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, we 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). We are constantly assessing sustainability risks and opportunities and conducting a comprehensive review on 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, we are 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 & investors, and etc.) through various communication channels, and develops solutions and initiatives to address them. We want to continue communicating with stakeholders to identify issues of interest and improve sustainability performance to create differentiated value for stakeholders.
Through the analysis of indicators from global disclosure standards, ESG rating agencies and industry peers, global megatrends, and the interests of our key stakeholders – customers, employees, suppliers, communities, governments, shareholders and investors – against our sustainability strategies, we selected 20 key indicators across four categories: environmental, social, governance, and growth. We are actively introducing ESG key indicators into corporate management.
ESG performance data have been collected from LG Chem’s headquarters, sales offices, 32 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.
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| Category | Key ESG Indicators | Financial Materiality | Impact Materiality |
|---|---|---|---|
Environment
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| Greenhouse Gas Emissions Reduction | |||
| Energy Consumption Reduction | |||
| Water Withdrawal, Consumption and Discharge | |||
| Water Pollutants Reduction | |||
| Air Pollutants Reduction | |||
| Waste Discharge and Recycling | |||
| Product Responsibility and Chemical Stewardship | |||
| Reused and Recycled Materials | |||
Society
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| Employee and Process EH&S | |||
| Employee Diversity, Equity and Inclusion | |||
| Talent Attraction, Training and Employee Engagement | |||
| Human and Labor Rights | |||
| Supply Chain Sustainability | |||
| Community Engagement | |||
Government
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| Corporate Governance | |||
| Corporate Behavior and Ethics | |||
| Cybersecurity and Information Security | |||
| Public Policy and Regulation | |||
Growth
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| 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 2020 have been revised due to changes in the organizational boundaries.
2) Figures for Scope 1 and Scope 2 emissions in Korea in 2021 have been partially revised based on the verification results of the Ministry of Environment.
3) Figures for Scope 1 and Scope 2 emissions in Korea in 2022 are based on values reported to the Ministry of Environment, and the above figures are subject to revision depending on the verification outcomes.
4) Emission Intensity = Global GHG Emissions / Revenues excluding LG Energy Solution, and Common and others
5) Scope 3 emissions have been calculated on the relevant categories of GHG Protocol’s Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011), and we plan to increase the scope of data collection.
6) Figures reflect the combined GHG emissions from waste and wastewater discharge.
7) Figures are based on the values reported to the Ministry of Environment, and the above figures are subject to revision depending on the verification outcomes.
We aim to reduce energy consumption and achieve 100% renewable energy use across our operations by improving energy efficiency and actively sourcing renewable energy.
1) Figures for energy consumption in 2020 have been partially revised due to changes in organizational boundaries. Figures for indirect energy consumption have been partially corrected due to the consistent use of the unit conversion factor (1 MWh = 0.0036 TJ).
2) Figures for energy consumption in Korea in 2021 have been revised based on the verification results of the Ministry of Environment.
3) Figures for energy consumption in Korea in 2022 may be revised in the future based on the verification results of the Ministry of Environment.
4) Energy Intensity = Global Energy Consumption / Revenues excluding LG Energy Solution, and Common and others.
5) Figures for electricity consumption in Korea include purchased electricity and self-generated electricity.
6) Means of renewable energy procurement include green pricing, RECs (solar, wind), and self-generation (solar).
As water scarcity intensifies around the world, the need for water management becomes increasingly important. We are closely managing water usage at our sites every step of the way, from withdrawal through the manufacturing stage, which includes raw material processing and cooling, to the discharge of properly treated wastewater. In particular, we aim to identify and minimize water withdrawal and consumption in water-stressed areas.
1) Figures for water withdrawal in 2020 and 2021 have been partially revised due to changes in organizational boundaries.
2) Other water sources include rainwater, reclaimed wastewater, etc.
3) Figures for wastewater discharge in 2020 and 2021 have been partially revised due to changes in organizational boundaries and data coverage (includes wastewater not subject to legal reporting).
4) The amount of recycled water within the operation and purchased reclaimed wastewater have been used to calculate water reuse rate.
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 on wastewater discharge facilities.
1) Reflects the gradual transition of reporting metrics from COD to TOC, in accordance with the Korean Water Environment Conservation Act.
We strictly comply with the emission standards for air pollutants emitted during the manufacturing process, and we aim to minimize emissions through regular inspections of emission facilities.
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) Naju and Iksan (cathode materials) in Korea, Quzhou in China.
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 percentage of the number of products containing each substance to the number of products sold per year.
2) The EU’s system of Registration, Evaluation, Authorization and Restriction of Chemicals.
3) Substances of Very High Concern; highly hazardous substances listed in Annex XIV of the EU’s REACH regulations.
4) Carcinogenic, Mutagenic and Reprotoxic chemicals.
5) Percentage of substances completed/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) The accident rate is calculated by applying actual hours worked from 2022 onward.
2) Fatality Rate: Total number of fatality cases * 200,000 / total hours worked
3) Total Recordable Incident Rate: Total number of recordable incidents * 200,000 / total hours worked
4) Lost Time Incident Rate: Total number of lost time incidents * 200,000 / total hours worked
5) Process safety events are calculated based on the standards set in the Accident Index, which includes injuries, fires, leakages, amount of loss, etc.
6) Process Safety Events
7) 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) Calculated based on the number of employees at the end of the fourth quarter of each year.
2) Refers to executive officers and registered directors at the vice president level and above.
3) Refers to employees at the positions of team leader and above, excluding executives.
4) Figures represent the number of employees reported to the Korea Employment Agency for Persons with Disabilities. Figures of 2020 are before the spin-off of LG Energy Solution.
5) Ratio of average female to male compensation, calculated by dividing the average compensation 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.
6) Refers to employees at the level of professionals/senior managers or 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 accordance with our global human rights labor policy, we conduct self-assessments and on-site inspections into the human rights risks in our workplaces. We plan to revise our human rights policy, improve business processes, and expand training to reduce potential and actual human rights risks and impacts.
We conduct periodic risk assessments and provide capacity building opportunities for our suppliers, to establish a sustainable supply chain that grows with 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 amount of KRW 100M or more and 3 or more POs issued.
2) Key suppliers refer to suppliers in the top 90% of purchase amounts, including companies of all sizes.
3) High-risk suppliers refer to suppliers who fall under high risk rating as a result of self-assessment, or fall into the high-risk group due to a score below the standard, findings of critical non-conformance items, and etc.
We strive to develop strong relationships with our communities by taking care of the environment and safety around our operations, providing employment and local development opportunities to our communities, and running partnership programs.
To ensure efficient and proactive governance, we are establishing a global-level governance structure and strengthening the actual authority and role of the board of directors to internalize board-centered management practices.
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 content on Jeong-Do management and the Code of Ethics.
2) Includes content on subcontractors and compliance.
To ensure the safe collection, use, and management of all information related to corporate operations, we continue to assess information security risks based on our enterprise risk management system. We also provide training to raise employee awareness on information security and cybersecurity.
We are proactively seeking out public-private partnerships by identifying policy issues and regulations that may affect our businesses. We pursue government proposals, and participate in policy-making through our local and overseas public affairs networks.
LG Chem recognizes that observing the tax laws of each country in which it operates and fulfilling its duty to pay taxes faithfully as a taxpayer are maximizing shareholder value and are important contributions to national finance. For sustainable management, we comply with the following tax policies and manage tax risks extensively.
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 is responding to tax risks through the following tax management process.
- When making important business decisions, assess tax risks based on advice from external experts and tax authorities
- 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 through collaborating with external experts
1) Based on consolidated financial statements from 2022.
With an aim 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 consolidated financial statements of FY 2022.
2) Represents simple deductions of revenues of LG Energy Solution and Common and others from total, this figure has been used to calculate intensity of environmental performance data; Common and others include revenues of FarmHannong. For details, please refer to the notes to the consolidated financial statements.
3) Includes expenses for projects in the areas of bio materials, recycling, and carbon neutrality.
By integrating customer grievance management within our internal operations and enhancing customer contact, we aim to prioritize customer-centric thinking across all our processes and deliver exceptional values to our customers.
1) Refers to the percentage of business units that have conducted customer satisfaction surveys. Since 2020, the Customer Value Innovation Team has been conducting customer satisfaction surveys for customers across all business units.
