Skip to Contents

Csr Management System

LG Electronics must assume a proactive role in making the market ecosystem healthier throughout its all business activities.

We strive to create the best value for customers and carry out its responsibilities as a corporate citizen with great energy and passion, from helping those in need to protecting the environment, in an effort to bring greater happiness to stakeholders, including customers and communities.

LGE established and is implementing four strategic tasks: Stakeholder Engagement, CSR Change Management, CSR Risk Management 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’ CSR Management System
Diagram describing four strategic tasks of LGE's CSR Management System.
  • Stakeholder Engagement

    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.

    Approach to Stakeholder Engagement
    Detail of how LG engages with stakeholders which creates differentiated value and reduce risks.

    LG Electronics formulated its guiding principles for stakeholder engagement based on the international standard "AA1000SES (Stakeholder Engagement Standard)," and engages and collaborates with stakeholders. We first prioritize stakeholder groups based on internal standards and analysis of opportunities and risks, establish a communication strategy and action plan for each stakeholder group. And then, we identify 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.

    Stakeholder Engagement Process
    Diagram of Stakeholder Engagement Process: Analyze, Plan & Design, Engage, Take Actions, Evaluate.

    LG Electronics performs a materiality analysis to systematically manage important CSR issues based on the "Five-Part Materiality Test" of AA1000SES. First, we create an issue pool by carefully reviewing latest CSR trends, after which we perform an assessment based on stakeholder interest and impact on LG Electronics. Finalized material issues are fully disclosed, along with a detailed review of our performances and directions, in the sustainability report and website. The issues are also presented at our Stakeholder Consultation as a key agenda, utilized in contribution programs and formulating marketing campaigns as an important reference.

    LGE Materiality Analysis Process
    Diagram of LGE Materiality Analysis Process: organize the issue pool and set priorities.

    The criteria for our material analysis consist of external standards (industry standard, stakeholder interest, and social norms) and internal standards (short-term financial impact and internal policy/awareness). In order to make an objective assessment on one of the key factors, stakeholder interest, we conduct surveys on experts, the public, and employees, and perform analysis of stakeholder consultation results, external stakeholder inquires, media coverage, and benchmarking issues of the industry.

    LGE Materiality Analysis Criteria
    Table explaining Five-Part Materiality Test Criteria, each Factors Considered by LGE.
    2015-2016 Materiality Analysis Metrics
    Diagram of 2015-2016 Materiality Analysis Metrics prioritized by importance.
    2016 Social and Environmental Impact analysis

    In today’s business environment, our stakeholders expect us to not only maximize shareholder value but also make positive contributions to the society on the whole. According to an analysis by KPMG and Trucost, the environmental costs that businesses fail to recognize—including carbon emissions, water usage, and waste disposal—exceed some 40% of their operating profits.

    In recognition of such studies, we thought deep into whether we have been making positive social contributions aside from delivering financial performance, and beginning 2016, we measured social and environmental impacts of our business activities using KPMG’s True Value methodology. In 2016, we analyzed the True Value of our business sites in Korea and extended the analysis in 2017 to include overseas sites. This enabled us to more clearly understand how our activities influenced the environment, helping to reinforce our belief in environmental protection efforts, and we used the data in setting strategic directions and developing future plans.

    It was identified that our environmental impact in 2016, when converted into cost, was some 156.3 billion Won (280,000 Won per one million Won in sales). 75% of the cost came from water usage and 24% from energy usage and CO2 discharge (see details in table/graph).

    We believe that it is important for us to continue to analyze social and environmental impacts of our business on an annual basis and use the results to review our progress and set future goals, enabling us to continuously reduce impacts and make positive contributions for our society.

    LG Electronics Impact Calculation (True Value) (unit: KRW 100 million)
    LG Electronics Impact Calculation (True Value)
  • 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 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 2012, LG Electronics has participated in the LG CSR Committee and Management Council, which is led by LG Corp., and whose mandate is to establish group-level directions for social contribution and assessing performance, and to improve risk assessment criteria. In April 2012, LG Electronics amended a certain provision of its BOD bylaws to include corporate social responsibility activities as part of BOD's official duty, and to strengthen the BOD's commitment toward Sustainability and CSR issues.

    In 2014, we launched a company-wide Executive Council for Sustainability Management, which consists of HQ executives in charge of labor/human rights, ethics, environmental management, and supply chain management. The Executive Council plays a leading role to decide CSR agenda which are reported to the BOD and CSR Committee and to strengthen our task execution while also to promote inter-departmental collaboration. Our working-level CSR Staff Council is entrusted with formulating specific action plans and improvement measures for each area and translating our CSR objectives into actual performance initiatives, as well as training CSR managers to help their competency-building efforts.

    In 2015, the Sustainability Management Council convened one session of the Executive Council meeting to review the progress for the year and discuss the 2016 plans, and held two sessions of the Working-level CSR Staff Council meeting, through which a total of ten improvement tasks and action plans were presented and implemented. In addition, we host Stakeholder Consultation sessions on a semiannual basis to ensure that the requirements from our stakeholders are heard and met, while conducting regular workshops for employees tasked with CSR risk management and social contribution initiatives to discuss the latest issues and enhance their professional capabilities.

    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.

    LGE’s Sustainability Management Organization
    Diagram of LGE’s Sustainability Management Organization.
    UNGC (United Nations Global Compact)  logo image.
    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, we have announced our 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 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 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 programs 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. We’ve been implementing programs to organize internal procedures, 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) logo image.
    EICC (Electronic Industry Citizenship Coalition)

    In August 2010, LG Electronics joined the Electronic Industry Citizenship Coalition (EICC), which has high standards regarding working conditions, business ethics, workers’ safety and health, and the environment that can be implemented across whole supply chain. And we have been already implementing a range of measures to improve its CSR management system in order to bring its global practices in line with the EICC Code of Conduct.

    Additionally, we’ve 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 suppliers training and consulting as they move to adopt management practices consistent with EICC guidelines. We 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

    In 2015, we conducted the EICC self-assessment at all of our 39 production sites (Eight in Korea and 31 overseas). In this year’s assessment, our production sites averaged 92.76 points, up 3.58 point from 2014 (89.18 points), with all of them rated as “low risk” (33 low-risk sites in 2014). Since we have achieved our initial goal of improving self-assessment performance across our production sites, we plan to implement an in-depth self-assessment with stronger requirements. In 2015, we made extensive management efforts in the Middle East and Africa region, where our production sites showed a relatively high risk level in the 2014 assessment. As a result, none of the regions showed elevated risk levels in the assessment conducted in the second half of 2015.

    A total of 78 issues were identified as requiring improvement efforts in our 2015 assessment, and of the 78 issues identified, 60 (77%) have been addressed (as of year-end 2015). In 2016, we plan to manage the rest of the issues together with newly emerging CSR issues, such as placement or recruitment fees.

    2016 Social and Environmental Impact analysis

    In today’s business environment, our stakeholders expect us to not only maximize shareholder value but also make positive contributions to the society on the whole. According to an analysis by KPMG and Trucost, the environmental costs that businesses fail to recognize—including carbon emissions, water usage, and waste disposal—exceed some 40% of their operating profits.

    In recognition of such studies, we thought deep into whether we have been making positive social contributions aside from delivering financial performance, and beginning 2016, we measured social and environmental impacts of our business activities using KPMG’s True Value methodology. In 2016, we analyzed the True Value of our business sites in Korea and extended the analysis in 2017 to include overseas sites. This enabled us to more clearly understand how our activities influenced the environment, helping to reinforce our belief in environmental protection efforts, and we used the data in setting strategic directions and developing future plans.

    It was identified that our environmental impact in 2016, when converted into cost, was some 156.3 billion Won (280,000 Won per one million Won in sales). 75% of the cost came from water usage and 24% from energy usage and CO2 discharge (see details in table/graph).

    We believe that it is important for us to continue to analyze social and environmental impacts of our business on an annual basis and use the results to review our progress and set future goals, enabling us to continuously reduce impacts and make positive contributions for our society.

    LG Electronics Impact Calculation (True Value) (unit: KRW 100 million)
    LG Electronics Impact Calculation (True Value)
  • Strategic Social Contribution

    LG Electronics’ vision for social contribution, conveys our belief that empathy in our thoughts and consideration in our actions are building a better life for all in the human society. As a responsible corporate citizen, LG Electronics also supports the United Nations Sustainable Development Goals and what these goals set out to achieve for the humanity. In support of the valuable cause, we established three strategic directions for social contribution initiatives. First, we will deliver differentiated value to those who need our products and technologies. To this end, we are developing and distributing products and technologies that help address social and environmental issues in our communities. Second, we value opinions from each of our stakeholders, and will make every effort to engage and collaborate with our stakeholders through diverse channels, incorporating the outcome into our business operations. Third, each and every member of our organization will continuously explore the ways in which we could help our neighbors in need and build a better life together, and volunteer our time, effort, and expertise to create a community where everyone feels respected and valued.