LG speeds up corporate governance improvement… ESG/internal transaction establishment

The LG Group will establish the ESG (Environmental, Social and Governance) Committee and the Internal Transaction Committee within each company’s board of directors. In addition to the authority and independence of the existing audit committee, the role of the committee for recommending candidates for outside directors is also strengthened.

LG announced on the 19th that it has listened to the opinions of the board of directors on how to improve the role of the board of directors and the audit committee, and plans to finalize the organization after approval of the board of directors. In addition to the holding companies, listed affiliates will be implemented after discussion and approval by the board of directors, respectively.

LG office building in Yeouido, Seoul. [연합뉴스]

The newly established ESG Committee is in charge of deliberating on major company-wide policies for each field, including environmental and safety, corporate social responsibility (CSR), enhancing customer and shareholder value, and improving corporate governance, and reporting to the board of directors. The committee is composed of all outside directors. The CEO of each company participates as a member to reinforce the execution power. In order to secure the expertise of the committee, a’consulting group’ consisting of external experts in related fields is established under the committee.

The Internal Transaction Committee deliberates on the transparency and adequacy of internal transactions, such as transactions subject to private interest infringement regulations under the Fair Trade Act, large-scale internal transactions, self-dealing under commercial law, use of company business opportunities, and transactions with related parties. There are three outside directors and one inside director, and the results of the deliberation are regularly reported to the board of directors. Subsequently, large-scale internal transactions or self-dealing, etc. (agenda items that must be deliberated by the board of directors) are deliberated by the internal transaction committee and approved by the board of directors.

In addition, LG and each of the listed affiliates plan to expand the composition of the Audit Committee, which currently consists of three outside directors, to four outside directors through a resolution at the regular shareholders’ meeting next year. The Audit Committee is responsible for not only auditing the financial soundness of the company, but also independently supervising the adequacy of business in terms of compliance management. An independent’internal audit department’ is also established to assist the audit committee and support the performance of the work.

In order to enhance independence, the Outside Director Candidate Recommendation Committee is scheduled to be chaired by an outside director, conduct regular inspection and evaluation of candidates for outside directors, and strengthen the committee’s deliberation and recommendation functions.

An LG official said, “We introduced a holding company system for the first time in a large Korean company, and this year, we will substantially implement ESG management and accelerate the improvement of the governance structure to achieve sustainable growth and increase shareholder value.”

Reporter Choi Hyun-joo [email protected]