SK Innovation turning green after four decades of R&D refinement

Once just an oil refiner, SK Innovation now seeks to transform itself into a "green energy company" that prioritizes carbon neutrality in its business task.

Lee Seong-jun, head of the Institute of Environmental Science & Technology at SK Innovation, speaks at a press event announcing the results of the company's R&D business strategies over the past four decades on Monday at SK headquarters in central Seoul. [SK INNOVATION]

Once just an oil refiner, SK Innovation now seeks to transform itself into a "green energy company" that prioritizes carbon neutrality in its business operations.

Research and Development (R&D) has always been at the center of SK Innovation's journey, which helped the company secure core technologies for a greener future, including electric vehicle batteries and biopharmaceuticals.

"SK Innovation slogged its way to invest in R&D, and the capabilities it gained through the process largely contributed to turning itself into an energy company that owns key future technologies including batteries and biopharmaceuticals," said Prof. Song Jae-yong who teaches business at Seoul National University, during a press event announcing the results of his joint research on SK Innovation's 40 years of R&D management history, with Lee Ji-hwan, a business professor at KAIST.

Professor Song Jae-yong who teaches business at Seoul National University, shares his analysis of SK Innovation's investment in R&D at a press event Monday at SK headquarters in central Seoul. [SK INNOVATION]

SK's R&D management is rooted in the philosophy of the late SK Group founder Chey Jong-hyun, father of current Chairman Chey Tae-won, who emphasized that R&D always should come with production and marketing, Song added.

SK first opened an R&D center in 1983 in Daejeon, as the first Korean petrochemical company to do so. The center renamed itself to the Institute of Environmental Science & Technology in 2021 and upped the number of researchers to 1,800, a three-fold increase compared to the end of 2016.

SK was also the first Korean company to build an R&D center in the United States in 1989. It recently built another one in Silicon Valley.

Song and Lee also shared some results that SK Innovation achieved through a focus on R&D.

In 1998 it successfully developed its own lithium-ion batteries used for smartphones, laptops and computers, which led to development of the fast-charging batteries for electric vehicles.

In 2004, SK also developed lithium-ion battery separators, one of four core components of making EV batteries, a first for a Korean company and the world's third company to do so.

SK also succeeded in developing two U.S. Food and Drug Administration (FDA)-approved drugs in 2019. It was the first case in which a Korean company developed a drug independently from the beginning and obtained approval from the FDA.

"In terms of biopharmaceuticals, it is the result of SK investing in it for more than three decades," said Song. "R&D doesn't always lead to sales increase, but SK's value surged more than six-fold compared to late 1990s."

The combined market capitalization of SK Innovation and its subsidiaries, which stood at 4.1 trillion won ($3.1 billion) in 1999, surged to 23.7 trillion won in 2022. During the same period, the main Kospi bourse has increased 2.17 times over.

"Through the latest project, we confirmed that SK Innovation's corporate value has been increased based on an emphasis on R&D," said Lee Seong-jun, head of the Institute of Environmental Science & Technology. "SK Innovation will become a global leader in the green energy area through continuous innovation in R&D."

BY SARAH CHEA [chea.sarah@joongang.co.kr]