LIFE’S GOOD WITH “Life’s Good with LG” is the official CSR slogan of LG Electronics and conveys our earnest desire for comprehensive communication with stakeholders about our CSR efforts in a variety of areas. LG 2014-20152014-20152015-2016 LG LG전자ElectronicsLG전자 지속가능경영보고서지속가능경영보고서 Sustainability Report OUR PATH TO SUSTAINABILITY th Dear stakeholders This year marks the 10th anniversary of our sustainability report. Over the course of this ten-year period, LG Electronics strived to achieve sustainable growth, guided by our corporate management philosophy, “Customer-Value Creation” and “People-Oriented Management.” And we did make great progress thanks to the enduring trust and support from our stakeholders. LG Electronics will continue to communicate with our stakeholders and strive to build a sustainable organization and sustainable business. OUR PATH TO SUSTAINABILITY: PAST 10 YEARS LG Electronics 2005-2015 History in Sustainability Management 2005 2009 PROMISE3 SUSTAINABILITY = ∑ INNOVATION - Organized the information under three aspects, “Society,” “the Environment” and - Organized the report into two parts, “Economy” based on the Triple “Materiality” and “Management” Bottom Line - Implemented a more systematic - Implemented the Global Reporting reporting approach, under which Initiative (GRI) guidelines the content is organized into three sections, “Approach,” “Performance,” - Launched the CSM taskforce in charge of and “Future Direction” sustainability management 2005 - Expanded the scope to include all 2009 Released in October 2006 - Declared RoHS compliance LG Electronics business locations in Released in June 2010 Korea and overseas - Held the inaugural Stakeholder Consultation on CSR - Operated the CSR council composed of 2006-2007 contact points from related departments ACTION CREATES VALUE - Listed on the DJSI Asia-Pacific for the first time - Joined the UN Global Compact - Implemented the GRI G3 guidelines - Completed the full GHG inventory for all - Identified material issues based on a business locations in Korea and overseas materiality analysis - Launched the CSR Committee chaired by the CEO and participated by the - Internally developed the Eco-Index™ presidents of the business companies, (Quantitatively expresses the Eco-design the managing directors of the region levels of products) representatives, and C-level executives at headquarters 2006-2007 Released in October 2008 2008 2010 INSIGHT FOR YOU COMMITMENT TO OUR STAKEHOLDERS - Segmented stakeholder groups for more effective engagement - Adopted the Key Progress and Performance table - Listed on the DJSI Korea for the first time - Featured a special section to highlight - Established the Principles for the labor union’s declaration of USR Sustainability Management - Hosted the First Global EESH - Joined the Electronic Industry 2008 Conference Citizenship Coalition (EICC) Released in July 2009 - Completed the full GHG inventory of all - Established the Stakeholder business locations in Korea (including 2010 Consultation on CSR as a regular event 12 production sites), a first for Korea’s Released in May 2011 (semiannual basis) electronics industry - Established and released the Global Labor Policy - Declared the Union Social Responsibility (USR) 2011 2014-2015 LG WAY TO SUSTAINABILITY LIFE’S GOOD WITH LG - Implemented the GRI G3.1 guidelines - Published the Chinese edition of our sustainability report - Acquired the Green Management System - Organized corporate information into three Certification, a first in Korea sections, “Who We Are,” “What We Do,” - Conducted EICC self-assessment for all and “Where We Operate” manufacturing sites and major suppliers - Published the statement on - Topped the list as the “Industry Leader conflict minerals (Leisure Equipment & Products and 2011-2012 Consumer Electronics Category)” on the 2014-2015 Released in May 2012 DJSI for the first time (Industry Group: Released in June 2015 Durables & Apparel Industry, also named the Industry Group Leader) 2012-2013 LIFE’S GOOD & - Revised the provisions on the Board of 2015-2016 Directors in the Article of Association to LIFE’S GOOD WITH LG establish corporate social responsibility (CSR) as an official duty of the board and began a CSR board briefing - Released the tenth edition - Featured the special section “Progress - Revised and released the and Impact of Sustainability Management Global Labor Policy of LG Electronics from 2005 to 2015” 2012-2013 - Signed an MOU with the US - Topped the list as the "Industry Leader" Released in June 2013 Environmental Protection Agency (EPA) for the second consecutive year - Listed on the DJSI World for the fourth consecutive year (listed on the DJSI Asia- 2015-2016 pacific for the sixth consecutive year Released in June 2016 and the DJSI Korea for the seventh consecutive year) 2013-2014 - Achieved 100 percent Low-Risk level LIFE’S GOOD WITH LG for all manufacturing sites by EICC self- assessment - Established the LG Electronics CSR slogan, “Life’s Good with LG” - Implemented the GRI G4 guidelines - Introduced a diagram to illustrate value created across the value chain - Launched the CSR committee in China - Introduced CSR aspects to New Supplier 2013-2014 selection process Released in June 2014 Download the PDF Version of Our Sustainability Report: Scan the QR code to access all editions of our sustainability report. REPORT OVERVIEW In preparing our 2015-2016 Sustainability Report, LG Electronics adopted Contents the G4 guidelines of the Global Reporting Initiative (GRI). As part of the pro- cess for implementing the guidelines, we reviewed the previous year’s edition and best practice cases from corporations at home and abroad against the latest indices to identify the aspects that are lacking in our report. In order OVERVIEW to address these aspects and prepare a more comprehensive and insightful report, we had extensive communication with functional departments, focus- 2 Report Overview/Contents ing primarily on our strengths and weaknesses. We also reached out to our 2005-2015 Progress and Impact of internal and external stakeholders through a wide range of communication 4 programs to seek their opinions, and performed a materiality analysis to iden- LG Electronics’ Sustainability Management tify the information that is considered material to stakeholders as well as to 8 President Message LG Electronics. 10 Management Messages Based on the findings, we tried to introduce information concerning “Material Fair Business Practices Aspects” as defined by the G4 guidelines. Externally, we worked with a third party assurer to review the analysis results against the aspects perceived as 11 Management Philosophy material to industry peers to verify what is missing from each other’s list (and 12 Corporate Governance vice versa), while internally reviewing the results with related business de- 13 Compliance Risk Management partments to select and introduce the information that is material and useful 14 Jeong-Do Management both to LG Electronics and to our stakeholders. Articles on material aspects 15 Fair Trade prepared by functional departments were finalized after a review by manage- ment and a third party assurer. Corporate Overview 16 Who We Are · What We Do REPORTING PRINCIPLES 18 Where We Operate G4 guidelines of the Global Reporting Initiative (GRI), 20 What We Achieved UN Global Compact (UNGC) Index, Accountability Principles Standard (AA1000APS), and Stakeholder Engagement Standard (AA1000SES) 22 CSR Management REPORTING SCOPE This report covers all business sites of LG Electronics, both in Korea and STAKEHOLDER COMMUNICATION overseas, and major supplier sites, including activities and performance in economic, environmental, and social areas. 24 Stakeholder Consultation on CSR 26 Stakeholder Engagement across Value Chain REPORTING BOUNDARY 30 Materiality Analysis Information is organized based on material issues and presented under the “DMA (Disclosure on Management Approach)” for each section. KEY PROGRESS & PERFORMANCE REPORTING PERIOD Data from the calendar year 2015, from January 1 to December 31 32 Key Progress & Performance (for performance in select areas, data from the first half of 2016 was also included) MATERIALITY REPORT ASSURANCE 34 With Our Customers Independent Assurance Statement (Korea Productivity Center) 42 With the Environment (See pp. 91-92) 60 With Our Suppliers 70 With the Community With Our Employees Information Sources concerning 78 LG Electronics’ Sustainability Management Efforts APPENDIX 88 Economic Data 89 EESH Certification 90 Memberships/Awards & Recognition 91 Independent Assurance Statement 93 GRI/UNGC Index LG Electronics Corporate Website LG Electronics Annual Report 97 Contributors to Report Preparation http://www.lg.com/global/sustainability CSR Team, LG Electronics | LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea Email: [email protected] Tel: 82-2-3777-3263 MATERIALITY REPORT With Our Customers p. 34 35 Engaging Customers 36 New Ultra Premium Brand, LG SIGNATURE 37 Customer Engagement based on Customer Service 38 Making Our Products Accessible for All of Our Customers 39 Ensuring Product Quality and Safety 40 Information Security & Protection of Personal Information With the Environment p. 42 43 Products with Greener Features 45 Product Stewardship 49 Green Partnerships 50 Environmental Awards 52 EESH Management System 53 Enhancing EESH Management 55 Management of Energy, GHG Emissions and Water Use 58 Environmental Data With Our Suppliers p. 60 61 Procurement & Supply Chain