The company prepares for mandatory climate reporting as it enters the maritime satellite communication market
Category: Business
SK Telecom is taking proactive steps to address climate risks associated with its nationwide telecommunications infrastructure, as the mandatory climate disclosure framework approaches. During the 4th ESG Economy Forum held on April 19, 2026, Lee Jae-hyung, head of the ESG Promotion Office at SK Telecom, outlined the company's strategies for connecting climate risks to financial impacts.
In recent years, environmental, social, and governance (ESG) reporting has primarily focused on carbon neutrality goals and eco-friendly initiatives. Moving forward, climate disclosures are set to evolve, emphasizing how climate change affects businesses' costs, assets, revenues, and investment plans. Lee noted that SK Telecom has been preparing for climate disclosures for the past four to five years, addressing internal skepticism by establishing a systematic response framework.
One of the unique challenges facing SK Telecom is its extensive network of telecommunications equipment, which is distributed across the country rather than concentrated in specific facilities. According to Lee, the company operates hundreds of thousands of sites and millions of devices, making it vulnerable to natural disasters such as wildfires, typhoons, heavy rainfall, and strong winds. Damage to telecommunications infrastructure due to these events can lead to increased recovery costs, asset impairment, and revenue loss from service disruptions.
To manage these physical risks, SK Telecom is not only treating them as disaster response issues but is also incorporating them into financial impact assessments for climate disclosures. Physical risks include direct threats to business operations, facilities, and personnel from climate change or extreme weather. Damage to telecommunications equipment can result in tangible asset impairment or recovery costs, and service disruptions can directly affect revenue streams. For example, extreme heat can reduce outdoor workers' productivity and increase electricity usage, thereby raising operational costs.
As part of its climate risk management strategy, SK Telecom conducts annual assessments of climate-related importance. Starting in 2023, the company implemented a survey-based importance evaluation, with plans to expand the assessment scope in 2024 to include separate criteria and a consolidated basis by 2025. This year, the company surveyed 188 individuals to gather insights on various risk factors, including rising electricity costs, greenhouse gas emission trading prices, and the potential impacts of typhoons, wildfires, and extreme heat.
The financial impact assessment involves identifying climate-related risks and opportunities, developing formulas to estimate how these factors affect revenue, operating expenses, and assets, and linking them to relevant line items in financial statements. For example, the impact of extreme heat can be calculated by considering outdoor workers' productivity loss rates, average wages, the number of extreme heat days, and the number of workers affected.
SK Telecom has established a climate disclosure working group that has been operational for four years. This group includes participation from the ESG team and departments such as finance, accounting, infrastructure, supply chain management, business management, and subsidiaries. Lee emphasized that climate disclosures cannot be the sole responsibility of the ESG team; governance structures must be established to facilitate comprehensive data management across the organization.
The working group reviews the connection between disclosure information and financial statements, with the infrastructure department providing data on telecommunications facilities and equipment, as well as actual damage records. SK Telecom is also undertaking a project to verify the reliability of external physical risk assessment models. The company utilizes external assessment tools like MSCI to analyze physical risks and conducts a "backcasting" exercise to compare actual disaster-related damages with assessment results. This approach allows SK Telecom to evaluate the accuracy of predictive outcomes based on internal infrastructure and business management data.
In addition to addressing climate risks, SK Telecom's subsidiary, SK Telink, has made strides in entering the maritime satellite communications market. On April 20, 2026, it was reported that SK Telink signed supply contracts for Starlink services with major domestic shipping companies, including HMM, Pan Ocean, and H-Line Shipping. The company plans to provide customized infrastructure solutions based on an analysis of each shipping company's operational routes and security requirements.
Meanwhile, KT, another major telecommunications company in South Korea, has been working on improving its governance structure. Recent reports indicate that KT's board of directors has revised its ethical guidelines and delegation contracts to strengthen the independence of outside directors, requiring them to self-assess compliance with these guidelines biannually. In addition, SK Telecom is addressing follow-up measures from past personal information leakage incidents. The company has improved its personal information processing systems and firewall policies, though some actions remain incomplete, prompting the Personal Information Protection Commission to conduct additional compliance checks by the end of the year.
As of mid-May 2026, the telecommunications sector has faced challenges, with a reported 5% decline in the telecommunications index, slightly underperforming the KOSPI's drop of 4.9%. Institutional investors have been net buyers of SK Telecom and LG Uplus stocks, whereas KT has seen net selling. In a competitive environment, LG Uplus has also launched a brand campaign featuring the idol group Boynextdoor, and KT has implemented transparent trading practices for used phones by posting daily price lists in retail locations.
Lee Jae-hyung concluded by emphasizing the need for definitive disclosure standards, stating, "What the ESG department has done so far has been our best effort. Now is the time to transform the structure to prepare for mandatory disclosures in the coming years." He urged that clarity on the timing and scope of disclosures is necessary for companies to adapt effectively.