CSM System

Corporate Sustainability Management System

For a more systematic approach to CSM, which is fast taking root as a global standard in the field of business, LG Electronics created a Corporate Sustainability Management Office in 2007 to lay the foundation for company-wide CSM activities before setting up a CSM Council in 2009. Since then it has strengthened the CSM Office, allowing it to carry out collaborative projects between different divisions at LGE’s headquarters, between LGE companies themselves, and between regions where LGE has a presence. CSM activities at LG Electronics, which really started gaining momentum in 2008, focus on formulating CSM strategies and implementation roadmaps, strengthening stakeholder communication, integrating the management of non-financial risks and performance, building up internal competencies, and linking CSM activities with brand management and marketing.

The CSM Office and the CSM Council play key roles in creating a strategic direction as well as in planning and leading action plans in order to perform a wide range of tasks at LG Electronics in a more integrated and systematic manner.

LG Electronics also created the CSM Council as a working-level communication channel throughout the corporation, as well as a communication channel among and between related company divisions such as corporate strategy, human resources, labor/management, environment & safety, social contribution, ethics, fair corporate culture, corporate communications, and IR.

The CSM Office is responsible for promoting in-house understanding of the importance of CSM activities, with members of the council sharing information on activities pursued by each business division, building up networking ties, and helping to prepare sustainability reports, among its many responsibilities.

< LG Electronics’ CSM System >

LG Electronics’ CSM Issue & Risk Management

Functional Issues	Potential Risks	Sector Projects
Human Rights/ Labor Practices	Non-financial risks related to overseas sites and supply chains require better management	Reinforce corporate policy on human rights/labor practices Manage corporate sustainability/non-financial risks
Purchasing/ Ethics	Non-financial factors (concerning transactions with partners, and diagnosis and support of partner companies) need to be incorporated	Make it compulsory to link purchase-diagnosis and set regulations Supply chain sustainability/non-financial risk management
Climate Change	Carbon risks related to process/products Focused on compliance	Establish a global response system to UNFCCC Participate in Carbon Disclosure Project (CDP) Secure carbon emission credit (mid-, long-term goal)
Establishment of Global Collection/Disposal System of Old Home Appliances	Collect/dispose of old home appliances across Korea Respond to Waste Electrical and Electronic Equipment (WEEE) Directive Global environmental management system required	Establish a global system of collecting and disposing of old home appliances (in cooperation with federal/local governments, and telecommunications carriers) Promote campaigns to collect old home appliances
Differentiate Green/ Social Brands	One-time promotion of results Low recognition of environmentally-friendly brands Poor external reviews (at present middle of the pack)	Build sustainable/environmentally-friendly brands (Global Communication) Link CSM to marketing
Non-Financial Risk Management	Lack of non-financial strategies/goals in social and environmental sectors Systematic approach to non-financial performance (data) management	Systematic approach to non-financial performance (data) management Monitor risks/performances by division
Publish CSM Reports	Published CSM reports in 2006, 2008 Based solely on domestic business sites and headquarters Better reflect stakeholders’ needs	Publish reports based on the Global Reporting Initiative’s (GRI) sustainability reporting guidelines criteria and which are authorized by a third party Have CSM Council play a greater role
Communication with Stakeholders	Improve management performances in non-financial (social and environmental) sectors Higher frequency of CSM-related results released	Communicate more CSM information and results to outside stakeholders -> To be chosen as a leading CSM corporation by Fortune, DJSI, FTSE