CSR Management System
In order for LG Electronics to earn the trust of stakeholders and achieve sustainable growth, it first must become a healthy organism in the market ecosystem and assume a proactive role in making the system healthier throughout its business activities, including products and services. Additionally, we need to take care of our communities, help those in need become self-reliant, interface and communicate with a variety of stakeholders throughout this process, and form a trust-based relationship with them.
To meet this goal, LGE established and is implementing four strategic tasks: CSR Change Management, CSR Risk Management, Stakeholder Engagement and Strategic Social Contribution. From product R&D through purchasing, production, sales and after sales service, LGE is striving to improve its CSR execution while strengthening its efforts to build consensus and partnership with stakeholders.
LG Electronics engages with its stakeholders based on a set of guiding principles born out of its management philosophy, and aims to address the concerns and meet the expectations of its stakeholders by delivering differentiated value. Our guiding principles for stakeholder engagement are applied to all our business sites across the world, with consideration to the social, cultural, and environmental aspects of the respective communities. Nevertheless, LG Electronics regards “Respect for Stakeholders” as the most fundamental principle in its engagement with stakeholders.
LG Electronics formulated its guiding principles for stakeholder engagement based on the international standard “AA1000SES (Stakeholder Engagement Standard),” and engages and collaborates with stakeholders following the process prescribed by the standard. Following the engagement process, we first prioritize stakeholder groups based on internal standards and based on our analysis of opportunities and risks, establish a communication strategy and action plan for each stakeholder group. Based on the strategy and action plan in place, we identify the needs and interests of our stakeholders by utilizing a wide range of communication channels, and finalize major issues through a materiality analysis.
If there is a major issue that requires better efforts on the part of LG Electronics, we communicate and collaborate with stakeholders to make improvements. The results are provided to stakeholders through our disclosure channels (sustainability report and corporate website) within a predetermined time frame. In order to assess the effectiveness of our efforts toward informing stakeholders, LG Electronics actively seeks feedback from major stakeholders, based on which we determine whether LG Electronics successfully identifies stakeholder needs and incorporates them into its business operations.
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CSR Change Management
In order to facilitate sustained value creation and build strong fundamentals, LG Electronics established the CSR Committee as a subcommittee of the Executive Management Committee from 2009 (comprised of top executives, including the CEO) to brief executives on CSR issues and obtain executive decisions on the issues. In addition, we also report CSR issues (i.e. buyer requests, risk assessment results, social contribution efforts) in management meetings at each business company, in which the company president and executives participate, to raise management awareness on CSR issues and facilitate improvement efforts.
Since 2011, LG Electronics has identified CSR issues that require corporate-level improvement efforts and implemented necessary measures on an annual basis. In 2013, we selected 10 corporate-level tasks—including establishing a conflict minerals response system and enhancing employee volunteer programs—and engaged in diverse initiatives throughout the year. In 2014, we will officially launch the Executive Council for Sustainability Management, comprised of HQ executives in charge of managing CSR issues (labor, human rights, ethics, environment, and supply chain), to strengthen our task execution and to promote inter-departmental collaboration.
Since 2012, LG Electronics has participated in the LG CSR Committee and Management Council led by LG Corp. to establish group-level directions for social contribution and assessing performance, and to improve risk assessment criteria. Our working-level CSR Staff Council consists of CSR managers from HQ, business companies, and overseas subsidiaries, and is organized into three working-level groups that each handle stakeholder requests and external assessment, social contribution, and risk management. The council is entrusted with formulating specific action plans and improvement measures for each area and translating our CSR objectives into actual performance.
Since we joined the United Nations Global Compact (UNGC) and the Electronic Industry Citizenship Coalition (EICC), we have been strengthening our compliance management for all Korean and overseas production sites and suppliers, while requiring new recruits (entry-level/with experience), sojourning employees and subsidiary president candidates to undergo CSR training to raise employee awareness. From 2012, the training program was extended to specialists such as procurement managers, and in 2013, we also further expanded the program to marketing managers and established online courses to provide employees easy access to CSR information.
UNGC (United Nations Global Compact)
In December 2009, LG Electronics became the first Korean corporation in the electronics industry to join the UN Global Compact. As a leading global corporation with social responsibilities, LG Electronics has announced its will to actively participate in solving global societal problems such as labor, human rights, environment, and anti-corruption.
The ten principals of UN Global Compact – established to call upon corporations worldwide to support and carry out social responsibilities – can be categorized into human rights, labor, environment, and anti-corruption. The main point is to protect international human rights and make efforts not to violate those rights, uphold freedom of association, guarantee the right to collective bargaining, and abolish all forms of forced labor, child labor, and labor discriminations. It also contains responsibilities of making efforts to prevent various environmental problems, develop green technology, and abolish all forms of corrupt activities such as extortion and bribery.
LG Electronics, which has already been carrying out various social contributions in the areas of human rights, labor, environment, and anti-corruption, has taken this opportunity of joining the UNGC to internalize corporate responsibilities in conducting business operations and at the same time, is planning to accelerate the establishment of a CSR (Corporate Social Responsibility) Change Management System. And to this end, LG Electronics is planning and implementing programs to organize internal procedures based on global CSR standards, establish a CSR risk management system, create a corporate-wide CSR Council, declare a charter for USR(Jan. 2010), enact a Global Labor Policy(Jul. 2010), create an agenda for CSR related tasks, and encourage employees to donate and participate in volunteer works.
EICC (Electronic Industry Citizenship Coalition)
In August 2010, LG Electronics joined the Electronic Industry Citizenship Coalition (EICC), which has high standards regarding working conditions, ethics of the business, safe and health of workers, and the environment that can be implemented across whole supply chain.
LG Electronics has already implemented a range of measures to improve its CSR management systems at home and abroad in order to bring its global practices in line with the EICC Code of Conduct which focuses significantly on issues related to labor, health and safety, environment, management systems and ethics.
However, EICC involvement is an another example of LG Electronics putting into practice its philosophy of Jeong-do Management, our unique code-of-conduct system for conducting business in a transparent and honest manner
For the purpose, LG Electronics introduced a Supplier Code of Conduct consistent with EICC standards for its suppliers to follow if they wish to continue their business relationship with LG Electronics in September 2010. Since 2011, LG Electronics has been offering its contractors training and consulting as they move to adopt management practices consistent with EICC guidelines. As part of EICC recommendations, LG Electronics will play an even greater role in the operations of its suppliers by sharing best practices, promoting CSR initiatives and helping to develop social responsibility strategies.
CSR Risk Management
To comply with the international standards and requirements prescribed by the EICC for its members (EICC Code of Conduct). LG Electronics implements a CSR risk management program at production sites (Korea and overseas) to assess our conformance in the areas of labor rights, ethics, the environment, health & safety, and management systems, and makes improvements to address the issues identified in the process. In the first half of 2012, we required 37 production sites(Korea and overseas), including new sites, to perform self-assessment(the EICC Self-Assessment Questionnaire). Based on the assessment results, we conducted onsite CSR consulting for 12 production sites and required the rest to implement self-improvement measures. In the second half of the year, we performed reassessment to monitor the progress, and identified improvement points for our 2013 plans. We have also asked suppliers to perform the self-assessment (the EICC Self-Assessment Questionnaire for major suppliers and simplified survey for the rest), and risk factors identified in the process will be managed systematically in association with the Win-Win Growth Team at the Procurement Center. (For more information, please refer to pp.62~64 and pp.68~71 of 2012-2013 LGE Sustainability Report.)
In 2013, we conducted the EICC assessment (self-assessment) on our 40 production sites (7 in Korea and 33 overseas) biannually. The number of assessment targets increased to 40 from 37 in the previous year as the assessment was expanded to include joint venture and new sites (Jeonju, Haiphong in Vietnam and Turkey). We plan to increase the number to 37 in 2014, and to lower the risk level of newly included production sites to “low risk” by 2015 through root cause analyses and intensive management efforts tailored for each individual site.
In our 2013 assessment of 201 major suppliers, 38 suppliers (19%) were rated high risk, and for 9 of these suppliers we performed a CSR audit and provided on-site consulting. Through our CSR audit and consulting, a total of 132 non-compliances were identified, and 79% of them have been addressed (as of March 2014).
Beginning in 2014, we plan to require all major suppliers to use the EICC’s online assessment system (EICC-ON) to further advance our risk management programs. In addition, we plan to shift our approach from assessing a new set of suppliers every year to assessing the same set of suppliers over a three-year period to track their progress.
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Strategic Social Contribution
LG Electronics makes social contributions based on the LG Way, the guiding principle for thinking and action for LG employees, to contribute to the sustainable development of the humanity. The strategic focus of our social contribution efforts is to achieve the United Nations Millennium Development Goals, particularly on resolving environmental, social and economic issues with our core capabilities such as technologies, products and employee participation. LGE’s efforts were fully represented in many of our cooperative initiatives: sponsorship of UNEP’s(the United Nations Environment Programme) Champions of the Earth Awards, partnership with the UNWFP (the UN World Food Programme) for famine relief efforts in Africa and Asia, and cooperation with the International Vaccine Institute (the IVI) in providing vaccines to Ethiopians. LGE also provides financial and management supports (i.e. productivity improvement consulting and management training) to social enterprise start-ups in the environmental area and contributes to creating green jobs. LGE also utilizes its technology and products to resolve social issues.
In 2013, we developed our 6th edition of a mobile phone that reads books and distributed them to the visually impaired free of charge. We are also actively participating in increasing global awareness of issues such as poverty and environment by utilizing our marketing infrastructure(i.e. New York Times Square digital billboard) and offering education programs such as the Mobile Science Class. Moreover, the increasing participation of employees in LGE’s social contribution efforts was evidenced by the “Life’s Good” volunteers who share their knowledge and talent to realize the vision of “LG, Supporting Youthful Dreams.” LGE employees also actively participate in donation initiatives such as the “Life’s Good Day” event (employees opt for simpler meals and volunteers to pass on savings in the form of donations), Salary Rounding Fund and Executive Contribution Fund. From 2013, we introduced a workday volunteer program to strengthen our support to employees’ social contribution efforts.
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