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CSR in Supply Chain

To ensure sustainable competitiveness, LG Electronics assumes a proactive role in making healthier system through the 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.

Systematizing Activities through EICC Code

LGE fosters win-win growth by supporting its suppliers in building CSR management systems and helping them to succeed in global competition. To provide a systematized support program, LGE joined Electronic Industry Citizenship Coalition (EICC), a CSR consultative group founded in 2008 with global electronic companies and actively participated in EICC’s regular meeting and its working groups from 2010. Also, we’re trying to conduct suppliers CSR risk management based on EICC Code, along with a training program to enhance supplier ability to conduct autonomous CSR risk management.

LGE Supplier Code of Conduct

Based on EICC Code, LGE established and declared its Supplier Code of Conduct in 2010 to assist its suppliers in fulfilling social responsibilities. We are providing Supplier Code of Conduct training programs to the suppliers in Korea as the initial step to obtain voluntary agreement on compliance with the Code of Conduct, and consequently expand CSR from LGE’s internal activity to overall supply chain management. Eventually, we plan to expand our activity globally to help every supplier fulfill its social responsibility and achieve long term competence.

Certification process  of LGE: Request, Plan, Plant Examination, Result,  Approval.
Supplier CSR Risk Management Program

LGE launched a comprehensive supply chain (production facility) risk management program based on the EICC process in 2011, and strengthened CSR competence of the suppliers located in Korea and in potential risk countries. The CSR risk management program to be conducted for around 4,000 manufacturing suppliers consists of four steps. The program (i) will be promoted in order to reach LGE’s all production sites and suppliers, and obtain consent on compliance with the Supplier Code of Conduct, (ii) evaluates the suppliers’ CSR risk, (iii) conducts diagnosis to the high-risk classified suppliers, and encourages improvement, and (iv) keeps monitoring to verify if the improvement is maintained at constant level, and support the suppliers to fulfill their social responsibilities.

Certification process  of LGE: Request, Plan, Plant Examination, Result,  Approval.
CSR Risk Management for Labor Agencies & Outsourced Suppliers

LG Electronics consider labor agency as one of major supplier. In 2015 for all Chinese subsidiaries there was CSR survey on labor agency. Some of them were interviewed with document review to identify potential CSR risks during dispatch worker management from hiring to resignation. With help from Chinese legal office, standard contract for labor agency to reflect CSR criteria was made in August 2015. Also, we have assessed CSR risks in major outsourced suppliers since 2014.

Incorporation of CSR Issues into Supplier Selection Process & Regular Supplier Assessment

LG Electronics has in place a multi-dimensional process to screen suppliers who wish to conduct business with our company. In 2013, we introduced CSR aspects to our prospective supplier assessment process under the Management (M) category.

The strengthened screening process is designed to verify prospective suppliers’ compliance with key requirements in HR and ESH during the plant inspection, ensuring assessment of site conditions as well as required documentation. Through such measures, we require potential suppliers to comply with key CSR requirements, encourage them to establish a CSR framework, and strive to improve the working conditions of their employees. In 2014, We intend to introduce CSR performance indicators to our quarterly assessment of existing suppliers and to offer incentives to suppliers who have shown excellent performance in the CSR area.

New Supplier Selection Process
1. Registration, 2. Screening of Target Pool, 3. Interview, 4. Business Proposal, 5. Plant Inspection, 6. Final Approval, 7. System Registration