“Is there a way to ask a wide range of questions about batteries, from basic knowledge to the current trend?”
“What strategies does LG Energy Solution have for its business in the battery market?”
We wanted to resolve your curiosities about batteries and LG Energy Solution, and here we present “Ask anything, LG Energy Solution will answer.” The first subject is ESG. Here we go with our answers to questions about LG Energy Solution’s ESG activities!
LG Energy Solution established the ESG vision “We CHARGE toward a better future” with the intention to keep creating a sustainable, better future as a leading global battery maker. The vision is the foundation of our ESG management for which we selected 8 critical areas regarding the environmental and social aspects and 4 key enablers regarding the governance aspect.
The 8 critical areas are C (Climate Action & Circular Economy), H (Human Value Management), A (Advanced EH&S) and R (Responsible & Impactful Business) with the right goals for each area.
For the C, climate action and circular economy, we are working hard to establish a perfect closed loop by 2025 and to achieve a carbon-negative status by 2050.
The H is about human rights management and human resource management. LG Energy Solution’s organizational culture evaluates diversity, equity, and inclusion (DEI). Plans for this area are the establishment of human rights risk-free business sites and nurturing talent based on diversity.
The A consists of △Product responsibility △Continued increase of environmental friendliness of products with Environmental Safety and Health policy △Zero environmental safety accidents. Specific plans for the goals include stricter management of the products’ environmental friendliness, stricter safety and health management at business sites, environmental impact management, and biodiversity management.
The goals for the R are to achieve responsible supply chain management, shared growth, and impact on local communities. For them, we will secure low ESG risk ratings for at least 90% of areas, enhance the corporate image as one pursuing shared growth, practice ESG risk management at the entire value chains, manage shared growth programs and cooperation for mutual prosperity programs, and organize activities for global social impact.
The 4 enablers consist of G (Good Governance) and E (ESG Disclosure & Communication). For the G, plans were made for enhancing compliance and ethical management as well as strengthening the governance system. And plans for the E are about transparent ESG disclosure and stronger communication and partnership with stakeholders.
The ESG vision enabled LG Energy Solution to achieve many successes in the year 2022.
In the environment, we achieved △conversion to a 56% renewable energy (61% for manufacturing sites) across the board △a 97% rate of recycling N-Methylpyrrolidone (NMP), a solvent used for manufacturing electrodes △announcement to support the Task Force on Climate-related Financial Disclosures (TCFD), the first to do so among Korean battery makers △earning of a platinum rating (Nanjing production plant in China) for achieving a 100% resource recycling from Underwriters Laboratories.
In the society part, our accomplishments include △becoming a board member of the Fair Cobalt Alliance, the first as a global battery maker △building of DEI policy across the board and revision of responsible procurement policy △raising the proportion of overseas employees to about 70% out of the total △becoming a certified “Great Place to Work” by the namesake American certification agency.
Lastly, in the governance, we △keep 50% of non-executive directors female △established the ESG IT Intelligence System to manage the ESG indices △provided ESG education to all employees △participated in the GBA battery passport pilot, the first Korean battery maker to do so.
However, reducing the impact of battery making on the environment is the most important of all. So, LG Energy Solution devised strategies and has implemented them with special efforts.
First, we plan to reach carbon neutrality at all of our value chains until 2050 and go carbon negative* eventually.
*Carbon negative: A part of efforts to proactively respond to climate change with local communities and interest holders even after achieving carbon neutrality. It means to offset more carbon than emitted in the operation process.
We have step-by-step targets for carbon neutrality. First, we will reach RE100 and EV100 across the board by 2030 and reduce emissions 53% vis-à-vis BAU emissions (Scope 1 and 2*). Next is to obtain carbon neutrality across the board by 2040 and then in the entire value chains by 2050 (Scope 1-3). From 2050, we will move toward carbon negative, our ultimate goal.
*Scope 1: Greenhouse gas emitted directly from business sites owned and managed by a company
*Scope 2: Greenhouse gas emitted indirectly from using energy sources such as electricity and steam
*Scope 3: All indirect emissions related to a company’s activities from its entire value chains
The goals to realize RE100 and EV100 by 2030 are 20 years earlier than the RE100 global initiative’s goal of transitioning to 100% renewable energy by 2050. Accordingly, we are committed to sourcing 100% of the electricity used for our global manufacturing sites with renewable energy by 2025 while doing the same for non-manufacturing sites including R&D centers by 2030. Also, we have a rule that new production bases and joint ventures should use 100% renewable power from the point of mass-production, and think about sourcing renewable energy from the stage of reviewing investment locations.
In addition, we manage carbon footprint* of our battery products to reach carbon negative. The introduction of a life-cycle assessment in 2019, carbon footprint criteria, and a roadmap is for that purpose. To support the implementation of these measures, we established guidelines for carbon footprint assessment considering the characteristics of battery products after reviewing both domestic and overseas guidelines for carbon footprint assessment. These assessment processes and results of our own making are certified by a third-certification agency. Lastly, LG Energy Solution participates in global initiatives where we monitor the establishment process of battery carbon footprint assessment and proactively express our opinions, while developing a life cycle sustainability assessment on batteries with the Korea Environmental Industry & Technology Institute (KEITI).
*Carbon footprint: The total greenhouse gas emissions, generated directly and indirectly by the entire process of production and consumption of a product, converted to carbon dioxide equivalent.
*Environmental Product Declaration: A system for quantifying the environmental impact of a product through its life cycle such as air and water pollution as well as global warming, and for marking the result on the product after being checked by KEITI.
Aside from achieving a carbon-negative status, we are committed to protecting the Earth’s resources. We adopted stricter in-house management criteria on air pollutants than the legally permitted criteria for clearer air. To save water resources, we introduced a water resource risk management system and established goals for reducing water pollutants and wastewater. Other measures include the establishment of a waste history management system, operation of collection facilities, and building of a resource recycling system through waste recycling. The Chemical Assurance and Regulation Management System (CHARMs 2.0) gathers and verifies the history of raw materials and a new system for managing hazardous substances in products was introduced. Lastly, a biodiversity management system supports the improvement of habitats of endangered species in Cheongju.
We have learned much about LG Energy Solution’s ESG activities! What would be the next questions? We will find out in the next “Ask anything” time!