Supply Chain Management Process
Analysis of Evaluation
Year of 2016
Established the code of conduct for partners.
Year of 2017
Established CSR management system for partners.
Year of 2018
Conducted CSR evaluation and on-site inspection of partners.
Korea and China
Year of 2019
Expanded evaluation targets and regions
China, Poland, etc.
Year of 2021~
Improved partner ESG assessment
Enforcing the Supplier Code of Conduct
In 2016, LG Energy Solution established the Supplier Code of Conduct that suppliers must comply with, consisting of 10 items, including human rights and labor, ethical management, safe environment, and ethical purchasing. In 2017, we prohibited the use of raw materials obtained through unethical methods such as illegal and serious human rights violations, including minerals from conflict zones. We also established the Due Diligence Policy to further strengthen the monitoring system for these raw materials. To ensure that suppliers comply with the Code of Conduct, they are obligated to submit an agreement to comply with it every year.
Conducting ESG Evaluation of Suppliers
LG Energy Solution annually assesses whether our suppliers practice the Supplier Code of Conduct, identifies assignments for improvement in conjunction with site due diligence, and monitors the results of their compliance. In particular, we are strengthening the evaluation criteria by improving the existing "CSR evaluation for Suppliers" to "ESG evaluation for Suppliers" in 2021 and conducting it in conjunction with purchase evaluations (evaluations for new registrations and regular evaluations). In the case of evaluations for new registered suppliers, we assess 10 items such as labor rights and safe environment from domestic companies and reflect the results on the evaluation score. Raw material manufacturers (over 200 companies every year) are subject to regular evaluations, which assess 60 items, including the prohibition of child labor, protection of workers subject to protection, compliance with working hours, management of conflict minerals, management of safe and healthy environment licenses, and management and prevention of risks.
LG Energy Solution selects high-risk groups based on the results of the ESG SAQ (Self-Assessment Questionaire) prepared by suppliers and conducts on-site audits. In 2018, CSR compliance inspections were conducted for five suppliers located in Nanjing, China. In the future, we plan to minimize supply chain ESG risks by expanding the inspection targets and regions from our global production bases.