Sustainability Report and ESG Performance Data
LG Chem pursues sustainable innovation based on 『Sustainability Vision』, which includes customer, environment and social value throughout its business activities.
Selection of Key ESG Indicators

In 2019, LG Chem established a vision and strategy for sustainability and selected nine key areas, which laid the foundation and strengthened the determination to pursue sustainability. In 2020, we proclaimed mid- to long-term goals including carbon-neutral growth, focusing on five top priorities among the key areas, and accelerated their implementation to become a pioneer in Korea. From now on, LG Chem will select and manage key indicators that must be prioritized from an ESG perspective to communicate with various stakeholders more proactively and strengthen our competitive edge.

By analyzing indicators from global standards, evaluation agencies, and within the industry, we chose 120 ESG indicators, integrated them into 30, and finalized 20 key indicators through a materiality test. Furthermore, based on the concept of stakeholder capitalism proposed by the World Economic Forum (WEF), we classified key indicators into four categories: environment, society, governance (ESG), and growth. In the future, LG Chem plans to disclose our ESG approaches and performances based on these key indicators.

In particular, the approaches and performances for ESG applied the methodology of sustainability-related financial disclosure, jointly suggested by CDP (Carbon Disclosure Project), CDSB(Climate Disclosure Standards Board), GRI(Global Reporting Initiative), IIRC(International Integrated Reporting Council), and SASB(Sustainability Accounting Standards Board) based on the recommendation of TCFD(Taskforce on Climate-related Financial Disclosure). Our internal management and external disclosure of ESG indicators will also be upgraded based on this methodology.

Key ESG Indicators
"구분, Sustainability Areas, Indicators"
구분 Sustainability Areas Indicators
Climate Action GHG Emission Reduction
Water Management Water Withdrawal, Consumption and Discharge
Renewable Energy Energy Consumption Reduction
Environment Protection Air Pollutants Reduction
Responsible Products Product Responsibility and Chemical Stewardship
Environment Protection Waste Emission and Recycling
Environment Protection Water Pollutants Reduction
Circular Economy Reused and Recycled Materials
Safety & Wellness Employee and Process EH&S
Human Rights & Diversity Talent Attraction, Training and Employee Engagement
Human Rights & Diversity Employee Diversity, Equity and Inclusion
Responsible Supply Chain Supply Chain Sustainability
Human Rights & Diversity Human and Labor Rights
New Areas Community Engagement
New Areas Corporate Governance
New Areas Corporate Ethics and Behavior
New Areas Cyber and Information Security
New Areas Public Policy and Regulation
Responsible Products Sustainable Solutions
Responsible Products Customer Satisfaction
Scope and Boundaries of Data

As of 2020, it includes the LG Chem headquarters, all domestic and overseas production sites, and R&D campuses.

The financial information partially applies the K-IFRS consolidated financial statement standards, and in case the reported scope is different, it is indicated separately.

※ Excludes data from production sites where business withdrawal is confirmed, LG Energy Solution, and FarmHannong

Greenhouse Gases and Energy

In 2020, LG Chem established the Sustainability Strategy Team under the CEO to help establish core strategies on corporate-wide sustainability, set mid- to long-term goals, and derive tasks for implementation. Major sustainability-related issues are reported and discussed at monthly management meetings of corporate-wide top management, and matters related to climate change are by far the highest priority. We also hold in-depth discussions on a regular basis at the weekly corporate staff meetings attended by the CEO and major executives of the corporate. In addition, the Energy Committee consisting of the CEO and plant leaders convenes annually to review greenhouse gases and energy-related activities and establish future plans. With the new ESG Committee established within the Board of Directors, the BOD plans to pursue a more professional and systematic response to climate changes related to greenhouse gases and energy.

Identifiable risks posed by climate change include increased operating costs in response to the strengthening of existing regulations (such as the emissions trading scheme) and new regulations that may serve as new trade barriers (e.g., the introduction of a carbon border adjustment mechanism); weakened competitive edge of high-carbon products due to changes in market and customer preferences; and physical losses that may occur to assets and supply chains following climate change such as heatwaves, storms, and sea-level rise. Nonetheless, LG Chem recognizes the crisis as an opportunity, doing our best to preoccupy new markets and increase sales through the development of low-carbon products and technologies, convert to the low-carbon system, and reduce operating costs from transportation.

Until 2019, LG Chem proactively responded to climate change risks and discovered business opportunities through our electric vehicle and ESS battery business portfolio. In 2020, we completed the spin-off process of LG Energy Solution to expand our businesses in the field. To continue to respond to risks arising from climate change and create new business opportunities, we are reorganizing our business portfolio and focusing our capabilities on eco-friendly materials that are recycled or bio-based and battery (cathode) materials.

Furthermore, we aim to go beyond our business portfolio and also convert domestic and overseas power plants to use 100% renewable energy. We plan to reach RE100 by 2030 for overseas business sites and 2050 for domestic business sites according to the local conditions in each country. In addition, we are actively investing in R&D to reduce greenhouse gas emissions from a mid- to long-term perspective, developing carbon capture and utilization (CCU) technology, new NCC processes, and low-carbon/eco-friendly process technologies.

LG Chem has declared the mid- to long-term goals of carbon-neutral growth, which will maintain the 2019 GHG emission level by 2050, and RE100 (Renewable Energy 100%), which will convert all energy use to renewable energy by 2050. As the international community has reached a consensus on net-zero emissions as the major response to climate change, LG Chem is internally reviewing to raise our mid- to long-term target.

Detailed Indicators for Greenhouse Gases
"GHG Emissions , Units, Scope, 2018, 2019, 2020 "
GHG Emissions Units Scope 2018 2019 2020
Scope 1 Emissions tCO2-eq Korea 5,161,403 5,260,041 5,193,936
Scope 2 Emissions 2,584,687 2,879,992 2,864,611
Scope 1+2 Emissions 7,746,089 8,140,033 8,058,547
Scope 1 Emissions excl. Korea 155,946 145,567 195,276
Scope 2 Emissions 1,196,537 1,224,411 1,265,960
Scope 1+2 Emissions 1,352,483 1,369,978 1,461,236
Scope 1 Emissions Global 5,317,349 5,405,608 5,389,212
Scope 2 Emissions 3,781,224 4,104,403 4,130,571
Scope 1+2 Emissions 9,098,572 9,510,011 9,519,783
Scope 1 Emissions Intensity tCO2-eq / KRW million 0.2593 0.2845 0.3043
Scope 2 Emissions Intensity 0..1844 0.2160 0.2332
Scope 1+2 Emissions Intensity 0.4437 0.5005 0.5374
Scope 3 Emissions tCO2-eq Korea 1,126,063 1,015,464 1,267,369
- Purchased goods and services 520,307 494,538 517,985
- Capital goods (upstream) 65 82 58
- Fuel and energy related activities 104,848 122,922 121,904
- Upstream transportation and distribution 283,810 151,406 318,438
- Waste generated in operations (composting, incinerating) 16,825 19,113 19,679
- Business travel 3,130 2,767 2,265
- Employee commuting 10,528 7,987 4,737
- Upstream leased assets N/A N/A N/A
- Downstream transportation and distribution N/A N/A N/A
- Processing of sold products N/A N/A N/A
- Use of sold products N/A N/A N/A
- End-of-life treatment of sold products N/A N/A N/A
- Downstream leased assets N/A N/A N/A
- Franchises N/A N/A N/A
- Investments 180,268 210,271 276,686
- Other upstream 6,282 6,379 5,616
- Other downstream N/A N/A N/A

1) Domestic greenhouse gas emissions are stated based on the submission of the greenhouse gas statement, including the emissions from the headquarters and sales offices.

Detailed Indicators for Energy
"Energy Consumption , Units, Scope, 2018, 2019, 2020 "
Energy Consumption Units Scope 2018 2019 2020
Direct Energy Use TJ Korea 96,624 96,964 95,033
Indirect Energy Use 57,149 52,929 47,777
Direct Energy Use excl. Korea 988 2,532 3,483
Indirect Energy Use 5,923 3,451 3,390
Direct Energy Use Global 97,612 99,496 98,517
Indirect Energy Use 63,072 56,379 51,166
Direct Energy Use Intensity TJ / KRW million 0.0048 0.0052 0.0056
Indirect Energy Use Intensity 0.0031 0.0030 0.0029
Total Energy Use TJ 160,683 155,875 149,683
Total Energy Use Intensity TJ / KRW million 0.0077 0.0081 0.0084
Total Renewable Energy Use GJ 50,727 58,893 63,371

1) Renewable energy consumption is expected to increase in the future as overseas power purchase agreements (PPAs) and domestic green premium systems are under discussion in 2021.

Water resources, pollutants, and waste

LG Chem is continuously inspecting legal risks through voluntary inspections of related laws and regulations, headed by the corporate EH&S department and the EH&S departments of each business sites. Based on these results, we are deriving areas that require improvement and selecting key tasks to respond proactively. Items that are subject to legal management undergo regular monitoring to check whether the management standards are constantly maintained. LG Chem is continuously expanding the scope to preemptively improve even the areas that are not subject to regulation.

For new business sites established after 2020, it will be mandatory to acquire the landfill zero certification, and we plan to gradually expand this rule to existing business sites to fulfill corporate social responsibility. To establish a more thorough and preemptive EH&S management system, we are raising awareness among our members by discovering, sharing, and awarding best practices of corporate-wide EH&S at annual meetings.

Detailed Indicators for Water Resources
"Water Consumption , Units, Scope, 2018, 2019, 2020 "
Water Consumption Units Scope 2018 2019 2020
Water Withdrawal m3 Global 63,364,900 64,410,387 58,698,737
- Ground water 412,247 433,258 411,154
- Surface water 687,961 609,695 -
- Industrial water 58,333,229 59,344,639 54,622,172
- Municipal water 3,878,805 3,959,695 3,650,039
- Rainwater 28,567 12,865 8,722
- etc 24,090 50,236 6,650
Water Withdrawal Intensity m3 / KRW million 3.0897 3.3895 3.3139
Total Wastewater m3 20,598,528 20,481,427 20,536,583
Total Wastewater Recycled 2,007,796 1,785,295 1,910,565
Total Wastewater Recycled % 10 9 9
Water Discharge m3 18,590,732 18,696,132 18,626,018
Water Discharge Intensity m3 / KRW million 0.9065 0.9839 1.0515
Water Consumption m3 44,774,167 45,714,256 40,072,720
Water Consumption Intensity m3 / KRW million 2.1832 2.4057 2.2623

1) Domestic water intake from water stress regions is 1.4%.

Detailed Indicators for Water Pollutants
"Water Pollutants , Units, Scope, 2018, 2019, 2020 "
Water Pollutants Units Scope 2018 2019 2020
COD Emissions metric tons Global 845 741 617
COD Emissions Intensity kg / KRW million 0.0412 0.0390 0.0348
T-N Emissions metric tons 313 297 217
T-N Emissions Intensity kg / KRW million 0.0153 0.0156 0.0123
T-P Emissions metric tons 44 33 28
T-P Emissions Intensity kg / KRW million 0.0021 0.0017 0.0016
Detailed Indicators for Air Pollutants
"Air Pollutants , Units, Scope, 2018, 2019, 2020 "
Air Pollutants Units Scope 2018 2019 2020
Dust Emissions metric tons Global 168 187 120
Dust Emissions Intensity kg / KRW million 0.0082 0.0098 0.0068
NOx Emissions metric tons 1,205 1,172 8,356
NOx Emissions Intensity kg / KRW million 0.0588 0.0617 0.4717
SOx Emissions metric tons 281 199 298
SOx Emissions Intensity kg / KRW million 0.0137 0.0105 0.0168
HAPs Emissions metric tons 18 87 42
HAPs Emissions Intensity kg / KRW million 0.0009 0.0046 0.0024
VOCs Emissions metric tons 234 305 658
VOCs Emissions Intensity kg / KRW million 0.0114 0.0161 0.0371

1) In the case of NOx and SOx, emissions from Yeosu and Daesan plants increased due to changes in the emission calculation method in accordance with the enforcement of the Domestic Air Control Zone Act.

Detailed Indicators for Waste
Waste Units Scope 2018 2019 2020
Nonhazardous Waste metric tons Global 126,803 134,833 113,191
Recycling 87,256 85,031 80,510
Incineration 21,745 26,237 22,652
Landfill 14,190 20,896 8,121
etc 3,612 2,669 1,909
Hazardous Waste 130,545 135,442 129,256
Recycling 103,321 105,771 103,752
Incineration 25,512 27,242 23,992
Landfill 1,184 1,898 897
etc 528 531 615
Total Waste 257,347 270,276 242,448
Total Waste Intensity metric tons / KRW million 0.0125 0.0142 0.0137
Recycling Rate % 74% 71% 76%
Product Responsibility and Hazardous Chemicals Management

LG Chem conducted an analysis of domestic and international chemical management laws and policies with the Chemical Stewardship Team in the EH&S department, and based on this, established a process for collecting chemical substances for each product. We are fulfilling our responsibility for product safety by monitoring information in real-time with the established chemical management system.

In particular, hazardous chemicals are classified into Levels 1, 2, and 3 based on internal classification standards, and prohibited substances designated in Levels 1 and 2 undergo eco-friendly material reviews with strict handling conditions applied from the raw material procurement stage to minimize related risks. The status of high-risk substances is constantly reviewed and presented to directors in annual reports.

Indicators for Hazardous Chemicals
"Hazardous Substances , Units, Scope, 2018, 2019, 2020 "
Hazardous Substances Units Scope 2018 2019 2020
REACH Substances % Global - 17.74 29.80
SVHC Substances 12.22 8.40 2.39
CMR Substances 25.41 15.89 5.99
Hazardous Substances Risk Assessment - 5.92 13.59
Product Life-cycle Assessment 67.8 63.6 73.8

1) EU REACH: Registration, Evaluation, Authorization and Restriction of Chemicals in the EU

2) SVHC (Substances of Very High Concern): High-risk substances listed in Annex XIV of EU REACH Regulation

3) CMR: Substances classified as carcinogenic, mutagenic or toxic to reproduction (CMR) according to hazard categories 1A and 1B of the Harmonized Classification, Labelling and Packaging (CLP) Regulation

4) Risk Assessment Ratio: Ratio of substances that have completed registration in REACH to all substances in chemical products

5) LCA performance ratio is based on sales by product, including internal transactions

Increase of reusable/recycled raw materials

LG Chem has established a research organization to develop reuse/recycling technologies to strengthen our capabilities. Each company is leading the expansion of its business portfolio based on recycled raw materials and building a new growth engine in line with the paradigm shift towards a circular economy.

As for plastic materials, in the short term, we are producing and offering PCR (Post Consumer Recycled) products made of raw materials that applied mechanical recycling. Through this effort, we are raising awareness of the circular economy in which waste plastics, considered as garbage in the past, become high value-added resources. In the mid to long term, we plan to consolidate the circular system of resources and obtain product competitiveness through chemical recycling technology. For our battery materials, we plan to preemptively establish a sustainable supply chain by building a production system through partnerships with companies that have metal refining and smelting technologies for the main ingredients and introducing recycled raw materials in the mid to long term.

In the case of sustainability-related business portfolios such as the expansion of reuse/recycled raw materials, we are reporting and inspecting key issues for each company at the monthly corporate-wide management meetings. By reviewing mid-to-long-term business strategies through annual business reports, we hope to fulfill our role as a global chemical company in establishing a global resource circulation system.

Detailed Indicators for Raw Materials Reuse/Recycling
"Reused and Recycled Materials , Units, Scope, 2018, 2019, 2020 "
Reused and Recycled Materials Units Scope 2018 2019 2020
Production Volume Based on Reused and Recycled Materials metric tons Global 1,582 2,533 4,186
Reused and Recycled Materials Input 518 827 1,245
EH&S for Workers and Processes

LG Chem is implementing the M-Project (Magnolia Project) to innovate and advance the EH&S management system, under the principle that there is no business worth conducting at the expense of EH&S. Through M-Project, we go beyond complying with minimum legal regulations to establish a preemptive risk management system. We will innovate our workplace to be the safest and derive tasks for improvement by reporting related conditions and performance to the top management at monthly management meetings.

In particular, we aim to reduce incident indicators by 20% every year, and we are strengthening our EH&S capabilities by establishing a new organization, recruiting new professionals, investing in EH&S, and enacting and revisioning technical guidelines.

Detailed Indicators for Workers and Process Safety
"EH , Units, Scope, 2019, 2020 "
EH&S Unit Scope 2019 2020
Employees Global
- Fatality Rate Rate - 0.0115
TRIR 0.4721 0.6620
LTIR 0.1500 0.2590
- Fatality Rate Rate - 0.0055
TRIR 0.3067 0.3619
LTIR 0.1592 0.1919
PSIC # 1 5
PSTIR Rate 0.0029 0.0140
Transport Incidents # 2 2
Road 2 1
Rail - -
Ship - 1

※ While it is desirable to obtain three years of data for a better comparison, the data from the last two years are offered here because it is difficult to accurately calculate the number of full-time workers at each workplace in 2018 due to company reorganization and business withdrawals. 수 산출이 어려워 최근 2개년 데이터만 기재함

The three-year data will be provided later.

1) Fatality Rate: Total number of fatal incidents*200,000/total working hours

2) TRIR (Total Recordable Incident Rate): Total number of recorded incidents*200,000/total working hours

3) LTIR (Lost Time Incident Rate): Total number of incidents on closure*200,000/total working hours

4) PSTIR (Process Safety Total Incident Rate): Number of process safety incidents*200,000/total working hours

5) The number of total working hours is based on regular employees working 300 days and 8 hours.

*The number of process safety incidents is based on the comprehensive internal incident index criteria considering injuries, fires, spills and leaks, and amount of loss.

Supply Chain

Led by our corporate Procurement Department and procurement departments within each business companies, LG Chem seeks to create a sustainable corporate ecosystem with our suppliers. We have established supply chain issues related to suppliers and are monitoring the status of contract conclusions in real-time through purchasing regulations that include supplier management regulations. Through this, we are establishing a preemptive response system so that individual issues of suppliers do not spread to the overall risk of LG Chem's supply chain.

In addition to real-time monitoring, the CSR evaluation results of suppliers are reflected in the regular purchase evaluation for each company to collectively check the sustainability-related risks and management capabilities of suppliers. By identifying tasks for improvement, we aim to achieve shared growth with our suppliers. We plan to apply an advanced CSR evaluation system that reflects LG Chem's sustainability strategy to strengthen our competitiveness.

Detailed Indicators for Supply Chain Management
"Supply Chain Management , Units, Scope, 2018, 2019, 2020 "
Supply Chain Management Units Scope 2018 2019 2020
Regular Suppliers # Global 1,328 1,288 1,262
- Sustainability evaluation conducted 187 171 291
- High risk suppliers 7 23 8
- On-site audits 6 13 -

1) Standards for regularly trading suppliers are based on internal standards and exclude suppliers with less than 3 orders and 300 million KRW in purchases per year (less than 100 million KRW for Life Sciences)

2) "High-risk suppliers" refers to suppliers that have scored less than 65 points in the supplier CSR evaluation.

3) Due to COVID-19 in 2020, we stopped conducting on-site inspections and sent operating guides to suppliers to independently improve their management. From 2021, the evaluation system will be upgraded by reflecting LG Chem's sustainability strategy.

Employment Indicators
"Employees , Units, Scope, 2018, 2019, 2020 "
Employees Units Scope 2018 2019 2020
Total Employees # Global 18,390 19,025 18,243
Korea 12,910 13,567 12,551
China 4,117 4,177 4,394
- Asia Pacific(excl China) 677 694 706
Europe 245 315 318
America 441 272 274
Total Employees in Leadership Positions 4,559 4,905 4,635
Korea 4,372 4,681 4,389
China 140 162 181
- Asia Pacific(excl China) 22 36 38
Europe 18 17 15
America 7 9 12
Local Hires 892 995 764
Executives from Local Hires 9 10 15

1) Leadership position refers to all levels of employees including or higher than the professionals

2) Executives refers to all levels of employees including or higher than department leaders or senior executives

Diversity Indicators
"Employees , Units, Scope, 2018, 2019, 2020 "
Employees Units Scope 2018 2019 2020
Employees by Gender # Korea 12,910 13,567 12,551
Male 11,095 11,633 10,825
Female 1,815 1,934 1,726
- Female Ratio % 14 14 14
Employees in Revenue Generated Positions (Sales, Production, R&D) # 3,928 3,486 3,224
Management Positions (Male) 2,758 2,883 2,670
- Management Positions (Female) 540 603 554
- Female Management Positions Ratio % 16 17 17
Employees in Leadership Positions # 4,372 4,681 4,389
Management Positions (Male) 3,625 3,833 3,577
- Management Positions (Female) 672 763 717
- Female Management Positions Ratio % 16 17 17
Senior Executives (Male) # 71 78 88
- Senior Executives (Female) 4 7 7
- Female Senior Executives Ratio % 5 8 7
Ratio of Average Female Salary to Male Korea
Non-management level (base salary only) % 74 76 76
Management level (base salary only) 91 92 93
Management level (base salary + other cash incentives) 89 91 94
Executive level (base salary only) 94 92 90
Employees by Age # 12,910 13,567 12,551
- >30 years old 2,550 2,930 2,407
- 30-50 years old 8,171 8,297 7,731
- <50 years old 2,189 2,340 2,413
Social Minorities
- People with disability # 327 350 348
- National Veterans 272 280 276
Employees Participated in Labor Union % 71.3 70.9 75.2
Employees Covered by Collective Bargaining Agreements 100 100 100

1) There is no discrimination in remuneration due to gender, and factors such as number of years of service contribute to the difference in remuneration.

2) As of 2020, the ratio of the average female compensation to the male average compensation for executive positions (base salary + other cash incentives) is 94%

3) In the case of the Employee Engagement survey, the employee satisfaction survey was conducted and the survey response rate was 81% and the positive response rate was 77% in 2020

Training Indicators
"Employees , Units, Scope, 2018, 2019, 2020 "
Employees Units Scope 2018 2019 2020
Employee Training Korea
- Total Training Hours Hours 530,601 491,626 428,997
- Average Training Hours Hours 41 36 34
- Total Amount Spent on Training KRW 100 million 184 183 125
- Average Amount Spent on Training KRW 10,000 143 135 100
Talent Acquisition Indicators
"Employees , Units, Scope, 2018, 2019, 2020 "
Employees Units Scope 2018 2019 2020
Total New Hires # Korea 1,464 1,497 402
- Male 1,127 1,246 320
- Female 337 251 82
- >30 years old 974 1,126 187
- 30-50 years old 439 302 144
- <50 years old 51 69 71
Total Employee Turnover 544 562 575
- Male 453 483 490
- Female 91 79 85
Total Voluntary Employee Turnover 309 317 284
- Male 231 248 223
- Female 78 69 61

LG Chem focuses on the social contribution vision of “LG Chem Green Connector” and has established four strategic tasks—Green Education, Green Ecology, Green Energy, and Green Economy—to contribute to local communities and engage in social contribution activities. We conduct impact evaluations for our major programs, and continuously discover new items in line with the trend of the times to expand the scope of our contribution to the local community in the mid to long term. We annually review the status of our corporate-wide CSR performance and achievements and pursue long-term and consistent social contribution activities that are aligned with the corporate strategy.

Detailed Indicators for Community Engagement
"Community Engagement , Units, Scope, 2018, 2019, 2020 "
Community Engagement Units Scope 2018 2019 2020
Total Corporate Giving KRW 100 million Global 162 171 156
Employees Volunteer Hours Hours 12,732 13,665 4,879

1) Due to COVID-19, volunteer hours for LG Chem members have been drastically reduced in 2020.

Board of Directors

Forming a board of directors with independence, expertise, and diversity is essential for effective and active governance. LG Chem reports all information related to corporate governance through the LG Chem Corporate Governance Report in accordance with the domestic securities market's disclosure regulations.

Ethics, anti-corruption, and fair competition

Based on Jeong-Do Management, LG’s unique mode of behavior, LG Chem is conducting risk assessments for illegal activities and corruption issues across areas spanning Audit, Legal, and Public Affairs Department. We strive to establish a fair and transparent culture not only for our members but for our stakeholders as well. Management diagnosis reports are conducted regularly, and performance and management conditions are monitored regularly through the audit committee twice a year, quarterly CEO reports, and regular corporate staff meetings.

Since 2012, LG Chem has appointed compliance officers and established and implemented compliance control standards. The purpose of compliance control standards is to classify the size and frequency of legal risks. The relevant validity evaluation is reported to the BOD once a year. In particular, with regard to anti-corruption measures and fair trade, we are inspecting risks through constant responses, and we plan to further advance the anti-corruption risk management process in the future. For fair trade issues such as collusion with subcontractors or agencies, the Public Affairs Department leads the implementation of annual CP (Compliance Programs) to preemptively check high-risk sectors and conduct preventive activities and training customized for each operating department.

Detailed Indicators for Ethics, Anti-Corruption, and Fair Competition
"Ethics and Behavior , Units, Scope, 2018, 2019, 2020 "
Ethics and Behavior Units Scope 2018 2019 2020
Anti-corruption Cases Under Investigation # Global 10 13 5
Anti-corruption Cases With Actions Taken 5 9 2
Participants in Anti-corruption Training Korea
-About Jeong-do Management # 12,910 13,567 12,511
- About Compliance - 11,436 20,360
Participants in Fair Trade Training
- About Subcontractors and Agents # 147 430 14,444
- About Compliance 9,715 11,436 12,151

1) The aggregation of data for training personnel was overlapped for each training area, and when offline training for working-level staff is included, it is expected to increase compared to the data above.

2) The data from training subcontractors and agencies increased by conducting online training in 2020.

Cyber Security

LG Chem is operating an information security council that consists of security-related managers and executive levels from related organizations to deliberate on changes to the company's major security policies and discuss mid- to long-term plans. We also have a working-level committee composed of department heads from working-level departments to review agenda items, discuss and coordinate security measures, and review plans and performance. In 2021, we discussed the revision of corporate regulations on information security, the direction of security policy implementation, and the reconsideration of security policies to vitalize Smart Work.

Aside from the Information Security Committee, a corporate-wide risk management committee was established under the supervision of the CRO (Chief Risk Officer, currently concurrently served by the CFO). Under this committee, an information security subcommittee joined by security and infrastructure directors has been installed. All related work is reported to the Chief Information Security Officer, and performance and plans are reported to the CFO every month, doing our best to protect trade secrets, including key technologies and management strategies of LG Chem.

Detailed Indicators for Cyber Security
"Cyber Security , Units, Scope, 2018, 2019, 2020 "
Cyber Security Units Scope 2018 2019 2020
ISO 27001 Certified # Korea 2 4 4
Cyber Security Awareness Activities 12 12 12
Average Training Hours About Cyber Security Minute 20 20 30

1) Information security risk assessment is carried out through accounting audits, mock hacking, and self-diagnosis. In 2020, self-diagnosis was performed on the Cheongju plant and related departments at the headquarters.

Tax Strategy

LG Chem recognizes that observing the tax laws of each country in which it operates business and fulfilling its duty to pay taxes faithfully as a taxpayer are important factors contributing to national finance as well as maximizing shareholder value. For sustainable management, we comply with the following tax policies and thoroughly manage tax risks.

Tax Policy

LG Chem has established and operated the following tax-related principles and regulations.

Fulfilling tax returns and payment obligations faithfully in accordance with the relevant laws of each country

Maintain a transparent relationship with the tax authorities and faithfully fulfill the obligation to submit data requested by the tax authorities of each country

Establish and implement a reasonable transfer pricing policy in line with tax laws and OECD transfer pricing guidelines for international transactions with overseas corporations

Establish an efficient tax management system such as calculating the effective tax rate by country and identifying the tax payer following the introduction of digital tax

Prohibition of transfer of income to a tax haven for the purpose of tax evasion

For transparent tax information disclosure, it is disclosed to the outside through the annual audit report and the electronic disclosure system.

Tax risk management

LG Chem is responding to tax risks by establishing the following tax management process.

Tax risk assessment based on advice from external experts and tax authorities when making important business decisions

Report to the management according to the type and amount of tax and clearly define responsibilities and tasks related to tax return and payment

In the event of tax risks such as uncertainties related to tax laws, the risks are resolved through collaboration with external experts

Detailed Indicators for Tax Strategy
"Other Economic Indicators, Units, Scope, 2018, 2019, 2020 "
Other Economic Indicators Units Scope 2018 2019 2020
Reported Taxes KRW million Global 435,606 169,180 367,839
- Korea 387,965 100,760 692,538
- Asia 60,362 108,503 290,065
- Europe 2,488 4,747 6,800
- America 1,631 -18,847 53,112
- Etc 101 149 141
- Adjustments -16,942 -26,131 -674,817
- Cash Taxes Paid 688,677 576,713 513,128

1) The total amount of reported taxes is based on consolidated financial statements

Response to Government Policies and Regulations

Led by the Public Affairs Department, our plans and status are reported to the management in response to annual government policies and regulations. When major issues arise, the details are constantly shared through reports. Centered on securing incentives in connection with major investments, maintaining existing items with tariff quota and discovering new items, and developing growth engine projects (battery materials, sustainable solutions, e-Mobility, and biopharmaceuticals), we identify tasks for policy support and improvement in regards to regulations that may affect our business, and make recommendations to the government.

Detailed Indicators for Policy and Regulatory Response
"Public Policy and Regulation , Units, Scope, 2018, 2019, 2020 "
Public Policy and Regulation Units Scope 2018 2019 2020
Contributions to trade associations KRW 1,000 Korea 2,098,253 2,311,660 2,090,714
Contributions to political campaigns - - -

1) In accordance with the Political Funds Act in Korea, corporate sponsorship of political organizations is prohibited.

2) The top five donors among industrial associations and their contributions are as follows (unit: 1,000 won):

- Korea Enterprises Federation: 321,450

- Korea Petrochemical Industry Association: 229,592

- GBA (Global Battery Alliance): 228,316

- PC/BPA Council: 206,181

- Korea Vinyl Environmental Council: 202,500

Sustainable Technology/Product

LG Chem provides differentiated sustainable solutions to our customers and stakeholders through an "outside-in" perspective that begins all business processes from the customer's point of view. LG Chem's sustainable solutions go beyond compliance with regulations. We evaluate and adjust our product portfolio and technologies according to the sustainability standards that we have defined and accommodate our customers' future business.

To establish sustainability standards for products and technologies, LG Chem analyzes indicators and initiatives of global standards and evaluation agencies, as well as guidance from government agencies such as EU Taxonomy, and identifies which sustainable values are globally pursued. Through benchmarking the industry, we have chosen six key areas of sustainability: carbon and energy, resource efficiency, product toxicity, biodiversity, water, and society. We plan to internally analyze and manage products and technologies being developed at LG Chem through negative impact checks (compliance with guidelines) and positive impact checks (key sustainability areas, contribution to financial performance). In the future, by strengthening the social impact analysis based on the Life Cycle Assessment (LCA) and the Value Balancing Alliance (VBA) framework, we will advance the degree of our products' improvement and contribution and upgrade their edge in sustainability.

Bio SAP (Super Absorbent Polymer)

Reduces carbon and contributes to reducing waste by using plant-based renewable raw materials such as waste cooking oil

Ensures biodiversity by reducing the use of palm oil, a high-risk material that may destroy rainforests

Carbon and Energy
Resource Efficiency
PCR ABS (Post Consumer Recycled Acrylonitrile Butadiene Styrene)

Reduces carbon and contributes to reducing waste through physical recycling of waste plastics

Carbon and Energy
Resource Efficiency
PLA (Poly Lactic Acid)

Synthesized using plant extracts, contributes to reducing carbon and waste as a raw material for biodegradable plastics

Carbon and Energy
Resource Efficiency
Customer Satisfaction

LG Chem's Customer Value Innovation Department supervises and supports corporate-wide customer value innovation activities. We consider customer-oriented thinking as the top priority in all business processes. Each company also established a customer value innovation team that oversees customer value innovation activities and works organically with the Customer Value Innovation Sector. On a biweekly basis, the management is reported on the status of customer value innovation activities and major customer pain points. The decisions are made through the corporate-wide management meetings, CEO-led customer value council, and corporate-wide monthly council. Through the Corporate Customer Value Innovation Team's customer satisfaction survey once a year, we gather specific feedback and establish the groundwork for improving customer satisfaction. We also derive tasks for improvement and proactively respond to the rising expectations of our customers.

Detailed Indicators for Customer Satisfaction
"Customer Satisfaction , Units, Scope, 2018, 2019, 2020 "
Customer Satisfaction Units Scope 2018 2019 2020
Satisfaction Survey Coverage % Global 94 94 100
Satisfaction Survey Score Score 61.4 66.1 79.9

1) The scope of the customer satisfaction survey is based on the scope of the entire business division that conducted the customer satisfaction survey.

2) Starting with the 2020 survey, the customer satisfaction surveys were conducted for all business divisions under the supervision of the Customer Value Innovation Team.

Other Economic Performance

LG Chem is growing with humankind and society by continuously creating direct and indirect economic values as well as social and environmental values throughout its business activities. We will further consolidate this approach to gain trust from members of society and provide the best value to our stakeholders.

Detailed Indicators for Economic Performance
"Other Economic Indicators , Units, Scope, 2018, 2019, 2020 "
Other Economic Indicators Units Scope 2018 2019 2020
Revenue KRW million Global 27,007,182 27,353,078 30,076,510
- Revenue excluding the LG Energy Solution 20,508,266 19,002,827 17,712,986
R&D Expenses KRW 100 million 7,171 7,186 7,193
R&D Personnel # 3,302 3,060 2,539
Procurement of Raw Materials KRW million 16,123,353 16,223,224 15,912,709
Total Dividends 460,058 153,608 778,383
EH&S Investments KRW 100 million 1,423 1,850 1,804

1) Total sales, corporate tax, raw material purchase, and dividends are based on consolidation accounting.