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Governance

Compliance Management

LG Energy Solution operates compliance control regulation and compliance management system (CMS) to identify and prevent compliance risks in major areas related to business activities such as fair trade, product quality, environment and safety, information security, and anti-corruption.

Compliance Governance

A compliance officer, designated by the Board of Directors, is responsible for overseeing compliance controls and monitoring the company-wide compliance management system. The compliance officer is mandated to report, biannually, to the Board of Directors and its ESG Committee on the progress of key compliance risks control, improvement plan and key findings from regular audits of effectiveness of the CMS to ensure the CMS meets evolving requirements of global standards and customers’ demands.

Key roles and responsibilities of
a Compliance Officer include

  1. 1

    Monitoring compliance controls on a regular / ad-hoc basis and reporting key findings to the Board of Directors

  2. 2

    Providing training and education to employees to promote awareness and understanding of compliance obligations

  3. 3

    Identifying and assessing legal and compliance risks

  4. 4

    Handling non-compliance cases from identification of non-compliance, consultation to advising on the appropriate actions

  5. 5

    Executing disciplinary actions for employee non-compliance

Compliance Management System(CMS)

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.

In November 2021, LG Energy Solution became the first company in the global battery industry to obtain ISO 37301, an international certification for the establishment of a global compliance management system. Going forward, the company will continue to enhance transparency and trust with customers and various stakeholders, while strengthening its competitive edge in the field of global compliance management.

CMS-based Compliance Risk Management Process

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.

01 Identification and Assessment of Compliance Risk. 02 Target Setting. 03 Risk Prevention and Remediation Activities. 04 Monitoring and Evaluation of Compliance Activities. 05 Corrective Measures Planning and Implementation. 06 Regular Audit of Compliance Management System. 07 Reporting to the Board of Directors.

  1. 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.

  2. 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.

  3. 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.

  4. Monitoring and Evalution 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.

  5. 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.

  6. 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.

  7. 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.

Anti-Bribery Policy
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 Anti-Bribery Guidelines for
Employee
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 ISO37001 Certification
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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.