LG Chem established its sustainability vision and strategy in 2019 based on nine focus areas and declared mid- to long-term goals including “Carbon-neutral Growth” in 2020. In 2021, seeking to invigorate communications with stakeholders and strengthen business competitiveness, LG Chem selected key indicators in the areas of environmental, social, governance, and growth, based on the concept of stakeholder capitalism proposed by the World Economic Forum (WEF). To keep pace with sustainable growth as a Top Global Science Company, LG Chem advanced its carbon-neutral growth goal by 20 years and announced a new target of “2030 Carbon-neutral Growth” and “2050 Net-Zero” for Scope 1 and 2 emissions. LG Chem is constantly assessing risks and opportunities, and conducting a comprehensive review of the potential short-, mid- to long-term business impacts across the entire value chain of the petrochemicals, advanced materials, and life sciences industries. By doing so, LG Chem is staying abreast of global megatrends and stakeholder demands as they evolve year to year.
LG Chem listens to the needs and concerns of key stakeholders – customers, employees, suppliers, communities, governments, shareholders and investors, etc. – through various communication channels. LG Chem shares key stakeholder interests with the management and the Board of Directors and integrates them into corporate strategy and sustainability goals. Through active communication with stakeholders, LG Chem strives to proactively respond to changes in the business environment and enhance sustainability performance to create differentiated value for the environment and society.
In 2023, LG Chem conducted a materiality assessment based on the concept of double materiality to determine material topics for sustainability reporting and identify and select material topics for mid- to long-term sustainability management. Based on the existing methodology, LG Chem has updated the materiality matrix with “impact materiality (inside-out perspective)” to assess the impact on the environment and society, and “financial materiality (outside-in perspective)” to assess the impact of external circumstances.
This report covers information and performance data collected from LG Chem’s headquarters, sales offices, 31 domestic and global production sites, and R&D campuses, excluding data from LG Energy Solution and FarmHannong. Some financial information has been prepared in accordance with the consolidated financial statements of K-IFRS. Any statement with a different scope of reporting is explicitly noted.
-
High Impact
-
Medium Impact
-
Low Impact
| Category | Key ESG Indicators | Financial Materiality | Impact Materiality |
|---|---|---|---|
Environmental
|
Greenhouse Gas Emissions | ||
| Energy Consumption | |||
| Water Withdrawal, Consumption, and Discharge | |||
| Water Pollutants Discharge | |||
| Air Pollutant Emissions | |||
| Waste Disposal and Recycling | |||
| Product Responsibility and Chemical Stewardship | |||
| Material Reuse and Recycle | |||
Social
|
Employee and Process EH&S | ||
| Diversity, Equity, and Inclusion | |||
| Talent Attraction, Training, and Employee Engagement | |||
| Labor and Human Rights | |||
| Supply Chain Sustainability | |||
| Community Engagement | |||
Governance
|
Corporate Governance | ||
| Corporate Behavior and Ethics | |||
| Information Security and Cybersecurity | |||
| Public Policy and Regulation | |||
Growth
|
Sustainable Solutions | ||
| Customer Satisfaction |
We seek to reduce and manage our scope 1, 2, and 3 GHG emissions by setting reduction targets and proactively identifying the risks and opportunities arising from our emissions.
1) Figures for Scope 1 and Scope 2 emissions in Korea in 2022 have been partially revised based on the verification results of the Ministry of Environment.
2) Figures for Scope 1 and Scope 2 emissions in Korea in 2023 are based on values reported to the Ministry of Environment, and the above figures are subject to revision depending on the verification results.
3) Emission Intensity = Global GHG Emissions / Revenues excluding LG Energy Solution, and Common and others. Figures for emission intensity in 2021 and 2022 have been partially revised due to the restatements reflecting discontinued operations.
4) Calculation of Scope 3 emissions have been limited to select categories of the Greenhouse Gas (GHG) Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011).
LG Chem's Scope 3 Emissions Reporting
-
With the introduction of sustainability reporting and climate disclosure rules and the growing importance of Scope 3 management, we are reexamining our data collection and calculation methods for Scope 3 emissions.
-
The calculation is based on the GHG Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011). In 2023, we expanded the scope of activity data collection and calculated Category 1 to 4 emissions using the emission factors for each activity
(Figures for Scope 3 emissions in 2021 and 2022 remain unchanged from last year's report and were not recalculated using the 2023 calculation criteria).- Category 1: Calculated emissions based on the purchase statements (more than 95% of the relevant purchase amount) of key material inputs (raw materials, intermediary goods, goods) of Petrochemicals and Advanced Materials businesses.
- Category 2: Calculated emissions based on asset statements of acquired, acquired/replaced tangible goods (buildings, facilities, machinery, vehicles, equipment, etc.).
- Category 3: Calculated emissions based on external fuel and energy purchases on the Statement of Greenhouse Gas Emissions.
- Category 4: Calculated transport-related emissions based on goods calculated in Category 1.
We plan to continue reviewing and developing calculation methods for other categories relevant to our value chain.
We aim to improve energy efficiency throughout our operations to reduce energy consumption, and actively source renewable energy to achieve 100% renewable energy use.
1) Figures for energy consumption in Korea in 2022 have been revised based on the verification results of the Ministry of Environment.
2) Figures for energy consumption in Korea in 2023 may be revised in the future based on the verification results of the Ministry of Environment.
3) Energy Intensity = Global Energy Consumption / Revenues excluding LG Energy Solution, and Common and others. Figures for energy intensity in 2021 and 2022 have been partially revised due to the restatements reflecting discontinued operations.
4) Means of renewable energy procurement include green pricing, renewable energy certificates (solar, wind), and self-generation (solar).
We closely monitor and manage water usage at our sites every step of the way, from water withdrawal, through the manufacturing stage, which includes raw material processing and cooling, to the discharge of properly treated wastewater. As the importance of water management continues to increase due to growing water scarcity, we aim to identify and minimize water withdrawal and consumption in water-stressed areas, in particular.
1) Other water sources include rainwater, etc.
2) Calculation of water reuse rate includes the amount of recycled water within the operation and purchased reclaimed wastewater.
1) Yeosu and Daesan plant source 100% of water through municipal water.
To return the water used during the manufacturing process back into the aquatic ecosystem, we track the sources and impacts of water pollutants and conduct regular inspections of wastewater discharge facilities.
1) Reflects the gradual transition of reporting metrics from COD to TOC, under the Korean Water Environment Conservation Act.
We strictly comply with the emission standards for air pollutants emitted during the manufacturing process and conduct regular inspections of emission facilities to minimize air pollutant emissions.
We catalogue and manage the disposal of general waste and hazardous waste, and consider ways to minimize waste generation and maximize recycling by analyzing incineration and landfill wastes.
1) Gimcheon, Cheongju (Separator), Guangzhou, Quzhou.
We evaluate risks that may arise during the use, storage, and transportation of hazardous chemical substances, and continue our efforts to reduce the use of hazardous substances in our products. We also conduct Life Cycle Assessments (LCAs) to analyze the environmental impact of our products and identify areas for improvement.
1) Calculated the proportion of products containing each substance relative to the number of products sold per year.
2) Proportion of products containing hazardous substances has increased with the addition of Annex 17, SVHCs, and CMR substances compared to 2022.
3) REACH: Registration, Evaluation, Authorization and Restriction of Chemicals.
4) SVHC: Substances of Very High Concern.
5) CMR: Carcinogenic, Mutagenic and Reprotoxic chemicals.
6) Proportion of substances that have completed or are exempt from substance registration among the constituent substances of the sold product.
We are developing various plastic recycling technologies, both mechanical and chemical, and plan to expand the production of recycled plastics.
As chemical manufacturing is exposed to heavy equipment, hazardous substances, and high temperatures and pressures, employee and process safety is of paramount importance. We have expanded the scope of our EH&S management to include not only our employees, but also in-house subcontractors, and have established an accident prevention system that goes above and beyond legal standards.
1) From 2022 onward, the accident rate is calculated by applying actual hours worked.
2) Fatality Rate: Total number of fatality cases * 200,000 / total hours worked.
3) TRIR(Total Recordable Incident Rate): Total number of recordable incidents * 200,000 / total hours worked.
4) LTIR(Lost Time Incident Rate): Total number of lost time incidents * 200,000 / total hours worked.
5) Calculations for process safety events are based on the internal accident index standard which includes injuries, fires, leakages, amount of loss, etc.
6) PSE(Process Safety Events).
7) PSER(Process Safety Event Rate): Number of process safety events * 200,000 / total hours worked.
We identify the diversity of our employees by gender, age, and region in each job group and career level, and monitor the equity of remuneration. We also operate various training and mentoring programs designed to develop a culture that embraces gender, generational, cultural, and cognitive diversity.
1) Figures for 2021 and 2022 have been partially revised due to changes in the organizational boundaries and internal classification criteria.
2) Calculated based on the number of employees at the end of the fourth quarter of each year.
3) Executives refer to executive officers and registered directors at the Vice President level and above. Figures for 2021 and 2022 have been revised to reflect the criteria in the Business Report.
4) Revenue-related refers to departments directly related to goods and services, such as production, sales, etc.
5) Leaders refer to employees at the positions of team leader and above, excluding executives.
6) R&D refers to departments related to research & development, technology, etc.
7) Ratio of average female to male remuneration, calculated by dividing the average remuneration of all women in a position by the average compensation of all men in the same position. There are no distinctions based on gender, while factors such as years of service contribute to the pay gap.
8) Management refers to employees at the level of professionals/senior managers and above, excluding executives.
We recruit talented individuals from diverse backgrounds, based on their abilities and competencies. We provide everyone with a variety of growth opportunities to help them enhance their global competencies and leadership capabilities.
In line with the <LG Chem Global Human Rights & Labor Policy>, we conduct self-assessments and on-site inspections into workplace human rights impacts. To mitigate potential and actual human rights impacts, we continue to revise human rights policies and improve business processes.
To enhance supply chain sustainability, we conduct periodic risk assessments and provide capacity-building opportunities for our suppliers. We assess potential risk factors such as human rights, EH&S, and ethics through supplier self-assessments and on-site audits, and offer programs to suppliers to help improve ESG competencies
1) Suppliers refer to domestic and overseas suppliers with records of annual purchase amounts of KRW 100M or more, and 3 or more purchase orders.
2) Core suppliers refer to suppliers in the top 90% of purchase amounts, and include companies of all sizes.
3) High-risk suppliers refer to suppliers who fall under a high-risk rating as a result of self-assessment or fall into the high-risk group due to findings of critical non-conformance items, etc.
4) The increase in the number of findings is attributed to on-site audits focused on ESG risk monitoring and inspection after the supplier training and support period (~2022).
We strive to take care of the environment and safety around our operations, provide employment and local development opportunities to the community, and operate partnership programs to develop close relationships with the community.
We uphold the fundamental values of expertise, independence, and transparency in the operations of the Board of Directors, and practice board-centered responsible management to ensure efficient and proactive governance.
We conduct regular inspections on corruption and bribery, and handle identified cases through internal disciplinary or legal procedures. We also provide training on ethics and fair trade practices to raise employee awareness and proactively manage risks.
1) Includes contents on Jeong-Do management and the Code of Ethics.
2) Includes contents related to subcontractors and compliance.
We conduct information security risk assessments based on our enterprise risk management and provide awareness-raising campaigns and training on information security and cybersecurity, to ensure the safe collection, use, and management of all information related to corporate operations.
We actively seek out public-private partnerships by identifying policy issues and regulations that may affect our business. We pursue government proposals and participate in policy-making through our local and overseas public affairs networks.
We recognize that observing the tax laws of each country in which we operate and fulfilling our duty to pay taxes faithfully as a taxpayer maximizes shareholder value and contributes to national finance. We comply with the following tax policies and extensively manage tax risks for sustainable management.
LG Chem observes the following tax-related principles and regulations:
- Fulfill tax reporting and payment obligations faithfully in accordance with the relevant local laws.
- Maintain a transparent relationship with the tax authorities and faithfully observe the obligation to submit data requested by the local tax authorities.
- Implement a reasonable transfer pricing policy in line with tax laws and OECD transfer pricing guidelines for international transactions with overseas corporations.
- Establish an efficient tax management system that calculates the effective tax rate and identifies the taxpayer in each country following the introduction of digital tax.
- Prohibit the transfer of income to a tax haven for the purpose of tax evasion.
- Release the annual audit report and other information on the electronic disclosure system to provide transparent tax information.
LG Chem practices the following tax risk management processes:
- Assess tax risks based on advice from external experts and tax authorities when making major business decisions.
- Report to the executives depending on the type and amount of the tax, and clearly define responsibilities and tasks related to tax reporting and payment.
- In the event of tax risks such as tax law-related uncertainties, resolve the risks by collaborating with external experts.
1) Based on the consolidated financial statements of FY 2023.
To provide superior social and environmental value in terms of sustainability, we have established the Sustainable Solution as an internal standard to check the sustainability contributions of our products and technologies based on six values: climate change, circular economy, water resources, product toxicity, biodiversity, and social value. By collating this information with stakeholder demands, we identify priority areas and increase investment to secure sustainability competitiveness at the product level.
1) Based on the consolidated financial statements of FY 2023.
2) Revenues for 2021 and 2022 have been restated reflecting discontinued operations.
3) Represents simple deductions of revenues of LG Energy Solution and Common and others from the total; Common and others include revenues of FarmHannong. This figure has been used to calculate the intensity of environmental performance data. For details, please refer to the notes to the consolidated financial statements.
4) Includes expenses for projects in the areas of bio materials, recycling, and carbon neutrality.
We prioritize customer-centric thinking across all our processes and deliver exceptional value to our customers, by enhancing customer satisfaction and integrating customer grievance management within our internal operations.
1) Refers to the percentage of business divisions that have conducted customer satisfaction surveys. Since 2020, the Customer Value Innovation Team has been conducting customer satisfaction surveys for customers across all business divisions.
