Sustainability Management Strategy

Vision

A planet borrowed for all of us
Through our ESG activities, to hand over a healthy and beautiful planet to our future generation, we will fulfill all our responsibilities
as a true successor.

ESG

ESG
Management
Direction

  • For Healthy Products
    Development of
    sustainable and
    user friendly products
    • Safety-assured products
    • Biodegradable materials
    • Clean beauty raw materials
  • For the Beautiful Planet
    Reduce environmental
    impact through
    eco-friendly products and recycling
    • Reduce greenhouse gas
    • Preserve water resources
    • Reduce waste
  • For Refreshing Society
    Strengthen social
    responsibility throughout
    company’s value chain
    • Protect labor rights
    • Prohibit discrimination
    • Strengthen work-life balance

Our Goals

  • Manage product safety & risk
    Enhance quality
    assurance system,
    manage emerging risks
  • Promote material recycling
    Introduce environment
    friendly packaging,
    More recycling thru collection
  • Increased CSR activities
    Strengthen programs for
    women and children

  • Portfolio diversification
    Expand new and
    overseas businesses

  • Lead climate change initiatives
    RE100 & carbon neutrality,
    increased energy efficiency,
    minimize carbon footprint across supply chain.
  • Build sustainable value chain
    Strengthen ESG capabilities of
    partner companies,
    expand RSPO
  • Increase products with social
    and environmental benefits
    Boost open innovation,
    engage in long-term projects for
    reducing environmental impact
  • More eco-friendly products
    More green products, more water
    saving products, more replacement
    of harmful chemicals
  • Improve working conditions
    Greater employee commitment,
    worker rights assessment

ESG Governance System

In 2021, company established ESG committee to strengthen its ESG capabilities by reflecting non-financial factors, e.g., environmental safety, customer value and governance in its management.. ESG committee, under BOD, is comprised of the CEO and all external members of the BOD. It is the highest body overseeing company’s sustainability activities. It will lead companywide ESG initiatives thru collaboration with the management and its staff members.

  • LG H&H BOD

  • ESG Committee
    (Biannually,Hold an extraordinary meeting if necessary)

    • Establish underlying policies and strategy for
      ESG management
    • Establish long-tern ESG goals
    • Monitor and review ESG activities

  • Secretariat : ESG Team

  • ESG Working Group
    (Quarterly)

    • Coordinate inter-departmental ESG issues and
      action plans
    • Regular reporting on major ESG issues
    • Identify and execute ESG projects.
    • External
      Cooperation Division
    • Environmental
      Safety Division
    • Packaging
      Development Division
    • Customer
      Value Division
    • Ethical(Jeong-Do)
      Management Division
    • Purchasing/Partner
      Support Division

Promise of LGH&H

  • Transparent information sharing and exemplary
    operation of BOD
  • Pursue happiness of all people and be a responsible
    corporate citizen
  • Assemble resources to achieve carbon neutrality
    by 2050
  • Develop, produce and market only safe and eco-
    friendly products
  • Operate sites under the principle of zero defect
    and zero hazard
  • Assist and seek joint growth with partner companies

Mid-term Roadmap

id-term Roadmap
Category Promotion tasks Key Performance Indicators(KPIs)* 2021 Performance Relevant SDGs
Economics and
Governance		 Develop Products with
Social Value		 Select mid-to-long-term tasks and research to reduce environmental impact and to promote customer safety and health(by 2025) · Implemented 'Clean Beauty Inside', which defines, measures, and manages clean beauty items and standards from an ESG point of view from the product development stage of our cosmetic products.(measured Clean Index by reflecting weights according to the importance of 12 management items)
· Developed eco-friendly formulations that does not require plastic containers and not produce waste, such as solid-type shampoo bars and toothpaste powder. 		sdg02
Develop leading technologies and products through open innovation such as cooperation with external organizations and local communities(by 2025) · Signing a research agreement contract with URBAN MINER, a start up company that creates functional activated carbon from by-product emitted during the coffee manufacturing process, and launching clean beauty products through upcycling raw materials for cosmetic products/daily necessities.
· Completed the development of 'skin condition data visualization technology' by signing a research agreement with Shimoda. Improved the understanding of product efficacy by visualizing skin conditions difficult to recognize with the naked eye
Enhance product safety · Operate and settle customer value innovation process by product lifecycle-specific reliable quality management(RQM) system(untill 2022 : design, mass production, distribution, consumer response quality)
· Secure global-level evaluation capabilities related to safety verification and build and operate reliability (by 2022)
· Establish supply chain operating system that respond to the future of informatization, intelligence, and automation based on customer value-oriented PEOS0) platform(by 2025)
· Secure global business capabilities through the unique LG H&H reliable quality certification system(by 2024)		 · Promoted expansion from production-oriented reliable quality diagnosis to product design and distribution stages: Prepared safety quality diagnosis standards in the design and distribution stages, and completed diagnosis using internal and external expert agencies for 69 enterprise-wide logistics centers(October 2021)
· Operated internal processes to prevent possible social issues such as human safety before the launch of new types (December 2021)
· Configured CS menu in the online order management system(OMS) to establish a supply chain and established an integrated CS incoming processing system(December 2021)
· Maintained KOLAS certification body approval and expanded to 7 additional evaluation items		 sdg03
Diversifying the Product
Portfolio		 Achieve KRW 3.17 trillion in sales through continuous expansion of overseas business(by 2025) · Achieved KRW 2.4 trillion in overseas sales  
Establishing
ESG Governance		 · Organize and operate ESG committee
· Achieve ESG Committee operation performance(additional)
· Reinforce the diversity and expertise of internal and external directors		 · Operating ESG committee(twice/year), held it once in 2021 as it was the first year of its establishment
· Operated ESG Council(quarterly) * Changed CSR Council to ESG Council to operate it(2022)
· Appointed new female independent director(2022)		 sdg01
Society Enhance social contribution
activities 		Constant expansion of beneficiaries of social advancement such as job creation for women(280 people cumulatively selected by 2025) · Selected 35 people for the 4th Term of Natural Beauty Creator1)(136 cumulative participants) sdg09
Continuously value-up through follow-up management of existing personnel · Opened live commerce expert courses and provided regular mentor training opportunities
Diversify education channels of 'Borrowed Earth School’, habit improvement convergence education program for teenagers and achieve a cumulative total of 100,400 beneficiaries2)(by 2025) · Ministry of Education : Selected as a certified institution of a 2021 education donation career experience
· 65,715 cumulative participants in 2021(10,813 participants in 2021 alone)
Expand the regions for a health musical for children, ‘Twinkle Twinkle Perio’ and achieved a cumulative total of 242,290 beneficiaries3)(by 2025). · 231,657 cumulative participants in 2021(4,362 participants in 2021 alone)
Establishing a sustainable
supply chain 		Improve reliable quality level for suppliers4) with(a cumulative total of 660 companies, by 2025) · Cumulative performance of 240 cases in 2021(64 cases in 2021 alone)
· Specified reliable quality certification system for suppliers(established procedures for evaluation of new suppliers)		 sdg05
Provide technical support for business partners4) with(a cumulative total of 1,811 cases, by 2025) · 949 cumulative cases from 2017 to 2021(193 cases in 2021 alone)
Provide financial support for business partners4) with(a cumulative total of KRW 310.2 billion, by 2025) · Cumulative performance of KRW 178.89 billion from 2017 to 2021(KRW 38.8 billion in 2021 alone)
Minimize risks by enhancing the ESG capabilities of suppliers · Written inspection(audit), and pre-monitoring of('Core partners', 'Key suppliers' among all suppliers)
· 12 partner companies for consulting(using external consulting companies)
Operating advanced consulting for oversea partners, as well as discovering and nurturing new partners · Completed internalizing the discovery and evaluation procedures of new overseas partners
· Completed diagnosis of 15 new overseas partners, and opened transaction codes for ten companies
· Requested reliable quality certification evaluation of existing overseas partners to an external diagnosis expert agency and reflected the results in evaluation(20 companies)
Target ratio for purchasing sustainable palm oil(64.9%, by 2025)5) · Achieved 33.7% of sustainable palm oil purchases6)
Creating a good working
environment		 Improve employee engagement(85 points, by 2025) · Achieved an average of 82 points in employee engagement score sdg06
Establish a global education system(a cumulative total of 750 who will have completed the course by 2025) · 1:1 English coaching class with native speakers : 43 participants
· Global Expertise Course(GEC) for business competency training in English-speaking regions : 16 participants
· GECC(Global Expertise Course China) for business competency training in Chinese-speaking regions : 6 participants
· Global MBA : 3 participants
· Overseas regional experts : 2 participants
· Japanese/Chinese Business Basic Conversation Course : 84 participants(aiming for 750 participants who have completed the course by 2025 by maintaining about 150 participants annually)
Build Global Leadership(by 2025) · LG H&H Global Internship Program
· Participants : 16 participants in 2021/Period : As of December 2021
Achieve a 28% ratio of female managers(by2023) · Achieved 27% of female managers(0.9% increase from 2020)
Environmental Promote resource
circulation		 Achieve KRW 510 billion in sales of green products through eco-labeling(by 2025) · Achieved KRW 450.7 billion in sales of green products
· 185 eco-labelings(176 environmental labels, 3 low-carbon products, 6 carbon footprints)		 sdg10
Achieve 200 tons of recycled plastic(by 2025 · Achieved 40 tons of recycled plastic use(PCR PET/PCR LLDPE)
Achieve 50% clean beauty products among new products of clean beauty-focused brand(by 2025) · Achieved 20% of clean beauty products that were launched(2021)
· Prepared a clean beauty new product guide, 'Clean Beauty Inside'(2021)
· Set a mid-to-long term goal : Average 8 points in 2022 → Average 11 points in 2025
· Operated 4 brands(Belif, The Face Shop, Beyond, Physiogel) as a priority(2022)
Achieve 1.46 tons/product-ton of water intensity(by 2025) · 1.67 tons/product-ton
Reduce restricted substances7) in use by 50%(by 2025) · Managed the items regarding 'Blue Beauty(Eco-friendly)' and 'Hazardous Ingredients Free(Human Safety)' in Clean Beauty internally to suppress the use of D5, and D6
· Restricted the use of restricted substances in new cleaning products, and expanded unused leave-on products
Lead the response to
climate change		 Achieve 0.069 tons CO2e/product-ton of GHG emissions intensity(production plant)(by 2025) · 0.148 tCO2e/product-ton sdg08
Carbon neutrality response activities and performance · Establishing mid-to-long term strategy for carbon neutrality
· Invested approximately KRW 200 billion in 84 core technologies and reduced carbon emissions by 45%(by 2030)
· Achieved Net Zero(by 2050)
Invest continuously to improve energy efficiencies, such as facility improvement at business sites and replacement of old equipment · Invested KRW 6.98 billion
* Detailed implementation goals could be altered depending on the annual implementation performance.
0) PEOS(Paperless Enterprise Operation System): A document-free operating system based on company-wide informatization
1) Natural Beauty Creator : A beauty creator training program for women on a career breaks
2) Borrowed Earth School : Cumulative data since 2014
3) Twinkle Twinkle Perio : Cumulative data since 2004
4) Cumulative data since 2019 for the reliable quality rating evaluation for partner companies/collected data since 2017 for the goals and performance related to technical support and financial support for partner companies
5) Target % refers to the annual sustainable palm oil purchases / annual total palm oil purchases
6) The purchase ratio is the weighted arithmetic average of 33.9% in the raw material division and 33.2% in the product division
7) Cyclopentasiloxane(D5) and Cyclopentasiloxane(D6) restricted by XVII in the EU REACH Annex