The Asian figures do not include Korean data, and the domestic field accident rate stood at 0.18% as of 2011)* TRIR (Total Recordable Incident Rate) = (Fatality + Lost Workday Case + Restricted Work + Medical Treatment) / Manhour X 200,000 LTIR (Lost Time Incident Rate) = (Fatality + Lost Workday Case) / Manhour X 200,000

In 2011, exposure work hours were 132,163,393 man-hours which were almost doubled compared to the 58,797,318 man-

hours recorded in 2010 as a result of expanded project activities. The level of accident management displayed by the Lost Time

Incident Rate (LTIR) stood at 0.0045 in 2011.

2011 Health and Safety Performance*

Africa

0 (LTIR)

0.1173 (TRIR)

0 (LTIR)

0.3430 (TRIR)

America0 (LTIR)

0 (TRIR)

Asia

0.0070 (LTIR)

0.0978 (TRIR)

Middle east

• Fatality: 1

• Lost Work Day: 2

• Restricted Work: 13

• Medical Treatment: 46

• First Aid: 314

• Near Miss: 894

total exposure work hours

132,163,393 Mh

LtiR

0.0045

standards and Guidelines | Samsung Engineering published

and distributed training guidelines by construction type

for managers and employees at overseas construction sites

in August 2011. A total of 30 manuals were published for

managers and 24 for other employees. They were delivered to

all sites along with safety training materials. In December 2011,

the Project Setup Guide Package was shared to help project

managers establish the HSE management system in the initial

stages of a project.

supervisor Assessment | Samsung Engineering assesses

the performance of supervisors at domestic and overseas

sites every six months. According to the evaluation

results, we reward outstanding performers and discipline

underperformers. As an increasing number of new employees

join the company, we sought new measures to enhance their

understanding of our safety management system.

Client hse satisfaction survey | Samsung Engineering

annually surveys overseas clients to see how they are satisfied

with our HSE management. The survey allows us to assess and

analyze the current HSE status and to understand the different

characteristics of clients. We also examine our strengths and

weaknesses by country. We are committed to achieving

excellent HSE performance by consistently carrying out HSE

management activities and correcting any problems.

university student internship program | We organized an

internship program in cooperation with the safety engineering

departments of prestigious universities to strengthen

students’ field working capabilities and enhance our corporate

image. One 4-week internship was held in each half of 2011.

Participants worked as field safety assistants.

Item Project Country Award Date

Achievement ofsafe MH without LTA(Lost Time Accident)

Borouge-3 PO/LDPE UAE 7 million MH without LTA December

GAS phase VIII (ASU) Saudi Arabia 6 million MH without LTA November

JERP #3 Aromatic Units Saudi Arabia 10 million MH without LTA October

Fertil-2 Ammonia/Urea UAE 5 million MH without LTA October

SAMCo Acrylic Acid Saudi Arabia 5 million MH without LTA September

BAPCO Lube Base Oil Bahrain 9.5 million MH without LTA July

Saudi Aramco DHT Saudi Arabia 17 million MH without LTA May

Ma'aden Ammonia Saudi Arabia 15 million MH without LTA March

HSE ExcellenceGlobal Engineering Center Project Korea

Grand prize in construction, Maeil Business Newspaper Safety

Management AwardDecember

Samsung Electronics Co., Ltd. NF China Tianjin City Haihe Cup Award March

Achievement of safe MH without LTA for GAS phase Ⅷ (ASU) project

University student internship progam Achievement of safe MH without LTA for Saudi Aramco DHT project


• 2011 HSE Award

supervisor Assessment Results

81

2010

82

2011

83

2010

85

2011

Domestic Overseas

Unit: Points Unit: Points

Client hse satisfaction survey Results

71

2009

81

2010

79

2011

Overseas

Unit: Points



Recruitment

human Resource philosophy | We are looking for people

who aspire to be experts in their fields, effective business

leaders and global citizens by committing themselves to our

common vision and values. We are helping our employees

acquire these qualities with a wide range of training programs

and employee benefits. These offerings will help them lead

innovative activities, adhere to ethical practices and become

successful global players.

Fair hR Management | We are committed to making our

organization more transparent and dynamic by ensuring

fairness in our human resource management. We have

established policies and guidelines for maintaining diversity in

our workforce to ensure that nobody is discriminated against

on the grounds of gender, age, religion or disability. We create

or modify our human resource management rules based on

Korea’s relevant laws and update them whenever they are

revised to prevent our employees from having their interests

compromised. Our overseas office hire and manage their

employees in compliance with relevant local laws.

talent Development programs

talent Development strategies | We are seeking to run

talent development programs that help our employees fulfill

their utmost potentials and promote a challenging spirit. To

make this happen, we encourage our employees not only to

enhance basic job skills but also to develop leadership and

cultural abilities for higher organizational efficiency; to have

a better understanding of engineering, procurement and

construction; to enhance their conversation skills including

advanced English proficiency; to expand globally based on

our domestic capabilities to increase our global presence.

To achieve the goal of cultivating talented employees, we

are implementing coherent human resource development

strategies, including strengthening our organizational

competitiveness (Value/Leadership/Job Skill/Global Business),

running rank-specific business leadership development

programs and attracting talented employees from around the

world.



emPloyees & WorKPlaCeCoMMitMeNt to sustAiNAbiLitY

Human resource management for successful Career Development

Samsung Engineering helps employees fulfill their true potentials by ensuring fairness in human resource management and offering integrated career development programs.


We are providing our employees with diverse training programs and attractive employee benefits to help them

lead innovative activities, stick to ethical practices and become successful global players. We aim to become an

ever-better company to work for by focusing more on developing human resources and providing a better working

environment.


• Human Resource Management • Industrial Relations Council

GoALs


* The employee benefits and training programs described in this report are mainly based on those offered at our headquarters in Korea. They may vary depending on the circumstances of each overseas office.

Improving development and training programs

for employees

Providing fair and competitive rewards

based on job performance

Building a corporate culture for effective

communication and cooperation

• Objectives of our Talent Development Programs

Samsung Engineering

wants who is...

Objective

Armed with expertise, leadership,global mindset and connecting with the

organization based on shared value and vision

Engineering Academy

job expert development Skill training Leadership

training

Global competitiveness

Learningculture

Earlyadaptation of

new recruit

e-HRD system implementation

Change champion

Global Standard

Performance driven

Client driven

Approach

• Human Resource Philosophy

Multi-Dimensional Thinking & Creative Imagination

Mod

esty

& Tr

ansp

aren

cy

FRo

Nti

eR iNteGRitY iNNo

VAtioN

Glob

al ta

lent

Next generation leader

to achieve common goals

Core member leading the world

passion, Challenging

spirits, Change

teAMWoRK

leading change and future

Team player maximizing synergy

Self-regulation Unity

in global management standard

chall

engi

ng th

e w

orld


40 41

training programs | Our training programs, which may

vary depending on employee rank, can be divided into

three segments: fundamental programs, cultural programs

and technical programs. The fundamental programs are

focused on basic work-related skills, including how to work

and communicate with other employees effectively. The

cultural programs are mainly composed of mental training

sessions designed to stimulate employees to develop cultural

competencies and act and think like leaders. Finally, the

technical programs are intended to help employees improve

work-related skills needed to lead future growth and become

global players by honing their foreign language skills intensively.

Training from Samsung Group Scheduled to openOnline trainingOffline training

• Structure of Talent Development Program

Newly-appoint-ed executives

Group introduction

Internal introduction

Newly-appointed assistant manager

Promoted managers [Introduction]

ScoutedExperienced

Overseas

Seniormanagers

Samsung EMBA

Internal mini-MBA

Character educationfor associates

Business EnglishOnline

Training regional specialists

Samsung MBA

Nurturing executives

Leadership education

foreach rank

Language courses

Internal small

foreign language

center

Special courses for business units

Strategic language courses

Onsite language courses

Intensive English courses for newly-hired employees

Leader'sAcademy

Executives

Sales SupportProject Design Procurement Construction

Process for upgrading entry-level employees to deploy them to major tasks earlier

PE KP CFM FCM

Management EPCPM LE PRM CM

EPCSchool

Core Jobs DevelopmentCourses

Business School

Education for eachjob skill

Middle manager nurturing process

Selection and training

bAsiC CuLtuRe teChNiQue teChNiQue

Course Purpose and Description Target

Quick upgradingEnable participants to do what is usually done by one-year

assistant managers in a project on their own Up to one year

after entry

Improving core job skills Improve job expertise and general management competenciesStaff - Depury

Managers

Internal foreignlanguage center

Enable participants to communicate with foreign business partners in a more professional way All employees

Business SchoolAllow participants to enhance business-related basic competencies to do

tasks from a multi-dimensional and integrated perspectiveAll employees

Reverse Engineering Enable participants to acquire the ability of engineering through case studiesThree to four

years after entry

TSDP (Technical Skill Development Program)

Enable participants to have a better understanding of design codes and specificationsto improve their basic competencies

Two to three years after entry

135 hours

Average annual learning hours per employee

177

2009

169

2010

197

2011

training expense per employee

performance Assessment and Rewards

We are offering a wide range of fair and competitive performance-

based rewards in order to retain talented employees with strong

capabilities and experience and to provide appropriate incentives

for outstanding performance. The rewards are based on the

systematic performance evaluation.

Annual salary system for All employees | We are offering

annually determined salaries based on performance for all

employees. Under the annual salary system, the basic salary and

bonus, which consisting of individual and group incentive, are

provided. Moreover, the incentives are given to the employees

who award a project, finish a project successfully and show

innovation in their fields.

Fair evaluations | Our performance evaluation programs are

based on competency and performance history. The evaluation

results are directly linked to promotion and annual salary. In 2011,

we began a new compensation program that bases payment

on previous evaluations in order to assess each employee’s

performance and competencies on a long-term basis. The new

program allows employees to receive more stable income by

focusing on the longer history of their performance.

We are committed to making our organization more integrated and promoting activities for more effective

communication among employees to maximize the positive effects of diversity in our workforce. As of December

2011, we had 1,213 local employees hired by overseas offices and the total number of our overseas employees stood

at 1,366, and female employees were 1,088, with the figures on an upward trend. In addition, we are striving to reduce

conflicts within our organization by holding meetings and forums for each rank since the number of entry-level and

experienced employees entering our organization has significantly increased for the past three years. They will promote

mutually-beneficial practices through communication and cooperation. Notably, we conducted research to see how

our employees treat and accept the colleagues with various background in order to improve the corporate culture and

strengthen our organizational capabilities in 2011.

>�Workforce Diversity


Unit: KRW in ten thousands

Workforce breakdown (Domestic vs. Overseas)

4,680

2009

5,882

2010

7,620

2011

total employees

Headquarters

Overseas Offices

6,407(84%)

1,213(16%)

* As of the end of 2011* This number includes all employees in the headquarters and overseas offices

Unit: People Unit: People

636

2009

828

2010

1,088

2011

Female employees

865

2009

1,021

2010

1,366

2011

overseas employees

18.5%17.4% 17.9%

13.6%14.1% 14.3%


Value Leadership job Skills Global Business

General

Managers

(Deputy)

Managers

Assistant M

anagersStaff

Ethics & Compliance Environment, Health & Safety• Employees & Workplace Supply Chain Local Community



42 43

We are committed to a balance between work and personal life for all staff. To make this happen, we are improving our working environment and providing a wide range of employee benefits.

Promoting a Work and life Balance

employee benefits

employee benefits | We are providing diverse fringe

benefits, including support for leisure activities, health

insurance and financial assistance for family events, to help

our staff concentrate on their work better. Notably, we

employed a selective benefits program, where employees

can choose the benefits they need in 2011. The new program

was adopted by reflecting employees’ feedback from the

Industrial Relations Council that the effects of the fringe

benefits may vary depending on the circumstances of

individual employees.

Retirement pension plans | We are running a retirement

pension plan to help our employees live on a stable income

stream after retirement in accordance with Korea’s Employee

Retirement Benefit Security Act. We offer a defined-benefit

type of pension plan, which has an accumulated capital of

KRW 86.7 billion, managed by Samsung Life Insurance.

Assistance for Maternity Care | We are striving to protect

maternity care in many ways so as to help raise the low birth

rate, one of today’s hottest social issues in Korea, and allow

female employees to maintain a balance between work and

family. If a female employee gets pregnant and reports it via

our internal maternity protection system, her department

manager will adjust what she has to do at work according to

her conditions and make sure that she has regular prenatal

tests. After she returns to work following the maternity leave

spanning 90 days before and after childbirth, she can use an

in-house Maternity Room, be given priority in getting her

child admitted to the company daycare center, and use a

flexible work schedule.

Realization of Great Workplace

employee satisfaction survey | Every employee has the

chance to respond to an annual employee satisfaction

survey as part of our efforts to enhance our organizational

strength and provide a better working environment for our

employees. The survey is designed to measure how much

individuals and teams understand and focus on work and

how effectively they communicate with each other. We take

measures to resolve problems, if there are any, based on the

results. In 2011, we developed a questionnaire reflecting

our specific circumstances and used it to measure what

our employees thought about their working environment.

Around 63.5 percent participated and the overall satisfaction

rate was 74.7. Regarding questions about leadership, general

tasks, and the overall organization, the scores were high, but

it was found that we needed to do something to increase

work efficiency, enhance system integration and define

corporate values more specifically to meet the needs of

our growing organization. We will analyze the results of the

survey and do what is needed to improve how we work at

the department level as well as the company-wide level.

in-house Counseling Center | We are running an in-

house counseling center with four regular qualified

counselors for our employees and their family members.

The center was opened in 2010 and provides around 200

counseling sessions every month as of 2012. The counseling

is conducted via face-to-face meeting, online counseling,

email, SMS and phone calls. The center helps reduce stress at

work and make communication and cooperation between

employees more effective by administering psychological

tests to our employees and departments, providing feedback

for them and offering department-level programs designed

to improve communication among team members. Notably,

in 2011, the center carried out a program called “Counselors

Visit You” in overseas offices and 9 domestic and overseas

construction sites (India, UAE and Algeria, etc.). In the

program, the counselors offered customized counseling

services through face-to-face meetings, which received a

tremendous response. In addition, the counseling center

provides parenting and family advice to give our employees

a sense of comfort and security and help them have more

harmonious family lives. Going forward, we will enhance our

counseling services on treatable mental health conditions,

such as depression and mental disabilities, and make

counseling mandatory for employees who work at sites for a

long time or who are dispatched to sites at an older age.

Club Activities | We encourage our employees to join

clubs, at least one club per person, as part of our efforts

to promote internal communication and strengthen the

corporate culture. Currently, there are over 30 clubs, including

basketball teams and bands, involving 1,500 people. As our

workforce increases in size, we are providing more assistance

for club activities by adding more specific activities to the

club list, paying 80 percent of the club bills and making it

simpler to get a refund. More importantly, we are running

donation programs in association with club activities to make

the participants fulfill themselves. In 2012, we will develop

the donation programs into “talent donation” activities in

association with community outreach programs.


Activities of skin-scuba diving

Christmas concertorganized by the music club

• Employee Benefits

employeebenefits

other benefi ts

Medical checkups

support for

supp

ort f

orGro

up insurance medical bills

educat

ion

fees

cove

red by accident insurance

• Chil

dren

pre

scho

ol tu

ition

s• T

hree major diseases

• Chi

ldre

n sc

hool

tuiti

ons

• Dental expenses

• General medical expenses• Basic checkup for staff

• Comprehensive checkup for staff

• Meal allowances• Selective benefits

2011 employee benefits Key Figures

percentage of employees who work more than 1 year after returning to work from maternity leave

100 %

Accumulated capital of our retirement pension plan

86.7 KRW billion

Turnover rate*

2009 2010 2011

2.03%1.84%

2.35%

* Turover rate is based on the annual average number of full-time employees in headquarters.

( as of December 2011, defined-benefit type)




44 45

operation of industrial Relations Council

industrial Relations Council (iRC) | We have established

a labor management council defined in the labor law in

order to improve employees’ welfare and put the company

on a sustainable footing by promoting engagement and

cooperation between the employer and employees. The

council, a representation of the employees, is helping to build

one of the best working environments in our industry, by

encouraging cooperation and a mutually beneficial corporate

culture based on trust and making the company share more of

the gains from growth with its employees. The representatives

of the IRC are elected by direct voting. Currently, twenty

representatives are working for the 18th H.U.G. IRC, which was

launched in April 2011, in several divisions, including Harmony,

Unique and GWP. The council is striving to realize its vision of

“creating a harmonious corporate culture” in many ways. They

are helping the management and employees feel connected

with each other by making visits to domestic and overseas

construction sites, holding diverse types of labor-management

meetings and forums once or more every month, making the

new headquarters building more comfortable for employees,

and running a program to enhance business sensibilities.

promoting Labor-Management Communication | We

hold regular labor-management council meetings involving

labor representatives and the same number of management

representatives. At the meetings, labor representatives share

employees’ feedback on major policies with the management

so that something can be done to improve the working

environment. In particular, the top management, including the

CEO, CFO meet with labor representatives on a regular basis

• Vision and Mission of the Industrial Relations Council

In 2011, we held the “Women’s Leadership Conference” to share ideas about the desired roles of women as leaders and promote

communication between female employees. In the event, the activities of the IRC for Woman were presented and an external leadership

instructor and a specialized counselor were invited to give a special lecture about how to become a successful female leader to the

audience. The conference also served as a valuable opportunity for networking.

>�Women’s Leadership Conference

MISSION

VisioN seCL DNA Creator Creating a harmonious corporate culture

harmonyPromote a harmonious

corporate culture through autonomous

communication

unique

Unlock your potential in diversity

GWp

Realize your dream as a professional

STRATEGY

Affinity / Relationship / Communication

A R

C

TrendMotivation

Global

GWp

Great Work place

Improve company

rules

Move into the new

headquarters building

WLB & sensibility programs

Shared growth

programs


18th h.u.G. iRC (industrial Relations Council)

our employee at samsung engineering india

Number of participants receiving education about the corporate culture

Training forcorporate culture

Training for corporate competence enhancement

* The education about the corporate culture includes classes focused on managing diversity and building communication to prevent discrimination regardless of gender, nationality, status and age.

to resolve complaints from employees and reflect their ideas

when revising main company policies and rules. These efforts

are helping to protect the rights of the employees.

strengthening the Corporate Culture and Addressing employees’ Complaints

sharing the Corporate Culture | We prohibit forced labor

and child labor at all of our work sites, domestic and overseas,

in accordance with Korea’s labor-related laws and the local

regulations of the countries where we operate. All newly-hired

employees, whether they are entry-level or experienced, are

required to take a two-hour class at an orientation about the

corporate culture pursuing shared growth and tolerance of

diversity regardless of region, nationality, gender, age, race and

religion. As for existing employees, they learn how to embrace

diversity, communicate and cooperate with colleagues, prevent

corruption and avoid discrimination through corporate culture

promotion programs. Also, all employees are educated about

gender equality and sexual harassment prevention every year

and can file a complaint via the IRC for Woman and counseling

center if there are any issues involving sexual discrimination or

harassment. In 2011, there were no reported cases of forced

labor, child labor, sexual harassment or sexual discrimination.

Addressing employees’ Complaints | We have established

an online and offline process to resolve complaints from

employees. If any of the employees finds unreasonable practices

or inconveniences, they can ask for a meeting with their

department leader or post an article via GRID-Q, the internal real-

time reporting system or the bulletin board or the anonymous

reporting function within the website of the IRC. If there are any

issues regarding human rights violations, personal worries or

matters that need to be kept confidential, we make sure that

internal specialized counselors have private meetings with the

reporter to address the issue. Our complaint resolution system is

working effectively to help create a better working environment

and build trust between employees and the company.

beyond Work place

3,475

2010

4,170

2011

1,541

2010

1,910

2011




46 47

Design Vendor subcontractor

F/S* Commissioning O&M**engineering procurement Construction

* F/S: Feasibility Study ** O&M: Operation & Maintenance

seGA (samsung engineering Global Alliance)

A total of 5,113 registered vendors, 257 seGA vendors

Category NameSEGA

Korea (Seongjohwe) India China Others Total

Static 862 32 (22) 10 8 12 62

Rotating & package 967 36 (15) 3 1 34 74

Piping 849 31 (19) 5 - 12 48

Electrical & instruments 1,005 36 (21) 9 2 13 60

Logistics & inspection 1,430 12 (8) 1 - - 13

Total 5,113 147 (85) 28 11 71 257

seGA: 20% of vendors ordered, 23% of the amount ordered

1,300 vendors

SEGA*

KRW 4.3 trillion5%

5%

87%

3%

KRW 1,000 billion(23%)257 (20%)

Number ofvendors ordered

Amount ofannual order

Countries of SEGA vendors ordered

Korea Europe North America Others


suPPly CHainCoMMitMeNt to sustAiNAbiLitY

* The number of registered SEGA vendors and the amount of orders are as of December 2011.


We maintain an integrated supply chain system to ensure fairness in transactions with our partners and share gains

from growth with them. We will strive to enhance the “shared growth” system by allowing our partners to communicate

with us more effectively.


• Audit • Compliance

• Outsourcing Planning • Construction Planning • Construction Technology

• Energy Engineering Support • Hydrocarbon Engineering Support • I&I Engineering Support

GoALs


Strengthening our global partnership

network

Establishing fair purchasing practices

Promoting “shared growth” and

communication

Global Network of our partners

Our partners are made up of design companies for engineering

design, vendors for procurement and subcontractors for

construction. Each department chooses and registers a company

as a partner according to criteria, such as expertise, overall

competencies, environmental awareness and ethical conduct.

A company registered as a partner tends to have a long-term

relationship with us.

Design for engineering | We have a total of 183 registered

design partners: 81 companies in the hydrocarbon sector and

102 companies in the non-hydrocarbon sectors, such as power,

metallurgy, industrial facilities, and water treatment. Moreover, we

are running Gisuhwe, an association of design companies, for 24

such companies. We are well aware that the development of our

design partners has a direct impact on the quality of plants we

make, so we are providing the partners with diverse assistance,

such as know-how transfer.

Vendors for procurement | We have 5,000 registered vendors

and since 1994, we have run Seongjohwe, an association of

vendors, consisting of Korean ones. In 2008, we began to run SEGA

(Samsung Engineering Global Alliance) to strengthen our global

network. We select SEGA member companies based on impartial

assessment and help them remain loyal to us with a wide range of

incentives. We analyze the needs of SEGA members and use the

results to explore ways to make inroads into new markets along

with SEGA members and develop training programs for them.

subcontractors for Construction | For a company which seeks

to carry out executing projects, especially in foreign countries,

selecting appropriate subcontractors is of great importance

to complete the project successfully. We have established the

Samsung Contractors Association for domestic projects and the

GPN (Global Partner Networking) for overseas projects to discover

competent subcontractors and build long-term partnerships with

them. We will use the GPN to set up a database of region-specific

and product-specific subcontractor information and analyze the

performance of subcontractors to select them strategically. At

the same time, the subcontractors will be able to use the GPN to

communicate with us by posting their demands to the system

and having discussions with us.

Global sourcing network Based on fair trade and shared Growth

We are committed to upgrading our global sourcing network to increase our business competencies, preventing collusion and corruption, and allowing all project participants to gain a fair share of growth based on transparent trade and principled business ethics.


48 49

Fair trade

We select new partners to add to our official partner list

carefully according to criteria, such as environmental

awareness and ethical conduct as well as expertise and overall

competences.

Corruption prevention | As more nations are stepping up

anti-corruption measures, we made it mandatory for our

partners to sign and submit the anti-corruption pledge and for

all proposal participants to attend classes about non-disclosure

requirements and the prevention of collusion and corruption

in 2011. In addition, our Audit Department and Compliance

Department have a team of dedicated instructors for each

rank to offer training programs for corporate competency

enhancement and compliance to entry-level employees,

experienced employees, employees to be dispatched to

overseas work sites, domestic and overseas employees for

construction sites and global offices.

Fair trade | We have introduced a fair trade compliance

agreement to enhance commitment to compliance with

regulations and ethical practices and are implementing specific

action plans accordingly. Moreover, we are striving to create

more transparent and equal partnerships by sticking to the

principle of shared growth throughout our operations of

choosing partners and managing processes. In addition, we are

imposing strict restrictions and requirements on areas possibly

subject to unfairness in bidding and selecting subcontractors.

Furthermore, we are running a fair trade system to evaluate our

partners regularly in a fair and objective manner and identify

unfair practices and resolve problems, if any. This system allows

us to help our partners improve the quality of their products

and enhance operational efficiency.

Win-win partnership

We help our Korean partners move into foreign markets with

us to build long-term partnerships with them. We offer them

well-organized assistance for financing, training and know-how

transfer, to allow them to enhance their competitiveness and

capture a fair share of gains from growth.

expanding overseas with partners | We help our Korean

partners make inroads into foreign markets with us. To make

this happen, we held a conference to explain how to penetrate

overseas markets and collect ideas from our partners in 2009.

We asked 66 participants about the countries in which they

would like to operate and helped them set up specific plans to

receive orders from foreign countries and operate in emerging

markets with significant growth potential. So far, we have

worked with several of our partners in Saudi Arabia and the UAE.

better payment Conditions | We began to make all payments

in cash to our partners based on the progress of a project.

Moreover, the payment term has been reduced from 15 days to

10 days.

Financial Assistance | We gave loans worth a total of KRW

2.05 billion with no interest for six months to five small and mid

sized cash-strapped partners. Also, we set up a shared growth

fund worth KRW 10.6 billion with a credit limit of KRW 31.8

billion and have lent a total of KRW 10.5 billion to 9 small and

mid sized partners with a 1% interest, which was lower than the

market interest rate, as of the end of January 2012.

support for education & training | We are helping our

partners improve their technological capabilities and increase

their corporate value by offering diverse education and training

programs. We held a total of 117 sessions of education about

the latest technology and best practices. We also offered online

training courses to 514 employees from our partners.

technical Know-how transfer | We are striving to provide our

partners with technical support, which they need most. We

offered training programs and technical support for the latest

technology, such as 3D modeling, to our partners to help them

implement operational innovations and enhance technological

capabilities. In addition, we assisted 28 of our partners in

earning ISO 9001 certification, an ISO standard for a quality

management system. Each of the certifications is reported to

have generated KRW 9.05 million, including a direct cost of

KRW 4.25 million, in cost savings.

2011 supply Chain Key Figures

Received the Good Company Award for fair trade and shared growth in October 2011

Value of Shared Growth Fund KRW 10.6 billion

(As of January 2012)

The number of partners assisted in obtaining ISO 9001 certification 28 partnersiso

Seminar on market trends of raw materials and equipments in june 2010

Signing ceremony of the fair trade agreement for the win-win cooperation and subcontracting in March 2010

Training about quality control for onsite super-visors of our subcontractors in April 2011

Communication Channels Frequency Tasks

Design companyMeeting of Gisuhwe Once a year Network and exchange information

Section meetings by disciplines Every quarter Discuss current matters at section level and exchange information

Vendor

General Meeting of SEGA Korea Seongjohwe

Once a yearShare operational organizations of SEGA Korea Seongjohwe and meet with the CEO

Section Meeting of Seongjohwe Any time Share the performance results of each section

Steering Committee of SeongjohweFour times a

yearDiscuss current matters of Seongjohwe and share the performance results of each section

Seminar on market trends of raw materials and equipments

Once a yearEliminate project risks accompanying fast changing market conditions and share expected market trends of raw materials and equipment

Subcontractor

Investigation of partners’ family satisfaction index (FSI)

Once a year

Assess the processes of choosing subcontractors, making agreements, managing construction, controlling quality and hazards, paying the bills, developing trade practices, and give advice on mutually beneficial cooperation

Meetings Any time Meetings by disciplines


We hold meetings with 'Gisuhwe', an association of design companies, 'Seongjohwe', an association of vendors, and 'Seong-

geonhwe', an association of subcontractors and collect feedback through surveys on a regular basis. Going forward, we will

strengthen communication with overseas partners through our global network.

�>�Communication with partners


Ethics & Compliance Environment, Health & Safety Employees & Workplace• Supply Chain Local Community


Contributing to the Development of local Communities through Business

We are helping local communities we operate in to grow and prosper by making the communities part of our business activities.

Global operations

We are a global corporation operating in diverse countries.

We contribute to the development of local communities we

operate in by hiring local employees and making purchases

from local firms.

By December 2011, we had set up 20 global offices in 30

countries where we have projects, and the number of locally

hired employees was 1,213, or 16 percent of all our employees.

We are making as many purchases as possible from local

companies to reduce cost and help boost the local economy.

We are aiming to exceed USD 5 billion in orders from overseas

offices, 5,800 employees hired by overseas operations (23

percent of our workforce) and 40-percent share of design

tasks by 2020. To achieve these goals, we will operate regional

headquarters in four major regions: the Middle East, India,

South East Asia and North America and multi-functional offices

with high marketing and resource capabilities in other regions.

Global operation support Department Created | We

established Samsung Engineering India (SEI), our first global

office in 2006 and have since strengthened our global network.

In July 2011, we created the Global Operation Support

Department at the headquarters in Korea to help make major

inroads into foreign markets through effective localization

strategies.

We will follow our “local content strategy” to purchase and

use resources efficiently, diversify our channels of recruitment

by making the most of our foreign EPC Center Pool through

regional EPC offices. Moreover, we will expand our global

outsourcing to add more value to our products and services.

50 51

• Functions of Global Offices

Functions of Offices Number of Offices Countries

Multi-functional(Marketing, Support for operations, IPO, EPC)

8 Saudi Arabia, India, USA, Mexico, Algeria, Thailand, UAE, China

Marketing 6 Vietnam, Japan, Brazil, Venezuela, Indonesia, Uzbekistan

Business Support 3 Malaysia, Hungary, Trinidad & Tobago

Procurement 1 Italy

Financing 2 UK, Singapore

Total 20

2011 Global operation Key Figures

30 countriesNumber of countrieswe operate in

20 offices

1,213 people

Global operations

Employees atglobal operations


loCal CommunityCoMMitMeNt to sustAiNAbiLitY


We are committed to helping local communities where we operate to grow and prosper by hiring local employees,

making purchases from local companies and investing in the infrastructure while engaging in community outreach

activities. We will continue to fulfill our corporate social responsibilities by encouraging more employees to participate

in community volunteer activities and maintaining close relationships with local organizations in need as part of our

global social contribution initiatives.


• Global Operation Support • Human Resource Management • PR/IR

GoALs


Systematic management of

global offices

Expanding local purchasing and

employment

Expanding contributions to local

communities


70%86%26%

58%41%

usAKorea

uAe

Malaysiaindia

saudi Arabia

We made 32 percent of all our purchases in the markets where we operate in 2011.*

Our total spending on procurement of materials for that year was more than KRW 1.35 trillion.

>� 2011 Local procurement Results

* The ratio of local procurement to total procurement of materials in major markets: Countries whose local procurement ratio is 10% or lower, such as China, Thailand, Malaysia and Algeria, are not included.

total Value of Local procurement KRW 1.35 trillion

Local to total procurement Ratio 32%

52 53

Localized Approach

hiring Local employees | We recruited a wide range of

employees from the countries where we operate in 2011

to help create a virtuous cycle in the local economy. We

are focused on expanding our global operations by hiring

employees from the region. Our goal is to increase the total

number of staffs employed by our overseas offices from 1,213

now to 3,600 by 2015.

We will not just increase local recruitment but also strive to

hire and retain more talented local employees as supervisors

for their workplaces so as to enhance operational efficiency.

Moreover, we will make the most of our staff rotation program

designed to deploy employees to understaffed workplaces to

nurture talented overseas employees at the headquarters in

Korea. We are increasing local recruitment every year to create

jobs and stimulate the local economy.

In addition, we are working to strengthen our local capabilities

by maintaining the ratio of locally-hired supervisors at a

reasonable 17 to 20 percent of the workforce in the region.

In Saudi Arabia, we are preferentially employing people with

disabilities, providing internship opportunities for college

students, and running a workplace tour program. In 2010,

we employed 30 people with disabilities in Saudi Arabia.

Also we are fully complying with the “Saudization Policy,” a

mandatory labor policy from the Ministry of Labor of Saudi

Arabia and have recently received the Best Company Award

for Saudization. We exceeded the NITAQAT requirement

ratio of 7 percent to achieve 11.7 percent in December 2011.

Furthermore, we employ many local workers or those from

other countries when carrying out overseas projects.

Finding and Cooperating with Local Companies | We

conduct an in-depth investigation of a country before we

decide to move into the market. We classify target countries

into a strategically important group and a general group

depending on how much they matter to our business

and look for local constructors and equipment makers

with a competitive advantage, which we can partner with

while estimating the sales potential of the markets. We are

striving to work with as many local companies as possible to

contribute to the development of local economy.

Managing impact on Local Community | Before we launch

construction of a project, we hold public hearings to minimize

its negative impacts on the local community. If any problems

are identified during public hearings, our project managers

find solutions following the internal procedure.

17%

Contributing to the Local Community - sNtV

Completion of sNtV | We held an opening ceremony for

Samsung Naffora Techno Valley (SNTV), a multi-functional

office building in Saudi Arabia. We began to construct the

building with the investment of around USD 100 million

in September 2009 and completed it after 21 months. The

building is located within the Jubail Industrial Complex

in Saudi Arabia, where we are carrying out four projects,

including the construction of refinery facilities.

Functions of sNtV | The SNTV, covering 50,000 m2 of the

site area and 38,000 m2 of the gross floor area, consists of

4 facilities including engineering, safety and sports center

as well as accommodations. The building will be used not

just to carry out its own EPC projects but also to recruit

local residents, offer training courses and provide voluntary

community services. The SNTV is designed to integrate

the functions of Samsung Saudi Arabia (SSA), our former

subsidiary in the nation and Samsung EPC (SEPC), a regional

office built to conduct local projects. Saudi Arabia is our

biggest market, where we received orders worth USD 4.7

billion in 2011. We will use the SNTV to provide permanent

offices and quality employee benefits, such as decent

accommodations, for our employees and to help our clients

achieve significant growth. In addition, the building will

serve not only as our regional headquarters for our biggest

market but as a cornerstone on which we can develop

our partnership with Saudi Arabia from business level to

economic, social and cultural level.

Local EconomyHire and train local employees

Local EnvironmentPublic awareness about

environmental protection

• Provide safety experience education for the general public

• Open sport facilities to people on holidays• Voluntary community services by employees, such as blood donation

• Hire and train Saudi employees• Offer safety training programs

• Hold a writing competition about environmental protection

• Support environmental protection activities through sisterhood relationships with local schools

We use the SNTV to help Saudi Arabia develop its economy, safety and welfare in diverse ways. The engineering center offers

offices for our client so that they can promote communication in and help hire and nurture local employees. The safety

training center is designed to raise the employees' awareness about safety and reduce industrial accidents by providing safety

education programs from the Occupational Safety and Health Administration. Finally, the sports center is provided to local

community as a sport and educational facility. The SNTV will be donated to the local community of Al-Jubail in thirty years.

We hope the building will pave the way for us to grow as a “Great Company” that is committed to the development of the

local community.

�>��Contributions of sNtV to the Local Community


Local CommunityContribute to the development of

the local community

The whole view of SNTV

Linking our business activities

with local contribution

programs


Ethics & Compliance Environment, Health & Safety Employees & Workplace Supply Chain• Local Community


'Kumpooh', environmental education program

We launched 'Kumpooh', the environmental education

program for schools in our neighborhood in 1996. At first, it

was part of voluntary community services conducted by a

department. The program offers online content and offline

activity programs about environmental protection for children.

This is one of our representative social contribution activities.

- Korean Website: www.e-gen.co.kr

- English Website: www.eco-generation.org

integrated online education site on environmental

protection | Children can have access to a wide range of

multimedia learning resources, such as Flash content, video files

games, stories and quizzes about the environment. The website

is available in two languages: Korean and English.

one -Day teachers’ Classes about environmental

protection | Our employees give specialized classes about

the environment, such as water treatment and energy, to

elementary and middle-school students. In addition, we provide

activity programs for experiments and quiz competitions. In

2011, we began to manage a team of employee supporters and

dispatch them to schools as one-day teachers to raise children’s

awareness about environmental protection.

uCC & english essay Competitions about environmental

preservation | We have held UCC competitions since 2007 and

organized English essay competitions via Eco-generation, our

English website since 2008 as part of our efforts to promote

environmental awareness among children. We will expand

the events to the 'Global Environment Forum for Teenagers', a

combination of competitions and lectures from 2012.

Mou for educational Donation signed | We signed a

memorandum of understanding to promote educational

donations with Korea’s Ministry of Education, Science and

Technology in August 2011. We are running online and offline

education programs in 'Kumpooh' about several topics, such

as the environment and green growth by using our own

technology and specialized staff. The MOU will allow us to

expand our existing activities.

Mou signed with uNep headquarters | In September

2011, we signed a memorandum of understanding to jointly

operate an environment networking platform for children

with the United Nations Environment Programme in Tunza,

Indonesia, where the International Children's Conference on the

Environment was held. The children around the world can share

diverse content on the environment and engage in community

activities via the online platform and communicate with each

other in real-time through SNS functions.

54 55

social Contributions and investment in the Community

We reaffirm our commitment to fulfilling our social corporate responsibilities through social contribution in Korea and overseas.

Creating Future Value through social Contribution Activities

We have engaged in a wide range of social contribution

activities based on our business activities in cooperation

with our global offices. We have reaffirmed our commitment

to responsibilities as a global corporate citizen by building

schools of hope in foreign countries and provided urgent

relief efforts for Haiti and laid the foundation to become a

socially responsible global corporate citizen by participating

in voluntary community services in major markets. Moreover,

we are leading the efforts to make the world a better place to

live in by engaging in diverse voluntary community services

and building sisterhood relationships with rural areas and other

local communities.

• Our Social Contribution Activities

• Building libraries in strategically important countries

• Voluntary community services in foreign countries

• Donation of talent, knowledge and experience

• Local public services in Gangdong-gu

• Giving festival

• Family public service activities of families

Creating a future value through

social contribution activities

Promoting talent donation and giving activities

Creating shared value through marketing strategies and association

Voluntary community services associated with the local community

Employees have greater pride in their company through social contribution activities

We engaged in more voluntary community services and collected more donations from our employees in 2011. The donations and direct

public services were focused on educational programs, and we also gave high priority to assistance for medical institutions and rural areas.

Category 2009 2010 2011

Donation 3,774,987 4,155,016 4,687,897

Direct public services 167,845 303,078 753,796

Fund-raising among our employees

50,774 72,741 109,908

Total 3,993,606 4,530,835 5,551,601

82,887 hours

Average time spent per person on participating in voluntary community services

Total time spent on participating in voluntary community services

12.1 hours

spending on social Contributions (unit: KRW 1,000)

� INTERVIEW

priceless experiences with 'Kumpooh'

“Kumpooh was a friend as well as a teacher to me.”

Hyo-Seon Koh, a volunteer for 'Kumpooh' summer camp

I joined 'Kumpooh' when I was an elementary school student and

have served as its member for over ten years. Though I used to live in

Jeju Island, I have been able to join the activities via the online website.

What I remember most is that I presented a speech introducing 'Kum-

pooh' at the Asian Children’s Conference on the Environment in Japan

in 2007. I hope more children will learn more about how to protect the

environment and have valuable experiences at 'Kumpooh'. (Hyo-Seon

Koh, student, 24)

2011 social Contributions Key Figures


'Kumpooh' summer camp

Composition of social Contributions in 2011

38.9%

57.3%

20.0%

2.7%

20.0%

29.7%

16.6%

3.2%

6.0%

5.6%

Donations Direct public services

Educational Institutions: KRW 1.8 billion

Environmental Institutions:KRW 280 million

'Kumpooh': KRW 430 million

Libraries: KRW 150 million

Assistance for Rural Areas: KRW 150 million

Others: KRW 20 million

Medical Institutions: KRW 1.4 billion

Culture: KRW 780 million

Social Welfare: KRW 150 million

Others: KRW 260 million




56 57

social Contributions in Korea

We are committed to growing along with local communities

where we operate by fulfi l l ing our corporate social

responsibilities. We will continue this commitment to help

shape a brighter future.

sisterhood Relationships with Rural Communities | We

have sisterhood relationships with nine villages in Korea. We

help them with farm work, hold direct markets for agricultural

products, invite local residents to take a tour of Seoul, and

offer assistance for village events. For example, our employees

regularly visit the villages to build close relationships with local

residents by helping them do farm work, including collecting

chestnuts and picking grapes and pears, in peak season.

Moreover, we provide medical examinations for residents in

sister villages with poor medical systems and donate thermal

underwear for the elderly so that they can keep warm in

winter. Meanwhile, we buy agricultural products from the

direct markets to help farm village create more profit and

donate the products to local welfare centers.

talent Donation | We are running a specialized volunteerism

program designed to allow our employees to volunteer their

expertise to less experienced and younger co-workers to

upgrade their professionalism as part of our commitment

to nurturing talent. For this program, we hold workshops for

volunteerism leaders, encourage our employees to participate

in more talent donation programs and do various activities in

association with clubs.

Voluntary Community services in Connection with Local

Communities | We sponsor community welfare organizations

in our neighborhood and provide voluntary services on a

regular basis to maintain close relationships with them. In

addition, our technicians visit low-income families to maintain

and repair their home appliances and work with community

organizations to provide specialized voluntary services.

We are also providing assistance and voluntary work for

events in Gangdong-gu, a home to our headquarters for the

development of local community.

➊ Voluntary services at Samsung Engineering India (SEI) ➋ Digging up potatoes as voluntary services ➌ Voluntary services at the School of Hope in Vietnam ➍ 'Kumpooh' workshop for the UNEP International Children’s Conference on the Environment➎ Employees’ voluntary services in the village of Mirinae, a rural community

➍

➌

➎

➋➊


social Contributions around the World

We donate part of our profits we earn in overseas markets to

the local communities we operate in.

school of hope in Vietnam | We built a 'School of Hope' in

Vietnam with donations from our employees and company's

financial assistance. The school is designed to provide

educational programs for preschoolers but it is also offering

health and medical services for local residents. We are providing

educational services for infants in Ky Tho Bac, a rural village

with poor education. We are also offering health education and

medical services for local residents, including pregnant women.

industry-university Collaboration and Voluntary Community

services in Mexico | We are engaged in projects in Mexico, with

dedication to serving the local community we operate in. We

consider ourselves a permanent member of the local community,

not as a temporary visitor. So we are finding organizations in need

and providing assistance for them under the slogan of “Samsung,

Buen Amigo” (“Samsung, Good Friend!”). Furthermore, we have

built a strong collaborative relationship with Universidad de

Colima, a university in the state of Colima, and offer its students

internships to find talented employees and teach them job

skills. In addition, we donated face masks to local organizations

when swine flu hit the nation, and are doing voluntary work at

orphanages and nursing homes.

Mentoring and other support for schools in poor Regions

in india | Our Indian office is providing school uniforms and

supplies for students from low-income regions in its “Corporate

Social Mentoring” program and offering mentoring services

to help create a intimate relationship with them. In 2010, we

provided personal computers and PC education programs

for elementary school students from low-income families

attending the Good Samaritans School in Madanpur Khadar.

Also, we invited 40 elementary school students to our Indian

office to take a tour of the offices to show them how engineers

work. In addition, we have done voluntary work at local

orphanages and sponsored sick children since 2006.

building Libraries in underdeveloped Nations | Given the

fact that engineering is a knowledge-based industry, we have

built libraries in strategically important nations since 2011. This

is part of our commitment to helping build a better future

by investing in nurturing talent in client nations. This year, we

will build libraries in India. This will be our first step towards

remodeling decrepit schools and community centers in rural

regions into new libraries for children and local residents.

Voluntary community services in Mexico




58 59

Plant enGineerinG anD our liVes

A sustainable future for the next generations will be ensured when limited resources of the earth are more effectively used through cutting-edge plant engineering technologies that prevent environmental impacts and improve energy efficiency. Based on know-how, experiences and insight accumulated for 42 years, we at Samsung Engineering are committed to providing optimal engineering solutions, thereby becoming a global leading plant engineering company that contributes to the sustainability of mankind and environment.

From the manufacturing of small plastic bottles with clean water that we drink every morning to the oil refining to power cars and airplanes for our journey, the plant engineering industry is closely connected with all of our lives.

energy plant

Refinery and gas plant separates and produces a variety of oils and

gases suitable for their uses from crude oil. And, the energy sources

are generally used in a wide range of our lives such as product

production, flight, driving, and commercial and residential facilities.

petrochemical plant

About 70% of our body is made of water, while

petrochemical products account for 70% of our daily

necessities. Petrochemical plants produce raw materials

for the production of our daily necessities by using basic

petrochemicals cracked in the refining process. These raw

materials are used in a variety of products such as vehicles,

cell phones and clothes.

power plant

Power plant generates and supplies electricity that is necessary for

our lives. The electric energy makes it possible for us to do a lot of

things that have been not feasible by other energy sources.

Environmental plant plays a major role in preventing

environmental pollution through the treatment of wastewater,

seawater desalination, incineration, landfill, reduction of

greenhouse gas emissions and recovery of soil pollution.

To maintain a clean environment along with industrial

development is valuable and essential for our next generations.

environmental plant

Industrial plant encompasses a wide range of facilities to

support basic industries and manufacturing such as roads,

railways, sports complexes, logistics bases, hotels and tire

factories, which are essential for our bountiful lives.

industrial Facilities plant

Metallurgy plant

Mineral resources are transformed into various metallic materials to make it easier

to be manufactured through the metallurgy plant. Moreover, metallic materials are

used in building facilities and manufacturing products such as vehicles and home

appliances.


64

samsunG enGineerinG SUSTAINABILITY REPORT

performance summary

eConomiC Data

Income Statement*(Unit: KRW million)

2010 2011

Revenue 5,312,261 9,298,184

- Domestic 1,782,934 2,437,309

- Overseas 3,529,327 6,860,875

Cost of sales 4,501,886 8,219,469

Gross profits 810,375 1,078,715

Administrative expenses 381,769 459,730

Other operating income 188,058 334,535

Other operating expenses 204,410 236,254

Operating profit 412,254 717,266

Share of profit of associates - 36

Financial income 69,375 63,905

Financial costs 22,603 94,187

Profit before income tax 459,026 687,020

Income tax 122,403 172,494

Profit for the year 336,623 514,526

* These financial statements are prepared on a consolidated basis and in accordance with the KIFRS standards.

Balance Sheet*(Unit: KRW million)

2010 2011

Total assets 3,534,863 5,188,615

Current assets 2,831,725 4,156,825

- Cash and cash equivalents 408,701 560,018

- Other current assets 2,423,024 3,596,807

Non-current assets 703,138 1,031,790

- Tangible and intangible assets 491,535 734,482

- Other non-current assets 211,603 297,308

Total liabilities 2,578,050 3,875,258

Current liabilities 2,404,525 3,644,841

Non-current liabilities 173,525 230,417

Total equity 956,813 1,313,357

Capital stock 200,000 200,000

Consolidated surplus 56,624 56,624

Retained earnings 937,816 1,358,353

Other reserve △197,489 △264,338

Non-controlling interest △40,138 △37,282

Total liabilities and equity 3,534,863 5,188,615

* These financial statements are prepared on a consolidated basis and in accordance with the KIFRS standards.

61SAMSUNG ENGINEERINGSUSTAINABILITY REPORT

enVironmental Data

health & safety

2010 2011Total time of exposure to work (Unit: MH) 58,797,318 132,163,393

Industrial accident rate: domestic-converted industrial accident rate* (Unit: %) 0.12 0.18

Industrial accident rate: overseas-LTIR** 0.0034 0.0045

- Middle East 0 0.0070

- Asia 0.0139 0

- Africa 0 0

- America 0 0

* Converted industrial accident rate (%) = Number of converted industrial accident victims / number of regular workers X 100 Number of converted accident victims: weighted by the deaths (10 times that of those who were injured in industrial accidents) Number of regular workers: (Annual sales value for domestic construction projects X Labor cost rate) / (Average monthly salary of the construction industry X 12)** LTIR (Lost Time Incident Rate) = (Fatality + Lost Workday Case) / Manhour X 200,000

hse Communication & investment

2010 2011Value of spending on the environment (Unit: KRW million) 6,287 9,111

- Spending on the environment* 3,487 6,511

- Investment in the environment** 2,800 2,600

Number of participants in education about the environment (Unit: People) 7,616 60,555

Number of participants in education about safety (Unit: People) 676,153 1,196,727

* Spending on the environment: money spent on the efforts to protect the environment, treat waste and purchase environmentally-friendly products** Investment in the environment: money spent on research and development for environmentally-friendly purposes

Consumption & emissions

2010 2011Consumption of energy (Unit: GJ) 382,435 1,030,151

Direct energy consumption 322,323 931,790

- Gasoline 59,116 92,314

- Diesel 218,889 793,285

- Kerosene 16,690 3,792

- Heavy oil 15 1,185

- LNG 26,495 39,081

- LPG 1,118 2,133

Indirect energy consumption 60,112 98,361

Consumption of water (Unit: Ton) 438,265 711,290

- Tap water 378,097 396,250

- Underground water 12,788 192,725

- Surface water 4,500 23,413

- Recycled water 42,880 98,902

Greenhouse gas emissions* (Unit: tCO2e) 31,199 80,713

Direct emissions (Scope 1) 23,342 67,824

Indirect emissions (Scope 2) 7,857 12,889

Other emissions (Scope 3) 1,742,941 1,894,948

- Subcontractors (Construction equipments) 62,974 198,480

- Environmental facilities** 1,679,967 1,696,468

Amount of waste produced (Unit: Ton) 274,490 482,219

- Construction waste 232,213 475,244

- Industrial waste 30,071 3,430

- Specified waste 12,206 3,545

Amount of waste treated (Unit: Ton) 274,490 482,219

- Burned 172,416 318,322

- Landfilled 42,720 52,241

- Recycled 59,354 111,654

- Discharged to the sea 0 2

* The greenhouse gas emissions are a total amount including Scope 1 and Scope 2.** Environmental facilities include sewage and waste water treatment plant and waste incineration plant.

62 63PERFORMANCESUMMARY


soCial Data

ethics & Compliance training

2010 2011Hours of training about ethics and compliance (Unit: Hours) 4,740 6,201

- Corruption prevention 4,740 1,828

- Compliance - 4,373

Number of participants in offline training about ethics and compliance (Unit: People) 4,458 4,518

- Corruption prevention 4,458 1,475

- Compliance - 3,043

Number of participants in online training about ethics and compliance (Unit: People) 3,518 8,412

- Corruption prevention - 4,045

- Compliance 3,518 4,367

social Contribution

2010 2011Total value of spending on social contributions (Unit: KRW million) 4,531 5,551

Donations 4,155 4,688

- Educational Institutions 65 1,822

- Medical Institutions 1,501 1,390

- Culture 2,000 780

- Environmental Institutions 185 282

- Social welfare 120 151

- Others 284 263

Direct public services 303 753

- Libraries 0 150

- 'Kumpooh' 100 430

- Assistance for Rural Areas 122 150

- Others 81 23

Fund-raising by employees 73 110

Total hours spent on participating in voluntary services (Unit: Hours) 60,382 82,887

Average hours spent per person on participating in voluntary services* (Unit: Hours) 11.4 12.1

* The average hours spent per person on participating in voluntary services is based on the average number of employees in the headquarters in Korea, with our overseas offices excluded.

supply Chain

2010 2011Number of partners we helped to obtain ISO certification (Unit: Companies) - 28

Volume of the win-win fund (Unit: KRW million) - 106

Percentage of SEGA order value (Unit: %) 32 23

Workforce status

2010 2011Total number of employees* (Unit: People) 5,882 7,620

Gender

- Male 5,054 6,532

- Female 828 1,088

Region of birth

- Korea 4,831 6,184

- Asia Pacific (excl. Korea) 888 1,175

- Americas 109 172

- Middle East Asia 11 44

- Europe 23 24

- Africa 20 21

Employment status

- Permanent 3,791 4,645

- Fixed-term 1,224 1,762

- Overseas offices 867 1,213

Percentage of locally-hired managers (Unit: %) 18 17

* The total number of employees refers to all employees in the headquarters and overseas offices as of December of each year.

training & Career Development

2010 2011Total training hours (Unit: Hours) 800,265 927,770

- Value 154,722 291,852

- Job 393,617 312,459

- Leadership 89,101 53,241

- Global business 162,825 270,218

Average training hours per employees* (Unit: Hours) 151 135

Training expense per employee* (Unit: KRW in ten thousands) 169 197

Percentage of annual performance assessment (Unit: %) 100 100

* The average training hours and training expense per employee are based on the average annual training time in the headquarters in Korea, excluding data from overseas offices.

employee Welfare

2010 2011Ratio of entry-level employees' wages to the official minimum wage* (Unit: %) 191.8 191.7

Wage tables for men and women Same Same

Turnover rate** (Unit: %) 1.84 2.35

* The ratio of entry-level employees' wages to the official minimum wage is based on the data from the headquarters in Korea. Our overseas offices pay more than what is required by local laws.** Turnover rate is based on the annual average number of full-time employees in headquarters.



Gri taBle

Indicator Description Page Status Remarks

Economic Performance Indicators

EC1 Direct economic value generated and distributed 61 ●EC2 Financial implications and other risks and opportunities for organization's activities due to climate change 21, 33 ●EC3 Coverage of organization's defined benefit plan obligations 42 ●EC4 Significant financial assistance received from governments - ○ Not Reported

EC5 Range of ratios of standard entry-level wages compared to local minimum wage at significant locations of operation

64 ◐

EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation 52 ●EC7 Process of hiring local workers preferably and percentages of locally-hired high-ranking managers 51, 64 ●

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement

53-57 ●

EC9 Understanding and describing significant indirect economic impacts 16-21 ●Environmental Performance Indicators

EN1 Materials used by weight or volume - ○ Not Reported

EN2 Percentage of materials used that are recycled input materials 31 ◐

EN3 Direct energy consumption by primary energy source 32, 62 ●EN4 Indirect energy consumption by primary source 32, 62 ◐

EN5 Energy saved due to conservation and efficiency improvements - ○ Not Reported

EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives or services more widely used

31 ◐

EN7 Initiatives to reduce indirect energy consumption and reductions achieved - ○ Not Reported

EN8 Total water withdrawal by source 32, 62 ◐

EN9 Water sources significantly affected by withdrawal of water 30 ● No water sources that are significantly affected are found

EN10 Percentage and total volume of water recycled and reused 62 ●

EN11Location and size of land owned, leased, managed in, or adjacent to protected areas and areas of high biodiversity managed by us

- ○ Not Reported

EN12 Description of significant impacts of activities, products, and services on biodiversity biological diversity 34 ◐

EN13Habitats protected or restored

34 ◐

EN14Strategies, current actions, and future plans for managing impacts on biodiversity

34 ●

EN15Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk and the government and living in the areas affected by our business activities

- ○ Not Reported

EN16 Total direct and indirect greenhouse gas emissions by weight 32-33, 62 ●EN17 Other relevant indirect greenhouse gas emissions by weight 33, 62 ●EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 21, 33 ●EN19 Emissions of ozone-depleting substances by weight - ○ Not Reported

EN20 NOx, SOx, and other significant air emissions by type and weight 18 ◐Practices of managing air pollutants are partially reported

EN21 Total water discharge by quality and destination 34 ◐

EN22 Total weight of waste by type and disposal method 62 ◐

EN23 Total number and volume of significant spills - ●

Prevented any major leaks from occurring by using toxic substance management guidelines for each project and no significant accident was occurred in 2011

EN24Weight of transported, imported, exported, or treated wastes deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII Annex of Basel Convention

- ●

No case of transportation, import and export, treatment of wastes specified in provisions I,II,III,IV of the Annex of Basel Convention has occurred

EN25Name of water bodies significantly affected by the reporting organization's discharges of water and runoff protection states, protection levels and biological diversity value of related habitats

- ○ Not Reported

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation20-21,30-31

●


1. Strategy and Analysis

1.1 Statement from most senior decision-maker in organization 2-3 ● 1.2 Description of key impacts, risks, and opportunities 2-3, 12-13 ●

2. Organizational Profile

2.1 Name of organization - ● Samsung Engineering Co., Ltd.

2.2 Primary brands, products, and/or services Inside the cover ●

2.3 Operational structure 74 ●2.4 Location of organization's headquarters 72-73 ●

2.5 Location of overseas branch offices and sites Inside the cover, 72-73 ●

2.6 Nature of ownership and legal form 72-73, 74 ●

2.7 Markets served Inside the cover, 72-73 ●

2.8 Scale of the reporting organization 61, 74 ●

2.9 Significant changes during reporting period regarding size, structure, or ownership - ● No major change affecting decisions made by stakeholders during the reporting period

2.10 Awards received in reporting period 75 ●3. Report Parameters

3.1 Reporting period 1 ● 2011. 01 ~ 2011. 12

3.2 Date of most recent previous report (if any) - ● No previous publication

3.3 Reporting cycle (annual, biennial, etc.) 1 ● Every year

3.4 Contact point for questions regarding the report or its contents Back Cover ●3.5 Process for defining report content 6-9 ●3.6 Boundaries of report 1 ●3.7 State any specific limitations on the scope or boundary of report 1 ● All domestic and overseas workplaces, with project

3.8 Basis for reporting on comparability from period to period and/or betweenorganizations

1 ●

3.9 Data measurement techniques and bases of calculations for data, includingperformance index

- ● Comment separately if special attention is needed for a basis of measuring and calculating data

3.10 Explanation of the effects of & reasons for any re-statements of informationprovided in earlier reports

- ● No previous publication

3.11 Significant changes from previous reporting periods applied in the report - ● No previous publication

3.12 Table identifying the location of the Standard Disclosures in the report 66-69 ●3.13 Policy and current practices with regard to seeking external assurances for the report 1, 76-79 ●

4. Governance, Commitments, and Engagement

4.1 Governance of organization 4-5 ●4.2 Indicate whether the Chair of the highest governance body is also an executive officer 4-5 ●4.3 Number of members of highest governance body that are independent and/or non-executive members 4-5 ●

4.4 Mechanisms for shareholders and employees to provide recommendations or directions to highest governance body

4-5 ●

4.5 Compensation for members of highest governance body, senior managers, and executives 4-5 ●4.6 Processes in place for highest governance body to ensure conflicts of interest are avoided 4-5 ●4.7 Process for determining the qualifications and expertise of the members of the highest governance body 4-5 ●4.8 Internally developed statements of mission or values, codes of conduct, and principles 4-5 ●

4.9Procedures of highest governance body for management of economic,environmental, and social performances

4-5 ●

4.10 Processes for evaluating highest governance body's own performance 4-5 ●4.11 Whether and how the precautionary approach or principle is addressed by the organization 2-3 ●4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives 75 ●4.13 Membership in associations and/or national/international advocacy organizations 75 ●4.14 List of stakeholder groups engaged by the organization 6-9 ●4.15 Bases for identification and selection of stakeholders with whom to engage 6-9 ●4.16 Approaches to stakeholder engagement, including frequency of engagement by type and stakeholder group 6-9 ●4.17 Key topics and concerns raised through stakeholder engagement, and responses to them 6-9 ●

● Reported ◐ Partially Reported ○Not Reported




Society Performance Indicators

SO1Percentage of operations with implemented local community engagement, impact assessments, and development programs

16-19, 52 ◐This can be checked through the initial environmental impact evaluation beginning of project execution.

SO2 Percentage and total number of business units analyzed for risks related to corruption 27 ◐

SO3 Percentage of employees trained in organization's anti-corruption policies and procedures 27 ●SO4 Actions taken in response to incidents of corruption - ○ Not Reported

SO5 Public policy positions and participation in public policy development and lobbying - ● The Code of Ethics stipulates that the company is prevented from participating in politics.

SO6Total value of financial and in-kind contributions to political parties, politicians, and related institutions, by country

- ● The Code of Ethics stipulates that the company is prevented from participating in politics.

SO7 Total number of legal actions for anti-competitive behavior and monopoly practices, and outcomes - ●No cases. There have been no legal actions in connection with unfair competition and monopoly behavior.

SO8Monetary value of significant fines, and total number of non-monetary sanctions for non-compliance with laws and regulations

- ○ Not Reported

SO9 Operations with significant potential or actual negative impacts on local communities - ◐

This is checked through the environmental impact evaluation at the beginning of project execution. No workplaces have been found to have a seriously negative impact on local communities

SO10Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities

- ○ Not Reported

Product Responsibility Performance Indicators

PR1 Life cycle stages in which health and safety impacts of products and services are assessed, and percentage of significant products and services subject to such procedures

35 ◐Safety elements are checked through the pre-evaluation of hazards during the project execution.

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes

- ○ Not applicable due to the nature of our business

PR3 Type of product and service information required by procedures, and percentage of products and services subject to such information requirements


PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling


PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction 15 ●

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications - ●Product marketing communication complying with marketing-related laws and targeting people randomly is not conducted.

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications

- ● 0 Case

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

- ● 0 Case

PR9 Monetary value of significant fines for noncompliance with laws and regulations concerning provision of products and services - ● 0 Case

Indicator Description Page Status Remarks EN27 Percentage of products sold and their packaging materials that are reclaimed by category - ● No packages were used.

EN28Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations

- ●

No case of violation other than a fine for environmental damage has occurred during the reporting period. There was one case of an imposed fine.

EN29Significant environmental impacts of transporting products and other goods and materials used for the organization's operations and transporting members of the workforce

30 ◐

EN30 Total environmental protection expenditures and investments by type 32, 62 ●Labor Practices and Decent Work Performance Indicators

LA1 Total workforce by employment type, employment contract, and region 64 ●LA2 Total number and rate of employee turnover by age group, gender, and region 42, 64 ●LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees 42 ●

LA4 Percentage of employees covered by collective bargaining agreements 44 ◐Collect requests and opinions of employees through the Industrial Relations Council.

LA5 Minimum notice period(s) regarding significant operational changes 44 ◐The notification is done via official channels, such as the Industrial Relations Council.

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees

- ◐The Health and Safety Committee is run for each project.

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities 36, 63 ●

LA8 Education, training, prevention, and risk-control programs to assist workforce members, their families, or community members family members and local residents deal with serious diseases

37 ●

LA9 Health and safety topics covered in formal agreements with labor unions - ◐There is no trade union. Health and safety issues are discussed through the HSE Department.

LA10 Average hours of training per year per employee 40, 64 ●LA11 Programs for skills management and lifelong learning for continued employability and managing career endings - ○ Not Reported

LA12 Percentage of employees receiving regular performance and career development reviews - ● 100%

LA13 Composition of governance bodies and breakdown of employees per category by indicators of diversity 4, 64 ●LA14 Ratio of basic salary of men to women by employee category 64 ●

LA15 Return to work and retention rates after parental leave 42 ● 100%

Human Rights Performance Indicators

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

- ●

0%. We do not have an official process to check about human rights protection when we determine whether to make an investment in our subsidiaries and joint ventures

HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights - ○ Not Reported

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including percentage of employees trained

45 ●

HR4 Total number of incidents of discrimination, and actions taken - ○ Not Reported

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk

- ○ Not Reported

HR6 Operations identified as having significant risk for incidents of child labor, and measures taken 45 ●HR7 Operations identified as having significant risk for incidents of forced labor, and measures taken 45 ●

HR8Percentage of security personnel trained in the organization's policies or procedures concerning human rights relevant to operations

- ◐

Partners are responsible for facility security and security managers are trained about human rights and ethics in accordance with internal ethics regulations.

HR9 Total number of incidents of violations involving rights of indigenous peoples, and actions taken 52 ◐

HR10Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments

8-9 ◐In 2011, the working environment and possible discrimination elements were evaluated with stakeholders involved.

HR11Number of complaints related human rights that are filed, dealt with, and resolved through the official complaint registration channel

45 ◐



samsunG enGineerinG SUSTAINABILITY REPORT

Appendix

Gri statement

70 PERFORMANCESUMMARY

Our sustainability report meets all requirements of Level B+ at the level of reporting indicators in the GRI G3.1 guidelines. Also, a third-party verifier and the

application level checking of GRI have confirmed that this report is appropriate for B+ in the application levels of the G3.1 guidelines.

USA

Mexico

Trinidad & Tobago

UK

Hungary

Algeria

Saudi Arabia

India

Vietnam

China

japan

Malaysia

Thailand

UAE

Venezuela

CorPorate Profile

Global network

Americas

Europe

Middle East / Africa

Asia

Americas

Grupo samsung ingenieria Mexico, s.A. De C.V.Sevilla #40 Piso 9 col. Juarez, Delegacion Cuauhtemoc C.P. 06600 Mexico CityTel 52-55-5207-6823Fax 52-55-5080-7721

samsung engineering America iNC. 2103 Citywest Blvd., 18th floor, #101 Houston TX 77042, USATel 1-281-360-2058Fax 1-281-360-2195

Samsung Engineering Co., Ltd. Venezuela officeOficina 10-B-3, Piso 10, Torre La Noria, Paseo Enrique Eraso, Urb. Las Mercedes, Sector San Roman, Caracas, VenezuelaTel 58-212-992-2831/3031Fax 58-212-992-3639

samsung engineering trinidad Co., Ltd.T&T Chamber of Industry & Commerce Bldg. 1st Floor Westmoorings Trinidad West Indies Port of Spain Trinidad & TobagoTel 51-868-637-5403Fax 1-868-632-6104

Samsung Engineering America do Sul Projeto e Consultoria Ltda 20090-003 Av. Rio Branco 1, 16 andar, Sala 1610 Centro, Rio de Janeiro, RJ, BrasilTel 55-21-3613-3100Fax 55-21-3613-3111

Middle east / Africa

samsung saudi Arabia Co., Ltd. & samsung epC Co., Ltd. P.O.BOX 35816, Samsung Naffora Techno Valley, Jubail 31961, Kingdom of Saudi ArabiaTel 966-3-356-5900Fax 966-3-356-5929

samsung engineering Abu Dhabi officeP.O. Box 73410, 31st Floor, Etihad Tower 3, Baynunah Street, Al Bateen, Abu Dhabi, UAETel 971- 2-676-2323Fax 971- 2-676-2772

samsung engineering Algeria (branch office)16035 01 Rue Des Cretes- Hydra, Alger, AlgerieTel 213-21-48-4620Fax 213-21-48-4622

Asia

samsung engineering tashkent office100084, International Business Centre, Block A, 8th Floor, 107B, Amir Temur Street, Tashkent, UzbekistanTel 998-71-238-5830~2Fax 998-71-238-5837

samsung engineering Co., Ltd. tokyo officeRoppongi T-cube 17F, 3-1-1, Roppongi, Minato-ku, Tokyo, 106-8532, JapanTel 81-3-6234-2184Fax 81-3-6234-2183

samsung engineering Malaysia sdn., bhd. Suite 14.06, 14th Fl, Kenanga international, Jalan Sultan Ismail 50250 Kuala Lumpur, MalaysiaTel 603-2162-0714Fax 603-2162-0907

samsung engineering Construction (shanghai) Co., Ltd. 15F, Onelujiazui No. 68 Yin Cheng Road Shanghai 200120, PRCTel 86-21-5010-6886Fax 86-21-5010-6887

samsung engineering india private Ltd.201301 A1, Windsor IT Park, Tower A, Level-5, Sector-125, Noida, U.P. IndiaTel 91-120-406-0700Fax 91-120-406-0750

samsung thai engineering Co., Ltd. 98 Sathom Square Office Tower, Unit 1~6, 14th Floor, and 15th Floor, North Sathom Rd, Silom, Bangrak, Bangkok 10500, ThailandTel 66-2-232-7500Fax 66-2-232-7525

samsung engineering Vietnam Representative office Unit 1909, 19th Floor, Keangnam Hanoi Landmark Tower 72 Building, Plot E6, Giay Giay New Urban Area, Me Tri Commune, Tu Liem District, Hanoi, VietnamTel 84-4-3934-7992Fax 84-4-3934-7994

samsung engineering Co., Ltd. singapore Representative office 049483 3 Church Street, 12-01 Samsung HUB Building, Singapore Tel 65-6222-0841Fax 65-6222-6735

but. samsung engineering indonesia135-856 Bapindo Plaza, 16th floor of Mandiri Tower Jl.Jend Sudirman Kav.54~55, Jakarta IndonesiaTel 62-21-2995-0112Fax 62-21-2995-0109

europe

samsung engineering Milan office Via Brescia 28, Palazzo D, Scala 3, 20063 Cernusco Sul Naviglio, Milano, ItalyTel 39-02-3672-2050Fax 39-02-3672-2074

Samsung Engineering Magyarorszag KFT. 1123 Alkotas u.53. Budapest HungaryTel 36-1-319-2694Fax 36-1-319-2641

samsung engineering Co., Ltd. uK office 16th Fl., City Tower, 40 Basinghall St. London EC2V 5DE UKTel 44-20-7382-1643Fax 44-20-7382-1649

Establish-ment Date 1970. 01. 20 Capital Stock KRW 200 billion

President & CEO

Ki-Seok Park Total AssetsKRW 5.19 trillion (as of the end of 2011, based on KIFRS)

Employees 7,620 (as of the end of 2011) RevenueKRW 9.3 trillion (as of the end of 2011, based on KIFRS)

ContactTel: 02-2053-3000Fax: 02-2053-3339

Operating Profit

KRW 717 billion (as of the end of 2011, based on the KIFRS)

Address 500 Samsung GEC, Sangil-dong, Gangdong-gu, Seoul, Korea

72 73APPENDIX

Brazil

Italy

Uzbekistan

Singapore

Indonesia

head office (seoul, Korea)


List of Awards (overseas)Category Year Awards Description

Overseas 2011 MEED 2011 Top EPC Contractor (Ranked 2nd) Ranked by MEED, a professional magazine on the Middle East economy. Received new orders in the oil and gas sectors

Overseas 2011ENR Top International Contractor (Overseas – Ranked 34th)

Ranked by ENR, a professional magazine on the US construction business, based on overseas sales

Overseas 2011ENR Top International Contractor (Global – Ranked 55th)

Ranked by ENR, a professional magazine on the US construction business, based on domestic/overseas sales

Overseas 2011PMI Distinguished Project Award (Thailand GSP-6)

Granted by PMI, the world’s leading not-for-profit membership association for the project management profession. Competencies for performing individual projects are evaluated and awards are given on a project-by-project basis

Overseas 2010 Oil & Gas Middle East Annual Ranking (2nd)Ranked by Oil & Gas, a professional magazine on the petrochemical business in the Middle East. Received new orders in the oil and gas sectors

Overseas 2010ENR Top International Contractor (Overseas – Ranked 35th)

Ranked by ENR, a professional magazine on the US construction business, based on overseas sales

Overseas 2010ENR Top International Contractor (Global – Ranked 69th)

Ranked by ENR, a professional magazine on the US construction business, based on domestic/overseas sales.

Overseas 2010 Institutional Investor (Best IR – Ranked 1st) Ranked by Institutional Investor, a professional magazine for stock investors, based on a survey of 800 investors and analysts

Overseas 2010 Forbes Asia’s 50 Fabulous Companies Ranked by Forbes Asia based on sales, operating profit, and market capitalization for the past five years

List of Awards (Domestic)Category Year Awards Description

Domestic 2011Hankyung Daily’s Super Companies in Korea (Ranked 31st)

Ranked by Hankyung Daily based on a combination of market capitalization, sales and net income

Domestic 2011Fortune Korea’s 500 Top Companies (Ranked 88th)

Ranked by Fortune Korea based on the sales of the previous year

Domestic 2011 Fortune Korea’s Fastest Growing Companies A total of 11 companies were on the list

Domestic 2010Hankyung Daily’s Super Companies in Korea (Ranked 37th)


Domestic 2010Fortune Korea’s 500 Top Companies (Ranked 93rd)

Ranked by Fortune Korea based on sales of the previous year

Domestic 2010 Fortune Korea’s Fastest Growing Companies Fortune Korea’s Fastest Growing Companies

Domestic 2009Hankyung Daily’s Super Companies in Korea (Ranked 51st)


Domestic 2009Fortune Korea’s 500 Top Companies (Ranked 117th)

Ranked by Fortune Korea based on sales of the previous year

Member of Associations*Construction Outsourcing Association Korea Construction Engineers Association Korea Carbon Capture and Storage Association

International Water Association(IWA) Korea Economic Research Institute Korea Electrical Contractors Association

Seoul Chapter, The Construction Association of Korea Korea Professional Engineers Association Korea Electric Engineers Association

Seoul Chamber of Commerce Korea Management Association Korea Information Communication Contractors Association

A Chapter of Korea Institute of Registered Architects The Korea International Trade Association The Korea Railway Association

The Federation of Korean Industries Korea Industrial Technology Association Korea Plant Industries Association

The American Chamber of Commerce in Korea Korea Fire Facility Association Korea Plant Engineering Association

The European Union Chamber of Commerce in Korea Korean Society of Fire Protection Professional Engineers Korea Institute of Plant Engineering & Construction

Korea Business Council for Sustainability Development (KBCSD) Fire Safety Association International Contractors Association of Korea

The Construction Management Association of Korea Korea Engineering & Consulting Association Korea Green Foundation

* The principles regarding corporate social responsibility or support for external initiatives are under internal consideration.

CorPorate Profile

shareholders Number of shares held equity Ratio

Cheil Industries Inc. 5,238,299 13.1%

National Pension Service of Korea 3,846,299 9.6%

Samsung SDI Co., Ltd. 2,036,966 5.1%

JF Asset Management Limited 1,748,374 4.4%

Korea Investment Trust Asset Management 1,667,782 4.2%

Others 25,462,280 63.6%

Total 40,000,000 100%

ownership structure

63.6%

13.1%

9.6%

5.1%

4.4%

4.2%

total shares issued

40 million

74 75APPENDIX

● Cheil Industries ● National Pension Service ● Samsung SDI ● JF Asset ● Korea Investment Trust ● Others

Organizational Chart

Upstream Project Management Division

Gas Project Management Division

Refinery Project Management Division

Petrochemical Project Management Division

Steel & Metals Plant Project Management Division

Energy Engineering Technology Division

Hydrocarbon Engineering Technology Division

Industrial & Infrastructure Engineering Technology

Division

Audit Department

HSE Department

Marketing Unit Energy Business Hydrocarbon BusinessBusiness Support

DivisionPower Business

Outsourcing Management Unit

Domestic Project Management Division

President ofCorporate Planning

Global Environment Research Center

CEO

Corporate Strategy & Planning Division

Financial Support Division


76 77APPENDIX

inDePenDent assuranCe statement

Scope and objectivesTwo Tomorrows (Asia) Limited has undertaken independent assurance of

Samsung Engineering’s 2011 Sustainability Report.

The assurance process was conducted in accordance with AA1000AS (2008).

We were engaged to provide moderate level, Type 1 assurance, which includes

evaluation of adherence to the AA1000APS (2008) principles of inclusivity,

materiality and responsiveness (the Principles).

We undertook no checking of sustainability performance data and

consequently offer no assurance over performance data or associated claims

included in the Report.

Responsibilities of the directors of samsung engineering and of the assurance providersThe directors of Samsung Engineering have sole responsibility for the

preparation of the Report. In performing our assurance work, our responsibility

is to the management of Samsung Engineering. However our statement

represents our independent opinion and is intended to inform all of Samsung

Engineering’s stakeholders. We adopt a balanced approach towards all of

Samsung Engineering’s stakeholders.

We have no other contract with Samsung Engineering and this is the first year

that we have provided independent assurance. We were not involved in the

preparation of any part of the Report. However, having reviewed and provided

feedback on drafts of the Report, in a number of instances changes were made

to the final version. Our team comprised MinGu Jun, project leader, and InMog

Yang. This assurance statement was prepared by the team in English, and

reviewed and signed off by Jon Woodhead, Sustainability Services Director, Two

Tomorrows. Further information, including individual competencies relating to

the team can be found at: www.twotomorrows.com.

basis of our opinionWe undertook the following activities:

• Review of Samsung Engineering’s process for identifying and evaluating

material issues.

• Brief materiality assessment based on internet research, peer reports,

performance standards of International Finance Corporation, ESG report of an

SRI (Socially Responsible Investment) analyst and our Tomorrow’s Value Rating

to compare the issues identified through the Samsung Engineering materiality

process.

• Interviews with four executive management team members and managers

responsible for managing non-financial issues, based at the Seoul

headquarters. Interviewees were suggested by Samsung Engineering and

agreed with Two Tomorrows.

• Review of Samsung Engineering’s approach to stakeholder engagement

and the outputs of recent stakeholder engagement. We had no direct

engagement with stakeholders other than staff.

• Assessment of information provided to us by Samsung Engineering on its

reporting and management processes relating to the Principles.

• Assessment of supporting evidence for key claims in the Report.

• Review and feedback on drafts of the Report and the Global Reporting

Initiative (GRI) index in the report.

FindingsWe reviewed and provided feedback on drafts of the Report and where

necessary changes were made. On the basis of the work undertaken, nothing

came to our attention to suggest that the Report does not properly describe

Samsung Engineering’s adherence to the Principles of the AA1000APS.

observationsWithout affecting our assurance opinion we also provide the following

observations.

In this first sustainability report, Samsung Engineering established three

‘directions’ and six ‘areas for CSR implementation’ and linked them with the

corporate vision of ‘Creative Engineering Solution Provider’. This is a good

starting point for integrating the CSR framework with efforts to achieve the

vision. In the future, integration between the corporate vision and strategy

and the CSR framework will be increased through regular review of the CSR

directions and areas, to ensure these reflect new material issues, and to exploit

further linkages with the corporate vision.

Over time, the current governance structure for CSR, where main issues are

managed by the CSR team, should be improved by appointing a responsible

Director and establishing a committee under the Board of Directors to oversee

progress and to provide authority for action. These developments should

also be used to support enhancements in the management and capacity of

relevant functional divisions.

The Report includes a series of CSR goals in the ‘Commitment to Sustainability’

section. Samsung Engineering should ensure that these goals are clearly linked

with material issues identified through stakeholder engagement and the

materiality assessment process. We also recommend that Samsung Engineering

improve the goals to include more specific, measurable, achievable, relevant

and time bound targets.

We have confirmed that the GRI indicators referenced in the GRI index pages

are reported either partially or fully. In our opinion the Report meets the criteria

within the GRI G3 guidelines to an application level of B+.

Inclusivity concerns the participation of stakeholders in developing and

achieving an accountable and strategic response to sustainability.

• Samsung Engineering categorises its stakeholders as ‘Business Stakeholders’

and ‘Non-Business Stakeholders’, in line with the AA1000 Stakeholder

Engagement Standard. Whilst this approach is seen as a good basis, a formal

documented process for stakeholder identification and participation should

be established to ensure that the current approach is ongoing and not ‘one

off’.

• Samsung Engineering demonstrates a high level of understanding and

response to overseas client’s needs, including the example of improving its

EHS performance and providing feedback to clients through VOC (Voice of

customer) system. In addition to clients, further improvement can be made by

expanding approaches such as use of regional experts and market intelligence

to cover potential CR risks relating to global project sites, suppliers and local

communities. We also recommend that Samsung Engineering should ensure

more systematic and integrated management of environmental and social

issues through continuous collection and analysis of related information

through regional hubs.

• Samsung Engineering’s approach and reporting emphasises eco-efficiency

in the whole life cycle of the business. To ensure continuous improvement,

stakeholders and relevant communication channels should be taken

into consideration at every step of the business including engineering,

procurement, construction and operations during the development of

stakeholder participation processes.

Material issues are those which are necessary for stakeholders to make

informed judgments concerning Samsung Engineering and its impacts.

• Based on the work undertaken, we are not aware of any issues that are of high

materiality for its operations that Samsung Engineering has not recognised

within its report. However, we recommend that future materiality assessment

should exclude those issues that many stakeholders consider as standard

business management activities, such as ‘Project Quality’, ‘Risk management’,

‘Providing base for continual growth’, unless these can be clearly linked with

CSR implementation areas and goals.

• The process for assessing the business impact of sustainability issues

should reflect legal, project quality and environmental risk factors. We

also recommend that Samsung Engineering should ensure consistent

implementation of the materiality assessment process by establishing a formal

process for top management review and approval of material assessment

processes and results.

• We also recommend that Samsung Engineering should introduce a

stakeholder review committee for review and moderation of the materiality

assessment process, to ensure this reflects the full range of stakeholders’

opinions.

Responsiveness concerns the extent to which an organisation responds to

stakeholder issues.

• The results of the company’s stakeholder survey revealed that ‘implementation

of environmental-friendly projects’ is seen by the majority of stakeholders as

the most important issue among the environmental section. As the materiality

analysis assigned relatively low significance to this topic, based on its current

business impact, the Report includes only one case study on the greenhouse

gas reduction plant project. We recommend that future reports should

include additional information on the company’s projects in this area, such

as enhancing relevant R&D, employee development and marketing capacity

building, and development of a strategy for creating related opportunity in the

long term.

• Establishing the ‘Green Management System’, that integrates the energy,

greenhouse gas and other environmental aspects of ISO 26000, is a

commendable approach. We recommend that Samsung Engineering should

ensure that the system is embedded within each functional division and

project teams.

• Samsung Engineering also utilises an ERS (Environmental Rating System) to

identify further performance improvement opportunities. In the future we

recommend that the company should ensure that the results of the ERS are

more directly reflected in the performance evaluation of the project teams.

• In many developing country projects, establishing joint ventures with local

partners is required by local law. We recommend that Samsung Engineering

should report on the current status of JVs in relevant developing countries,

and efforts to establish a formal system for screening partner companies’

capacity for managing social and environmental risks will be needed.

• Samsung Engineering is potentially exposed to risk through incidents within

international projects and local suppliers. We recommend that Samsung

Engineering should establish a systematic incident management plan

that prioritises and implements a communication strategy for relevant

stakeholders.

Two Tomorrows (Asia) Limited

Seoul, Korea

15th May 2012

Jon WoodheadProject Director

MinGu JunProject Leader

inMog YangLead Associate

Two Tomorrows (Asia) Limited is part of DNV, a global provider of services for managing risk, helping

customers to safely and responsibly improve their business performance. www.twotomorrows.com


78 79APPENDIX

reVieW oPinion

I am very pleased to meet the Sustainability Report of Samsung Engineering,

which is leading the industry through many successful projects both in Korea

and abroad. After having reviewed this report, I would like to give you four

points as follows:

The first point is about the role of the engineering industry in relation with

sustainability management.

So far Samsung Engineering has endeavored to accommodate client’s

requirements fully and address quality challenges thoroughly by means of

Plant Satisfaction Index (PSI), which is introduced in this report. And it is very

likely that Samsung Engineering’s key clients in the oil and gas, petrochemical,

power generation, and steel industry will include sustainability-related issues

in their project requirements. Sustainability activities by the International

Petroleum Industry Environmental Conservation Association (IPIECA), the

International Association of Oil & Gas Producers (OGP), and the World Steel

Association are such examples.

At the same time, the Royal Academy of Engineering has demanded that an

engineer should consider a way of contributing to sustainable development

in applying his/her engineering knowledge even when his/her client does

not ask him/her to do so. Therefore I hope that Samsung Engineering will not

only respond to client’s increasing demands for sustainable development

completely, but also be equipped with a capability of proposing a creative

sustainability solution that the client has not thought of yet, and thus

enhancing the level of sustainability management of both Samsung

Engineering and its client.

The second point is concerned with the linkage between corporate strategy

and sustainability management strategy.

I think that the vision of “Creative Engineering Solution Provider” for the

well-being of humankind and the environment, presented in this report, is

a major step forward of the company’s strategy because it links Samsung

Engineering’s corporate strategy and sustainability management strategy

with this common value. In particular, “Global Citizenship” that Samsung

Engineering has selected as one of its core values shows the company’s

strong will to become a corporate citizen contributing to sustainable

development.

However, it should be borne in mind that it is not a matter of verbal

expression simply to improve logical consistency when we assert that

sustainability management strategy should be linked to corporate strategy

closely. Rather, it is a warning against a superficial approach that mechanically

adds a new societal demand of sustainability management without any

change in the existing management practices. Therefore, I hope that the

future strategy of Samsung Engineering will evolve into an integrated one,

which merges an aspect of sustainable development with the company’s

established tradition of uncompromising quality control of its projects and

performance.

My third point is about the meaning of sustainability reporting.

It should be noted that sustainability reporting is not merely publishing

a report, but a part of continuous process of plan-do-check-act. In this

sense, the following report will need to demonstrate clearly how Samsung

Engineering has incorporated what is measured, assessed, and promised in

this report in the company’s business activities during the reporting period.

The fourth point is related to a way of building up trust in communicating

sustainability.

Along with assurance, the third-party review has been used as a way of

gaining stakeholder trust in a company’s sustainability report. However, above

all things, stakeholder trust relies on how consistently the company has put

its promise into action.

Samsung Engineering should review constantly whether its business activities

are proceeding towards the directions as promised in the disclosures on

management approach of this report (to cite a few, strengthening compliance

system; establishing an eco-friendly business management; creating a work

environment balancing work and life; fair trade and mutually beneficial supply

chain management; and contributing to the local community) and prove

how it is materializing its promises in its activities to achieve performance as

anticipated.

To link this point with the aforementioned meaning of sustainability

reporting, publishing this report may be the first step to stakeholder trust, but

the reports to be published next year, the year following next year, and the

subsequent years that show consistent actions towards its promises are truly

the way to earn and accumulate trust.

I am looking forward to seeing Samsung Engineering developing into a

company obtaining stakeholder trust and leading sustainable development

through business and management innovation.

May 2012

Director of Sustainability Management Research Center,

Kookmin Institute of Business Research

han-Kyun Rho

GHG assuranCe statement

introduction

DNV Certification, Ltd. (“DNV”) was commissioned by Samsung Engineering Co.,

Ltd. (“Samsung Engineering”) to verify the Samsung Engineering’s Greenhouse

Gas Inventory Report for the calendar year 2010~2011 (“the report”) based

upon a limited level of assurance. Samsung Engineering is responsible for the

preparation of the GHG emissions data on the basis set out within the WRI/

WBCSD GHG protocol: 2004 and the principles set out in ISO 14064-1:2006.

Our responsibility in performing this work is to the management of Samsung

Engineering only and in accordance with terms of reference agreed with them.

DNV expressly disclaims any liability or responsibility for any decisions, whether

investment or otherwise, based upon this assurance statement.

scope of Assurance

The emissions data covered by our examination comprise Direct emissions

(Scope 1 emissions), Energy indirect emissions (Scope 2 emissions) and Other

indirect emissions (Scope 3 emissions) :

• Reporting period under verification : Calendar Year 2010~2011

• Organizational boundary for reporting : Samsung Engineering Co., Ltd.

Organizational Boundaries

Address / RemarkVerification activity

Year 2010 Year 2011

Buildings6 buildings(including

headquarter)

9 buildings(including

headquarter)

Desk Review, Site visit, Process & data

verificationDomestic

construction sites

34 construction sites in Korea

46 construction sites in Korea


verificationOverseas

construction sites

Overseas 14 construction sites

Overseas 17 construction sites

Desk Review, Process & data verification

Operation & Maintenance

sites

7 sites for Operation & Maintenance

7 sites for Operation & Maintenance


verification

Verification Approach

The verification has been conducted by DNV from 23rd April through 18th May

2012 and performed in accordance with the verification principles and tasks

outlined in ISO 14064-3:2006. We planned and performed our work so as to

obtain all the information and explanations deemed necessary to provide us

with sufficient evidence to provide a limited verification opinion concerning

the completeness of the emission inventory as well as the reported emission

figures in ton CO2 equivalent. As part of the verification process:

• We have reviewed and verified the Samsung Engineering’s Greenhouse gas

Management System.

• We have reviewed the GHG inventory Report dated on 23rd April 2012.

• We have reviewed and verified the process to generate, aggregate and report

the emissions data.

Conclusions

As a result of the work described above, in our opinion nothing has come to

our attention that would cause us to believe that the GHG emissions data set

out in Samsung Engineering’s report are not fairly stated. The GHG Emissions of

Samsung Engineering for the year 2010~2011 were confirmed as below;

Greenhouse Gas emissions of samsung engineering Co., Ltd. from Yr

2010~2011(Unit: ton CO2-e)

Operational Boundary (Period)

Direct emissions (Scope 1)

Indirect emission(Scope 2)

Other indirect emissions (Scope 3)

Totalemissions

Year 2010 23,342 7,857 1,742,941 1,774,140

Year 2010 67,824 12,889 1,894,948 1,975,661

※ In order to report the GHG emissions as an integer, the rounded number on the statement

might be different from the number on the system with ± 1 tCO2.

※ Total emissions = Scope 1 + Scope 2 + Scope 3

18th May 2012

This Assurance Statement is valid as of the date of the issuance (18th May 2012). Please note that this Assurance statement would be revised if any material discrepancy which

may impact on the Greenhouse Gas Emissions of Samsung engineering Co., Ltd., is subsequently brought to our attention.

In the event of ambiguity or contradiction in this statement between English version and Korean version, Korean shall be given precedent.

in-KyoonCountry Manager

DNV Certification, Ltd.

tae-ho KimLead Verifier

DNV ASSURANCE STATEMENT

No.: AS_PRJC-378793-2012-CCS-KOR_E


Terms Description

AA1000ASThis is a principle regarding obligations to explain sustainability management, specified by the company. The international standard includes three principles: inclusivity, materiality and responsiveness.

CCS (Carbon Capture and Storage)This refers to all technologies that remove carbon dioxide from fossil fuels by capturing and storing the gas. This technology allows you to collect in high density, take away and store carbon dioxide before it is emitted into the air. Research is under way to make this technology available as an alternative technology for preventing global warming.

CDM (Clean Development Mechanism)In this system, which is stipulated in Article 12 of the Kyoto Protocol, an advanced nation can be considered to have reduced greenhouse gases in its region by investing in a developing nation to reduce greenhouse gas emissions in the region.

CDP (Carbon Disclosure Project)This refers to a global project by international financial or investment organizations, to conduct a survey asking major businesses in each country what strategies they have to respond to climate change and how much carbon they release into the air.

CO2 RecoveryThis technology allows you to increase efficiency, reduce emissions of or reuse CO2 in processes to treat byproducts, such as methanol and urea, or ancillary materials by recycling CO2 generated in consuming fuel in a petrochemical plant.

Engineering This refers to collecting and integrating technologies from various fields and completing projects.

EPC This is a combination of the initials of engineering, procurement and construction and refers to the scope of work of an engineering project.

FEED (Front End Engineering Design)This indicates the entire engineering process from front end engineering, design, design basis to process the design package to completion of the basic design package.

Green House Gas This refers to a gas causing a greenhouse effect. Greenhouse gases specified by the WRI/WBSCD are CO2, CH4, N2O, PFCs, HFCs and SF6.

GOSP (Gas Oil Separation Plant)This indicates a plant that separates oil and gas before treating them. Oil and gas are mixed when they are extracted from oil wells and separated to be made into products.

GRI (Global Reporting Initiative)

This is an independent international non-profit organization that created international standards for a sustainability report. This organization provides standardized reporting indices for a sustainability report. The current version is G3.1. In accordance with the international trends towards integrated reporting, the organization is developing G4, a new framework for a sustainability report, including existing financial reports and expected to announce it in 2013.

ITB (Invitation to Bid)This refers to the client demanding that contractors propose price, delivery date, and other options conditions in relation to the construction of a plant or purchase of equipment.

LSTK (Lump Sum Turn Key)This refers to a package deal, where a plant construction agreement is signed based on estimated construction volume and amount while design is incomplete. The contractor provides all services, including financing, land purchase, design, construction and test operation, and delivers the facility to the client in complete form.

Materiality TestThis refers to a technique of identifying opportunities and risks a company faces and determine which are more important than the others by considering both stakeholders’ interests and business issues deducted from communication among stakeholders.

OffshoreIn the dictionary, this means a part of sea, which is near the coast. This also indicates all facilities and activities for drilling oil and natural gas from the sea and transporting them through pipes to the shores.

Para-Xylene This refers to a colorless, transparent and volatile liquid smelling of aromatic odor, which is one of xylene isomers with two methyl groups attached to benzene.

Plant This refers to a combination of industrial facilities, machine, electricity, construction, communications and is used to indicate facilities and factories.

PQ (Pre-Qualification) This refers to evaluating qualifications of bidders when the client requests that they submit a bidding or proposal.

Reverse Engineering This refers to disassembling and examining, or analyzing a finished product in detail to discover its design or production process.

SR (Social Responsibility)This refers to responsibilities that the government, companies, institutions and organizations should fulfill. For businesses, this may be called “corporate sustainability”. Responsibilities are applied to various fields, such as human rights, the environment, labor practices and organizational governance and the international standard for social responsibility (ISO 26000) came into effect in 2010.

UreaThis refers to organic compounds (CO(NH2)2) with crystalline materials and no color. They are final compounds in the protein metabolism of mammals and certain fish (AA1000AS).

UpstreamThis refers to a process from oil exploration, mining to the production of petrochemical products. On the contrary, the sales process, including marketing, transportation and distribution, is called downstream.

Value EngineeringAll activities, such as design criteria, specification, suppliers and construction methods, can be improved to meet requirements of quality, construction period, and stability in each section of EPC at minimum cost.

Glossary

80APPENDIX

500 Samsung GEC,Sangil-dong, Gangdong-gu, Seoul, Korea134-090

Tel: +82-2-2053-3000Fax: +82-2-2053-3339E-mail: [email protected] Website: http://www.samsungengineering.com

If you want to download this report in PDF format, visit our website at

http://www.samsungengineering.com

If you have any suggestions or questions about this report, please contact us using the

information below.

2011 samsung engineering sustainability Managementtask Force

CsR office

Project Management

Corporate Governance

ethics & Compliance

environment, health & safety

employees & Workplace

supply Chain

Local Community

Sung-Il Hong, Jeong-Hee Sohn, Sung-Ah Lee, Seung-Kyu Lee

Dong-Jin Lee, Beom-Seop Yun, Ji-Young Kim, Jeong-In Song, Jin-Hyung Park, Ji-Won Moon

Min-Kook Kang, Seung-Kwon Bang, Wan-Seob Kim

Tae-Yong Park, Jae-Sang Na, Jong-Kwang Lee

Dae-Hoon Kim, Soo-Jung Hong, Cheon-Su Yeo

Ki-Chae Ahn, Jae-Hyun Park, Seok-Min Lee, Ki-Seung Han, Do-Young Park, Joon-Kyu Chung

Dong-Soo Son, Kyu-Ha Kim, Joung-Jun Baek, Ji-Eun Shin

Song-Yi Kim, Ho-Jae Lee, Ji-Hee lim, Jae-Woo Chang, Na-Mi Choi

500 Samsung GEC, Sangil-dong, Gangdong-gu, Seoul, Korea Tel. 02-2053-3000 Fax. 02-2053-3339

www.samsungengineering.com

Samsung Engineering Co., Ltd. was selected as a component of the Dow Jones Sustainability Index (DJSI).

The DJSI is a benchmark index for global sustainability management.

This report was printed on environment-friendly paper using soy ink.

2011 Samsung Engineering SR Eng1

Documents

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