Supply Chain

Supply Chain ESG

With increasing worldwide cases of supply chain sustainability issues affecting businesses, directly and indirectly, the importance of related risk management is also growing rapidly.
LG Energy Solution has established a supply chain management system in accordance with the standards required by international institutions such as the UN and OECD. We maintain close communications with major stakeholders such as suppliers, clients, investors, and NGOs, introducing the Supplier Code of Conduct and recommending suppliers to protect human rights in business activities through ESG evaluations.

Supply Chain Management Process

  1. Plan

    Suppliers’ Code
    of Conduct

  2. Do

    CSR Evaluation
    of Suppliers

  3. Check

    Analysis of Evaluation
    Results

  4. Act

    Monitoring
    Improvements

Progress

  1. Year of 2016

    Established the code of conduct for partners.

  2. Year of 2017

    Established CSR management system for partners.

  3. Year of 2018

    Conducted CSR evaluation and on-site inspection of partners.
    Korea and China

  4. Year of 2019

    Expanded evaluation targets and regions
    China, Poland, etc.

  5. 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.

Supplier Code of Conduct