LG embraces ESG management standards with first groupwide report

South Korea’s fourth-largest conglomerate LG is rapidly embracing environmental, social and governance standards as key criteria in evaluating group subsidiaries’ business performance.

LG Corp., the holding company of the consumer electronics-to-battery conglomerate, said on Wednesday it has published its first groupwide ESG report in line with its intensified efforts to transform into an eco-friendly enterprise.

“With a sense of responsibility for the global climate crisis, we will grow into a company that coexists with future generations,” Group Chairman Koo Kwang-mo said in the report.

Under the slogan "Responsible Business, Sustainable Future," LG said it will "actively promote and foster clean technology to achieve carbon neutrality, use more renewable energy and build a product waste recycling system.”

The report detailed the 2021 performance of ESG activities at LG Corp. and its affiliates at a glance and their new goals.

LG Group saw an improvement in water and waste management efforts in 2021.

LG companies increased the use of recycled water by 2.38 million tons last year from a year earlier. The affiliates also recycled an additional 17,073 tons of general product waste.

LG companies’ financial contribution to social issues reached 150.9 billion won ($105 million) in 2021, up by 57.6 billion won from the previous year.

The conglomerate also made efforts to ensure transparent management by establishing an ESG committee at 10 subsidiaries and filling a third of independent directors’ seats with women.

As examples of ESG activities, the group cited LG Chem Ltd.'s development last year of carbon dioxide catalyst technology; LG Energy Solution Ltd.'s establishment of a waste battery recycling business; and LG CNS Co.’s operation of an eco-friendly data center.

RESPONSE TO CLIMATE CHANGE

Apart from the ESG report, LG Group said it will publish a "Climate Action Report," containing group affiliates’ carbon reduction strategies and roadmaps, by year-end.

LG's eight major affiliates, including LG Electronics Inc. and LG Chem, have so far published their respective ESG reports to disclose their environmental, social and governance-related activities.

LG Corp. said in June it will invest 2 trillion won over the next five years in green projects related to biomaterials, recycling of used batteries and plastics, and carbon-neutral technologies.

The investment will accelerate the group’s business model change from petrochemicals to sustainable and more eco-friendly businesses in line with the global adoption of ESG standards, it said.

LG’s aggressive green push comes as Group Chairman Koo Kwang-mo marks his fourth anniversary at the helm of the conglomerate. He took office as chairman and chief executive of LG Corp. in June 2018.

ESG, THE NAME OF THE GAME AT KOREA INC.

LG said its pursuit of clean tech also comes in response to growing demand from its clients that companies abide by rules to cut carbon emissions throughout the supply chain, particularly in Europe where environmental regulations are tougher.

ESG principles are rapidly becoming standard for corporate management at most large companies in Korea.

Over the past couple of years, Korean companies have launched a dedicated ESG team to meet growing calls for sustainable growth and transparent management.

A survey in March of Korea’s 100 largest companies by The Korea Economic Daily showed nine of 10 companies operate a separate ESG division, some of them under the direct control of a president-level executive.

Eighty-nine percent of the companies said they run an ESG-dedicated team, up from 54% in a similar survey a year ago.

Write to Sung-Soo Bae at baebae@hankyung.com
In-Soo Nam edited this article.