CSR in Supply Chain
LG Electronics motivates its suppliers to comply with LGE’s Supplier Code of Conduct, which is based on EICC Code, and encourages them to analyze and improve their weak points through CSR risk management.
Respecting human rights and preserving the environment in all business activity is a core principle at LG Electronics, and issues like child labor, exposure to hazards, environmental degradation and other human rights abuses in mineral mining are of great concern to us. While we do not purchase raw ore or unrefined minerals directly from mines, metals such as gold, cobalt and copper are included in some of the materials, parts or components that LG purchases from first-tier suppliers which then end up in our products.
We are aware of serious reports of various issues that are occurring at mine sites and have recently received a number of related inquiries. Consistent with LG’s corporate social responsibility mission, we are committed to conducting business in an ethical, socially and environmentally responsible way. Because of this we are prioritizing issues of high concern with our stakeholders. This includes responding to several specific requests from civil society organizations related to allegations of child labor in cobalt mines in the Democratic Republic of the Congo (DRC) and the unsafe mercury exposure to workers in gold processing in small artisanal mines.
Following recent reports of child laborers in cobalt mining in the DRC, we immediately began investigating to better understand where cobalt is being used in our products. According to our investigation, based on 2015 data, we found 3,750 parts containing cobalt from 363 first-tier suppliers. LG Electronics’ Supplier Code of Conduct clearly states that our suppliers must not use materials obtained through any illegal form of mining. The challenge for LG, being multiple tiers removed from mining activities, is to try to assure that the practices of others in the minerals supply chain such as sub-tier suppliers, smelters and refiners, and mineral traders, are not inconsistent with our Supplier Code of Conduct.
We have also received inquiries regarding the use of mercury in gold processing in small artisanal mines. LG Electronics has a strict policy restricting the use of heavy metals, including mercury, in our products. However, we face a similar challenge as previously mentioned in assuring the practices of others who are many levels removed in our supply chain.
Complexity and lack of transparency in the supply chain are issues industry is facing as a whole. This is why LG Electronics is working together with relevant stakeholders to better understand where the materials being used in our products come from and how we can support responsible sourcing practices to prevent human rights abuses and other workplace hazards. Toward this end, LG Electronics is participating in several responsible supply chain and sourcing initiatives, including the Electronics Industry Citizenship Coalition (EICC), the Conflict Free Sourcing Initiative, and the Sustainable Trade Initiative’s program to support responsible tin mining practices in Indonesia.
LG Electronics recognizes the importance of government’s role in helping to end and prevent situations where abuses of workers are allowed to continue. We also raised this issue to the EICC in March 2016 and have begun participating in several related industry meetings and action committees as a next step to understand the best way to support a collaborative approach that includes industry, government and civil society for meaningful solutions to these serious and complex situations.
Meanwhile, LG Electronics’ supplier CSR risk management program continues to focus on preventing human rights abuses such as forced labor, child labor and any critical issue in terms of environment/health/safety. The results and progress of this program can be found in our sustainability report released every year. Although we’re currently focusing on first tier suppliers, we will look to take further action for responsible sourcing throughout our overall supply chain.