Achieving ESG with Small and Medium Enterprises LG Chem Selected as the First2021.07.07
Achieving ESG with Small and Medium Enterprises LG Chem Selected as the First "Voluntary Business for Win-win Relationship" in the Petrochemical Industry
■ Will invest 100 billion won in funds to spread ESG management in SMEs through pursuing mutual prosperity voluntarily
□ To help SMEs in all areas of management, such as producing eco-friendly products and improving safety and health conditions
□ Will contribute 100 billion won out of the 820-billion ESG bonds previously issued, supporting up to 3 billion won per company
■ Ministry of SMEs and Startups selected LG Chem as a Voluntary Business for Win-win Relationship in recognition of its efforts for mutual growth and leading the ESG sector
□ Selected as the first Voluntary Business for Win-win Relationship 2.0 in the petrochemical industry; sixth among all companies
□ Ministry of SMEs and Startups: “It is significant as a case in which a major corporation and SMEs participate together in ESG management”
■ Chief Executive Officer Hak Cheol Shin:
“ESG is an issue not only for large corporations but for the entire supply chain, and LG Chem will expand its win-win growth activities to establish itself as a true shared growth partner that can coexist with the local community.”
LG Chem, which has supported the ESG management of small and medium-sized enterprises (SMEs), was selected as a “Voluntary Business for Win-win Relationship” by the Ministry of SMEs and Startups for the first time in the petrochemical industry.
Voluntary Business for Win-win Relationship is a project to find large corporations that willingly share their know-how with small and medium-sized enterprises through cooperation. The Ministry of SMEs and Startups recently upgraded this project to 2.0, expanding the scope of support for SMEs’ carbon neutrality and ESG management.
LG Chem announced on July 7th that it had signed a “Business Agreement for the Spread of ESG Management in Small and Medium-Sized Enterprises” at LG Science Park in Magok, Seoul, with the Ministry of SMEs and Startups, Shinhan Bank, and the Korea Commission for Corporate Partnership.
Through this agreement, LG Chem plans to contribute 100 billion won out of the 820 billion won ESG bonds previously issued to create a fund and support SMEs in all directions. Shinhan Bank will apply LG Chem’s deposits to reduce or subsidize loan interest for SMEs. When SMEs request assistance from LG Chem for activities that require funds according to their sectors, LG Chem will decide whether to provide financial support considering the degree of contribution to the environment, society, and governance, as well as systematic measures to monitor the process.
Since announcing carbon-neutral growth by 2050 for the first time in the petrochemical industry, LG Chem is taking the lead in climate change response, renewable energy conversion, and the development of environmentally friendly products. Moreover, LG Chem is passing on related know-how to SMEs by providing energy-saving facilities, equipment for analysis, and financial support. On selecting LG Chem for Voluntary Business for Win-win Relationship, the Ministry of SMEs and Startups explained, “It is significant as a case in which a major corporation and SMEs participate together in ESG management, considering the growing importance of ESG and LG Chem’s role as the leader in this sector.”
For the environmental component of SMEs’ ESG management, LG Chem will support the improvement of environmental systems such as carbon reduction and application of new technologies related to low-carbon emissions, conversion to renewable energy, improvement of energy efficiency in facilities and processes, reduction of air pollutant emissions, and recycling of waste plastics. For example, when SMEs shift from coal to LNG as fuel, or replace the deteriorated and inefficient energy facilities, they can receive funding from LG Chem.
In the social aspect, LG Chem plans to focus on safety management and quality improvement of SMEs. The scope of support includes upgrading safety, health, and quality to prevent serious accidents, strengthening human resources management, enhancing the management of supply chains, and improving customer satisfaction.
In the field of governance, SMEs will be able to receive financial support when they need operating funds for business ethics, fair competition, managing financial risks, and organizing the board of directors and audit committees.
Various support measures are prepared to strengthen the capabilities of SMEs, including financial support for technological development and joint overseas advancement, expansion of free support programs for various analysis and testing, joint technological development of materials, parts, and equipment, and incentives of 3 million won per person for hiring new employees.
“ESG is not only critical to large corporations but the entire supply chain,” said LG Chem Chief Executive Officer Hak Cheol Shin. “Going forward, LG Chem will pursue more diverse and meaningful activities for shared growth and further establish itself as a true win-win partner that can coexist with local communities,” he added.
Minister of SMEs and Startups Kwon Chil-seung remarked, “This agreement is a significant example of how outstanding large companies that are practicing ESG management can help SMEs adopt it.” He added, “We are thankful to LG Chem, Shinhan Bank, and the Korea Commission for Corporate Partnership for creating a voluntary win-win cooperation model in the ESG field. The ministry will also provide proactive support for spreading ESG management.”
Since concluding the first fair trade agreement for win-win cooperation with subcontractors in the chemical industry in 2008, LG Chem has promoted the virtuous cycle of cooperation for mutual growth with SMEs, such as participating in the Korea Commission for Corporate Partnership’s ESG support project for SMEs.