Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Action & Circular Economy
• Human Value Management
• Advanced EH&S
• Responsible & Impactful Business
• Good Governance
• ESG Disclosure & Communication

Environmental Achievements

• Renewable energy transition rate for all business sites was 44% in 2021
• LGESNJ Corporation acquired Land Fill Zero Platinum rating in 2021
• Achieved 'Zero Waste to Landfill' claim validation mark from UL Solutions for LGESNJ Corporation

Social Achievements

• Managing LGES' Diversity Index (Gender, Disability, Race, Nationality)
• Strengthening ESG management of supply chains; Carrying out ESG assessment of 143 suppliers in 2022
• Operating shared growth investment fund with suppliers and participating in global community impact activities

Governance Achievements

• Strengthening BoD expertise and transparency (e.g., operation of ESG Committee)
• Being the first in the battery industry to have ISO 37301 (Compliance Management System) certification.
• Having ISO 22301 (Business Continuity Management System) certification
• Participating in global initiatives like RBA, RMI, RLI, GBA, UNGC, and FCA

Climate Goals & Targets

Environmental Challenges

• Rapid increase in energy use due to high growth of the battery industry making it difficult to achieve carbon neutrality goal
• Insufficient institutional arrangements for battery revitalization
• Various measures known and available to reach carbon neutrality, but challenging to find measures applicable to the company
• Systems and environments for supply and demand of renewable energy vary by country and region
• Each supplier has different climate-related policies, hence shows different pace in proceeding with the goal and adopting renewable energy

Mitigation Strategies

• Continuing energy-saving activities such as the introduction of high-efficiency facilities through optimized facility operation
• Participating in policy development by having a dialogue with the government
• Exploring other measures for carbon neutrality and collaborating with LG Energy Solution on renewable energy plant installation support project
• Sharing know-how in transition to RE100 and latest regulatory updates with suppliers; discussing with each supplier to develop annual transition plans and implementation methods
• Close collaboration with suppliers to overcome obstacles and continuously promote RE100

Supply Chain Management

Supplier Audits: 143 suppliers in 2022

Responsible Procurement

• Code of Conduct for Suppliers
• ESG compliance clauses in purchasing contracts
• Encouraging and supporting suppliers' transition to renewable energy
• Blockchain platform to track and manage warehousing of raw materials and product manufacturing history

Climate-Related Risks & Opportunities

Physical Risks

• Typhoon
• Flood
• Drought
• Rising Temperatures

Transition Risks

• Increasing expense of purchasing CER due to rising price and tightening regulations
• Increasing costs due to new and strengthened carbon-related regulations
• Increasing costs due to renovation of highly efficient facilities and new investment costs
• Increasing costs due to renewable energy procurement

Opportunities

• Selling surplus emission rights through activities to reduce greenhouse gas emissions
• Acquiring additional emission rights through external carbon reduction business
• Reducing greenhouse gas emissions in business sites and reducing energy costs
• Expanding business opportunities through energy/carbon reduction technology
• Expanding ESS business opportunities to supplement intermittent nature of renewable energy
• Cost reduction through long-term PPA contract for renewable electricity and power generation businesses
• Reducing utility consumption by improving the equipment and processes
• Enhancing efficiency of the energy usage by adapting to utility recycling (waste heat/wastewater) technology

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: ISO 14001, ISO 45001, ISO 37301, ISO 22301

Third-party Assurance: Korea Management Registrar (KMR)

Sustainable Products & Innovation

• RESU16H Prime ESS battery
• RESU Flex ESS battery
• High-power cylindrical batteries for power tools
• High-capacity cylindrical batteries for electric bikes
• All-solid-state battery cells
• Lightweight lithium-sulfur battery cells

Environmental Metrics

ESG Focus Areas

• Climate Action
• Circular Economy
• Sustainable Value Chain
• Diversity, Equity, and Inclusion (DEI)

Environmental Achievements

• Achieved 61% renewable energy conversion rate at global factories.
• Nanjing facility achieved 100% resource circulation rate (Platinum grade UL certification).
• Ochang Energy Plant achieved over 90% resource circulation rate (Gold grade UL certification).
• Increased NMP recycling rate from 80% to 97%.

Social Achievements

• Established DEI policy and revised responsible procurement policy for all business sites.
• Obtained Great Place to Work Certification.
• Increased number of employees with disabilities in Korea from 143 to 185.
• Launched in-house ventures KooRoo and AVEL to expand the circular battery ecosystem.

Governance Achievements

• Maintained 50% proportion of female external directors.
• Became the first Korean battery company to declare support for TCFD.
• Approved Guidelines on Independent Directors’ Independence and Expertise & Diversity of the Board of Directors and the Corporate Governance Charter.
• Obtained ISO 37301 certification for compliance management.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to geopolitical factors and climate change.
• Increased carbon credit prices and strengthened carbon-related regulations.
• Increased demand for product specifications regarding carbon footprint.
• Increased costs for low-carbon raw material and renewable energy procurement.

Mitigation Strategies

• Diversification and decentralization of raw material sourcing.
• Promotion of emission reduction through energy efficiency and renewable energy.
• Active response to customer demands and communication on carbon reduction plans.
• Encouragement and support of suppliers’ transition to RE100.

Supply Chain Management

Supplier Audits: 145 suppliers in 2023; on-site audits for 10 key suppliers in 2022.

Responsible Procurement

• Responsible Sourcing Policy
• Code of Conduct for Suppliers
• ESG evaluations of suppliers
• On-site audits of high-risk suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Prolonged periods of high temperatures
• Increased likelihood of loss from tropical cyclones and heavy rainfall
• Increased likelihood of floods and snow damage
• Increased prevalence of heat-related and cold-related illnesses

Transition Risks

• Increased carbon credit prices
• Strengthened carbon-related regulations
• Increased demand for product specifications regarding carbon footprint
• Increased costs for low-carbon raw materials and renewable energy

Opportunities

• Increased demand for EV/ESS technologies
• Increased number of newly-invented applications using batteries

Reporting Standards

Frameworks Used: GRI Standards 2021, ISSB, SASB, TCFD, UNGC

Certifications: ISO 14001, ISO 45001, ISO 37301, UL Platinum (Nanjing facility), UL Gold (Ochang Energy Plant)

Third-party Assurance: Korea Management Registrar (KMR)

UN Sustainable Development Goals

• Goal 1
• Goal 3
• Goal 4
• Goal 5
• Goal 6
• Goal 7
• Goal 8
• Goal 9
• Goal 10
• Goal 12
• Goal 13
• Goal 16
• Goal 17

Various sustainability management activities related to these goals.

Awards & Recognition

• Great Place to Work Certification

Environmental Metrics

ESG Focus Areas

• Climate Action & Circular Economy
• Human Value Management
• Advanced EH&S
• Responsible & Impactful Business
• Good Governance
• ESG Disclosure & Communication

Environmental Achievements

• Achieved a 56% RE100 conversion rate in 2023
• Reduced total GHG (Scope 1 & 2) emissions from 1,430 TJ in 2021 to 1,741 TJ in 2023 (while exceeding planned targets)
• Three facilities in Nanjing, China achieved UL Platinum certification as landfill-free sites
• Earned 16 cumulative EPD certifications (As of 2023)

Social Achievements

• Increased the number of female employees in Korea by approximately 14% compared to 2022
• Increased the number of employees with disabilities in Korea from 185 to 200
• Launched various employee well-being programs, including Healing Day, Healing Trip, and various fitness and meditation activities
• Implemented the 'Thank you, ENSOL' platform to foster a culture of gratitude and encouragement

Governance Achievements

• Established an internal ESG Committee in June 2021
• Organized dedicated ESG departments and ESG Working Council
• Became the first in the battery industry to obtain ISO 37301 certification in 2021
• Established anti-corruption policies and guidelines in 2024

Climate Goals & Targets

Environmental Challenges

• Global slowdown in the electric vehicle market
• Geopolitical protectionism
• Supply chain disruptions due to climate events
• Increasingly stringent ESG regulations (e.g., EU Battery Regulation, IRA)
• Managing conflict minerals

Mitigation Strategies

• Strengthening preemptive execution and pursuing qualitative growth
• Securing unrivaled product/quality technology, structural cost competitiveness, unmatched customer loyalty, and innovation in future technologies and business models
• Establishing a carbon negative strategy
• Switching to renewable energy at all global business sites
• Developing low-carbon processing technologies
• Sourcing more low-carbon raw materials
• Increasing the recycling rate of raw materials
• Implementing a supply chain ESG risk management framework
• Conducting ESG evaluations of suppliers
• Implementing third-party audits for core raw material supply chains

Supply Chain Management

Supplier Audits: 9 Tier-1 and 8 Tier-2 suppliers audited in 2023

Responsible Procurement

• Supplier Code of Conduct
• Responsible Sourcing Policy
• Conflict Minerals Reporting Template (CMRT)
• Self-Assessment Questionnaire (SAQ)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Flooding
• Prolonged high temperatures
• Heat-related illnesses

Transition Risks

• Rising carbon prices
• Increased regulatory requirements
• Higher raw material costs
• Increased demand for low-carbon materials

Opportunities

• Increased demand for EVs and ESS
• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards 2021, ISSB, ESRS, SASB, TCFD, UNGC, SDGs

Certifications: ISO 14001, ISO 45001, ISO 9001, ISO 22301, ISO 27001, ISO 37301, UL Platinum (landfill-free), EPD

Third-party Assurance: Korea Management Registrar (KMR)

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation, and infrastructure)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)

Initiatives contribute to these goals through renewable energy adoption, sustainable supply chain management, waste reduction, and climate action

Sustainable Products & Innovation

• Next-generation high capacity and high safety batteries
• Solid-state batteries
• Lithium-sulfur batteries

Awards & Recognition

• '2023 Korea’s Top 100 Companies for Job Creation'