Overview of Compliance Management System
LG Energy Solution has appointed a Compliance Officer to oversee the company's compliance activities. Under their command, the Compliance Team was installed to operate the compliance management system. The Compliance Team operates the Compliance Management System (CMS) in collaboration with each business practice area.
Systematic Management based on Compliance Management Systems
LG Energy Solution’s Compliance Management System (CMS) is a comprehensive framework that enables to effectively identify and address global legal and regulatory requirements and risks in key areas relevant to our global business, as well as monitor and manage compliance activities within LG Energy Solution and its operating sites. These areas include fair trade, product quality, environment and safety, information security, and anti-corruption. The CMS is overseen by the Compliance Team under Compliance Officer’s leadership, in collaboration with relevant departments. In 2023, LG Energy Solution launched a ‘Compliance Portal’ within its intranet, to enhance the systematic management of compliance control activities carried out by each and every relevant department. The Portal serves as a centralized database to document and track all activities and facilitates effective monitoring and performance management.
Operational Process of CMS
LG Energy Solution's Compliance Management System (CMS) identifies and evaluates compliance risks every year and establishes compliance goals to address and prevent them. They monitor violations and/or illegal activities and carry out evaluations to continuously improve CMS.
| Identification and Assessment of Compliance Risk | This step involves close and continuous monitoring of regulatory and policy landscape in relevant countries to identify potential compliance risk that may arise in our daily business operations. Once potential risks are identified, we assess the current level of compliance with relevant regulations. Based on the assessment, key risks are defined to prioritize compliance activities.
[Compliance Management Areas] Compliance management areas include, but not limited to, fair trade, environment and safety, product quality, intellectual property, information security, human resources management (including sexual and non-sexual harassment), trade and customs, foreign exchange, tax, and anti-corruption. |
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| Target Setting | The next step is to establish targets and measures to prevent the risks identified and assessed in the previous step. By risk area, relevant departments are responsible for setting quantitative targets, timeline and appropriate compliance activities in relation to their respective roles. |
| Risk Prevention and Remediation Activities | Activities range from development and/or revision of company policies, regulations, manuals and relevant guidelines, training and education, progress monitoring, to IT system development and improvement. |
| Monitoring and Evaluation of Compliance Activities | This step aims to monitor and evaluate potential non-compliance activities that may arise in assuming the roles of relevant departments. Based on key findings from monitoring and evaluation, root cause analysis and improvement planning follows. |
| Corrective Measures Planning and Implementation | The analysis of root cause and area of improvement informs planning of corrective measures. The concrete plans are established and implemented in coordination across relevant departments and/or with monitoring department. |
| Regular Audit of Compliance Management System | The CMS are audited on a regular basis to ensure continuous improvement. The regular audit is designed to evaluate the relevance and effectiveness of risk prevention measures, compliance trainings, and progress made in achieving the targets. |
| Reporting to the Board of Directors | As the highest decision-making body within LG Energy Solution, the Board of Directors (BoD) plays a crucial role in overseeing compliance matters. In accordance with the Korean Commercial Law, the BoD has the authority to appoint a Compliance Officer and must be informed about key compliance issues regularly to make relevant decisions. In accordance with LG Energy Solution's ESG Committee Regulation, the ESG Committee under the BoD assumes the role of supervision of the company-wide compliance management. It facilitates and formalizes active engagement of BoD in compliance issues and continuous improvement of the CMS. |
Corruption Risk Management
In order to enhance transparency and foster trust among our stakeholders, LG Energy Solution is committed to effectively managing and mitigating the risks associated with corruption and bribery.
LG Energy Solution strictly prohibits corruption or bribery in any form. We uphold these principles with unwavering commitment and undertake various measures to effectively manage corruption risks through our Compliance Management System.
To ensure the compliance, we conduct close monitoring of legislative revisions and new enactments, as well as policy and regulatory landscape in relevant authorities. We assess legal and regulatory requirements and identify any potential or actual risk and control measures on a continuous basis. The control measures are also regularly monitored and evaluated to identify areas for improvement to ensure their effectiveness.
LG Energy Solution takes a comprehensive approach to managing corruption and bribery risks, specifically through establishment and implementation of an Anti-Bribery Policy, operational rules, guidelines, and checklists. We continuously review and manage these ethical standards to ensure they are in compliance with laws and regulations in all applicable jurisdictions, as well as global standards. The update and revision of our ethical standards is made taking into account the results from the review and audit. All employees at LG Energy Solution are required to sign the "Pledge of Compliance with Bribery Prevention Acts" and complete mandatory trainings to raise awareness and promote a culture of anti-corruption. We also require supplier’s compliance with our regulations. All suppliers shall sign the "Jeong-do Management Pledge." Further, suppliers’ corruption and bribery risks are monitored through LG Energy Solution’s supply chain due diligence process.
Fundamental principles regulated by Anti-Bribery Policy and Guidelines :
- Compliance with anti-bribery and corruption laws and regulations
- Guide to conduct when contacting public officials, etc.
- Prohibition of bribery (money, goods, etc.)
- Prohibition of improper solicitation
- Accurate and proper accounting and record-keeping, and prohibition of money-laundering
- Third-party corruption risk assessment and prevention.
LG Energy Solution's anti-bribery management system is based on ISO 37001, an internationally recognized certification for anti-bribery management systems. The ISO 37001 certification process is on-going with sites in Korea and Poland to be certified by 2024, and the certification process for the remaining subsidiaries will follow.