LG Group focus on improving ESG management

By Baek Byung-yeul

LG Group has joined the race to improve environmental, social and corporate governance (ESG)-centered management at a time when the set of values-based standards has become essential to attracting global institutional investors.

LG Corp., the holding company of the group, said Friday that its listed subsidiaries will launch an ESG committee and a committee that looks into business transactions between the conglomerate's affiliates.

“We've listened to opinions of our board of directors about restructuring our management strategy and the plan will be up for consideration and action by the board members,” the company official said.

The newly established ESG committee will be the group's highest review board for evaluating ESG standards such as environmental, safety, corporate social responsibility, customer value, shareholders' value and governance.

The members of the committee will be comprised of outside directors, and CEOs of each affiliate will also join to enhance executive quality. In a bid to increase professionalism of the committee, a consulting group consisted of specialists in each component of ESG, will also be under the committee.

LG Corp. said the so-called internal transaction watchdog committee is designed to better abide by monopoly regulations and the fair trade act. Comprised of three outside directors and one in-company director, the committee will review if there are major internal transactions, private interest-pursuing business trades or misuse of a company's business opportunities.

“The committee is to review transparency and adequacy of internal business transactions. It will report its activities on a regular basis to the board of directors and large business transactions will be require approval of the board after passing through the review process of the committee,” LG Corp. said.

LG Corp. also come up with ways to enhance its compliance practices.

The holding company and its affiliates will add one more outside member to their respective audit committees, which are currently operated by three members. After winning approval at next year's shareholders' meeting, the audit committees will not only review the financial soundness of each company but also work as a watchdog to monitor compliance.

To improve inclusivity and diversity, the group's affiliates will actively seek to appoint female outside directors who have expertise in their fields.

“LG Group has been well-received for introducing the holding company system for the first time among the country's conglomerates. This year, the group will continue trying to achieve sustainable growth and generate greater shareholder value by promoting ESG management and accelerating governance improvement,” the company official added.