LG Energy Solution ESG REPORT
Plus for Minus, Minus for Plus

2022

LG Energy Solution ESG REPORTCOMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

About this Report
Publisher
LG Energy Solution
Headquarter
108 Yeoui-daero, Yeongdeungpo-gu,
Seoul, Republic of Korea
Publication Date
July 2023
Department in Charge
LG Energy Solution ESG Impact Teamesgteam@lgensol.com
Websitewww.lgensol.com/en/esg-sustainability
Reporting Period
January 1, 2022 - December 31, 2022
* Some information includes progress and activities
until July 2023.

Report Overview
LG Energy Solution has been publishing ESG reports
annually since 2021 to communicate our ESG management
system to our stakeholders. This report includes the annual
financial and non-financial performance with a focus on ESG
management strategy. We will continue to effectively manage
ESG values and progress, transparently disclose them to thestakeholders, thereby fulfilling our ESG responsibilities.
Reporting Standards and Principles
This report is written in accordance with the Global Reporting
Initiative (GRI) Standards 2021. The financial informationaligns with the consolidated financial statement standards of
K-IFRS. The non-financial information that follows different
standards have been written separately by including therespective standards and scope. Also, we incorporated theglobally recognized standards such as the International
Sustainability Standards Board (ISSB) and Sustainability
Accounting Standards Board (SASB) as our reporting
guidelines. For our climate-related data, we adopted therecommendations of the Task Force on Climate-related
Financial Disclosures (TCFD). In addition, as a member of theUnited Nations Global Compact (UNGC), the report includes
the principles and indicators of the Sustainable Development
Goals (SDGs), adhering to the Ten Principles of the UNGC.

Reporting Scope
The report covers the local and global locations of LG Energy
Solution, including the headquarter in Seoul, R&D Campusesin Daejeon, Gwacheon, and Magok, along with the Ochang
Energy Plant and Ochang Energy Plant 2. Additionally, it
includes global production and sales sites in the US, China,
Poland, Australia, Germany, and Taipei.
Independent AssuranceThis report has been conducted in accordance with theinternational verification standard AA1000AS v3, andthird-party verification has been performed by the Korea
Management Registrar (KMR). The third-party assurance
verification statement can be found on page 106 of thereport.
For Inquiries
If you have any questions about the report, please contact us.
ESG Impact Team, esgteam@lgensol.com

Reporting Period
This report covers quantitative and qualitative performances
between January 1, 2022, and December 31, 2022. Some
information contains activities from January to July 2023, of
which separate remarks were made in footnotes specifying
the period of occurrence. We included quantitative data fromtwo years-2021 and 2022, following the recommendation of
the third-party assurer, Korea Management Registrar (KMR), topresent more accurate information since our spin-off.

LG ENERGY SOLUTION ESG REPORT 2022

2

Plus
for Minus

Add Nature,
Add Responsibility,
Add Communication

LG Energy Solution aims to lead ESG
management with the belief that our businessgrowth in the battery industry is the essence
to green energy, contributing to a sustainable
future for humanity.

In each area of ESG, we strive to reduce unnecessary elements andenhance essential ones through establishing a circular system of“Plus for Minus and Minus for Plus,” to build a better future.

Reduce Carbon Footprint,
Reduce Discrimination,
Reduce Customary Practice

Minusfor Plus🅴 Value nature and reduce carbon,

🆂 Embrace responsibility and ban discrimination,

🅶 Minimize customary practice and foster communication,

working toward creating a sustainable society

Unlocking our infinite potential for the future generation,
we will contribute to the pursuit of ESG in the global battery
ecosystem by boldly facing today’s challenges.

Contents
Company
Overview

ESG Impact

CEO Message

About UsBusiness Highlight

ESG Focus

ESG Vision and Strategy

Double Materiality Assessment

ESG
Management

E
Carbon Negative Strategy

Perfect Closed LoopE
Environmental, Health and Safety (EH&S)



Safety and Health Management



Employee Health ManagementEnvironmental Compliance Management



Air Pollution Management

Water Resource Management



Waste Management



Hazardous Substance Management

Biodiversity Conservation



S

S

Talent Management and Training

Labor Relations

Product Safety

Fair Trade

Sustainable Value Chain

Shared GrowthSustainable Workplace

Information Security

Corporate Social Responsibility

G
Corporate GovernanceGAppendix

Risk Management

Jeong-Do Management

Compensation PolicyStakeholder

Shareholder PolicyCommunication

TCFD



Global Initiatives

ESG Data

Third-party Assurance 

Global ESG Index



- GRI

- UNGC- SASB- ISSB- UN SDGs

LG ENERGY SOLUTION ESG REPORT 2022

4

Company
Overview
CEO Message
About Us
Business Highlight
ESG Focus
ESG Vision and Strategy

LG Energy Solution is a global battery company that is leading theway with cutting-edge technology by enhancing Advanced
Automotive, Mobility & IT, and Energy Storage System (ESS) battery
with a vision to lead the future green energy era.

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

CEO Message
Dear stakeholders of LG Energy Solution,
Last year, LG Energy Solution made another significant stride despite
numerous challenges. With your unwavering support and a solid
market response, we achieved steady growth recording the highest
annual performance with sales of KRW 25 trillion and operating profit
of KRW 1 trillion.
This year, we continue to improve our competitiveness with ourdedication to quality, cost, and delivery (QCD). We will lead the global
battery industry by expanding production network and JVs, stabilizing
operations through smart factory technology and increasing global
sales.
The battery industry’s high potential for growth is being recognizedwith increasing importance of ESG worldwide. The battery industry is
closely related to the concept of eco-friendliness, and it will become
the core technology to transform every lives of humanity. We expect
LG Energy Solution’s technology to lead in transportation and energy
sectors as the world transitions to a green economy. LG Energy
Solution aims to go beyond carbon neutrality and achieve carbon
negative across all aspects of management, demonstrating leadershipin climate action.
Since ESG management is geared toward advancing the future of
the world and humanity, collective efforts and collaboration are more
important than ever. As carbon neutrality policies spread throughout
the world, LG Energy Solution is making breakthroughs in many
aspects to expand the battery business ecosystem.
Strengthening Our Business Value around ESG
In late 2022, LG Energy Solution launched two in-house ventures
KooRoo and AVEL. KooRoo is a battery swapping station (BSS) businessfor electric two-wheelers. It provides services that increase userconvenience through exchanging battery pack instead of charging
them. We expect it will contribute significantly to expanding theinfrastructure for electric two-wheelers along with carbon reduction.
AVEL manages renewable energy power grids through energy storage
systems (ESS), enabling precise prediction and efficient managementof renewable energy. AVEL’s business will become the bellwether for

LG ENERGY SOLUTION ESG REPORT 2022

stabilized domestic power supply network to expand the virtual power
plant market. LG Energy Solution supports independent operationand stable management of in-house ventures through various
institutional measures to become “a company fostering mutual growthof individuals and organization” and to expand the ESG businessecosystem.
Enhancing Our Disclosure Practice around ESG
The year 2023 is meaningful in a sense that ESG disclosure obligations
are being significantly reinforced throughout the world. In January, theCorporate Sustainability Reporting Directive (CSRD) became effectivein the EU. In June, the International Sustainability Standards Board(ISSB) announced its first two finalized ESG disclosure standards.
Furthermore, the number of institutions in the Task Force on Climaterelated Financial Disclosures (TCFD), in which LG Energy Solution
became the first Korean battery company to declare support for,continues to grow. In response to the regulatory authorities and thecapital market, we have reinforced our ESG disclosure system in thisreport. We will continue to make efforts to improve transparency of
information disclosure.
Integrating Our Organizational Culture with ESG
With the mindset of “employees as the most valuable customers”,
we are constantly striving to innovate organizational culture and HR
systems. We are committed to securing diverse talents regardless ofrace, nationality, gender, or disability and promoting a horizontal culture
to create “a company where people love to work.” We will continue
to foster an environment where our employees can demonstrateenthusiasm and proactive mindset to embrace challenges andopportunities, and embed ESG in every aspect of the business to create
sustainable values rather than focusing on short-term goals.
LG Energy Solution will continuously innovate to contribute toward
global carbon neutrality and the future of humanity while realizing ourgoal of being the “world’s No.1 company earning customers’ trust andrespect.”
July 2023
CEO of LG Energy Solution
Kwon, Young Soo

6

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

About Us
Corporate Overview

LG Energy Solution embarked on our first battery development research since 1992 andhas been dedicated to creating unparalleled material technologies and next-generation
batteries. With outstanding technological capabilities in the fields of Advanced Automotive,
Mobility & IT, and Energy Storage System (ESS) batteries, we are actively pursuing new
product development and securing a world-class battery production capacity, expanding
the next-generation energy market.

Company Name
EstablishedCEO
Headquarter
Address
Business Areas
WebsiteLG Energy Solution
December 2020
Kwon, Young Soo
Park One Tower 1, 108 Yeoui-daero,
Yeongdeungpo-gu, Seoul, Republic of Korea
Advanced Automotive, Mobility & IT, ESS Batteries
www.lgensol.com

Corporate History
1947

1992

1996

1999

2000

2004

2009

2012

Lucky Corp.
established

Lithium-ion battery
research began

Lithium-ion battery
production began

Mass production ofcylindrical lithiumion batteries started

The R&D campus in
the US established

Ochang Energy Plant
completed,
Nanjing plant in
China completed

World’s first mass
production to supply
batteries for Electric
Vehicles (GM Volt) began

Electric vehicle
battery plant in the
US completed

2013

2015

2017

2018

2020

2021

2022

2023

World’s first nextgeneration batteries

Mass production of
ESS cells began

Poland electricvehicle battery
plant construction
completed

World’s first
freeform battery
developed

December 2020

April 2021

March 2022

May 2023(first in the industry)(a JV with Stellantis for(currently LG Chem)(stepped, curved, wirebattery) developed

LG ENERGY SOLUTION ESG REPORT 2022

LG Energy Solution’s
Establishment
Ultium Cells (JV)
established with GM
for electric vehicle
batteries

RE100 and EV100 joined
September 2021

JV with Hyundai Motor
Group for Indonesia
Battery Cell
construction began

Nextstar Energy
Electric Vehicle Batteries)

established

August 2022

JV MOU with
Hyundai Motor
Group in the US
signedJV Agreement with
Honda to establish in the
US signed

7

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ESG MANAGEMENTAPPENDIX

Global Business
LG Energy Solution is expanding our R&D, production, and sales bases in major regions
worldwide - in the US, the EU, China, and Korea. There are approximately 24,000
employees in the overseas sites. This number accounts for about 70% of our total
workforce of approximately 34,000 (as of December 2022).

Advanced Mobility
Automotive
& IT

ESS

Headquarter Production

R&D

Sales

China
Nanjing (3)CanadaPolandNextstar Energy

Wrocław(Stellantis JV)

Windsor, Ontario

Korea
Seoul

Germany

India

Sulzbach

New Delhi

Headquarter

Daejeon / Gwacheon / Magok

The US

Ochang Energy Plant

Holland, Michigan

Ochang Energy Plant 2

Queen Creek, Arizona

Australia

Plant 1 Lordstown, Ohio
Plant 2 Spring Hill, Tennessee
Plant 3 Lansing, Michigan

R&D

TaipeiUltium Cells (GM JV)

Indonesia
PT. HLI Green Power(Hyundai Motor Group JV)

Karawang

Victoria

L-H Battery Company(Honda JV, tentative)

Fayette County, Ohio

LGES-HMG Battery(Hyundai Motor Group JV, tentative)

LG ENERGY SOLUTION ESG REPORT 2022

Savannah, Georgia

8

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ESG MANAGEMENTAPPENDIX

Financial Performance(Unit: Billion KRW)

Financial Information
Category

2022(Unit: Million KRW)

Consolidated Income Statement
2022

2021

Assets

2021

Sales

Category



Liabilities



Cost of Goods Sold



Equity



Gross Profit



Selling and Administrative Expenses



Operating Profit (Loss)



Financial Income



Financial Expenses



Equity Method Income()()Other Non-operating Income



Other Non-operating Expenses



Profit (Loss) before Corporate Tax





Corporate Tax Expense (Income)

Net Income (Loss) from Continuing Operations





* As of the 2022 Annual Report published in March 2023

(Unit: Billion KRW)

Sales Performance
Sales Type
Product
Category

Items
EV Batteries, ESS Batteries,
Mobility & IT Batteries andothers.

2022

2021

Export Sales



Domestic Sales









Total Sales* As of the 2022 Annual Report published in March 2023

Net Income (Loss) from Discontinued Operations
Net Income (Loss)

Attribution of Net Income (Loss)
Ownership Interest of the Controlling Company
Net Income (Loss) from Continuing Operations













Net Income from Discontinued Operations
Non-controlling Interests
Net Income from Continuing OperationsNet Income from Discontinued Operations

Income (Loss) per Share for the Ownership Interest of the Controlling Company
Income (Loss) of Base and Diluted Common Shares (Unit: 1 KRW)





Continued Operating Income (Loss) of Base andDiluted Common Shares (Unit: 1 KRW)





* As of the 2022 Annual Report published in March 2023

LG ENERGY SOLUTION ESG REPORT 2022

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COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Business Highlight
LG Energy Solution in Numbers

Sales
LG Energy Solution achieved KRW 13.8 trillion in sales in the year of our spin-off from LG
Chem in 2020* and maintained an annual growth rate of 37%, reaching KRW 25.6 trillion insales in 2022.

2

1

×2

6

GrowthSales doubled since the spin-off in 2020

Countries*
Global production network* Korea, China, Poland, the US, Canada, andIndonesia

3

22.5

43%
30%

15

7.5

25.6
17.9

13.8

0

2020

2021

2022

* The 2020 revenue represents the sum of theconsolidated financial statements of LG Chem’s
sales division as of 2020, before the establishmentof LG Energy Solution, and the consolidated financial
statements following the K-IFRS as of December 2020,
following the spin-off of LG Energy Solution.

Order Backlog

4

30+

26k+

Battery research and expertise since 1992

Number of battery-related patents issued

Years

Unit: Trillion KRW
30

Patents

Since 2020, we have observed consistent growth in our order backlog*. Our company
possessed a backlog of KRW 150 trillion in 2020. In 2022, the number reached KRW 385
trillion, more than twice the volume compared to 2020. This unprecedented growth rate has
contributed significantly to our exceptional sales and improved profitability. Furthermore,
we are securing differentiated production capabilities with smart factories, strengthening ourposition as a global leader in the industry. LG Energy Solution is solidifying our growth
momentum through strategic partnerships with global automakers.
Unit: Trillion KRW
400

48%

300

73%

200
100

385
260

150

0

2020

2021

2022

* Order backlog: The cumulative value of orders received from customers

LG ENERGY SOLUTION ESG REPORT 2022

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ESG MANAGEMENTAPPENDIX

Business Highlight
Production Capacity

Joint Venture (JV)

200GWh/EV approximately 2.5 million units (2022)→ 490-510GWh/EV approximately 6.1-6.4 million units (by end of 2025)

LG Energy Solution is strengthening core partnerships by establishing joint ventures (JVs) with
suppliers to expand our global business presence. In 2019, we engaged in JVs with General
Motors (GM), starting with our first plant of Ultium Cells in Ohio, United States.

LG Energy Solution is establishing and implementing a proactive global strategy to effectively
respond to the increasing demand for rechargeable batteries. We are steadily expanding ourmanufacturing capacity by establishing production facilities in the US and Poland. By the endof 2025, we plan to expand the annual battery production capacity to 490-510GWh, which
is about 2.5 times larger than the 200GWh capacity in 2022. Considering that the battery
capacity for producing one high-performance electric vehicle is 80kWh, this is the capacity
which can produce energy for approximately 6.1-6.4 million EVs.

Production Capacity
Rate of global production

Approximately
2.5 times increase

EuropeAsia
below
below 40%
20%

North America
below 50%

200GWh490-510GWh≈ 2.5 million EVs≈ 6.1-6.4 million EVs

2022

end of 2025

LG Energy Solution JV Status and Plan
2019
Ultium Cells(GM JV) Plant 1
Lordstown, OH, USA

2021
Ultium Cells(GM JV) Plant 2
Spring Hill, TN, USA

2022
NextStar Energy(Stellantis JV)
Ontario, Canada

2023
LGES-HMG Battery(Hyundai Motor Group JV,
tentative)
Savannah, GA, USA

PT. HLJ Green Power
Ultium Cells(Hyundai Motor Group JV) (GM JV) Plant 3
Karawang, Indonesia
Lansing, MI, USA
LH Battery Company(Honda JV, tentative)
Fayette County, OH, USA

Battery capacity needed to manufacture a high-performance pure electric vehicle (EV)To produce a high-performance pure EV, approximately 80kWh of battery capacity is required, and thisallows a travel distance of more than 500km on a single charge.
The kWh is the unit that appears on the electricity bill. W (watt) is the unit of power and the rate of work
performed when a current of 1A (ampere) flows through a voltage of 1V (volt). Wh (watt hour) is the unit ofenergy equivalent to the power consumed for an hour. It is calculated by multiplying watts with hour(s).
A kWh is a unit for measuring more electricity, with 1 kWh equaling 1,000Wh. Considering that a family offour has an average monthly power usage ofs 350kWh, 80kWh is approximately the amount one person
uses for a month.

LG ENERGY SOLUTION ESG REPORT 2022

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ESG MANAGEMENTAPPENDIX

Business Highlight
Securing Stable Global Supply Chain
LG Energy Solution is securing a stable global supply chain for raw material supply andrecycling in order to produce batteries to meet the increasing demand for rechargeable
batteries.
In July 2023, we entered into a long-term lithium purchase agreement with SQM, a worldrenowned lithium producer in Chile, for a scale of 100,000 tons over seven years. This is
the single largest lithium purchase agreement and provides the capacity to manufacture
batteries for over 2 million high-performance pure electric vehicles. Through this agreement,
we plan to receive a large-scale supply of not only lithium hydroxide, which is used as araw material for “high-nickel and high-capacity electric vehicle batteries,” but also lithium
carbonate, mainly used for “low-nickel and lithium iron phosphate (LFP) batteries.” SQM,
headquartered in Santiago, Chile, has lithium mines in countries such as Chile and Australia,
which are signatories of the US Free Trade Agreement (FTA), and can meet the requirementsof the US Inflation Reduction Act (IRA). Furthermore, SQM has secured advanced eco-friendly
technologies, such as using solar power for 95% of the energy used in the lithium extraction
process, contributing to the enhancement of LG Energy Solution’s supply chain ESG
competitiveness.

Status of Long-Term Partnerships for Stable Raw Material Procurement
Year

Month

2020

OCT

QPM

10-year supply agreement for 7,000 tons of nickel and 0.7 tons of cobalt

DEC

Indonesia
Government

MOU to secure local nickel deposits for the Indonesia’s local JV

JAN

SQM

8-year supply agreement for 55,000 tons of lithium

Solus Advanced
Materials$380 million contract for Hungary copper foil factory

ShenzhenCapchemTechnology

15% acquisition of shares in Polish electrolyte JV with Capchem

APR

QPM

20,000 tons of nickel secured for 6 years from 2023

JUN

EcoProPartnership agreement for high steel recycling in battery
manufacturing plants

QPM

7,000 tons of nickel and 700 tons of cobalt secured annually for
10 years from 2025

Liontown

700,000 tons of lithium ore (Spodumene) secured annually for 5 years
from 2024

Vulcan energy

45,000 tons of lithium hydroxide secured annually for 5 years
from 2026

JUN

Compass Minerals

40% supply of carbonate and lithium hydroxide produced by Compass
Minerals for 7 years from 2025

OCT

Syrah

Start of supply of 2,000 tons of natural graphite from 2025,with continuous cooperation for expanding mass production

MAY

Green Technology
Metals

25% supply of lithium ore produced for 5 years from 2026

JUL

SQM

100,000 tons of carbonate and lithium hydroxide secured annually for
7 years from 2023

2021

2022

2023

LG ENERGY SOLUTION ESG REPORT 2022

JAN

EntityDetails12

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Business Portfolio
Advanced Automotive Battery

With our world-class battery technology andstable global production capacity, we will leadfuture mobility innovation and drive the widespread
adoption of EVs.
LG Energy Solution produces battery products worldwide which feature the latest technology
such as long-cell batteries with maximized energy density and increased mileage. Our
unparalleled technological competitiveness has enabled us to form strategic partnerships withthe world’s leading automakers, positioning us as the leaders in the global EV market. In addition,
we produce cell, module, and pack that feature highly advanced technologies, and total battery
solution where technology support and Battery Management System (BMS) are optimized.
Through our total battery solutions and unmatched battery performance, we are at the forefrontof pioneering new markets, including electric buses, trucks, ships, and Urban Air Mobility (UAM),
thereby driving innovation in future mobility.
Competitiveness1

The best partner of global automakers

2

Optimized solution with cutting-edge technology

3

Global production sites located near customers and markets

Products

Cell

LG ENERGY SOLUTION ESG REPORT 2022

ModulePack

13

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Business Portfolio

Mobility & IT Battery

With exceptional battery performance and creative
design for material technology, we have opened theera of Battery of Things (BoT), including IT devices
and Light Electric Vehicles (LEVs).
Since successfully developing the first lithium-ion battery in Korea in 1999, we have continuously
led the innovation of wireless devices, including laptops, power tools, and cordless vacuum
cleaners. Our world’s first freeform battery is a high-performance and standardized battery
that can be integrated seamlessly into various products, such as IT devices, home appliances,and LEVs, with minimized constraints to size and shape. In addition, leveraging our producttechnology, which fulfills the demand for high capacity, high power, and ultra-slim design, we areat the forefront of creating the BoT era. We achieve this by incorporating batteries into everyday
products with future technologies such as drones, robots, and electric vehicles.
Competitiveness
1

Enhanced compatibility with various applications beyond size and shape2

Battery design that improves space utilization

3

High-capacity, High-power, Ultra-slim battery with differentiated material technology

Products

Cylindrical

LG ENERGY SOLUTION ESG REPORT 2022

Pouch

freeform

14

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Business Portfolio

ESS Battery

Based on our ESS product lineup, we will expand the
supply of renewable energy and the Smart Grid era.
With our high-performance and high-quality battery production capabilities, LG Energy Solution
has established close partnerships with customers who require ESS solutions for various
applications such as power grids, commercial buildings, residential homes, and Uninterruptible
Power Supply (UPS) systems. We are striving to achieve the Smart Grid era by securing
technologies to repurpose end-of-life batteries into ESS and improving energy efficiency.
Competitiveness1

Battery cells developed with the cutting-edge technology

2

Product lineup and total solution for customer convenience3

Enhanced efficiency with compact size and high capacity

Products

Cell

LG ENERGY SOLUTION ESG REPORT 2022

Pack

Rack

15

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Innovating through R&D
Based on our three R&D innovation strategies, LG Energy Solution is enhancing our business competitiveness by focusing on core technologies such as next-generation high capacity andhigh safety material technology development and advancements in battery manufacturing processes. Furthermore, we are expanding our investment in R&D to explore new technologies
and products that will drive future growth, particularly in recycling, reuse, and next-generation batteries. We aim to contribute to a sustainable future by providing green and competitive
solutions. We plan on achieving this vision by minimizing the environmental impact throughout the battery manufacturing process and promoting resource circulation in the battery
ecosystem by developing waste battery reuse and recycling technology.

3 Core R&D Innovation Strategies

Development of battery technology forcustomer value innovation

Development of unparalleled battery
materials and process technology

R&D
Organization

Expanding R&D Investment and Workforce
The R&D investment in 2022 reached KRW 876 billion, which is 34% higher than in 2021,
representing 3.4% of total sales. To drive R&D efforts, we have established researchorganizations worldwide in the advanced automotive, mobility & IT, and ESS batteries fields.
Additionally, we operate research institutes dedicated to cell and pack / BMS advanced
research and technology strategy. As of 2022, there were 3,923 researchers and continue
to focus on retaining a good talent pool. We will strive harder to fast bring green energy era
through active and aggressive R&D investment.
R&D Expenses

R&D Workforce
876

900

34%

3,000

654

700

2,577

2,000

600

0
(Billion KRW )Chief Technology Officer(CTO)

Advanced Cell Research Center
Advanced Pack Research Center
Next Generation Battery Research Center
Analytical Center

LG Energy Solution
R&D

BMS R&D Center

Advanced Automotive
Battery Department

Advanced Automotive Battery
Development Center

Mobility & IT Battery
Department

Mobility & IT Battery Business Unit

ESS Battery Department

ESS Battery Development Center

Chief Quality Officer(CQO)

Development Quality Group

Chief Production &Procurement Officer (CPO)

Technology Center

3,390

800

500

3,923

4,000

Development of next-generation battery
technology

55%

1,000

422

0

2020

2021

2022

LG ENERGY SOLUTION ESG REPORT 2022

(Number of
employees)

2020

2021

2022

16

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Innovating through R&D
R&D Areas and Application Status
LG Energy Solution is enhancing business competitiveness by strengthening our research in the fields of advanced automotive batteries, such as Battery Electric Vehicles (BEV) and Plug-in HybridElectric Vehicles (PHEV), along with mobility & IT batteries for smartphones, e-mobility, power grids, and residential energy storage systems (ESS).

Battery Materials
Materials, Process,

Advanced Automotive Battery

Mobility & IT Battery

ESS Battery

BEV / PHEV Battery

Cylindrical Battery, Pouch Battery

Power Grid, Residential

and Next Generation Battery,
Pack / BMS, Advanced ResearchBattery Materials and Process Technologies
LG Energy Solution possesses and develops three distinctive material technologies. The
first is a high-capacity cathode material technology, which is used to develop high-energy
batteries by employing high-nickel content cathode material with added aluminum to theNCM (Nickel-Cobalt-Manganese). The second is an innovative technology that uses patented
proprietary technology to enhance the charge / discharge efficiency by maximizing the siliconoxide content in the anode material. The third is the SRS (Safety Reinforced Separator) technology,
which enhances durability by coating the ceramic on the separator between the anode andcathode materials.
In addition to these distinctive material technology, LG Energy Solution maximizes energy
density and maintains battery durability during long-term charge / discharge process throughour unique L&S (Lamination & Stacking) method, which reduces space waste inside the battery
cells. This technology, which provides high design flexibility, is optimized for various electricvehicles, from multi-platforms to premium vehicles, and can be deemed as the driving force
leading the mass adoption of electric vehicles.
Advanced Automotive Battery
LG Energy Solution supplies both cylindrical and pouch-type batteries in order to meet thedemands of the global customers. Furthermore, with stable technology, we have developed
Long Cell products that can be mounted on the world’s first dedicated electric vehicle
platform, and we are also expanding their applications.

LG ENERGY SOLUTION ESG REPORT 2022

Mobility & IT Battery
Mobility & IT batteries utilize the “Stepped Battery” technology, which allows for maximum
capacity in a small space, enabling the creation of small and lightweight IT devices.
Cylindrical batteries are utilized in a wide range of applications, from power tools to fans,energy storage systems (ESS), and satellites. Particularly, high-power cylindrical batteries
used in power tools apply LG Energy Solution’s low-resistance technology and high-capacity
materials, which provide improved power density. Additionally, high-capacity cylindricalbatteries based on LG Energy Solution’s high-energy NCM battery technology achieve
the highest capacity in the industry among 18650 and 21700 cylindrical batteries. Thesecylindrical batteries are compact and slim, allowing them to be installed inside e-bike frames
and can travel up to 150km on a single charge (based on a 500Wh pack).
ESS Battery
For residential use, LG Energy Solution has developed EnBlock 16H Prime which boasts
the world’s largest capacity (16kWh) for a single pack and can be expanded up to 32kWh byparallely connecting the two units. Recently, we have also introduced EnBlock Flex, which
provides flexible installation options with various capacities and installation forms. For power
grid applications, we have secured high-voltage solutions (1,500V class) to meet the trends inthe power market and are increasing the customer convenience through the development ofstandardized system-level products (factory-assembled).

17

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Innovating through R&D
Open Innovation
Next-Generation Battery Technologies
LG Energy Solution is currently developing solid-state batteries for enhanced safety andlightweight lithium-sulfur batteries with high energy density. Solid-state batteries replace
the previously liquid electrolyte with a solid one, significantly enhancing safety. We arecommercializing (semi) solid-state batteries that utilize polymer, improving the safety by
utilizing existing lithium-ion battery processes, prepare for the market of solid-state batteries
that satisfy both high energy density and safety by using sulfur-based materials. Lithiumsulfur batteries use sulfur, a low-cost lightweight material, as the cathode material, making
them the next-generation battery with high energy density that are cost competitive. We aredeveloping lithium-sulfur batteries with the goal of applying them to High Altitude Pseudo
Satellite (HAPS) and Urban Air Mobility (UAM), unmanned aircraft for the stratosphere and otherapplications.

Patents+

Overseas
18,067

Domestic
8,574

Total number of patents
26,641LG Energy Solution is strengthening technology development collaboration with academia,
industry, and startups. We host various open innovation programs to build networks withexperts from various fields and support innovative ideas that can be commercialized.
Battery Innovation Contest (BIC)
Innovative discoveries and ideas mainly originate from university and research institute’s
laboratories. Through the Battery Innovation Contest (BIC), LG Energy Solution supports
researchers at universities and research institutes to conduct more challenging research byproviding research and development funds. The researchers’ autonomy is guaranteed, and
LG Energy Solution’s dedicated research team is matched with them to jointly establish thedirection of technological development, ensuring that their creative ideas can be linked tocommercialization.
The Battery Challenge
The Battery Challenge is a battery-related startup contest program hosted by LG Energy
Solution. Startups selected through The Battery Challenge present their technologies during
the Pitch Day attended by technologies to key executives and employees. They receive
feedback of their technologies through expert matching in LG Energy Solution’s relevant
fields and have the opportunity to collaborate. Furthermore, we foster mutual growth throughongoing collaboration, such as joint R&D efforts and equity investment.
Innovation ForumThe Battery Forum is an open forum where renowned battery experts worldwide sit together
and openly converse about the future of batteries. The forum serves as a platform for sharing
knowledge, learning about the latest research trends, and engaging in discussions regarding
the future direction and potential advancements in battery technology.

* As of December 2022

LG ENERGY SOLUTION ESG REPORT 2022

18

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Mutual Growth of Individuals and Companies
Expanding the Battery Ecosystem with In-House Ventures
In 2022 Fall, KooRoo and AVEL were established as internal independent companies of LG Energy Solution to expand LG Energy Solution’s circular battery ecosystem, thereby increasing the
ESG impact.

KooRoo
KooRoo is an in-house startup focused on the battery swapping station (BSS) business forelectric electric two-wheelers. Since its establishment, KooRoo has experienced growth anddiversified business opportunities. KooRoo’s service allows the replacement of discharged
electric motorcycle batteries with fully charged ones within 20 seconds through a quick
battery exchange system. These battery exchange stations are strategically located atconvenience stores and grocery shops, including the GS Convenience Store and GS theFresh. It caters to quick commerce delivery riders that need to swiftly swap their batteries
without waiting.
KooRoo works closely with domestic electric two-wheelers manufacturers to enhancecompatibility with the local battery pack exchangers. By late 2023, seven electric twowheelers models are expected to be compatible with KooRoo’s battery pack exchangesystem. Furthermore, KooRoo leverages the battery field data collected through its
battery pack service to advance its battery solutions. KooRoo envisions expanding into therechargeable battery pack market and taking on the responsibility of safety management fordelivery riders and citizens in the future.

KooRooAhn, Hong Deok, Leader

KooRoo has prioritized ESG management from the very early stages of business.
First and foremost, KooRoo’s BSS business helps reduce environmental pollution. Studies have shown that small 50cc motorcycles emit 12 times
more carbon monoxide and 124 times more hydrocarbons than light cars. It may be shocking to many people that motorcycles pollute the air
significantly more than cars. By converting 120,000 internal combustion engine motorcycles to electric motorcycles in Seoul, it is estimated thatthe city could save environmental costs of 66 billion won in just one year. Electric motorcycles can solve noise pollution issues. The number ofcomplaints raised due to noise generated by delivery motorcycles has significantly increased in various locations in Seoul. Switching to electric
two-wheelers can greatly improve citizens suffering from noise pollution.
Secondly, our business model fosters stronger cooperation and synergy with small and medium-sized enterprises (SMEs). The domestic internal
combustion engine motorcycle market is dominated mostly by companies from Japan and Taipei. Backed by highly compatible battery packs,
we are collaborating with domestic SMEs to build more charging infrastructure and manufacturers to increase the market share of domesticallyproduced electric two-wheelers. We aim to transform this market, which is currently dominated by foreign companies, into a green technologydriven market while simultaneously promoting the growth of the domestic electric two-wheelers market with our SMEs.

LG ENERGY SOLUTION ESG REPORT 2022

19

Business Highlight

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Mutual Growth of Individuals and Companies

AVEL (Add Value to Energy Label)
AVEL is an in-house startup of LG Energy Solution that was founded to facilitate theintegrated management of the renewable energy power grid using an energy storage system(ESS). As a pilot project, AVEL initiated a large-scale ESS project to alleviate the problemsof renewable sources in Jeju Island. The company’s primary focus is developing a systemcapable of accurately predicting the amount of renewable energy generation in the region
and efficiently managing its utilization.
* Output control: Government restrictions on solar and wind power generation during periods of high generation
when the power grid cannot accommodate it.

AVEL
Kim, Hyun Tae, Leader

AVEL’s slogan is “Go Green.” We embarked on this business with a mission to efficiently utilize and supply renewable energy at the forefront ofsolving various problems arising from the increased penetration of renewable energy. As an engineer in the battery field for over 10 years, I wanted
to develop a new business in Energy as a Service (EaaS) through AVEL, providing energy services instead of solely focusing on development.
There are two problems that AVEL aims to address in renewable energy generation. First, there are instances when the distribution lines cannot
demand all the generated renewable energy, resulting in the inability to transmit it to consumers. Second, solar and wind power generation arehighly influenced by weather conditions, making it difficult to accurately predict their generation volume and errors.
I questioned whether the high variability of renewable energy could be solved through ESS and released to the power grid at the appropriate time.
Facing the infrastructural situation in Korea, I found a solution for efficient utilization of renewable energy in ESS, which became the core of thisbusiness model.
A pilot project will be conducted in Jeju Island starting from the end of 2023 for a period of two years. Jeju Island has a renewable energy utilization
rate of approximately 20%, which is significantly higher than the national average of 7-8%. However, considering the infrastructure capacity, Jeju
Island has the potential to achieve a utilization rate of 40%. This means that even in Jeju Island, which has the highest renewable energy utilization
rate in the country, only half of the facility level is currently being utilized. AVEL plans to accumulate technological expertise and experience throughthe Jeju pilot project and expand the business nationwide starting from the end of 2025, ensuring that renewable energy resources in Korea canbe fully supplied to the power grid. In particular, as 40% of Jeju Island’s total power generation comes from wind power, AVEL aims to enhance
prediction accuracy through ensemble prediction algorithms that integrate multiple prediction models and compensate for prediction errors using
ESS as a supplemental resource. AVEL will do our best to ensure stable supply of renewable energy to consumers nationwide, which is essential forachieving the 40% carbon reduction target (NDC) by 2030.

LG ENERGY SOLUTION ESG REPORT 2022

20

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Focus
Environmental
Transition to renewable electricity
at the entire company

Recycling rate of spentcathode materials solvent (NMP)

56%

97%

TCFD* Pledged

The first to join as Korea’s
battery company(61% for Manufacturing Facilities)

100% resource circulation rate
recognized by UL**

Platinum Gradein China facilities(LGESNJ / LGESNA)

SocialThe first to join as
global battery company

A member of the Steering
Committee in FCA

Established the DEI policy andrevised the responsible procurement
policy for all business sites.

Proportion of overseas employees

Approximately 70%

All business sites

Certification from U.S. Great Place
to Work InstituteObtained Great Place
to Work Certification

Governance
Proportion of Female external Directors

ESG Data Management System

ESG Training

GBA Battery Passport pilot project

Maintained at 50%

ESG IT Intelligence developed

All-employee

The first in the world
to present prototype
The first to join as Korea’s
battery company* TCFD: Task Force on Climate-related Financial Disclosures ** UL: Underwriters Laboratories

LG ENERGY SOLUTION ESG REPORT 2022

21

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Vision and Strategy
LG Energy Solution is committed to driving ESG management with the belief that our business growth contributes to a sustainable future for humanity.

GovernanceTo systematically address the growing demand of ESG, LG Energy Solution establishedinternal ESG Committee in June 2021. We also formed dedicated ESG departments andworking groups to enhance the execution of strategies and initiatives.

Dedicated ESG Teams and Council
LG Energy Solution’s dedicated ESG Teams are responsible for establishing an ESG-focusedstrategy system and coordinating with relevant functional groups and teams to carryout progress related to ESG activities across the company. The ESG Working Council iscomposed of teams and groups responsible for implementing ESG vision and strategies. They
engage in quarterly meetings to assess the progress of ESG strategic initiatives, and share
key issues and insights.
All Employees
ESG management at LG Energy Solution is not achieved solely through the efforts of specificdepartments. To internalize an ESG-driven work style, a total of 51 “ESG Education” sessions
have been conducted, compliance training has been expanded to include ESG-related
training, and the monthly publication of “ESG Trend Focus” has been on-going. These
initiatives aim to create an environment where all employees can proactively participate inand practice ESG management.

ESG Committee

Dedicated ESG Teams

ESG Implementation and Internalization

ESG Committee
The ESG Committee formulates fundamental policies, strategies, and medium- to longterm goals in ESG areas such as environment, human rights, safety and health, social
responsibility, customer value, shareholder value, and governance. The Committee reviews
and makes decisions on ESG agenda and programs. The ESG Committee consists of fivemembers, with four of them being external directors, and it meets semi-annually.

Board of Directors

ESG Impact TeamESG Policy Team

Formulating and managing carbon
negative strategies

Establishing strategic ESG direction

Product life cycle assessment (LCA) andcarbon footprint management

Managing global ESG initiatives

Planning and operating social
contribution programs

Addressing ESG external communications

Internalizing ESG among employees
Supply chain ESG management
Publishing ESG reports
Operating ESG advisory panels

Managing key ESG initiatives
Addressing ESG assessments
Seving as the secretariat of the
ESG Committee
Operating ESG Working Council
Managing ESG risk at our operating sites

ESG Working Council

All LG Energy Solution Employees

LG ENERGY SOLUTION ESG REPORT 2022

22

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Vision and Strategy

Lee, Bang Soo

Park, Jin Won

President /Chief Risk Officer (CRO)

Executive Vice President /Leader of External Relations GroupIn the past few years, I’ve been observing a noticeable change in social perspectives
regarding ESG. Not long ago, ESG presented a dilemma over financial performance and beinga good company. Now, ESG is seen as an instrument that brings competitive advantage andattracts investment and business opportunities, and ESG indicators are considered relevant
financial performance indicators.
There is a clear reason for such a shift. The Business Roundtable (BRT) in 2019 redefined
the purpose of companies from conventional capitalism approach of maximizing profits tomaximizing stakeholder values. In 2020, this changing importance of ESG was recognizedby the capital market. Regulatory instruments driven by the US and the EU such as the
US Inflation Reduction Act, Critical Raw Materials Act, and Carbon Border Adjustment
Mechanism, send a strong signal for companies to pursue ESG. I believe there is now ageneral consensus that ESG is no longer a non-financial, secondary businss element; it drives
competitiveness and corporate financial performance.
To LG Energy Solution, global ESG trend presents both an opportunity and threat. As thebattery industry gains attention with the acceleration of the green energy transition, themarket is expanding rapidly, making LG Energy Solution an attractive company. To sustain ourbusiness, it is fundamental to identify and manage risks in various areas including climate,energy, water, waste, health and safety, and human rights. Since managing all these areas
with equal efforts can be challenging, LG Energy Solution will focus on building an ESG
management system that aligns with stakeholders’ demands by prioritizing and tackling the
key issues one by one.
We will make sure that ESG goals are supported by effective governance, sufficientdeliberation and due diligence process, and that our procedures and progress arecommunicated to stakeholders in a transparent and timely manner. As a global leader infuture energy industry, we will put our utmost efforts for building a sustainable future.

LG ENERGY SOLUTION ESG REPORT 2022

LG Energy Solution established the strategic framework for ESG management under thevision called “We CHARGE toward a better future.” The framework consists of 14 key tasks
that uphold the vision, including four priority tasks in the areas of climate action, circular
economy, valule chain ESG risks management, and inclusion (DEI). We have set objectives andimplementation plans for each task, and we monitor the progress on a regular basis. Further,
initiatives to help promote awareness of employees are being rolled out such as through ESG
training and periodic publication of ESG Trend Focus.
The 2022 ESG report intends to transparently disclose our ESG performance according to
global ESG reporting standards such as the Global Reporting Initiative (GRI), International
Sustainability Standards Board (ISSB), Task Force on Climate-related Financial Disclosures(TCFD), and Sustainability Accounting Standards Board (SASB). In February 2023, we became
the first Korean battery manufacturer to declare support for TCFD. We intend to build on the
momentum and strengthen our climate risks assessment and disclosure.
In April 2023, we strengthened our governance system by approving the Guidelines on
Independent Directors’ Independence and Expertise & Diversity of the Board of Directors aswell as the Corporate Governance Charter. To proactively respond to global ESG regulations,
we assigned compliance issues to be reviewed and approved by the ESG Committee.
Moving forward, LG Energy Solution will continue to make meaningful and ethical decisions
through a healthy governance system that considers stakeholder perspectives to ensuresustainable ESG progress. We will establish and manage goals, and we will provide
transparent and accurate disclosures to our stakeholders. We will strive to be a leading
company in the battery industry, creating a sustainable future and spreading positive
influence around the world. We will continuously practice ESG management matching thename of “First Mover” in the battery industry and meet the ESG needs of our stakeholders.

23

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Vision and Strategy
ESG Strategy
LG Energy Solution has established an ESG vision, “We CHARGE toward a better future,” with the determination to be a sustainable global leader in thebattery industry and contribute to creating a better future. We have identified 8 core areas related to environmental and social aspects, along with 4 Enabler
areas in the governance aspect, to drive our ESG initiatives.

We CHARGE toward a better future
8 Core areas

4 Enabler areas

C

H

A

R

G

E

Climate Action& Circular Economy

Human ValueManagement

Advanced
EH&S

Responsible& Impactful BusinessGood
Governance

ESG Disclosure& Communication

Human Rights
Build human rights risk-freebusiness sites

Product Stewardship
Secure 100%
green products by 2022

Responsible
Supply Chain Management
Secure over 90%
ESG low-risk group by 2030

Compliance Management /Ethical Management

Enhanced ESG Disclosure

Human Capital Management
Promote diversity,
equity and inclusion

Environment, Health, and Safety
Zero serious
EH&S accidents〮 Corporate culture thatembraces DEI〮 Reinforcing producteco-friendliness〮 Health and safety managementof business sites〮 Environment impact
management〮 Biodiversity conservation

Climate Action
Achieve carbon
neutrality by 2050
Circular Economy
Build a closed loop by 2025

〮 Carbon negative strategy〮 Perfect Closed Loop

LG ENERGY SOLUTION ESG REPORT 2022

Shared growth andLocal Community Impact
Reinforce mutual growthand cooperation〮 Sustainable value chain〮 Shared growth〮 Global social impact programs

Enhancing
Governance System〮 Stregthening complianceprogram and ethicalcorporate behavior〮 Stregthening governancesystemIncreased Stakeholder
Communication and Partnership〮 Stregthening ESG disclosure〮 Increasing stakeholder
communication andpartnership

24

ESG
ImpactDouble Materiality Assessment

E

Carbon Negative Strategy
Perfect Closed Loop

S

Product Safety
Sustainable Value Chain
Sustainable Workplace

G

Corporate Governance

Based on the results of the double materiality assessment,
LG Energy Solution aims to achieve critical issues ofCarbon negative strategy, Perfect Closed Loop, Product safety, Sustainable
Value Chain, Sustainable Workplace, and Corporate Governance.

LG ENERGY SOLUTION ESG REPORT 2022

25

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Double Materiality Assessment
LG Energy Solution conducts an annual materiality assessment to identify and manage the issues that stakeholders consider important at a regular basis. This year, we introduce a
double materiality assessment that reflects both social·environmental impact and financial impact. We incorporated globally-recognized ESG standard indicators such as GRI, SASB,
MSCI, and KCGS, as well as publicly available information from the media. As a result, a total of 24 issues were derived, and priorities were set based on their material importance.
After a managerial review by the executives, six were ultimately selected as impact issues.

Process of Issue Pool Development

Analysis of Double Materiality Assessment

01 Construction ofIssue Data

02 Initial Construction ofIssue Pool

03 Final Selection ofIssue PoolESG issue pooling

Data-based issue selection

Final material issue selected

Establishment of ESG issue
data pool considering global
standards and evaluation
criteria such as GRI and MSCI,
resulting in a total of
847 issue data.

Construction of issue poolbased on data pool,reflecting the main keywords
from issue adjustment
and media research,
resulting in 34 issues.

Final selection ofissue pool of 14 ESG
strategies, directions, andcoverage in the previous
year’s reporting, resulting
in a total of 24 issues.

Financial Impact
SocialㆍEnvironmental Impact

SocietySocial · Environmental Impact

Global ESG
Standards

Media andCorporate
Documents

Company

Assessment of SocialㆍEnvironmental and Financial Impact for Issue Pool
SocialㆍEnvironmental Impact

Financial Impact

ㆍA review of global ESG standards

ㆍA review of global ESG standards

ㆍEmployee and external stakeholder survey

ㆍEmployee and external stakeholder survey

ㆍMedia research

LG ENERGY SOLUTION ESG REPORT 2022

ㆍInternal data review

Employee andStakeholder
SurveysAn analysis of indicators on social
responsibility established byinternational entities such as theUnited Nations (UN)- GRI, UN SDGs, UNGC ISO26000, WEF

A keyword search composed ofissues and “LG Energy Solution”(14,164 cases) between January 1 andDecember 31, 2022
- Among the total keyword search,content related to positive andnegative impacts on society,environment amounted to 10,934
cases, accounting for 77%.

Financial Impact
Financial / accounting-based
information disclosure indicators and
ESG evaluation indicators analysis- TCFD, SASB, MSCI, DJSI, KCGS

CEO messages and open business
reports that mention ESG- 2022 Annual reports, Sales reports,
2021 ESG report

Target: 665 employees, 556 stakeholders
SocialㆍEnvironmental impact and financial impact inquiries and priority selection
by area
Period: April 13 to 18, 2023
Respondents and response rate: Employees - 115 (17.3%), Stakeholders - 133 (23.9%)

26

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Double Materiality Assessment

NO

Area

Key Issues

GRI Standards Topic

Page

1

E

Carbon Negative Strategy

GRI-305

28-33

2

E

Perfect Closed Loop

GRI-306

34-35

3

S

Product Safety

GRI-416

36

4

S

Sustainable Value Chain

GRI-308, 414

37-39

5

S

Sustainable Workplace

GRI-401, 405

40-44

6

G

Corporate Governance

-

45-47

● High Impact● Medium Impact

Financial impact

Based on the results of the 2023 double materiality assessment, we aim to focus on thefollowing six core issues as our ESG impact tasks.

Carbon Negative
Strategy
Sustainable
Workplace

Corporate
Governance

Carbon Negative Strategy
Perfect Closed Loop
Product Safety
Sustainable Value Chain
Sustainable Workplace

Environment

Shareholder /Investor

Academic /expertSupplier

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●
●

●

●

●

●

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Employee

●

●

●
●

●
●

●
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●

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●

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●

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●

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●

●

Information security and customer data protection
Inclusive growth and shared growth
Corporate social responsibility
Organizational culture for diversity, equity, and inclusivity (DEI)
Customer pain points and satisfaction
KPI and compensation systems
Risk management
Compliance and Jeong-Do Management
Emerging policies and regulations
ESG disclosure
Stakeholder communication

LG ENERGY SOLUTION ESG REPORT 2022

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Sustainable workplace and employee health and safety

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Talent management and training

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Biodiversity conservation

Governance

Customer

Financial

Enhancing product eco-friendliness

Water source management

SocialStakeholder●

Hazardous substances management

Perfect Closed
Loop

Industry
Association

Social·Environmental

Corporate GovernanceWaste management

Sustainable
Value Chain

2

Social · Environmental impact● Low Impact

Issue

3

4
6

ImpactIMPACT

Product Safety

5

1

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27

E

S

G

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Carbon Negative Strategy
LG Energy Solution aims to achieve carbon neutrality throughout the value chain by 2050.
Ultimately, we strive to go beyond carbon neutral and contribute to carbon reduction of various stakeholders by targeting carbon negative.
In 2015, 196 countries entered into the Paris Agreement, committing to limit the rise of
global temperature to no more than 1.5℃ above the pre-industrial levels (1850-1900). A global
reduction of at least 45% in carbon emissions compared to 2010 must be achieved by 2030,
and a path toward carbon neutrality by 2050 must be set. As a response, countries, including
Korea, have voluntarily submitted their national reduction goals.
LG Energy Solution has responded in the climate change mitigation efforts by setting longterm carbon neutrality goals and specific interim targets. Beyond our own efforts to address
climate change, we plan to support carbon reduction of local communities by reflecting our
mission to go beyond carbon neutrality.

2020

2050

Scope 1&2
■ RE conversion■ Fossil fuelconversion

Long-term goals for carbon neutrality pursued by LG Energy Solution are as follows:
2030

2040

LG Energy
Solution· Achieve RE100* /EV100 at all
business sites· Achieve 53%
emission reduction
from BAU emission· Achieve Scope1&2
carbon neutrality(Scope 1&2)

Suppliers· Achieve RE100
for Tier-1 suppliers* Core battery
materials(ex. CAM, AAM,
Cu-Foils)· Achieve RE100 ofcore value chain

2050· Achieve carbon
neutrality
throughout thevalue chain(Scope 1-3)

Scope 1~3
Carbon Neutrality
Achieved

Post-2050· Achieve carbon
negative

Net Zero

Scope 1&2
Carbon Neutrality
Achieved■ Carbonoffsetting■ Increase inrecycled
contents* RE100 (Renewable Electricity 100%), EV100 (Electric Vehicle 100%)■ Developmentof low-carbon
materials

Carbon Negative
The term refers to the most active state of carbon emissions reduction goal where the company removes
more carbon than the amount of carbon emitted solely from our operations. It reflects our ongoing effort tofrom our operations.

Scope 1, 2, 3
Scope 1: Greenhouse gases emitted directly from a company’s own business sites
Scope 2: Greenhouse gases emitted indirectly from a company’s energy source such as electricity and steam
Scope 3: Greenhouse gases emitted indirectly from a company’s value chain activities

LG ENERGY SOLUTION ESG REPORT 2022

■ RE100 for
suppliers

Scope 3

2020

2030

2040

2050

Achieve RE100
for all global sites
Achieve RE100
for Tier-1 supplier

Achieve carbon
neutrality of all
global sites(Scope 1&2 net-zero)

Achievecarbon neutriality
for entire value chain

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ESG MANAGEMENTAPPENDIX

Carbon Negative Strategy

Climate Governance

Implementing Energy Efficiency

LG Energy Solution’s carbon neutrality goal setting and our related carbon reduction activities
are decided and operated through a transparent and efficient governance system. The
Board of Directors, the company’s top decision-making body, makes the final decisions andoversees the execution of the implementation of climate change response strategies andinvestments.

LG Energy Solution has been garnering efforts to enhance operational excellence byimplementing various measures to reduce energy and to maintain our facility operation in ahighly-efficient state despite the growth of our battery production volume. These measures
include energy leakage inspections and diagnostics process, replacement of high-efficiency
equipment, waste heat recovery in the manufacturing process, and optimization of utility
facility operations. In particular, to manage the energy flow of business sites, IoT modules andsensors on each facility were installed. Equipped with the Energy and Utility Management(EUM), we are able to gather facility management data and monitor them. EUM provides areal-time operation status and energy analysis information. In addition, this allows us to utilize
various data analysis tools of EUM, thereby forecasting the energy use more stably andefficiently.

The ESG Committee is established under the Board of Directors to biannually review thedirection of climate change response strategies and manage and supervise the approval andexecution of major tasks. The Carbon Neutrality Council, composed of relevant personnel
and professionals within the company related to climate change, selects to achieve carbon
neutrality. The ESG Impact Team runs the Carbon Neutrality Council which makes plans forclimate change response strategies, and handles communication with internal and external
stakeholders.

Implementing Carbon Neutrality
Most of the greenhouse gas emissions during the battery manufacturing process are
generated from energy sources used in the production process, such as heat and electricity.
Specifically, about 70-80% of the total greenhouse gas emissions are indirect emissions
generated during the power generation process, and the rest are from fuel combustion (i.e.,
LNG, gasoline). To achieve carbon neutrality, we need to maximize the conversion of electricity
into renewable energy sources and minimize energy consumption by replacing fuels withalternative energy sources. To this end, LG Energy Solution has established a strategy and along-term roadmap for achieving carbon neutrality, and we manage them on a rolling basis
for continuous implementation.

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Carbon Negative Strategy~ 2030
RE100/EV100 for all business sites and RE100 for Tier-1 supplier

Scope
1&2
(LG Energy Solution)

Scope
3(Supplier)In April 2021, LG Energy Solution became the first in the battery industry to simultaneously join RE100 and EV100 (converting 100% of business vehicles to EVs). With this effort, we wereable to move up our initial goal of RE100 from 2050 to 2030, a faster transition of 20 years. The global production sites are targeted to convert all electricity to renewablesources 100% by 2025. The remaining non-production sites, such as the R&D centers, will be targeted to achieve RE100 by 2030. Also, we established a principle to operate
our new production sites and joint ventures (JVs) in 100% renewable electricity from the production stage and to include the renewable energy procurement strategy from theearly phase of the investment planning stage.
In 2022, a company-wide transition rate was 56% while global factories achieved 61% of renewable energy conversion rate. The Wrocław plant in Poland (LGESWA) andthe Michigan plant in the US (LGESMI) converted 100% of their electricity to renewable energy through the Green Pricing system and Renewable Energy Certificates (REC).
Furthermore, LG Energy Solution is progressively increasing the proportion of renewable electricity used in the Ochang Energy Plant in Korea and the Nanjing plant in China.

LG Energy Solution plans to convert the electricity used in our Tier-1 suppliers’ core battery material production into renewable energy sources. In addition to core materials
such as cathode material, anode material, and copper foil used in battery production, we plan to actively support other remaining Tier-1 suppliers such as separator,
electrolyte, and Al-pouch to achieve RE100. In addition, suppliers who pledged to achieve 100% renewable electricity on their production, we have been monitoring theirrenewable electricity roadmap and their progress by 2025.
In 2022, LG Energy Solution verified the renewable energy conversion progress and plans of our core Tier-1 suppliers, and conducted Life cycle Assessment (LCA) and
Environmental Product Declarations (EPD) of suppliers. In particular, we have been conducting supplier’s emission impact analysis by calculating their energy intensity basedon suppliers’ annual electricity consumption and purchase volume. In 2023, we created Carbon Neutrality Guideline for suppliers to enhance their understanding of carbon
neutrality and RE100 to encourage their participation.

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Carbon Negative Strategy

Scope
1&2
(LG Energy Solution)

Scope
3

~ 2040~ 2050

Scope1&2 Carbon Neutrality& RE100 for core value chain

Carbon Neutrality
for Entire value chain

To achieve carbon neutrality on scope where LG Energy
Solution directly and indirectly makes emissions (battery
production, scope 1&2), alternative energy sources must be
secured. Transitioning fuels to climate-friendly sources (i.e.,biomass, hydrogen) are the notable solutions. Any remaining
emission that are unable to convert to renewable sources
should be offset through carbon credit. To accomplish this, wefirst need to increase the operating excellence by maximizing
energy efficiency and then sourcing from alternative climatefriendly energy source. Also, any fossil fuel-based equipment
currently used should be converted into electricity-based
facilities could utilize for renewable electricity supply.
Furthermore, we are considering to take part in offset projects
by using our batteries and afforestation projects.

LG Energy Solution will achieve carbon neutrality by 2040

We have selected Tier-2 and lower-tier suppliers as carbon
reduction hot spots in our core metal value chain such as
cathode material and anode material. We plan to support our
hot spot suppliers to convert to 100% renewable electricity intheir raw material production process. To achieve this, we plan
to conduct Life Cycle Assessment (LCA) for the battery value
chain and identify hot spot suppliers who have high carbon
emission impact.

The key to carbon neutrality for LG Energy Solution is thatthe entire value chain achieves carbon neutrality by 2050.
According to the Life Cycle Assessment (LCA) methodology
for batteries, a significant amount of carbon is emitted
during our raw material productions. Accordingly, we plan toexpand the scope of carbon emission monitoring from Tier1 suppliers to Tier-N suppliers (i.e., mining) and support their
RE100 participation and carbon reduction efforts. Additionally,
we will gradually increase the use of climate-friendly, recycledmaterials instead of directly mined raw materials, thereby
fulfilling raw material circular system.

(Supplier)

LG ENERGY SOLUTION ESG REPORT 2022

Beyond 2050

LG Energy Solution will continue
to proceed with our carbonfree activities in our value chain
by 2050 and achieve carbon
negative through external carbon
reduction efforts. In particular,
we plan to contribute to climatechange response and welfare for
local communities by developing
renewable energy and installingenergy storage (ESS) systems
near our own business sites in
Korea and abroad. Furthermore,in collaboration with customers,
NGOs, and local communities, wewill implement support projects forclimate-vulnerable regions globally.

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Carbon Negative Strategy
Battery Carbon Footprint Management

A Step-by-step Process (in detail)

Recently, the demand for product-level sustainability has been increasing. EU and otherregulatory institutions are reinforcing the disclosure requirements under battery carbon
footprint, battery passport, and recycling regulation. The EU will soon obligate companies
to disclose LCA-based carbon footprint of the battery products and rate the level ofsustainability to prohibit less eco-friendly battery products from entering the market.
It means it is becoming increasingly important to calculate and reduce a product’s carbon
footprint accurately. LG Energy Solution will respond to these newly emerging regulations by
calculating and disclosing our battery carbon footprint.
Overview of Life Cycle Assessment (LCA)
LCA, or life-cycle assessment, is an integrated methodology for assessing environmental
impacts associated with the entire life-cycle stage (cradle-to-grave) from raw material
acquisition to disposal, analyzing the quantitative impacts to air, water, and soil.
Since 2019, LG Energy Solution has implemented LCAs to evaluate potential impacts arisingfrom our products, and we communicate these results with our key stakeholders, including
clients and customers. Internally, we have been uptaking these assessment results to identify
hot-spot raw material within value chain and to establish long-term carbon-neutral strategies.
LCA Process (ISO14040)
Target and scope

Inventory Analysis

Analysis

Impact Assessment

Target and scope

Inventory Analysis

Impact Assessment

Analysis· Defining the target andscope of LCA· Defining the evaluation
scope for each stage ofthe product life cycle· Collecting data onenergy and material
inputs and outputs
throughout the productlife cycle· Calculating anddocumenting the resultsof the inventory analysis· Scientifically-derived· Interpreting the resultsof the inventory
analysis and impact
assessment according
to research purposes

environmental impacts,
such as global warming,
caused by the inputs
and outputs areanalyzed in step 2

Battery Carbon Footprint
01 Calculation Method and Roadmap
We have established internal rule and guidlines for product carbon footprint calculation by
adopting the referenced international standards and various product category rules of global
institutions. Each product has been managed through an individual carbon footprint roadmap.
02 Participation in Carbon Footprint Rule Establishment
We engage and work together with the global initiatives such as RECHARGE - The Advanced
Rechargeable and Lithium Battery Association in Europe - and the Global Battery Alliance(GBA) to monitor the establishment process of carbon footprint calculation standards targeted
for batteries, and contribute through leadership and advisory activities. Additionally, we
collaborate with the Korea Environmental Industry and Technology Institute to develop
product category rule for life cycle assessment of the lithium-ion batteries.
03 Third-party Certification (EPD, Environmental Product Declaration) for Transparency Enhancement
LG Energy Solution provides a third-party certified calculation result and process for the
product’s internal carbon footprint to our customers and clients. In 2022, four ESS products
received third-party certification, and we plan to expand the number of certified products
in 2023.

Global Battery Alliance (GBA)The Global Battery Alliance (GBA) started as a sub-division of the World Economic Forum (WEF),
which became an independent initiative in 2017. With more than 140 participants, including companies,
governments, international organizations, and NGOs, the GBA aims to establish a sustainable value chainthat embraces the economy, environment, and society by 2030.

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Carbon Negative Strategy

Reducing Battery Carbon Footprint
01 Managing Suppliers’ Carbon Emissions
Based on the LCA analysis, it has been confirmed that approximately 20-30% of greenhousegas emissions are generated during the cell production process of the batteries wemanufacture. Approximately 70-80% of greenhouse gases are generated from the battery
raw material productions within the supply chain, including anode materials, cathodematerials, separators, and electrolytes. We have identified environmental impacts at eachstage of the supply chain through LCA hot spot analysis, and have established a supply
chain carbon reduction strategy recommending Tier-1 suppliers that are core suppliers ofthese materials to convert to 100% renewable electricity by 2025. This strategy will graduallyextend to our Tier-N suppliers by upgrading the hot spot analysis and prioritizing therenewable electricity transition.
02 Strengthening LCA Management System
To respond to the reinforcing global regulations on greenhouse gas emissions and the
mandatory disclosure of carbon metrics, we are currently considering to implement a
dedicated internal LCA management system that instantly integrates various internal
activity data such as energy usage, production volume, and wastewater / waste treatment
information to quantify gate-to-gate data. We are also deriving solution to link our calculated
result through LCA management system with certification programs.

Battery Passport Pilot Member
At the WEF’s Davos Forum in January 2023, the Global Battery Alliance (GBA) unveiled theworld’s first prototype of the Battery Passport, which provides information on the battery
life cycle. LG Energy Solution joined the GBA in May 2022 and became the first global
battery company to participate in the development project. In particular, we participated ina pilot project conducted for pre-validating the Battery Passport prototype. By collecting
and providing essential information required for the composition of the Battery Passport,such as basic battery raw material logistics information, greenhouse gas emissions during
the manufacturing process, and information on human rights and child labor risks atmanufacturing facilities, we contributed to its successful launch.
In the future, we will continue to make efforts to build a sustainable battery ecosystemthrough various collaborative activities, including the GBA Battery Passport development
project.

03 Product Development Process
To reduce greenhouse gas emissions, it is important to adopt low-carbon raw materials andprocesses from the initial product development stage. To achieve this, LG Energy Solution
is developing measures to run simulations to calculate carbon footprint from the early
development stage.
GBA Battery Passport Prototype

Battery Passport
The Battery Passport is an open digital system proposed by the GBA at the 2020 Davos Forum. It enables
real-time access through QR codes attached to batteries to provide information on the entire life cycle ofbatteries, from raw material extraction to production, use, disposal, reuse, and recycling. The EU plans to
implement the Battery Passport system from 2026, targeting all rechargeable industrial and electric vehicle
batteries with a capacity of 2kWh or more. Through this system, the EU will establish a battery circular
economy and promote the trading of batteries that comply with EU environmental regulations.

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Perfect Closed Loop
Amidst the global efforts to address climate change, the electric vehicle (EV) market is growing rapidly, bringing the proper handling of end-of-life batteries to the forefront
as a major challenge. LG Energy Solution is pursuing various business and technological developments to establish a perfect closed loop system for battery resources by reusing
or recycling them.

End-of-Life Batteries as Resources
Policies and regulations regarding end-of-life batteries are rapidly being introduced,
particularly in the US, the EU, and China. For example, for batteries entering the EU market,
the EU Battery Regulation requires proof of environmental and safety performances
throughout the entire life cycle period, from battery production to recycling. In response,
minimum requirements have been established for recycled materials used at the
manufacturing stage of batteries sold in Europe.
To comply with such regulations, we are establishing a closed-loop system that covers theentire value chain, from the production of battery raw materials to consumption, disposal, andrecycling. We are also collaborating with local suppliers to ensure the reuse, recycling, andenvironmentally responsible disposal of end-of-life batteries that meet global environmental
requirements.
Battery Circular Ecosystem
We are promoting a sustainable industrial ecosystem through a comprehensive management across the entire
process, from the production of raw materials to their use, disposal, and recycling.

Raw Material
Procurement

Materials andComponents

Cell

Electric Vehicles

End-of-Life
Batteries
ESS

Reuse

LG ENERGY SOLUTION ESG REPORT 2022

We aim to establish a resource circulation system that covers the entire value chain of
products, from the production of battery raw materials to their consumption and disposal.
It is part our response to investor demands and government regulations that emphasize
circular economy to minimize environmental impacts during battery production. To prepare
for the expansion of the battery recycling market, we are currently establishing a process thatprovides production scraps to the recycler which diverts back to recycled cathode materials
using extracted metals such as nickel, cobalt, and lithium. In 2022, we have completed theconstruction of a recycling system at our China plant and signed a contract with Li-Cycle, thebattery recycling company in North America for supplying 20,000 tons of nickel over a periodof ten years in exchange with our production scrap. This amount is equivalent to producing
batteries for 300,000 high-performance EV with a battery capacity of 80kWh. We plan tofurther expand the establishment of resource circulation systems to other global sites locatedat the US, the EU, and Korea.
End-of-life Battery Circular Ecosystem for recycling

Recycling
Mobility & IT

Battery Recycling Processes
Battery recycling is crucial for achieving circular economy as it contributes to greenhousegas emissions reduction generated during the raw material extraction process, in preventing
resource depletion, and minimizing environmental damage.

Battery
Modules /Packs

Recycling

Precursors

Cathode Materials

LG Energy Solution

Carbonate /Lithium Hydroxide

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Perfect Closed Loop

Battery Reuse Strategy
LG Energy Solution is continuously developing technologies to establish various businessmodels to build a second-life ecosystem for batteries, such as end-of-life battery for Energy
Storage Systems (ESS), and Battery as a Service (BaaS). We have advanced data-based safety
and lifespan evaluation algorithms and secure validated system solutions. Furthermore, wehave been accumulating expertise through various attempts and improvement processes
utilizing end-of-life batteries, such as installing electric vehicle charging stations (Ochang,
Chungcheongbuk-do) and establishing renewable energy-linked Energy Storage Systems (Jeju
Island).
Additionally, we are actively collaborating with key customers and related companies while
participating in the development of regional regulations and systems. In preparation forthe mainstream adoption of end-of-life battery collection from electric vehicles, we aredeveloping diversified business models, proposing validated solutions and providing verified
solutions. Moreover, for the case where batteries are no longer usable, a “manufacturingclosed-loop system” is established for battery disassembly, refining, and extraction of metals
necessary for battery production.

Implementing Battery Reuse Process
End-of-life EV batteries still have a remaining residual capacity of about 70-80% compared to
the new, unused ones. Even though the EV battery completed its lifespan, it could be reused
depending on its residual capacity and state of health (SoH). LG Energy Solution is establishingand implementing processes to utilize end-of-life batteries as valuable energy resource.
01 Collection of End-of-life BatteriesThis stage involves collecting batteries that can no longer be used in EVs due to reasons
such as end of vehicle life or accidents. After the end-of-life batteries are collected throughregional collection systems, an initial diagnosis is conducted to sort out batteries that aresuitable for reuse and those that require recycling. Batteries deemed suitable for reuse are
separately transported and stored.
02 Diagnosis and Commercialization
1) Diagnosis and Classification (Reconditioning)
In this stage, the external condition of batteries suitable for reuse in the collection stage isinspected, and technical diagnostics, such as electrical tests and lifespan assessments, areperformed to examine their internal condition. Batteries suitable for reuse are categorized into
grades based on their condition and intended use. Batteries that do not meet the reuse criteria areclassified as recycling products.
2) RefurbishingThis stage involves refurbishing batteries according to their intended reuse purpose, ensuring costcompetitiveness. This stage includes not only solution development to meet system performance,
quality standards, certification regulations required to be cost competitive, but also emphasis on
safety through optimal design and streamlining of manufacturing processes.

Electric Vehicle Charging Stations

03 Sale and Marketing of Reused Products
In order to provide safe and high quality products with price competitiveness, it is importantto secure markets that can maximize the value of our reused batteries and formulate businessstrategies to sell reused products according to their specific purposes, promote recycling,
and at the same time establish a superior collection system to increase the quantity andquality of end-of-life batteries that are collected. We have been dedicated to a thorough theprocess of evaluation, execution, and early validation in each stage.

Korea Ochang Energy Plant

LG ENERGY SOLUTION ESG REPORT 2022

Korea Jeju World Cup Stadium

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Product Safety
ESS Battery Management System ʻEMAS’

ESS Battery Fire Extinguishing Process

LG Energy Solution supports the stable operation of ESS (Energy Storage System) systems
and provides quality management services by implementing the EMAS (ESS Management
and Analysis System), an advanced system for ESS operation and management. Portable LTE
communication devices are installed at customer sites to collect and analyze data generated
by the battery system on cloud servers. This enables real-time email and SMS notifications
in case of incidents and various after-sales customer quality management services such as
automatic after-sales customer service (CS) reception.

The National Fire Protection Association (NFPA) in the US, FM Global’s safety management
standards (FMDS), and the International Code Council’s fire-related code IFC1206 all require
the installation of sprinkler systems for ESS installation and maintenance.
LG Energy Solution reduces the risk of fire spread by selectively extinguishing the modules
affected by thermal runaway inside the ESS battery. We also have an Active Vent System torapidly exhaust combustible gases that may be produced during fire suppression.

Fire Extinguishing Process in Case of Fire
Network
ProviderCustomer Site

LG Energy Solution

Customer
Local

LTE

Network
Devices
Rack
System

BSC

Internet

Thermal Runaway and Gas
Formation within
Battery Modules

LG Energy Solution
EMAS Server

Event Detection through
Smoke Detectors

LG Energy Solution

Detection /Diagnosis by Receiving Unit
(Power Shutdown)

Active Vent System

Cloud

BSM
Fire ProofHDD

Fan Operation andExternal Air Intake
through Control Box

Acquisition and transmission of
Operation Feedback Signals to
BSM (Battery System Monitoring)(Data Collection from BSC)

FTP

Battery
SystemESS
Battery Status Log Data

ESS
Event Log Data

(Event Data
Occurrence)

Automated Processing of Log Data /Big Data Analysis
Real-time Notification of Events
Event
Occurrence
FilterWarning / Fault

USB

ESS
Status Log / Event Data

Automatic
CS
Registration

CS
Processing
ResultRegistration

Water Discharge

Customer
ReportProvisionby Maintenance Company

Water Supply through Pipes

Selective Suppression of Fire
Modules using Passive Valves
Developed by LG Energy Solution

Battery Section Controller (BSC)

BSM (Battery System Monitoring)

The BSC is a software that manages the entire battery, monitors and diagnoses the battery system’s status,
the modules, and records related information as data.

Software that monitors and records data related to battery systems without a user interface.

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Sustainable Value Chain
The implementation of ESG management is expanding globally, not only within individual companies but also throughout the supply chain. This is evidenced by the increasing
obligations on the global battery supply chain as seen in The European Union’s Corporate Sustainable Due Diligence Directive (EU CSDDD) and due diligence requirements under
the EU Battery Regulation as well as Germany’s Human Rights Due Diligence law.

Managing ESG Risks in Our Supply Chain

Supply Chain Management Process

Supply Chain ESG Risk Management Framework
LG Energy Solution has established and implemented a “Responsible Sourcing Policy” inaccordance with global standards, such as the OECD, UN, and ILO to minimize ESG risks inthe supply chain, including human rights and labor, ethical management, workplace safety
and health, environmental sustainability, and responsible mineral procurement. Additionally,
LG Energy Solution operates a grievance mechanism which enables stakeholders to reportany issues or concerns relevant to potential ESG risks along our supply chain anonymously;
we handle such issues in a timely manner.

Supplier ESG Risk Assessment Process
LG Energy Solution conducts ESG evaluations annually to assess their compliance with
the Code of Conduct for Suppliers. We also monitor improvement tasks and results linking
the on-site evaluations. The ESG Risk Assessment for suppliers is conducted in two maintypes: ❶ New Supplier Evaluation and ❷ Regular Evaluation. LG Energy Solution evaluates
new supplier candidates against ten ESG risk indicators as part of the selection process.
The New Supplier Evaluation is a diagnostic evaluation consisting of ten ESG risk indicatorsfor new supplier candidates. For the suppliers that are already in our supply chain, supplier
ESG evaluations proceed in conjunction with regular evaluations, where over 60 ESG risk
indicators are incorporated. ESG evaluation factors account for 20% of the total supplier
regular evaluation, which is strictly managed in conjunction with the supplier purchasing
evaluation.

Furthermore, LG Energy Solution has developed and implemented a Code of Conduct
for Suppliers that outlines the regulations and principles where all suppliers must comply
with to maintain a sustainable supply chain in the areas of human rights and labor, ethics,
occupational safety and health, environmental sustainability, responsible sourcing, and thegrievance mechanism. All suppliers that carry out transactions with LG Energy Solution must
agree to fully acquaint and comply with the Code, and the information on suppliers’ informed
consent is managed through the Singlex Purchasing System.

Building a Sustainable Battery Ecosystem
To build a sustainable battery ecosystem, it is important to expand to the entire supply chainthat participate in ESG activities beyond our Tier-1 suppliers. LG Energy Solution seeks todrive greater transparency and traceability with the chain of custody through the operation of
the Supplier Code of Conduct and the regular process of supplier ESG evaluation.

LG Energy Solution has developed Self-Assessment Questionnaires (SAQs) consisting of 65
ESG risk indicators in the areas of labor, human rights, ethics, CSR, energy and greenhousegases, and environment, health, and safety for Tier-1 suppliers. We require our suppliers tomonitor their compliance to Code of Conduct through the SAQ. We conduct an on-site thirdparty audit on suppliers of high-risk group, identify and plan corrective actions, monitor theirimplementation, and disclose the information on procedures and outcomes of the evaluationin our ESG report.
In the first quarter of 2023, LG Energy Solution conducted ESG Assessments for 145
suppliers. The scores on energy and greenhouse gases and supplier CSR fields increasedslightly compared to 2022, resulting in a 2.6% increase in the total score, equivalent to 2.4
points. This improvement reflects impact of the strengthening of global regulations andincreased ESG awareness in society, which has led to suppliers improving their awarenessand response capabilities.
In addition, for some suppliers identified as high-risk groups through the ESG Assessment,
we conduct on-site audits to identify significant non-compliances and monitor improvementtasks and results. In 2022, on-site audits were conducted for ten key suppliers with a hightrading volume in Poland or identified with significant non-compliances.

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Sustainable Value Chain

ESG Evaluation Process for Tier-1 Suppliers■ Low-Risk Group Score of 85 or higher■ Medium-Risk Group 65 ≤ Score ＜ 85
■ High-Risk Group Score below 65

Risk Group Distribution

Regular Evaluation
SAQ
Assessment

Risk Group
Analysis

Selection of Sites
for On-site Audits

Identified as
Low-Risk,Medium-Risk, andHigh-Risk Groups

On-siteAudits

Improvement
Requests

2020

2022

2023

117 Companies

143 Companies

145 Companies■ 2020

93

89

95

97

69

85

■ 2022 ■ 2023
93

67

60

20
Labor and Human Rights

100

Ethical Management

92

95

40

11.2% 0.7%
60

80

100

ESG Risk Management for Core Raw Materials Suppliers
In 2022, the risk audit management system within the supply chain was significantly
strengthened to reflect changing international norms, such as the OECD Due Diligence
Guidance for Responsible Supply Chain of Minerals from Conflict-Affected and High-Risk
Areas (3rd Edition) and stakeholder requirements. In particular, we monitor Korea’s and global
regulations related to the battery industry to thoroughly review the standards and norms
that global battery companies must comply with. Specifically, we operate a supply chain
assessment process that can systematically manage various risk factors that may arise within
the raw material supply chain by checking the human rights, environmental, and governancerisk management status of key material suppliers in accordance with the OECD Due Diligence
Guidance, and managing identified risks to be improved within the specified timeframe.

80

91

57

60

40

20

Energy / Greenhouse Gases* Assessment conducted from 2022

LG ENERGY SOLUTION ESG REPORT 2022

Occupational Healthand Safety

RemedyManagement
SystemIdentification of
Sensitivity Factors
for Risk Evaluation

Implementation of
Risk Identification
and Response
Measures

Review of
Response
Measures andEffects

PublicDisclosure of
Audit Results- Establishingaudit plans- Development ofCode of Conduct
for Suppliers- Strengthening
suppliers’
capabilities
and contract
termination
criteria- Identifying risk
factors within the
supply chain- Prioritizing risk
factors- Establishing andimplementing risk
prevention andmitigation plans- Evaluating
current stateand effects
of response
measures- Improving
existing
responsibility
management
system- Disclosure inform of reports orother formats

Supplier CSR

97

80

0
Score

20

OECD Enterprise Audit Procedure

40

40

10.5% 2.1%
88.1%

0

Reflection of Assessment Results

Assessment Results by Categories

0
Score

9.4%

87.4%

2023

Regular ESG Assessment Results

80

52.1%

* In 2021, ESG Assessments were not conducted due to the maintenance of the purchasing management system.

On-site Audits

94

38.5%

2022

Identification of Major
Non-compliance
Issues andDiscovery of
Improvement Tasks

New Supplier Evaluation

100

2020

Total

94

· Criteria:
Likelihood of
occurrence,
resilience andothers.

· Training of
employees andsuppliers· Monitoring risk
factors· Responsibility
management
system, identified
risk factors,
response
measures, andresults

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Sustainable Value Chain

Furthermore, in 2023, LG Energy Solution will strictly reinforce the assessments for our raw
material supply chain, including cobalt, lithium, nickel, manganese, and natural graphite. We
conduct on-site assessments in collaboration with external agencies based on the OECD Due
Diligence Guidance for responsible supply chain. During the on-site audits, compliance withhuman rights and environmental safety regulations, as well as the suppliers’ supply chain
audit management processes, risk identification / assessment / mitigation processes andperformance, and supply chain audit reports are examined to assess the management statusof human rights, environmental, and governance risks within the supply chain based on theOECD Due Diligence Guidance. Based on the findings from the audits, improvement plans
for suppliers are reviewed, and support for enhancing supply chain management capabilities
through suppliers training is planned. We plan to expand the scope of management by
establishing strategies and promoting audits for major and high-risk suppliers and major
Tier-2 suppliers.
Additionally, in May 2022, LG Energy Solution became the first Korean company to join the
Fair Cobalt Alliance (FCA) and participate as a member of the Steering Committee. Throughthis participation, LG Energy Solution aims to contribute to eradication of forced and childlabor in the production environment of cobalt, a key material in batteries, and to address
fundamental environmental and social issues in local communities.

ESG Risk Auditing of Core Raw Material Suppliers

Conflict Minerals Management
In addition to ESG Assessments throughout the supply chain, we have an internal IT system
to monitor the information of materials to manage the risks related to conflict minerals, which
are sectors where the international community is actively carrying out supervision anderadication activities. Based on the monitoring results, we identify suppliers that source anyof the conflict minerals (tin, tantalum, tungsten, and gold) and requires them to report through RMI
Conflict Minerals Reporting Template (CMRT) on the use of conflict minerals, mineral countryof origin, and the smelters and refiners being utilized.

Managing ESG Risks at Our Operating Sites
LG Energy solution is managing ESG risks not only at the supply chain, but also at ouroperating sites. Starting from 2023, we have designated one ESG Risk Management Officer*
for each production facility to manage ESG risks on an ongoing basis, and to establish asystem for integrated training, audit, and improvement tasks through coherent collaboration
between ESG department at the headquarter and overseas subsidiaries. In the second halfof 2023, we plan to conduct third-party on-site audits through RBA VAP (Validated Assessment
Program) for five production facilities (Korea, 3 locations in China, and Poland). We aim to identify
and implement improvement tasks in a consolidated manner in the areas of labor andhuman rights, occupational safety and health, environment, ethics, management systems,
and supply chain management, and to enhance communication with stakeholders bytransparently disclosing the progress and monitoring of these tasks on our official website or
ESG report.
* ESG Risk Managment Officers: Korea (Ochang), China (NJ, NA, NB), one in Poland, and the US (MI)2017
Third-party due diligence
conducted on Huayou Cobalt,
a cobalt refiner and precursor
supplier in China

2018
On-site audit of artisanal mines(small cobalt mines)
in the Democratic Republic of
the Congo to investigate
for child labor practices

2021
Joined the Responsible Minerals Initiative (RMI)
under the Responsible Business Alliance (RBA),
participating in international collaborative efforts
to address ESG risks within the supply chain andexpressing our commitment

LG ENERGY SOLUTION ESG REPORT

2020
Comprehensive investigation
conducted on major cobalt
supply chain, identification of
improvement tasks for eachcompany, and verification of theirimplementation status

2022
Joined the Fair Cobalt Alliance (FCA), participatingin various local community support activities toeradicate forced labor and child labor in artisanalmines in the Democratic Republic of the CongoManaging ESG Risks at Our Operating Sites

01
Key areas of
ESG risk assessment

02
Conducting ESG risk
assessment at facility level· Environmental· Human rights· HR / labor· Ethics· Occupation safety and health· Responsible Sourcing· Self-Assessment Questionnaire (SAQ)· Third-party on-site audits

03
Identification and Planning ofCorrective Actions

04
Transparent disclosure
corrective actions

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Sustainable Workplace
Employee well-being is an important value that leads to stakeholder trust. To realize these values, we conduct various activities to maximize positive experiences and emotional
engagement for our employees. We are creating a cultural atmosphere that allows our employees to engage in their work in a healthy and wholesome manner by providing support
programs that reflect our value in individual lifecycle and family care, thereby fostering a sustainable work environment where employees feel happy to ʻget up and go to work.’

Employee Wellness Care Program
LG Energy Solution has a variety of programs to help our employees manage their physicaland mental health.
A Refreshing Area ʻEntral Park’
LG Energy Solution has cafe lounges, food trucks, group yoga zones (GX zone), nap room
(querencia), sky lounges, screen golf zones, game zones, and mini libraries for our employees
to enjoy as refreshing, healing areas. We also created ʻEntral Park’ at major business sites,such as Daejeon R&D Center and Ochang Energy Plant to provide resting spaces for our
employees.
Group Exercise and Healing Program
The yoga zone at Entral Park includes various healing programs, such as meditation andyoga, during office hours. We also provide online stress detox programs for employees toenjoy at home. The programs offered at the yoga zone are designed to help members heal
their bodies and minds at locations they feel most comfortable. These programs include
aromatherapy, sound meditation, and coffee meditation.

Healing Day
Every Wednesday is Healing Day at LG Energy Solution. We provide programs in Entral
Park where employees can enjoy various contents and recover. Through seasonal music
performances, one-day classes, meditation programs, and other activities, we provide
employees with time to focus on themselves and take a break from work.
Customized Employee Care Program
LG Energy Solution offers care programs tailored to the various needs of employees. For
example, we delivered a Quarantine Self-care Kit to employees who were quarantined due
to COVID-19. The kit included stretching equipment, healthy tea, personal hygiene products,
books / hobby items, and meal kits. We also provide welcome gift, including various gift items
for newborns to employees who have recently given birth.

Healing Trips and Online Healing Program
We provide Healing Trips for employees who are worn out from short / long (overseas) businesstrips and heavy work load so that they can recover using the Healing Center located in
Gangwon-do. Surrounded by nature, employees can enjoy meditation and healthy natural
meals, which help restore the energy of the body and mind; employees will also be able tofind the best way to manage stress. Employees who have difficulty traveling can use theonline healing program that is operated monthly. Through a digital interface, there are various
programs where employees can relax and enjoy at the best place they feel comfortable:
aromatherapy, stretching yoga, coffee meditation, and relaxation meditation are some
options.

Employee Lounge Space ʻEntral Park’

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Sustainable Workplace

Family and Employee Lifecycle Care Program

Activities to boost employees’ passion and energy

LG Energy Solution offers many programs to support employees’ families and friends throughseasonal activities.

To motivate employees’ energy and morale and create an energetic organization, and toalso make the workplace enjoyable, we hold parties and contests every seasons (ex. New Year,
year-end, each season, Lunar New Year, holidays). One notable activity is the sale of ʻEnsol-i’ mascot
merchandise at LG Energy Solution. In the future, we will continue to support various care andcultural activities for employees.

Family and Friends Invitation Events
Every Saturday, we open ʻEntral Park’ to employees’ families. We also offer an employee
office tour where families can directly observe and experience the workplace. These family
invitation programs encourage and motivate employees, increasing their passion for theorganization. On the last Friday evening of each month, in addition to families, we hold aʻFriend’s Night’ event where employees can invite their friends. The event includes a night
tour, performances, and food to enjoy.
On Children’s Day (May 5th), we provide various programs, playrooms, performances, and gifts
for employees’ children, giving them a special day. On Parents’ Day (May 8th), we hold an event
where we invite parents of overseas employees who are working hard to stabilize overseas
subsidiaries. They receive video messages and letters from their children, experience Entral
Park, and enjoy major tourist attractions and hotel meals in Yeouido, providing parents with
an opportunity to experience firsthand their children’s workplace.

Family and friends invitation event ʻFriend’s Night’Customized programs for family / child life stages
LG Energy Solution offers various programs tailored to each family’s life stages andcircumstances. During the March admission season, we conduct special lectures forelementary school children to commemorate the new school year, career exploration
programs during vacation periods, and family counseling programs. We also support familyfriendly events suitable for different situations, such as delivering support gifts to students
taking the college entrance exam and hosting family invitation events for children who havetaken the exam.

External Certifications
LG Energy Solution respects employees’ creativity and freedom, values their abilities, and ensures appropriate rewards for their performance. We provide programs to foster employees
who can take a leading role in securing corporate transparency and fairness. We actively support employees’ career transitions in preparation for an aging society. To create a company
where employees want to come to work in the morning, we conduct various activities to maximize their positive experiences. Based on the results of an employee survey in 2022, witha positive response rate of 71% for all items and a satisfaction rate of 79% for excellent satisfaction items, we received certification as a “Great Place to Work” from a US certification
organization. We also obtained the “Family-Friendly Company” external certification for 2022 through document screening, on-site inspections, and employee satisfaction surveys,
granting us the qualification for three years.

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Sustainable Workplace

A Corporate Culture of Diversity, Equity, and Inclusion
LG Energy Solution pursues an organizational culture based onʻdiversity’ that respects uniqueness without discrimination, ʻfairness’
that provides equal opportunities and does not discriminate basedon social status, and ʻembracement’ based on mutual understanding,respect, and trust among members. Following these policies ofʻdiversity, equity, and inclusion (DEI),’ we conduct internal educationand strive to spread this organizational culture throughout all global
business sites.

Detailed Link to DEI
Policy on the website

Organizational Culture that Respects Diversity
01 Recruiting global talents based on diversity
LG Energy Solution respects diversity of individuals, idenfitied by the characteristics,
preferences, and choices of gender, disabilities, nationality, and gender identity. We hire
talents from various countries. As of 2022, the ratio of foreign employees in global businesssites is approximately 70%, and considering additional investments and expansions in the
North American region, this ratio is expected to increase further. We will continue to promote
diversity at all levels in domestic and overseas business sites.

Culture that Values Equality and Fairness
01 Providing fair opportunities for young talents
LG Energy Solution engages in various internships, content, and mentoring programs withthe local universities near our major business sites. In addition, as part of our policy for afair and inclusive opportunity toward balanced regional growth and youth job creation, weoffer training to talents from non-metropolitan areas, which get reflected in our recruitment
process.
02 Equal opportunity based on performance
LG Energy Solution is responsible for fair and equal promotion, compensation, and trainingthat does not discriminate against gender, age, race, religion, labor union participation,
disability, pregnancy, marital status, and social status. Accordingly, we hire based on our
discrimination-free principle and offer opportunities for promotion and compensation
based on employee merits and capabilities, putting into practice a fair human resource
management, training, and welfare system that our employees can trust.

02 Attracting and strengthening female talents and leadership
As of 2022, the number of female employees at LG Energy Solution’s business sites in Korea
has increased by approximately 106% compared to 2019 (903 employees), reaching 1,850
employees. We also hold women’s leadership meetings and introduce HR systems, such assupport for leave and funding for infertility treatment and maternity protection systems for
adoption, to create an environment where women can work securely.
03 Expanding employment opportunities for people with disabilities
LG Energy Solution strives to increase the employment rate of people with disabilities andcreate a culture where everyone is respected and works together without discrimination.
As of 2022, the number of employees with disabilities increased from 143 to 185 in Korea. In
addition, we operate a subsidiary called ʻAreumnuri’ that focuses on employing people withdisabilities. Disabled workers perform various tasks at the headquarter, Ochang, and Daejeon
business sites, such as store management, cafes, parking management, cleaning, steam car
wash, and supplies management.

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Sustainable Workplace

Culture that Embraces Inclusivity
LG Energy Solution builds an organizational culture based on mutual understanding andrespect, fostering a stable environment for employees to grow as experts in their respective
fields. Regardless of positions or job functions, we aim for a horizontal culture where opinions
can be freely shared with mutual respect. All employees at LG Energy Solution use a unified
way to call each other by ʻ○○○ Nim.’

01 EnTalk - a hotline between employees and the CEO
We operate ʻEnTalk,’ a hotline channel that allows employees to directly voice their concerns
to the CEO. Since its establishment in November 2021 and as of May 2023, a total of
1,161 improvement ideas have been posted, and various systems have been adopted andimplemented through EnTalk to enhance employee work satisfaction, such as infertility leaveand treatment cost support and on-site company daycare centers.

(* Note: We removed the honorifics in names and titles to embed an equal and inclusive culture.)

Guided by our philosophy that ʻemployees are our most valuable customers,’ LG Energy
Solution listens to employees’ voices through various channels such as EnTalk (a CEO hotline),organizational culture surveys, and the Junior Board (a representative body of employees) for our
corporate culture programs. In January 2022, we announced the ʻSix Major Challenges ofCorporate Culture’ (reporting and meeting culture, flexible working culture, horizontal culture, positive culture,enjoyable workplace culture, and sharing culture), aiming to have employees internalize them 100%. We
are committed to driving organizational culture for innovation. Furthermore, we continue to
conduct employee satisfaction surveys to incorporate their feedback into our programs.

Six Cultures that Make a "happy workplace"

02 Junior Boar
One representative is selected for each responsible organization (a total of 180 representatives) asa ʻChange Agent,’ and we hold monthly meetings with section representatives and the CEO
to incorporate improvement ideas into the field. Major decisions related to organizational
culture, including the Six Major Challenges, leadership development, clear roles andresponsibilities (R&R), employee growth support, and IT system improvements, are largely
made based on the opinions of the Junior Board.
03 CEO Townhall Meeting
We conduct CEO Town Hall Meetings, a time for real-time communication and interaction
between the CEO and employees. Town Hall Meetings, held for all employees, take placeat the headquarter, in Ochang and the Daejeon business sites in Korea, and at the China,
Poland, and US subsidiaries overseas.

Let’s stop and improve things that hinder performance.
Let's work with a safe and healthy mind and focus on the core tasks!
A meeting and reporting culturethat focuses on main issues

Stop making fancy reports
Meetings/Reports are for discussion and decision-making only.
※ Share meeting materials in advance and show up prepared

A positive culture full of gratitude and praise
Tell how you feel thru LGCynergy
Use a sandwich speech (Praise - Honest Feedback - Encouragement)
Encourage meaningful failure

A ﬂexible culture that
focuses on performance

A happy work culture
hat caters to the health and mind

A horizontal culture that calls by 'Nim'

A culture of sharing lovewith our neighbors

Work at the most eﬃcient place and time
(Feat. Flextime, Remote work system)

Everyone, regardless of rank and age, must be
addressed with "Nim" at the end of the name

My dream is to make LG
Energy Solution the company
where all employees want
to “come to work in themorning.”

Focus when working, then take complete rest

Active support for volunteer activities

ʻEnTalk,’ the Hotline Channel

LG ENERGY SOLUTION ESG REPORT 2022

A direct communication channel
between LG Energy Solution’s
global employees and the CEO.

CEO Town Hall Meetings

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Sustainable Workplace

04 LGENergy & Hidden HeroAs part of the six major challenges of organizational culture, LG Energy Solution operates thecompliment and encouragement platform called ʻLGENergy,’ aiming to foster a positive culture
overflowing with appreciation and compliments. It serves as a communication channel where
LG Energy Solution members can praise and express gratitude to each other and give andreceive small bonuses. Through LGENergy, employees can thank the colleague who suggested
ideas even outside their own work, willingly shared knowledge and provided assistance, andelevated the values of the team and the company. In 2022 alone, approximately 15,000 Korea
and Global employees exchanged over 167,000 ENergy (compliments and gratitude), creating anorganizational atmosphere filled with appreciation and compliments. Also, through our monthly
Hidden Hero program, twelve incidents in 2022, and a total of 256 employees by July 2023
have been mentioned for their Dream Thinking / volunteering attitude / breaking stereotypes/ customer-friendliness / tenacity / innovativeness / cooperation / self-help. We are creating a
positive work culture through this monthly Hidden Hero program.

05 Culture Diagnosis and Development
We conduct semi-annual surveys on the six major challenges of organizational culture
targeting both domestic and international office staff. The results are shared with all
employees, and individual reports are sent to department leaders. In 2022, we produced
and distributed the ʻMeeting and Reporting Guide’ and the ʻRemote Work Guide’ basedon the survey results of all leaders within the company. The Meeting and Reporting Guide
were displayed in all meeting rooms. In the second half of the year, we included questions
about the level of improvement in the survey and incorporated the results into the personalevaluations of department leaders. We also operate 17 customized programs to addressorganizational issues.
06 Free and Flexible Environment
To allow employees to work freely at their desired locations and times, we have secured andprovided over 80 shared offices nationwide. In this vein, we operate flexible work systems in
82 locations (72 in the metropolitan area, 2 in Ochang / Cheongju, 5 in Daejeon / Sejong, 1 in Gumi, and 2 in Jeju).

Praise and Encouragement Platform ʻLGENergy’

Hidden Hero

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Corporate Governance
Under the principle of transparent governance structure, LG Energy Solution has established the “Corporate Governance Charter” and “Composition and Activities of the Boardof Directors and its Committees.” The establishment and operation of corporate governance follow the principles and procedures specified in these principles.
Furthermore, relevant information and the Corporate Governance Charter are disclosed through our website and other channels.

Composition and Operation of the Board of Directors
To implement a stable and sound governance structure, LG Energy Solution operates theBoard of Directors with a ratio of more than 50% being external directors (currently 4 outof 7 directors, accounting for 57%). External directors with diverse expertise and backgrounds
participate as Board member to enhance efficiency. Independent, external directors exercise
oversight roles and supervise on business matters.

NameShinn, Mee Nam

GenderRoles within
the Board

External Director / Chairperson of the ESG Committee

Term

June 2021 - March 2024

Key
Experiences

Former CEO of K Auction
Former President, Doosan Fuel Cell Business Unit

Name

Yeo, Mee Sook

FemaleMembers of the Board
Name

Kwon, Young Soo

GenderRoles within
the Board

Chairperson of the BOD / Inside Director

Roles within
the Board

External Director / Chairperson of the Internal Transaction Committee

Term

November 2021 - March 2024

Term

June 2021 - March 2024

Key
Experiences

Vice Chairman, CEO of LG Energy Solution
Former Vice Chairman, COO of LG Corp

Key
Experiences

Professor, Hanyang University School of Law
Former Presiding Judge, Seoul High Court / Seoul Central District Court

Name

Kwon, Bong Seok

NameHan, Seung Soo

Roles within
the Board

Non-standing Director

Roles within
the Board

External Director / Chairperson of the Audit Committee

Term

March 2022 - March 2025

Term

June 2021 - March 2024

Key
Experiences

Vice Chairman, COO of LG Corp
Former President, CEO of LG Electronics

Key
Experiences

Professor, Korea University Business School
Vice Chairman, Korean Association for Accounting and Policy

Name

Lee, Chang Sil

NamePark, Jin Kyu

External Director / Chairperson of the Nominating Committee forExternal Director Candidates

GenderGender

Male

Male

Male

GenderGenderGenderFemaleMale

Male

Roles within
the Board

Inside Director

Roles within
the Board

Term

December 2020 - March 2025

Term

March 2023 - March 2026

Key
Experiences

Executive Vice President, CFO & CSO of LG Energy Solution
Former Senior Vice President,
Business Management Department of LG ChemKey
Experiences

Specially appointed professor, University Research Institute Industry
Collaboration Center, Korea University
Former 1st Vice Minister, Ministry of Trade, Industry & Energy

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Corporate GovernancePrinciples for Operating the Board of Directors
Until October 2021, LG Energy Solution has seperated the role of CEO and chairperson of
the Board. However, considering the increased uncertainty in the domestic and international
business environment, such as global trade disputes, supply chain instability, and raw
material price hikes, and recognizing the high level of expertise required for our business,
CEO Kwon Young Soo concurrently holds the position as Chairperson of the Board sinceNovember 1, 2021. Currently, we have established and operate the Audit Committee, Internal
Transaction Committee, ESG Committee, Nominating Committee for External Director
Candidates, and Management Committee within the Board of Directors to ensure specialized
and objective deliberations on individual agenda items. All committees, except for theManagement Committee, are chaired by external directors.

Committee-Centric Operation
LG Energy Solution has established and operates five Committees within the Board of
Directors: the Audit Committee, Internal Transaction Committee, ESG Committee, Nominating
Committee for External Director Candidates, and Management Committee. In addition to
the roles and authorities specified by laws and regulations, the specific roles and authoritiesof each committee are stated in their respective regulations, thereby enhancing theeffectiveness, expertise, and independence of the Committees within the Board.
The Board is held quarterly in principle, however, special Board meetings are held whennecessary. In 2022, total ten Board meetings were held; 30 agenda had been approved, 13
agenda have been reported, the attendance rate reaching 100%.

Composition of External Directors
According to Article 27 of the Articles of Incorporation, the Board of Directors should consistof at least three but no more than seven directors, with a majority of external directors
representing four out of seven directors (approximately 57%). The Board of Directors is composed
and operated to ensure a majority of external directors. Moreover, under the principle of“diversity,” which prevents external directors from having a specific common background or
representing specific interests, the external directors are selected from various fields related
to finance and accounting, law, international trade, and industry professionals. They bringdiverse backgrounds and expertise to the Board of Directors for substantive deliberations
on agenda items and practical supervision and oversight of the management’s execution ofduties.

Appointing External Directors with Business-related Expertise
Candidates for external directors are selected through a rigorous process, includinginterviews and preliminary screenings, to ensure that the most suitable talents are chosen.
Furthermore, to enhance the expertise of the Board, there is active provision of information
on management decision-making related to external directors, and pre-explanation sessions
are conducted before each board meeting to support the best decision-making. In addition,
to increase the understanding of LG Energy Solution, regular reports on major businessupdates are provided to the external directors, and periodic education is conducted for the
Audit Committee members, particularly on the internal accounting control system.

Organization Chart of the Board of Directors, Committees, and Supporting Departments
Nominating Committee forExternal Director Candidates
Non-Executive Director: 1 member,
External Directors: 2 members

Secretariat of theNominating Committee forExternal Director Candidates
3 members

Audit Committee

Audit Support Team

External Directors: 3 members

3 members

ESG Committee

Secretariat of the
ESG Committee

Board of Directors
Inside Directors 2 members,
External Directors 4 members,
Non-Executive Director 1 member

As of June 2023

Inside Director: 1 member,
External Directors: 4 members

Internal Transaction Committee
Inside Director: 1 member,
External Directors: 3 members

BOD Secretariat

Management Committee

General Affairs Office, 4 members

Inside Directors: 2 members

LG ENERGY SOLUTION ESG REPORT 2022

Enhancing the Expertise and Diversity
LG Energy Solution adheres to the “diversity principle” to avoid having external directors of acommon specific background or representing specific interests. On April 24, 2023, the ESG
Committee approved the Guidelines for Expertise and Diversity of the Board of Directors,
which ensures compliance with regulations for securing expertise and diversity within the
Board. Additionally, from July 3 to July 9, 2022, a North America site tour was conducted
for the Board and committee members to visit local production subsidiaries, factories, andcustomer facilities, aiming to enhance their industry-specific knowledge.

3 members

Secretariat of the Internal
Transaction Committee
3 members

Secretariat of theManagement Committee
3 members

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Corporate GovernanceEvaluation of External Directors
To ensure fairness, the evaluation of external directors is conducted by considering
quantitative and qualitative results. The BOD secretariat and HR department review
the attendance rate, the thoroughness of opinions put forth during the meetings, andeffectiveness of their advisory. For the Audit Committee members, the evaluation includes
an assessment of their contribution to internal control and internal monitoring system forfinancial risks. These evaluations are conducted regularly according to internal standards.
As stated by the commercial Act, (re) appoint of external directors must undergo annual
evaluation. Based on the results, the Nominating Committee recommends candidates to theGeneral Meeting of Shareholders.
Board Skill Matrix
Critieria
Compete Leadership-nciesCEO Experience
GlobalFinancce /Accounting

Kwon
Kwon
Lee
Young-soo Bong-seok Chang-sil
●

●

●

●

●

●

●

●

●

●

●

Legal
2021

2022

2020

Autonomy
Age

●

●

●

●

R&D
Year

●

●

Yeo
Mi-sukHan
Seung-soo●●●

Policy /Administration

Diversity

Shinn
Mee-nam

2021
●

●

2021
●

Park
Jin-kyu
●

●
●

2021
●

2023
●

66

60

59

62

57

53

57

Nationality

Korea

Korea

Korea

Korea

Korea

Korea

Korea

Gender

Male

Male

Male

FemaleFemaleMale

MaleNominating Committee for External Director Candidates
To ensure fairness in candidate selection, the Nominating Committee for External Director
Candidates consists of three members, two of whom are external directors. The Chairmanof the Committee is selected among the external directors, and the remaining Committee
members are appointed as non-executive directors. The Committee recommends external
director candidates who align with the interests of shareholders and other stakeholder
who possesses expertise and capabilities. Particularly, the Committee ensures there is nodiscrimination based on factors such as gender, nationality, or race.
Internal Transaction Committee
The Internal Transaction Committee deliberates on transactions with major shareholders
and related parties as stipulated by the Commercial Act, transactions subject to regulations
on preventing personal gain under the Fair Trade Act, and other internal transactions
requiring approval by the Board of Directors according to relevant laws and regulations. The
Committee consists of four members, with three of them being external directors, and the
Chairperson of the Committee is appointed among the external directors unless there are
special circumstances.
Management Committee
The Management Committee deliberates on management matters related to our financing
and daily operations within the approved borrowing limit, including bond issuance,
establishment or closure of branches, and appointments or terminations of executives.
ESG Committee
The ESG Committee establishes basic policies and strategies for ESG areas such asenvironment, safety, social responsibility, customer value, shareholder value, andgovernance. It deliberates on medium to long-term objectives. As of June 2023, the ESG
Committee consists of five members, with four members being external directors (excluding the
Chairman of the Committee unless there are special circumstances) to ensure operational independence.

Committees within the Board
Year

Audit Committee
The Audit Committee consists entirely of external directors to ensure independence.
According to the Audit Committee regulations, it performs audits on accounting andoperational matters, performance of directors’ duties, demands reports on business
operations, investigates the company’s business and financial status, and receives
reports on the status of external audits. Additionally, the Audit Committee fulfills its role ininternal control. To enhance the expertise of the Committee members, special training was
conducted in collaboration with external accounting firms.
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2022
2023

Round

Date

AgendaAttendance /QuorumType

Content

Type

1

March 17

5/5

Reporting

ESG management direction and plan2

October 24

3/4

Reporting2022 ESG progress check

Reported1

April 24

Approval

ESG Guideline and Corporate Governance
CharterApproved

Reporting2023 ESG management direction and plan

Reported

5/5

Reported

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ESG MANAGEMENTAPPENDIXESG Committee External Director Interviews

Shinn, Mee Nam

Han, Seung Soo

Chairperson / External Director

External Director

Just a few years ago, ESG management was seen as a quality that is ʻgood to have,’ but now
it has become clear that it is a ʻmust-have.’ As Chairperson of the ESG Committee, it makes
me grow a sense of responsibility. To summarize, ESG should be implemented by graspingthe 4Cs: Contribution, Continuity, Co-relation / Coordination, and Capitalization.
LG Energy Solution should recognize that the company benefits from climate change.
First, it means that we must consider the responsibilities that follow in a sincere mannerby having CONTRIBUTION plans. Second, ESG management requires long-term plans
and strategies. We must develop detailed plans and implement them diligently based on
CONTINUITY; this is also important in demonstrating the sincerity of our company. Third,
CO-relation or COORDINATION among various stakeholders and differing issues must be
prioritized and optimized. Nowadays, every business decision is intertwined with ESG. As a
global company, we must focus on becoming green while extending our outreach to othersocial dimensions such as DEI, procurement, and suppliers. It may not be easy, but we needto raise our business standards across all business sites and the entire supply chain byadopting the strictest regulations among the countries by setting priorities followed by clear
implementation plans. Last but not least, CAPITALIZATION will always be of the essence
for a business. LG Energy Solution should explore areas that can be newly developed andcommercialized such as by utilizing the voluntary carbon market, ESS, and end-of-lifebatteries.
We must embrace our leadership role and take responsibility for ESG management. As ESG
Committee Chairperson, I will help enhance the governance of our company and ensurethat Board members continue to raise our expertise to stand on par with the excellent global
companies in battery business and ESG management.

LG ENERGY SOLUTION ESG REPORT 2022

Under the previous system of shareholder capitalism, corporate social responsibility (CSR)
activities often conflicted with the company’s financial value generation. However, the riseof stakeholder capitalism, which emphasizes the interests of various stakeholders alongside
the shareholders, has brought about a significant paradigm shift. ESG management is now
recognized as a driver of social value directly linked to profit generation. ESG influences acompany’s capital procurement costs through increased corporate sustainability and social
trust, customer loyalty, and talent attraction and retention.
While it may take time for ESG management to derive financial value since measuring
ESG and relevant KPIs remains a complex task, many efforts are being made to develop
and standardize performance indicators. These efforts will likely overcome the current
measurement challenge, and we will be required to provide reliable and standardized ESGrelated information to investors and other stakeholders; this information will be asked todemonstrate the relevance of ESG activities to corporate value. The once-popular perceptionthat the direct link between ESG and financial value is inconclusive will naturally fade.
The establishment of ESG disclosure standards led by organizations like the ISSB is set toaccelerate this trend further, helping draw a more direct link between sustainability andfuture value.
Currently, LG Energy Solution is rapidly growing in overseas markets, particularly in the US,
Europe, and China. Once we establish and demonstrate the visible connection between
ESG and financial performance, we will be able to be an even more attractive company inthe capital market. The battery industry, in particular, will be an exemplary industry of green
profit if we consider the potential of the circular economy.
As a leading battery business, LG Energy Solution should lead in setting industry standards
for performing, measuring, evaluating, and disclosing ESG progress.

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ESG MANAGEMENTAPPENDIXESG Committee External Director Interviews

Yeo, Mee Sook

Park, Jin Kyu

External Director

External Director

As a global leader from its inception, LG Energy Solution is responsible for setting the trend
in ESG management. The currently increasing regulations should not be considered risks
but instruments that can help the company grow. LG Energy Solution can begin by closely
monitoring the policies and then responding proactively by establishing and meeting therequirements of different countries. What is important is that ESG should not be seen as mere
decoration but as a foundational structure or frame as in architecture. ESG management is afoundation of business that deserves our highest attention from the early build-up stage. Just
as a good solid building requires a strong foundation, I suggest LG Energy Solution adopt ESG
as the core basis of growth.
In April, the ESG Committee agreed to pass a corporate policy on compliance programs
where the ESG Committee can oversee and conduct regular monitoring. It was a clear
defining moment for the Committee to oversee compliance issues by adopting a stricter
standard to enhance the legality of the company’s business operations and functions. It
is customary to treat legal matters in a passive, reactionary manner. By strengthening thecompliance mechanism, LG Energy Solution has advanced its system to the next level,
preventing regulatory risk with more stringent standards and supervision.
The ESG Committee is expected to play a vital role in improving corporate transparency, a
key compliance aspect. We will make every effort to ensure that the matters discussed at
the ESG Committee are reported to the Board and subsequently disclosed transparently.
Although it has been less than two years since our public listing, I earnestly hope LG Energy
Solution’s diligent efforts in promoting and leading ESG management.

The global market is undergoing significant changes, driven by increased demands forsustainability that is around green, social responsibility, and good governance. The US
and the EU are quickly institutionalizing these requirements into laws and international
regulations. These national-level mandatory requirements may be a part of strategies tomaximize national interests, however, it is nonetheless true that ESG is as both a challenge
and an opportunity.
For LG Energy Solution, these changes in the global business environment affect nearly
all sectors of our business. A clear example is the US Inflation Reduction Act (IRA), which
awaits the decision on the subsidy level imposing as a threat that could jeopardize LG
Energy Solution in the US market if we fail to meet their requirements. As most of our battery
materials are sourced from China, meeting the IRA requirements becomes crucial for
securing access to subsidies and a stable supply chain.
On the other hand, ESG management can be an opportunity that can be utilized to manage
risks and retain competitiveness. However, doing so requires strategies. The IRA sets strict
criteria for supply chain, granting subsidies only to those that comply. It means ensuring
our compliance becomes an important task. We need to transition by moving away fromour traditional business value that focus on production and sales and develop a working
environment and an organization fit to practice ESG. Supplier engagement is also becoming
increasingly important, and we must prepare our suppliers to participate in the ESG initiatives.
Only companies that respond proactively and timely to the evolving business standard willsurvive and remain competitive.

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ESG
MANAGEMENT

E

Environmental, Health and Safety (EH&S)
Safety and Health Management
Employee Health Management
Environmental Compliance Management
Air Pollution Management
Water Resource Management
Waste Management
Hazardous Substance Management

As our philosophy of “Plus for Minus, Minus for Plus” reflects, we will create abetter future by reducing unnecessary elements and adding necessary onesin each area of environment, society, and governance. Flowing naturally
like the Plus for Minus, Minus for Plus concept, we will fearlessly embrace newattempts and possibilities to build a green battery ecosystem where everyone
shares positive energy.

Biodiversity Conservation

S

Talent Management and Training
Labor Relations
Fair Trade
Shared Growth
Information Security
Corporate Social Responsibility

G

Risk Management
Compensation Policy
Shareholder Policy
Jeong-Do Management
Stakeholder Communication

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ESG MANAGEMENTAPPENDIX

Environmental Health and Safety (EH&S)
LG Energy Solution strives to balance our business competitiveness and environmental health and safety (EH&S) capability by focusing on the following key tasks.

Environmental Health and Safety (EH&S) Governance

Environmental Health and Safety Management

The company-wide Environmental Health and Safety Committee consists of EH&S executives
responsible for environmental health and safety (EH&S) decision-making. The Committee
meets monthly and discusses key issues, progress on priority initiatives, and future plans,
providing leadership in setting EH&S policies and strengthening responsible management.
Additionally, we have site-level “Joint Labor-Management Occupational Safety and HealthCommittee” composed of equal representation of employee and employer representatives
that discuss and decide on major occupational safety and health issues. Furthermore, wetake responsibility for preventing risks that may occur at workplaces and manage employee
health. Regular consultations and joint inspections are conducted with suppliers andsubcontractors to listen to improvement suggestions from workers and identify and addressrisks in the workplace. Moreover, LG Energy Solution shares best practices in EH&S throughemployee workshops and discusses improvement measures.

LG Energy Solution takes systematic approach to EH&S management by following thestandards of ISO 14001 (Environmental Management System) and ISO 45001 (Occupational Health and Safety
Management System). To demonstrate our commitment, the “Environmental Health and Safety
Policy” has been established. Based on this policy, standards, environmental health and safety
regulations, and operational guidelines are developed for flexible site-specific operatingprocedures. Furthermore, proactive management activities at the field level and organizationspecific initiatives are carried out to prevent accidents. Our employee evaluation reflects
environmental health and safety incidents, thereby improving awareness and execution.

Ensuring Absolute
SafetyProactive HealthManagement

Continuous
Environmental
Improvement· Enhancing Employee Safety
Awareness· Improving Facility and Process
Safety· Preventing Fire and Explosions· Developing the Systems andFrameworks· Improving Working Environment· Treatment for Employees with
Medical Symptoms· Improvement Programs for
Employee Health· Timely Response to Local /Global Regulations and Issues· Reducing Pollutants· Increasing Resource Efficiency· Biodiversity Conservation* All 9 locations at Ochang, Daejeon, Gwacheon, Magok, LGESNJ, LGESNA, LGESNB, LGESWA, LGESMI have beencertified by ISO14001 and ISO 45001.

EH&S Policy

1

LG Energy Solution publicly announces ourcommitment to environmental health and safety
management, which provides consistent direction
for EH&S rules to establish a foundation for
optimized management.

EH&S Guidelines
Requirements, detailed methods, and unified
procedures of each EH&S Standard are outlined.

EH&S Standards

2

The Standards define the basic rules for EH&S
management throughout the company

3

EH&S Procedures

4

Individual business sites (i.e., HQ, departments,
factories, R&D centers) have procedures for
performing independent tasks. These procedures
include non-permanent and variable work
procedures and standards.

EH&S Policy
At LG Energy Solution, we recognize that safety, health, and environment (EH&S) are fundamental to securing differentiated competitiveness. For continuous improvement on EH&S performance, LG Energy Solution will becommitted to implementing the following principles.
• We will comply with all applicable EH&S legal requirements and establish leading corporate EH&S rules and best practices.
• We will drive continuous innovation throughout the operation life cycle to supply environmentally-friendly products and services.
• We will provide a safe, healthy work environment and ensure the principle-adhering corporate culture.
• As our social responsibility, we will support suppliers and local communities to improve their EH&S practices.
• We will communicate our EH&S policies and programs with stakeholders.

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ESG MANAGEMENTAPPENDIX

Safety and Health Management
Environmental Safety System
Regulation and System Improvement
We have revised the regulations related to safety and health to a systematic safety programs
to guide the practices of relevant departments and suppliers. We have also enhanced thesafety operation permit process and the management criteria for in-house and suppliers.
We have established and updated technical guidelines for safety and health-related facilities.
These guidelines are reviewed in advance to ensure that essential requirements are reflectedin the design and operations process.
Safety and Health Management System Diagnosis
LG Energy Solution periodically evaluates whether each workplace systematically complies
with safety and health objectives and management regulations. In case of any issues, special
diagnostics are conducted to confirm compliance with global regulations and countryspecific laws and to support improvements in identified risk factors.
Regular Diagnosis

Planning Diagnosis

Special Diagnosis

Management System, Process
Safety, Facility and Operation
Safety, Industrial Health,Fire Safety and Hazardous
Materials, and Environmental
Field

Supplier’s Safety Assessment,
Facility Safety Management,
Emergency Response System,
Pre-Operation Environmental
Safety Inspection, Compliance
Inspection.

Special diagnoses are
conducted at business sites
where serious accidents
have occurred or where there
is a high possibility of such
accidents.

A Company-wide Environmentally-safe Smart Factory
LG Energy Solution aims to construct an integrated, environmentally-safe smart factories
across all business locations to create a safer and healthier workplace. This smart factory
will enable real-time remote monitoring of various potential hazards, such as abnormal
temperature / pressure conditions and hazardous chemical leaks, allowing for early
identification of unusual situations and immediate response capabilities. Furthermore, thesmart factory has an automatic control system equipped to prevent deviations from normal
ranges and mitigate damages effectively.
Instilling an Environmental Safety Mindset
The most important aspect of safety and health management is employees’ safety
awareness. LG Energy Solution will improve this by identifying ʻnear-miss incidents ,’improving risk factors, and sharing reports and videos of exemplary cases at our internalsocial media platform every month. Additionally, these reports and videos are utilized forrisk prediction training.
LG ENERGY SOLUTION ESG REPORT 2022

Safety Education and Progress Sharing Events
LG Energy Solution operates beyond the required safety education at each businesssite to enhance employees’ safety awareness using experience-based learning centers.
Additionally, we conduct compliance education to strengthen competency in safety andhealth. In 2022, we provided various education sessions for all employees, including an
introduction and response to Serious Accidents Punishment Act, environmental safety
accident classification and reporting systems, chemical substance regulations, andcompliance guidelines for employees handling chemical substances. Every year, throughour progress sharing events, employees gather to share environmental safety improvement,
learning the best practices to apply at their own sites. We also reward exemplary casesand encourage their applications in other locations. Employees from overseas subsidiaries’
environmental safety departments also participate, facilitating exchanges within LG Energy
Solution and capacity building.
Employee Environmental Safety Training
Tailored Programsfor Employees
by Job Functions
and Positions

Programs for
All Employees at
All Business Sites

Programs for
New Hires andRelated Employees

Training Programsfor Special Task
Workers

Programs for
Employees ofSuppliers

Introductory /Basic / Professional
Courses

Fostering anenvironmental
safety mindset

Before-worksafety and healthprecaution training
for field employees

Training Programsfor Employees
in Hazardous
Conditions

Supplier Safety
Management
Enforcement
Training

Compliance Training on Safety and Health in 2022
Courses
Offered1

Introduction to Serious Accidents Punishment Act

2

Amendments and Reporting Procedures forEnvironmental Safety

3Compliance Guidelines for Employees Handling
Chemical Substances

Environmental Safety Training Program

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Employee Health Management
Environmental Safety System
LG Energy Solution has established in-house medical centers to provide medical services
to employees at a professional level. At the center, employees regularly check the extent
of exposure to noise, dust, and other workplace factors that affect employee health. The
centers also quantitatively evaluate the musculoskeletal burden of work and continuously
improving the work environment. Additionally, LG Energy Solution operates a “Green Mind
Counseling Room” to create an environment where employees can manage their physicaland mental health. LG Energy Solution will continuously enhance our capacity for safety andhealth management by promoting the health of our employees.

ESG MANAGEMENTAPPENDIX

Environmental Compliance Management
LG Energy Solution identifies compliance risks related to environmental laws andconducts regular preventive activities.

Environmental Compliance
LG Energy Solution selects and manages preventive measures for a total of 58 environmental
risks. These activities are categorized into five processes: ❶ Regulations / Policies,❷ Education, ❸ Inspections / Surveys, ❹ Regulatory Trend Analysis, and ❺ System
Establishment. In particular, LG Energy Solution continuously monitors areas such as air /water quality, waste, soil, and chemicals, which have a high impact on the environment due tothe nature of LG Energy Solution’s industry and product characteristics.
Risk Areas
Air / Water
Quality

Health clinics at each business site

ESG IMPACT

Risks and Definitions

Related Regulations[Installation of facilities that Discharge Air / Water Pollution Without· Clean Air
Permission / Report] The act of installing air / water pollution facilities without Conservation Act
obtaining the required permission or making the necessary report.
· Special Act On
the improvement[Exceeding Emission Standards] The act of emitting pollutants exceeding theof Air Quality inlegally permissible limits.
Air Control Zones[Operation of Emission and Prevention Facilities] The act of violating the· Waterprohibited actions specified in the law during the operation of emission
Environment
facilities and prevention facilities.
Conservation Act[Self-Monitoring] The act of not conducting self-monitoring of emitted
pollutants from the facilities or not accurately recording and preserving the data.

Annual health checkups are offered to employees aged
35 and above with 5 or more years of employment.

[Failure to Report or Obtain Permission for a Change] The act of not reportingto the administrative authority or obtaining permission when a change
requires reporting or approval.
Waste[Violation of Waste Treatment Standards] The act of collecting, transporting, · Wastes Control
storing, or treating industrial wastes in violation of legally prescribedActstandards without commissioning a waste treatment operator.
[Non-Declaration of Waste] The act of not declaring the type and amount ofwaste generated or making false declarations.
[Obligations of Industrial Waste Dischargers] The act of not verifying
whether the company falls under the category of a industrial waste discharger
or failing to comply with all required obligations as specified by the law.

Counseling rooms at each business site are provided
where employees can receive professional counselingand referral to a specialized hospital.

[Obligations to Prepare and Provide Hazards Information Data] The act of
not preparing certain hazards information data, such as information regarding
designated wastes.
[Waste Not Managed and Treated in Accordance with Appropriate Criteria
and Methods] The act of not managing and treating waste according to theappropriate treatment criteria and methods.
* The above regulations are selected among LG Energy Solution’s environmental risk pool for illustrative purposes.

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ESG MANAGEMENTAPPENDIX

Environmental Compliance Management

Management
Area
Soil

ChemicalSubstances

Related Risks and Definitions

RelatedRegulations[Non-Declaration or False Declaration of Specific Soil Contamination
Specified Facilities Subject to Control of Soil Contamination] The act of notreporting or falsely reporting the installation of specified facilities subject
to control of soil contamination to the supervisory authority.

· Soil Environment
Conservation Act- Article 4 (2)(Worrisome
Levels of Soil
[Export or Disposal of Contaminated Soil] The act of exporting contaminatedContamination)soil from the contaminated site for purification or leaking or discharging- Article 12
contaminated soil.
(Reportingon Specified[Violation of Operating and Management Standards for Specified Facilities
Facilities Subject
Subject to Control of Soil Contamination] The act of discharging soil
to Control of Soilcontaminants exceeding the legal standard through unlawful methods orContamination)
manipulating the discharge data.
[Use of Prohibited or Unauthorized Hazardous Chemical Substances]
The act of using prohibited hazardous chemical substances or using
hazardous substances requiring approval without obtaining permission
from the supervisory authority.

· Chemical
Substances
Control Act· Act onRegistration and
Evaluation ofChemicalSubstances· Persistent
PollutantsControl Act

In addition, we are pursuing the establishment of policy trend sensing and system to respondto ESG regulations centered on Europe and the US such as EU Battery Regulation, CSRD,
CSDDD, IRA, and CRMA.

Environmental Impact Assessment
LG Energy Solution regularly conducts a six-step environmental impact assessment toevaluate and systematically manage actual and potential impacts of our business activities.
Management
Area

Environmental Impact Assessment Activity

Step 1

Selection of Environmental Impact Assessment Targets
Environmental impact assessments are conducted separately for production and nonproduction sectors. The production sector is assessed annually, while the non-production
sector is assessed every three years. However, occasional assessments are conducted duringinitial assessments due to new establishments or changes in production processes, facilities,
or processes.

Step 2

Identification of Environmental Impacts
A thorough analysis is conducted to identify all environmental impact factors directly andindirectly related to business activities, categorized into production and non-production
activities.

Step 3[Violation of Obligations to Report and Obtain Permission] The act of
not fulfilling the obligations to report and obtain permission from relevant
administrative agencies concerning the installation, use, and managementof environmental-related facilities and workplaces.

Identification of Environmental Issues
Material balance sheets are prepared for each step from raw material intake to productshipment. We identify and quantify the environmental impacts that may occur at each process
stage using the material balance sheet.

Step 4[Violation of Permits for the Manufacture, Import, and Use of Restricted/ Substances] The act of not following the procedures for reporting, or
obtaining permission or approval for the manufacture, import, or use of
specific substances specified in the law.

Environmental Impact Assessment
Environmental impact assessments are conducted for identified environmental impact factors.
Severity and likelihood are quantified, and improvement measures are derived to minimize
environmental impacts based on these assessments.

Step 5

Review of Assessment Results
The adequacy of assessment results and improvement measures is reviewed, andreassessments are conducted if necessary.

Step 6

Incorporation of Objectives and Post Management
Results derived from previous steps are incorporated into objectives, and improvement plans
are established and followed up with post management. Furthermore, by sharing such results
among members, awareness of environmental impact is enhanced.

[Installation and Operation of Facilities Handling Hazardous Chemical
Substances] The act of not conducting safety inspections when installingand operating facilities handling hazardous chemical substances.
[Violation of Registration and Evaluation Criteria for Chemical
Substances] The act of violating legal obligations concerning theregistration, hazardousness, and toxicity assessment of chemical
substances.
[Failure to Report Chemical Accidents] The act of not reporting chemical
accidents according to the legal reporting standards.
[Chemical Substance Emission Survey] The act of not truthfully submitting
chemical substance emission data every year.

[Violation of Handling Standards for Hazardous Chemical Substances]
The act of violating handling standards for hazardous chemical substances
specified by the law, including failure to wear protective equipment,
non-compliance with storage and display limits, and non-compliance withlabeling requirements for hazardous chemical substances.
* The above regulations are selected among LG Energy Solution’s environmental risk pool for illustrative purposes.

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Air Pollution Management

ESG IMPACT

ESG MANAGEMENTAPPENDIX

Water Resource Management

LG Energy Solution focuses on minimizing the generation of pollutants by managing
and disclosing the amount of air pollutants.

LG Energy Solution has a risk management system for water resources to improve ourusage and management level.

Air Pollutant Management System

Managing Water Usage

For air pollutants, LG Energy Solution establishes and manages internal management
standards that are more stringent than legal emission limits. Regular voluntary inspections
are conducted. We have also replaced facility boilers with low nitrogen oxide (NOx) burners to
reduce its emissions. Efforts to minimize air pollutant emissions include establishing VOCs
monitoring system, improving A/C Tower facilities and supply / exhaust systems, and various
management efforts.

Water Management System
To secure water resources for business, LG Energy Solution has established “Environmental
Impact Assessment Regulations” to analyze the possibility of supplying dedicated water
before installing facilities at the site and responding to various water-related laws andregulations risks. In addition, we utilize the Aqueduct Program made by WRI (World Resource
Institute) throughout the global production facilities to analyze the water stress, indicating theprospect of water scarcity in each region.
The analysis of water stress risks for global sites in 2030 and 2040 identified that the US
sites (LGESMI, Ultium Cells) are at a high level, while domestic sites (Ochang Energy Plant and Ochange
Energy Plant 2) and the Poland site (LGESWA) are at medium to high level. In response, we haveestablished the “Environmental Operation Management Regulations,” which state that thehead of the water usage management department should identify water usage of eachsource and monitor the major water usage areas and water consumption through the EUM.

01 Minimizing Air Pollutions by Complying with Internal Management Standards

Type
Dust

Legal
Standard

Unit

Internal
Management
Standard

Emission Level
Emission
Concentration*

Compared toLegal standard(%)

mg/㎥

30 or less10 or less

0.3

1.1

Sulfur Compounds

ppm

70 or less3 or less

1.6

2.2

Nitrogen Oxides

ppm

150 or less5 or less

1.0

0.6

Results of Water Stress Analysis* Emission concentrations based on the standards of the Ochang Energy Plant in Korea.

02 Reducing Air Pollution
LG Energy Solution conducts the following activities to reduce air pollutant emissions through(1) on-site inspections and (2) facility operation.
Activities to Reduce Air Pollutant Emissions
On-Site Inspections

Facility Operation· Voluntary inspections (as needed)· Regular inspections (annual)· Compliance risk inspections (annual)· Timely replacement of consumables- Activated carbon (semi-annual), filter media(annual)· Regular inspections of wet scrubbers- pH of treated water, spray nozzle, packing,internal contamination and others.

LG ENERGY SOLUTION ESG REPORT 2022

Low

Low to Medium

Medium to HighHighLGESNJ

Ochang Energy Plant

LGESMILGESNA

Ochang Energy Plant 2

Ultium Cells

LGESNB

LGESWA

Extremely High

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ESG MANAGEMENTAPPENDIX

Water Resource Management
Reducing Water UsageManaging Wastewater

Reducing the use of water at the facilities is critical to respond to water risks and securesustainable water supply. LG Energy Solution is engaged in water conservation efforts, suchas optimizing the management of the chilled water system by increasing the heat exchange
efficiency through the pipes of the chiller and cooling tower, and reusing the concentrated
wastewater generated from the reverse osmosis (RO) system as a coolant at the cooling tower.

Setting Goals to Reduce Water Pollution
LG Energy Solution establishes internal water quality management standards that are stricter
than legal limits, aiming for a drastic reduction in water pollution. A thorough monitoringis conducted to achieve a reduction in water pollution and wastewater discharge. Various
efforts, including the improvement of the current wastewater treatment systems andmanaging water pollutants, are made to minimize the environmental impact caused bywastewater generation.

Process of Reusing RO WastewaterRO
Water
Reverse Osmosis (RO)

Water Tank

Filter

Type
RO
Tank

Water Use

Reverse Osmosis (RO)

Unit

Legal Standard

Internal
Management
Standard

Emission Level
Emission
Concentration*

Compared toLegal Standard(%)

BOD

mg/L

100 or less50 or less

9.3

9.3

SS

mg/L

100 or less50 or less

8.8

8.8

TOC

mg/L

60 or less30 or less

13.3

22.2

* Emission concentrations based on the standards of the Ochang Energy Plant in Korea
Reverse Osmosis (RO)Concentrated
Wastewater

LG ENERGY SOLUTION ESG REPORT 2022

Wastewater
Treatment
Facility

Cooling
Water

Reducing and Managing Wastewaters
LG Energy Solution operates our wastewater treatment facilities and shares treatment
facilities. We also conduct daily inspections of the entire plant’s total wastewater generation
to minimize the wastewater’s environmental impact. We run a water quality monitoring system
where we conduct regular tests of our water pollution items registered in the wastewater
discharge based on the standardized test, or commission an external monitoring agency toevaluate based on the environmental assessment criteria at least once a year.
Through these efforts, LG Energy Solution identifies areas for improvement and takes
proactive measures to reduce pollutants and discharge volume. By improving wastewater
treatment systems for rechargeable battery manufacturing and industrial facilities, cleaning
and condensing waste gases and dust, and reusing cooling water for RO wastewater, we aim
to minimize water usage and our environmental impact.

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ESG MANAGEMENTAPPENDIX

Waste Management
Resource scarcity and waste issues are becoming severe worldwide. As a result, the transition to a resource circulation system that increases resource reuse and recycling rates tominimize the consumption of natural resources is recognized as an essential element of ESG management. LG Energy Solution is promoting the conversion to resource circulation system
by minimizing waste incineration and landfilling, promoting the recycling of waste generated at our facilities. Furthermore, LG Energy Solution is committed to thoroughly managing
battery waste by establishing waste information and management systems, operating recovery facilities, and developing innovative technologies. We prioritize environmental protection
and resource recycling and aim to provide exemplary battery waste management practices and sustainable energy solutions for future generations.

Reducing Waste through Enhanced Process Efficiency

Diversified Waste Reduction Programs

The total amount of waste increased by approximately 6% in 2021 to 153,654 tons due toincreased production in terms of waste per ton, approximately 7% as reduced to 340kg/
ton through process efficiency enhancements. Efforts are being made to transition waste
incineration into recycling. LG Energy Solution will continue to promote ongoing transitions toa resource circulation system through waste reduction and recycling.

Landfill Waste Reduction
LG Energy Solution promotes the recycling of waste generated at our facilities to achieve“Zero Waste To Landfill.” The facilities in Nanjing, China, have obtained platinum-grade
certification from Underwriters Laboratories (UL), a global certification organization, forachieving a 100% resource circulation rate. The Ochang Energy Plant in Korea has obtained
gold-grade certification for achieving a resource circulation rate of over 90%. The US facility
has been certified as “Landfill Zero” since 2018 by the National Sanitation Foundation (NSF)
for landfill waste being less than 1% of the total waste.

Production Volume (in tons)
447,006 tons, ≈ 12% increase

Process
Efficiency
Improved in
2022

Total Waste Amount
153,654 tons, ≈ 6% increase

Waste Emission (kg) per Produced
Amount (ton)
340 kg/ton, ≈ 7% reduction
Increased Recycling Rate by 5%
through Incineration Waste Recycling

Landfill Waste Reduction Certifications
Underwriters Laboratories (UL) certification: Nanjing facility in China (Platinum), Ochang Energy Plant facility
in Korea (Gold)ENVIRONMENTAL CLAIM VALIDATION SUMMARYENVIRONMENTAL CLAIM VALIDATION SUMMARYENVIRONMENTAL CLAIM VALIDATION SUMMARY

LG Energy Solution (Nanjing) Co., Ltd.

LG Energy Solution Battery(Nanjing) Co.,Ltd.

LG Energy Solution, Ltd. Ochang Plant

LG Energy Solution (Nanjing) Co., Ltd.

LG Energy Solution Battery (Nanjing) Co., Ltd.

LG EnergySolution Ochang Plant

Report Number:

Report Number:

Report Number:

260218-4160

306383-4160

295494-4160

Validation Period:

Validation Period:

Validation Period:

05 Dec 2018 - 31 Dec 2023

29 Jun 2023 - 29 Jun 2024

24 Nov 2022 - 24 Nov 2023

Claim:

Claim:

Claim:LG Energy Solution (Nanjing) Co., Ltd. has achieved Zero Waste to Landfill Platinum Operations, 100% diversion, with
5% Thermal Processing with Energy Recovery.

LG Energy Solution Battery (Nanjing) Co., Ltd. has achieved Zero Waste to Landfill Platinum Operations, 100%
diversion, with 10% Thermal Processing with Energy Recovery.

LG Energy Solution Ochang Plant has achieved Zero Waste to Landfill Gold Operations, 96% diversion rate, with 4%
Thermal Processing with Energy Recovery.

Method:Method:Method:Environmental Claim Validation Procedure (ECVP) for Zero Waste Classifications, UL 2799A First Edition, Dated July20, 2018

Environmental Claim Validation Procedure (ECVP) for Zero Waste Classifications, UL 2799A First Edition, Dated July20, 2018

Environmental Claim Validation Procedure (ECVP) for Zero Waste Classifications, UL 2799A First Edition, Dated July20, 2018

Facility:

Facility:

Facility:

No.17-18 Hengyi Road, No.26 Hengfei Road Nanjing Economic & Technological Development Zone,Nanjing,
JIangsu,China,210038

No.79 Hengtong Road, Nanjing Economic & Technological Development Zone, Nanjing, Jiangsu 210038, China

29, Gwahaksaneop 3-ro, Oksan-myeon, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Korea, 28122

Increasing Waste Incineration
The facilities in Nanjing, China, have developed technologies to handle anode wastewater
generated during the production process of batteries, improving the operation conditionsof the in-house wastewater treatment plant (e.g., adjusting coagulant mixing). Furthermore, theeffective removal of substances such as graphite from the anode wastewater significantly
reduced the amount of waste from incineration.
Reducing Hazardous Waste
The facilities in Nanjing, China, have developed innovative technologies to recycle the solvent(NMP) in electrode materials, which accounts for approximately 85% of hazardous waste.
Through Lab-Scale Tests and other methods, the effectiveness of the film evaporation
technology has been verified, increasing the NMP recycling rate from the previous 80% to97%. Improvements in waste management are being pursued at global facilities, including
those in Korea, Poland, and the US.
Landfill Waste Certification by Underwriters Laboratories (UL)

© 2019 UL • 2211 Newmarket Parkway, Marietta, GA 30067-9399 USA • T: 888.485.4733 • F: 770.980.0072 • W: ul.com/environment

Certification for LGESNJ in China(Platinum)© 2019 UL • 2211 Newmarket Parkway, Marietta, GA 30067-9399 USA • T: 888.485.4733 • F: 770.980.0072 • W: ul.com/environment

Certification for LGESNA in China(Platinum)

LG ENERGY SOLUTION ESG REPORT 2022

© 2019 UL • 2211 Newmarket Parkway, Marietta, GA 30067-9399 USA • T: 888.485.4733 • F: 770.980.0072 • W: ul.com/environment

Certification for Ochang Energy
Plant facility in Korea (Gold)

Established in the US in 1894, the UL is an international safety certification testing organization thatprovides services in developing standards and certifying product safety. Landfill Zero Certification is
granted based on the ratio of waste generated at a facility that is reused as resources, with certifications
starting from 80% or more.
- Grade by Ratio: Silver (90-94%), Gold (95-99%), Platinum (100%)

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Hazardous Substance Management
Starting from Europe, product environmental regulations and customers’ environmental management requirements are being strengthened in countries, thus increasing the importanceof environmental management. LG Energy Solution continuously monitors changing environmental regulations and strives to meet them, to provide our customers with green products.
To achieve this, LG Energy Solution applies sustainable supply chain management guidelines internally and for suppliers, enhancing the management of hazardous substances in the
supply chain and selecting materials that comply with regulations from the raw material stage.

Managing Hazardous Substances for Products
LG Energy Solution obtains and verifies material information of raw and auxiliary materials
used through the Chemical Assurance and Regulation Management System (CHARMs)
2.0, an integrated chemical management system. In addition, to achieve more effective
product environmental management, LG Energy Solution plans to introduce new Hazardous
Substance Management System (HSMS) by 2024 to integrate and manage material informationfrom all production sites.

Key Functions of CHARMs 2.0
Materials

New
Substance
Registration

What are Chemical Substances?*
Chemical substances are obtained by artificially reacting elements, compounds, or those that exist
naturally, chemically modified, extracted, or refined. Each country ensures the safe use of chemical
products by confirming the chemical substances entering the domestic market and obtaining and sharing
information necessary for safety, such as their hazardousness, to prevent toxicity accidents and protect
public health and the environment. Regulatory authorities in the US, Europe, China, and other countries
operate various laws and regulations for registering, evaluating, permitting, and regulating hazardous
substances. LG Energy Solution manages them through CHARMs 2.0.
* Source: Chemicals Control Act

LG ENERGY SOLUTION ESG REPORT 2022

Raw materials(chemical
substances)
Raw materials(minerals)
Raw materials(components)
Samplematerials (R&D)
MRO*(paint, etc.)

Review ChemicalComposition
Review Chemical
Volume byComposition
Supply Chain
Inspection

Purchase andProduction

Product
Standard
Assurance

Review Regulations(by country and/or
authority)* MRO: Maintenance Repair and Operation procurement

Application Areas of CHARMs 2.0 according to Product Life Cycle
Product Life Cycle

Management Items

Business Activities

Research &Development

Development of eco-friendly
products, pre-regulatory reviews(Exporting countries, REACH,
RoHS, etc.)

Purchase &Sourcing

Purchase of materials that comply · Review of eco-friendly materials
with customer requirements and- Confirmation of material composition, receipt of ecoregulations
friendly supply guarantee certificate· Managing suppliers’ eco-friendliness

Manufacture

Risk prevention of production· Product component management
discontinuation and worker safety · Information on hazardous substances / chemicalcomposition· Inventory traceability

Sales andDistribution

Sale of products that comply
with customer requirements andregulations· Verification of product compliance with regulations· Lead time reduction for product assurance· Provision of green products

Services

Communication with customers
regarding hazardousness andsafety· Provision of Product Safety Data Sheets (PSDS) andregulatory assurance certificates· Improvement of customer satisfaction· Confirmation of chemical composition information· Verification of regulated chemical substances· Promotion of chemical substance registration

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Biodiversity Conservation
Products must be manufactured sustainably to conserve biodiversity, and we should not negatively impact the balance of ecosystems. To this end, LG Energy Solution is working to
reduce the consumption of natural capital, returning the resources back to nature.

Our Efforts to Conserve Biodiversity

Biodiversity and Natural CapitalSpecies
Diversity

Ecosystem
Diversity

Genetic
Diversity

Refers to the diversity of plant,
animal, and microbial species
and generally refers to thediversity level of species andtaxonomic diversity within aparticular region.

Refers to the diversity of
ecosystems such as deserts,
forests, wetlands, mountains,lakes, agricultural land, andthe diversity of interactions
between all living and nonliving components within theecosystem.

Refers to the variation in genetic
characteristics within a species,
which refers to different
populations within the same
species or the genetic variation
among individuals within apopulation.

As one of the core ESG strategy tasks, we promote “biodiversity management” as ourcompany-wide efforts. As part of this initiative, we are conserving endangered species in theCheongju area. In the future, LG Energy Solution plans to collaborate with local environmental
agencies, local communities, habitat conservation organizations, and residents to understandthe biodiversity in the vicinity of our facilities and the local community and work towardbiodiversity conservation.

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Natural Capital refers to the stock of living and non-living goods and services that sustain human life; froman economic perspective of view, it refers to how society and businesses rely on the world’s natural assets,such as forests, rivers, and soil for their functioning (National Park Management Division, 2015). The lossof natural capital, such as fisheries resources, water resources, mineral resources, tidal flat sediments,
marine energy, and marine landscapes, due to climate change can pose risks that can undermine business
operations.

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30
20

In 1992, Article 2 of the Convention on Biological Diversity was signed by 150 governments at the Earth
Summit in Rio de Janeiro. Biodiversity refers to the variability among living organisms from all sources,
including terrestrial, marine, and other aquatic ecosystems, and the ecological complexes of which they arepart and includes diversity within species, between species, and of ecosystems. In other words, it is a termthat collectively refers to the diversity of species on Earth, the diversity of ecosystems in which organisms
inhabit, and the diversity of genes possessed by organisms.

■ Endangered Wildlife Class I 68 species■ Endangered Wildlife Class II 214 species

Conservation of Endangered Species
in the Cheongju Area

10

16

14
6

0
species

Mammals

Birds

21

18
11
1 3

1 3

Amphibians

Reptiles

Fish

8

13
4

Insects Invertebrates Terrestrial
Plants2

1

Reef

CoralsLG Energy Solution’s Ochang Energy Plant is working with theGeumgang River Basin Environmental Office and Cheongju City byentering into a Memorandum of Understanding (MOU) to support
the conservation and habitat improvement activities of endangered
species (Endangered Wildlife Class I, known as “Muljanguns”) in
the Cheongju area. Muljangun is one of the 21 Class II endangered
insect species, and their population has been rapidly declining
due to habitat destruction caused by urbanization, water pollution,
and agricultural land improvement projects. Through habitat
conservation organizations, LG Energy Solution supports the propagation of Muljanguns and considers
the level of human interference, light pollution, and water supply when selecting new habitats for them.
Additionally, the successful hibernation of Mulgwanguns is monitored, and we reflect the results for future
habitat selection. LG Energy Solution will continue to pursue practices that enable the coexistence of
ecosystems and local communities.

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Talent Management and Training
To continuously develop the skills and competitiveness of employees, we provide training programs for all ranks and job positions.

Recruiting and Growing Talents based on HR Philosophy and Value
LG Energy Solution establishes and operates a talent recruitment and development systemthat is organically linked to our business goals / strategies based on the HR philosophyof “Creating Value for Customers, Realizing Management Based on Human Dignity” andthe talent profile of being “a person equipped with beliefs and execution power in the LG
Way.” Starting from the onboarding programs that support the smooth adaptation for new
employees, we provide step-by-step support according to leadership / job-specific training
system, enabling members to grow into highly competitive talents. We also create systematicand strategic development programs and a self-directed learning environment that reflect
members’ life cycles and growth needs.

BTC in North America

BTC in Korea

Excellent Talent Recruitment Process
LG Energy Solution has introduced and implemented the “Battery Tech Conference (BTC)” asan event to secure excellent Korean and international R&D talents. In 2022, two BTCs were
held in Korea, and in 2023, one BTC event was held in North America (April) and one in Korea(June). In the latter half of 2023, another event is scheduled for October. At BTC, outstanding
master’s and doctoral candidates are invited and LG Energy Solution’s vision for battery
technology and business are introduced, providing networking opportunities between
employee and invitees.
To recruit essential master’s and doctoral talents for LG Energy Solution’s R&D positions,
we select target labs through rigorous verification by the top leaders of R&D organizations
and provide company presentations and job-related information. Through these activities,
we secure talent pools and operate a special recruitment process that involves inviting
applicants to the BTC event, conducting interviews, and completing the recruitment process
within approximately one month from the application. This program provides a positive
applicant experience and has shown high satisfaction and employment rates, contributing tosuccessful onboarding.
Following the successful recruitment of 80 top-level master’s and doctoral candidates
through BTC in 2022, the Battery Tech Conference in San Francisco was held in April 2023,
where 40 local Korean-American master’s and doctoral candidates were invited for the event
and interview process. In addition, the BTC event held in Seoul in June 2023 included visits
to target labs where we met 35 masters and doctoral candidates. We will continue to secure
outstanding talents in the battery field.
Assisting New Employees (Onboarding Program)
LG Energy Solution runs a “Day 1 program” that cultivates job performance capabilities andprovides the education necessary for company life. Through this process, we instill a senseof belonging and pride in the company, followed by mentoring programs to support a natural
adaptation to the organization and job positions. Specifically, for new employees, LG Energy
Solution operates talent-oriented programs and experiential programs to enhance theirunderstanding of the organizational culture and business, effectively supporting the new
employees’ stable integration within the organization.

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Talent Management and Training

Enhancing Leadership Competencies at Each Stage (Leadership Development Program)
As the company continues to grow, we recognize the importance of cultivating leaders whoare committed to fulfilling social responsibilities and roles. To support successful leadership,
we have implemented a comprehensive leadership development system at every stage. Our
system includes ongoing support for leadership development programs through a variety
of methods, including online and offline education, leadership diagnostics, and coaching.
We emphasize the importance of a leadership mindset before assuming the position, andthen shift our focus to successful role transitions and continuous improvement of leadershipcompetencies. By investing in our leaders, we are confident that we can continue to grow ourbusiness while also making a positive impact on society.
Additionally, we identify and systematically develop future business entrepreneurs who
possess business execution capabilities and leadership competencies. We support programs
such as Global MBA, LGMBA, and degree programs to foster leaders with integrated andstrategic thinking skills.
Cultivating Top Experts in Each Field (Job Competency Development Program)
LG Energy Solution is committed to enhancing the job competencies of all employees
through our Battery Academy (LBA, LG Battery Academy). LBA is a comprehensive job-specifictraining program that covers various fields, including production, technology, quality,
R&D, procurement, supply chain management, sales, project management, and digitaltransformation. With over 130 courses available, our employees have access to thelatest knowledge and skills to excel in their roles. In addition to LBA, we are dedicated toempowering new talents who join our company and fostering battery experts through theInstitute of Battery Technology (IBT). IBT is actively operating, and we plan to expand it tooverseas locations to reach even more employees.

Employee Performance and Compensation
LG Energy Solution operates a performance management system and job competency
diagnosis to support organizational goal achievement and member growth. We establish
specific goals that are aligned with organizational goals and job competency development,
providing regular feedback on performance results. We also conduct year-end evaluations
with peer feedback to improve objectivity and fairness of evaluations. Through job
competency diagnosis, we promote member-driven enhancement of job expertise,
strengthen effective talent management and utilization, and enhance organizational
capabilities.
Our compensation system operates based on the principle of performance-oriented HR.
We consider external competitiveness and individual performance when determining basic
salary, and we support appropriate rewards for members’ performance through various
variable pay systems.
Institute of Battery Technology (IBT)An education program of six months was instituted in 2021 to empower new employees globally early on.
Education Objective: To provide basic job knowledge and skills and understand standard job contents in the
production / technology / quality departments, enabling employees to perform process-based tasks.

Enhancing Global Business Capabilities (Global Competency Development Program)
LG Energy Solution recognizes the importance of cultivating executives and representatives
who can lead our global business and contribute directly to achieving results. We haveestablished and operated competency modeling and development systems. These systems
are designed to strategically develop our employees’ skills and competencies, ensuring thatthey are equipped to succeed in their roles. In addition, we are committed to embracing
members with diverse backgrounds in the global business environment and creatingorganizational synergy. To achieve this, we conduct foreign language education programs forall employees and programs to enhance understanding of global diversity.

LG ENERGY SOLUTION ESG REPORT 2022

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Labor Relations
At LG Energy Solution, we recognize the importance of workers and labor unions as important partners in our success. We practice a mutual organizational culture and collective labormanagement relations based on trust. Our employees are free to join and engage in labor unions, and every year, we conduct business-oriented and productive collective bargainings
that benefit both labor and management. To ensure that our employees’ voices are heard, we have established Labor-Management Consultative Committee that meets quarterly to
discuss employees’ grievances and improvements in working conditions, as required by relevant regulations. Decisions made through collective bargaining or the consultative committee
are promptly announced to employees, and changes are implemented with a 100% application rate. Additionally, we regularly monitor relevant regulatory trends to secure workers’ rights
and mitigate compliance risks.

Human Rights

Global Human Rights and Labor Policy

LG Energy Solution respects the human rights of employees and all stakeholders, and works
to fulfill the responsibility of respecting human rights throughout our business activities.
To achieve this, we support international human rights and labor standards, such as the
Universal Declaration of Human Rights, UN Global Compact Principles, UN Guiding Principles
on Business and Human Rights, and core conventions of the International Labor Organization(ILO). We comply with labor laws in all countries and regions we operate. We have establishedglobal human rights and labor policy which applies to all business sites worldwide andcontinually monitor and improve human rights and labor-related risks.

Humanitarian
Treatment

We shall strive to create a safe working environment for all employees by respecting theirdignity and preventing them from inhumane treatment or threats, such as mental or physicalforce or abusive language.

Prohibition ofForced Labor

We shall prohibit unfair confinement of mental or physical freedom or forced labor against
the will of the employees either by intimidation or threat, or by physical confinement, humantrafficking, slavery or any other means. We shall not demand the transfer of personal
identification, passport or the original copy of labor permit as an employment condition,and shall not require employees to pay any recruitment fees or other related fees for theiremployment.

Prohibition ofChild Labor

We shall comply with the minimum employment age stipulated by the laws of each country
and region and prohibit child labor of age 16 or under. When employing an adolescent
whose age is 18 or under, we shall not offer a hazardous task in terms of occupational safety(including night shifts and overtime).

Nondiscrimination

We shall give all employees equal opportunities for employment, promotion, wages,
compensation, and training, and shall prohibit all types of discrimination according togender, age, race, religion, labor union activities, disabilities, pregnancy, marital status,
social status, etc.

Working Hours

We shall comply with the regulations regarding regular working hours, overtime and holidays
stipulated by the laws in each country and region and shall not force anyone to workovertime outside their regular working hours. If anyone works overtime (within the limits set
by the laws), we shall pay out the overtime compensation, as mandated by the relevant laws.
In accordance with Responsible Business Alliance’s Code of Conduct, we shall ensure that
our employees work a maximum of 60 hours per week, and that they have at least one day
off every seven days.

Category

Multi-faceted Grievance Program
To respect the rights and welfare of employees and create an inclusive working environment,
we are strengthening the grievance program. All grievances are handled promptly andtransparently, and the results of the grievance process are communicated to the respective
employees under strict rule / protection.
ESG Risk Management Process
We operate a regular ESG risk management process at our business sites to practicehuman rights management. For global business sites, we diagnose risks in ESG, including
human rights and labor. Through regular ESG risk assessments and on-site inspections, weincorporate improvement measures into our business operations. Additionally, we monitor
and manage the human rights aspects of suppliers by identifying and evaluating human rights
and labor risks through supplier ESG checks.

LG ENERGY SOLUTION ESG REPORT 2022

Content

Wage andWe shall pay out wages exceeding the minimum wage stipulated by the laws in each country
Employee Benefit and region to all employees.
Freedom of
Association

We acknowledge the freedom of association and right to collective bargaining, which are
guaranteed by the laws in each country and region. We shall create an environment where all
our employees can communicate easily without the fear of threats or retaliation.
We shall not unfairly treat anyone for forming, joining or participating in a labor union.

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Fair Trade
LG Energy Solution strives to establish a fair and transparent trading system, secure trust from our suppliers, and achieve mutual growth through collaboration.

Instilling and Implementing Fair Trade
LG Energy Solution engages in fair trade compliance activities, including education,
inspection, and advisory services, and responds to investigations and disputes through our
Fair Trade Committee. We minimize fair trade risks in all business areas and dedicate ourorganizational capabilities to establish a culture of voluntary compliance on fair trade. We
display the four major practices of the Fair Trade Committee on our website.
Four Major Practices of the Fair Trade Committee
1

Recommended practices for fair contract
negotiations for cooperative collaboration
between large, medium, and small enterprises

2

Recommended practices for the fair selection(registration) of suppliers.

3

Recommended practices for establishingand operating internal review committees for
subcontracting transactions.

4

Recommended practices for issuing andpreserving appropriate written documents in
subcontracting

Initiating Fair Trade Processes
We conduct fair trade education, inspections, and improvement activities throughout theyear (regular and occasional) to ensure that employees are aware of and comply with fair trade
regulations and guidelines during their work. When there is a possibility of violating fair trade
regulations and guidelines, employees must report it based on internal rules. Specifically,
we promptly incorporate the revised fair trade-related laws, subcontracting laws, andother regulatory changes into internal processes and rules to establish a fair trade culture
within our company. To prevent collusion risks, we have implemented “Competition Contact
Management Regulations” and “Competition Contact Reporting Process” that obligate
employees to report any contact with competitors. We also provide legal advisory for unfair
support practices, unfair trade, and other matters during contract signing and transactions.
Risk Prevention

Inspections

Improvement· Company-wide education· Legal advisory· Regular / occasional
inspections· Online / offline monitoring· Requests for improvement· Provision of improvement
measuresIn the procurement process, we provide equal opportunities for all qualified entities toparticipate in the registration and selection of suppliers. The registration and selection of
suppliers are conducted based on objective and fair evaluation criteria.
LG ENERGY SOLUTION ESG REPORT 2022

Enhancing Our Fair Trade Competency
We have established new regulations (internal rules) that reflect the revised subcontracting
law, providing specific and clear guidelines for employee compliance in subcontracting
transactions. Additionally, we have distributed fair trade guidelines for affiliate company
transactions (established in 2021) and subcontracting transactions (established in 2022) to enhancefair trade competence. Furthermore, we published three editions of the “Compliance
Newsletter” in 2022 to inform employees about introducing confidentiality agreements,
appropriate precautions in affiliate company transactions, and preventing informationexchange collusion. After conducting a mandatory, company-wide training on understanding
the revised fair trade law, we provided occasional training (e.g., prevention of technology theft,technology protection system, subcontracting law) for relevant departments and mandatory training (e.g.,
unfair trade, safe working environment, prohibition of discrimination) for overseas corporate employees.
Fair Trade Education and Training
CourseSchedule

TargetAttendees

Training on the subcontract law related to thetechnology protection system of suppliers

March 2022

ESS Development Center

126
employees

Understanding the Revised Fair Trade Law(H1 Compliance Training)

May 2022

Company-wide employees(mandatory)

6,450
employees

Training on technology use under thesubcontracting

November 2022 Procurement Center

30
employees

Subcontracting law education at LBA(LG Batery Acadmey)

Throughout
the year

Company-wide(optional)

58
employees

Education on unfair trade, safe working
environment, prohibition of discrimination

October 2022

Overseas corporate employees(mandatory)-

Compliance Newsletter

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Shared Growth
LG Energy Solution is establishing various shared growth strategies to achieve sustainable growth with our suppliers.

Fulfilling Shared Growth Strategies with Our Suppliers

Improving Our Shared Growth Programs

LG Energy Solution fosters a fair trading culture and implements shared growth policies tosupport our suppliers’ long-term and substantial growth. To enhance the competitiveness of
suppliers through various support programs, we are pursuing five major strategies.

LG Energy Solution is implementing various activities for shared growth. To efficiently support
the equipment investment and operation funds necessary for our suppliers, we have renewed
and expanded our existing “Shared Growth Investment Support Fund” by lowering theinterest rates. Additionally, we have expanded the scope of the productivity improvement andquality enhancement support system, which is currently in operation, from Korean suppliers
to overseas suppliers to enhance their technical capabilities. In 2022, after implementing
the system for 10 suppliers in Korea, we achieved significant results, including the defectrate improvement (13,400 ppm → 0 ppm) of 18% in productivity, and a 13% reduction in loss rate.
Furthermore, to maintain continuous cooperation with suppliers, we held the “Partners Day”
event in 2022, providing opportunities discuss major management plans and purchasing
policies with 104 suppliers.

Five Major Shared Growth Strategies
NO

Strategy

Activities

1

Fostering a Fair Trade Culture· Employee training on compliance with laws and regulations· Introduction on the use of standardized subcontracts· Practice of Jeong-Do management and compliance programs (CP)2

Improving Suppliers Finance· Fundraising of KRW 150 billion Shared Growth Investment Support Fund
· Early payment before the holidays

3

Fostering a Safe andEco-friendly Partnership· Diagnosis on facility and workplace safety· Eco-friendly Partnership Forum· Raw material component investigation system· Assist Occupational Health and Safety Management System(KOSHA18001) certification· Safety and health cooperation agreement

4

Enhancing Capability ofSuppliers· Localization of parts and equipment· Assist product analysis and testing· Support domestic and international sales channel· Technical support and protection of suppliers

5

Information Sharing andCommunication Activities· Operation of Singlex purchasing portal· Operation of communication channel for suppliers (ECOTalk)· Operation of shared growth request channel

LG ENERGY SOLUTION ESG REPORT 2022

In the future, LG Energy Solution plans to introduce new and diverse shared growthprograms. Starting in 2023, we plan to establish autonomous Dispute Resolution Committee
to provide a platform for suppliers to freely discuss and resolve issues they encounter during
the trading process. We also plan to operate a subcontracting review committee to monitor
unfair trade practices during contract signing, operation, and termination.

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Information Security
LG Energy Solution has established and implemented operational rules for each entity responsible for information security practices, including employees, suppliers, information security
authorities, and related organizations, following information security regulations. To strictly adhere to information security, we enforce policies that follow the principles of need-to-know
and minimum privilege, implementing restricted access to information.

Information Security Governance

Information Security Compliance

Organization and Responsibilities
To systematically carry out various information security management activities, LG Energy
Solution has designated Chief Information Security Officer (CISO) following the Information
and Communications Network Act to manage our security management system and protect
key information assets. Additionally, we have established and operated information security
organizations at the headquarter and each business site.

Information Security Policies
LG Energy Solution complies with domestic and international information security-related
laws and regulations to securely handle and manage the personal information of employees,
customers, national core technology, and core talent pool. In Korea, we implement protective
measures that comply with the security requirements specified in the Personal Information
Protection Act and the Industrial Technology Protection Act. We continuously implement
necessary measures following regulatory revisions. For overseas subsidiaries, we executeprotective measures following the respective countries’ and regions’ laws, regulations, andpolicies, such as the European General Data Protection Regulation (GDPR) and the Chinese
Network Security Law.

We have formed an information security consultation group targeting security officersof all business sites in Korea and overseas subsidiaries, sharing and discussing security
issues and concerns. We also hold Information Security Committee with the participation of
executives from management and related departments to facilitate decision-making at the
management level. Depending on the significance of the agenda, we share and report to the
CFO and relevant departments to enhance monitoring. Furthermore, to enhance the level of
information security, we allocate an annual investment budget for information security in thebusiness plan.
Information Security Management System
We treat our business information, trade secrets, intellectual property, and all information
related to employees, customers, and suppliers as important information assets to beprotected. We have established an information security management system based oninternational certifications such as ISO / IEC 27001 and TISAX to minimize security risks andensure efficient security management.

LG ENERGY SOLUTION ESG REPORT 2022

Improvement of Information Security AwarenessWe conduct information security education and promotional activities to raise security
awareness among employees. We provide regular information security education for all
employees annually. We implement tailored education programs for specific groups suchas new hires, retiring employees, suppliers, visitors, national core technology, personnel,
and personal information handlers. Additionally, we promote security rules, case studies of
information security violations, and other relevant materials to encourage all members to beinterested in security issues.
Preventive and Responsive Activities
LG Energy Solution operates a continuous security monitoring system throughout the officeareas and manufacturing facilities. To respond in real time to various cyber attacks frominternal and external sources, we conduct regular security vulnerability assessments andperform simulated hacking and training sessions for employees to continuously enhance
security levels and response capabilities. Regarding personal information protection, we
conduct prior security reviews to check for potential misprotection of personal informationand compliance issues. Furthermore, we designate Data Protection Officer responsible foroverall personal information handling tasks for inquiries, complaints, and remedies related topersonal information.

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Corporate Social Responsibility
LG Energy Solution considers resilience a key theme for our corporate social responsibility (CSR). Focusing on three main directions: “Shared Resilience,” “Social Resilience,” and“Environmental Resilience,” we aim to lead social change for the environment, society, and future generations.

CSR Programs that Build Community Resilience

CSR Programs

LG Energy Solution has defined three major areas of CSR activities to support community
resilience and is engaged in various CSR initiatives.

LG Energy Solution is committed to growing with the local communities where our global
business sites are located. In addition to supporting socially underprivileged groups in thecommunity, we strive to promote the spread of green energy and improve living conditions in
the region by installing renewable energy facilities tailored to the local context.

Three Strategic Directions of CSR

Shared Resilience

Create psychological safety toemployees and local residents throughparticipation in sharing activities

Social Resilience

Support vulnerable social groups with
opportunities to be self-sufficient

Environmental Resilience

Make green energy more accessible
and affordable and contribute to
avoided emissions

Cheongju Hope Green Power Plant
Through partnerships with local governments and NGOs, LG Energy Solution completed the“Cheongju Hope Green Power Plant,” a 410kW solar power facility, at the Cheongju Northern
Transfer Center in December 2020. If operated for 20 years, this facility is expected toreduce greenhouse gas emissions by 244 tons annually, totaling 4,900 tons, and generate
an estimated revenue of approximately KRW 800-1,000 million. The revenue generated fromthis power plant is donated to the “Hope Green Energy Center” to support underprivileged
youth in the Chungbuk region and cultivate young environmental leaders among them. The
Hope Green Energy Center is a forum for collaboration among LG Energy Solution, Cheongju
City Hall, NGOs, and city council members. Through ongoing initiatives, we plan to continue
welfare and energy improvement projects for vulnerable groups in the Chungbuk region.

Cheongju Hope Green Power Plant

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Hope Green Scholarship Award Ceremony

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Corporate Social Responsibility

Fostering Talent for Science and Technology
LG Energy Solution operates various programs to enhance scientific and technologicalcapabilities, which are the foundation of national strength and industrial development. In
Korea, we foster specialized technical professionals by donating a customized education
program called CEP (Customized Education Polymer Program) at KAIST (Korea Advanced Institute of Scienceand Technology) in Daejeon. At our overseas business sites, we hold the China University
Student Battery Innovation Contest (China), donate to the Electric Mobility Research Instituteat Wrocław University of Technology & Science (Poland), and co-host vocational training
courses for battery production with the Girl Scouts of the USA.
Donating Book and basic Necessities
In Korea, we carry out support projects for the self-reliance of socially vulnerable groups inlocal communities, such as the Book2U activity, where we donate books to social welfareorganizations’ libraries (Ochang), donation of firefighting supplies to vulnerable groups (Ochang),
support replacing old household appliances (Daejeon), regular sponsorship for children inunderprivileged families (Daejeon), and housing safety support (Daejeon). At our overseas
business sites, we participate in activities through donating various supplies (China) and toys(the US). Additionally, we continue to engage in activities such as the Nobile Gift, where wematch volunteers and donors to deliver specific items needed by families in need, support
educational supplies for local childcare centers, and sponsor vulnerable families (Poland).

Science and Technology Talent Foster Program | University Student Battery Innovation Contest in China

LG ENERGY SOLUTION ESG REPORT 2022

Providing Opportunities for Self-Reliance [Sharing Dreams Onstage]“Sharing Dream Onstage” is a program by LG Energy Solution that supports children
and adolescents with developmental disabilities with artistic talents but lack educational
opportunities. We provide tailored art education and psychotherapy by specialized art
instructors in a 1:1 class to young artists with developmental disabilities recommended byprofessional organizations.
After completing the program, the participants can exhibit their artwork or perform on thestage at “Entral Park,” at LG Energy Solution’s business sites in Korea. Furthermore, theartistic works from exhibitions and performances are produced as merchandise and sold to
employees. The proceeds from these sales are donated to those in need. Program graduates
are also supported to register as artists on the art exhibition platform operated by “disability”- an enterprise that discovers and exhibits artworks by artists with developmental disabilities
to continue their artistic activities.

Sharing Dreams Onstage | Dream Exhibition

Sharing Dreams Onstage | Merchanise Sales

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ESG MANAGEMENTAPPENDIX

Corporate Social Responsibility

Employee Participation in CSR
LG Energy Solution provides opportunities for employees to directly participate in volunteer
activities, allowing them to share love with their neighbors and experience gratitude andhappiness. Additionally, we have implemented “Volunteer Leave” where employees receive
paid leaves for participating in activities other than company-sponsored ones, encouraging
them to engage more in volunteering.
Employee Volunteer Group “Hamsori (Together, Ensol)”“Hamsori” in Korean means “Together, Ensol” and is a program aimed at providing
opportunities for employees who wish to participate in neighborly love and sharing
activities. We recruit employees who wish to participate in and share their talent at ourSeoul headquarter, Daejeon, and Ochang business sites and operate the program. In 2022,
170 employees participated in 21 activities, including volunteering for stray dogs, flogging,and providing free meals for the elderly in various locations. These activities are conductedwith enjoyable work activities, supporting the culture of volunteerism and sharing among
employees. By structuring monthly plans based on the most desired activities through survey
called “Activities You Want to Participate In,” we encourage active employee participation.

Monthly Activities

Ensol Touch“Ensol Touch” is a kiosk system that allows employees to donate to underprivileged children
with a simple screen touch. Installed at various locations such as entrances, lounges, andrestaurants in our domestic business sites, employees can voluntarily donate after reading
the stories of underprivileged children displayed on the screen. Currently, eight kiosks are
installed at the headquarter, Ochang, Daejeon, and Gwacheon business site. From July 2022
to June 2023, we have supported 12 children.

Application and Implementation of Volunteer Activities

July 2022

Volunteering for stray dogs, Bap-puh Free Meals

August 2022

Volunteering for stray dogs, Job experience program provided for underserved children

September 2022

Volunteering for stray dogs, Baby Box Facility, Apple Farm Experience

October 2022

Seoul Forest flogging, Ochang Sohacheon flogging, Local Festival Science Festival: Making
Electric Cars

November 2022

Kimjang (kimchi making), Physical activities at local children's centers, Housing
environment improvement activity, Community sharing junior engineering class: Making
electric cars (two middle schools), Yeontan (knead coal) delivery

LG ENERGY SOLUTION ESG REPORT 2022

Hamsori | LG Energy Solution Employee Volunteer Group

Hamsori | Volunteering for stray dogs

Hamsori | Bap-puh Free Meals

Ensol Touch | Donation Kiosk System

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ESG MANAGEMENTAPPENDIX

Risk Management
By establishing a comprehensive crisis management system, LG Energy Solution carries out activities to prepare for risks in various areas such as quality, safety, supply chain, business,finance, and social / environmental risks. Through this, we strive to minimize negative impacts such as business interruption and maintain resilience even in the event of actual risk
occurrence and crisis situations.

A Company-wide Risk Management GovernanceRisk Management System
To effectively manage risks at a company-wide level, LG Energy Solution has appointed
Chief Risk Officer (CRO), the highest-ranking executive responsible for risk management.
Additionally, for product quality area, we have appointed Chief Quality Officer (CQO) as aseparate management responsible for managing risks through technical expertise andindependent quality leadership.
The CRO is appointed by the Board of Directors and demonstrates leadership in recognizing
the importance and intention of company-wide crisis management in various areas such asenvironmental safety, supply chain management, and employee accidents. The CRO preevaluates potential crises, conducts impact analysis, and instructs relevant departments for
mitigation. In times of an actual company-wide crisis, as the Chairperson of our company’s
Emergency Committee, which is the highest decision-making body for emergencies, theCRO is responsible for convening and dissoluting the committee, approving crisis response
measures, overseeing company-wide communication and external activities, and leadingcrisis management efforts.
Risk Response Procedures
LG Energy Solution activates the company-wide crisis response system according to the
response manual in the event of a risk occurrence. If a situation is deemed a “companywide crisis” based on predefined grades for various accidents or crisis type, Emergency
Committee chaired by the CRO is convened following the simultaneous reporting andcommunication procedures. The Emergency Committee operates a comprehensive situation
room to communicate with the field and support accident response and recovery. Oncethe crisis is resolved, the Committee monitors the implementation of measures to prevent
recurrence and verifies the results.
The dedicated organization under the CRO’s authority lists changes in crises and theirimpacts, develops scenarios, including the decision-making process of the Emergency
Committee, and conducts mock drills to enhance crisis response capabilities. Additionally, LG
Energy Solution improves crisis response manuals and systems and horizontally shares thesemeasures to prevent similar crises from recurring.
LG ENERGY SOLUTION ESG REPORT 2022

Board of Directors

ReportingApproval · Verification

Chief Risk Officer (CRO)

Company-wide Risk Management Organization

A Company-wide Risk Management Committee(In case of emergency) Emergency Committee

Reporting

Subcommittes by function / organization

SupportAssistance

Risk Owner

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ESG MANAGEMENTAPPENDIX

Risk Management

Strengthening a Company-wide Risk Management
Post-crisis Management and Improvement Activities
LG Energy Solution continuously strengthens our ability to maintain business continuity
despite crises. As a result, we obtained ISO 22301 certification for our domestic facilities in
2021, which objectively recognizes our business continuity management system. We alsoplan to obtain this certification for our overseas facilities.
Furthermore, we incorporate risk management performance into the evaluation of executives,
separate from their management performance. In particular, we consider the safety and livesof employees and local community residents as the top priority value and include achievinga safe working environment as a differentiated reward in the evaluation criteria for key
executives. In the future, we plan to gradually expand the areas of risk management includedin the evaluation criteria.
Identification and Management of Key Risks
LG Energy Solution identifies and mitigates key risks by raising sensitivity to potential risks
that may develop into crises and systematically conducts risk identification and mitigation
activities. Based on these efforts, we establish a company-wide, medium- to long-term
strategies and task-specific processes and manage product quality, environmental safety,
and supply chain management as key risk areas through various methods such as interviews
and risk analysis by field.

02 Occupational Safety Risk Management
As LG Energy Solution expands our business rapidly worldwide, we are making various
efforts to ensure the safety of employees and the surrounding communities near ourfacilities. Considering the increased potential for environmental and safety risks due to theconstruction of numerous new facilities and the increased use of new equipment, we are
implementing proactive risk identification and prevention measures. Furthermore, for facilities
approaching 20 years of operation, we identify risks associated with aging and implement
rigorous diagnostics and improvement measures. To achieve this, we continuously study andimprove compliance with safety and environmental regulations in various countries.
03 Supply Chain Risks
The importance of supply chain management has been emphasized due to increasing
geographical and climate-related issues (i.e., geopolitical factors and climate change). Accordingly, we
diversify and decentralize specific raw materials or supply regions, enhance the continuityof supply, respond to various regulations and requirements, and improve collaboration
structures with suppliers to enhance our response capability to improve supply chain
management risks. We also identify and efficiently manage supply chain-related risks byproactively collaborating with external organizations. In collaboration with external experts,
we have assessed the possibility of future natural disasters and supply chain risks in newinvestment areas. We plan to expand these assessments progressively.

01 Quality Risk Management
We recognize fire accidents in electric vehicles and energy storage systems as significant
risks. These accidents pose risks to consumer safety and property and spread negative
perceptions to the future green energy industry among the public. To reduce the likelihoodof such accidents, we collaborate closely with major customers and safety management
agencies in each country. We also conduct comprehensive analyses of the causes of electricvehicle fires in collaboration with external research institutions. We continuously work to
mitigate product quality-related risks, by applying diagnostic technologies and the voluntary
recall of problematic products.

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Risk Management

Risk Identification and Management
Category

Risk Factors

Potential Impact

Mitigation Activities

Quality
Risks

Quality
Management· Need for quality risk
management for small andlarge battery products usedby customers· Aim to enhance system-based quality management
and optimize quality management, establish andoperate a company-wide quality management
specialized organizational structure· Implement activities for quality issue discussions
with customers and government agencies· Execute recall processes based on recall committee
decisions

SafetyRisks

Environmental
SafetyManagement· Chemical-related accidents
and violations of regulations
can lead to damage to thecompany’s trustworthinessand competitiveness· Financial loss and damage
to corporate image inthe event of businessinterruption or fines due
to non-compliance with
relevant regulations· Strengthen safety education for handlers ofhazardous substances· Enhance pre-filtering of chemicals exceeding
domestic and international regulatory standards
and explore alternative substances to hazardous
substances· Conduct regular environmental and safety
diagnostics, planning diagnostics, and special
diagnostics for all domestic and international
facilities· Enhance company-wide environmental and safety
management system, including the operation ofCEO-led environmental and safety committees· Strengthen risk and performance management
system through the establishment of companywide environmental and safety policies andinternal regulations and the construction of anenvironmental and safety portal· Need for systematic
risk management due toincreased order projects
and larger order scales· Establish a company-wide order management system· Strengthen company-level order review criteria (i.e.,
profitability, risk response)· Secure early profitability of orders throughmanagement at the estimation stage· Establish a foundation for responding to lossrelated risks· Intensified competitionin the battery market andchanging market dynamics· Secure leading technological position throughthe enhancement of manufacturing and R&D
capabilities· Secure competitive advantage in new businesses
through open innovation and various channels

Business Order
RisksManagement

Intensified
Competition

Category

Financial
Risks

Social /Environmental
Risks

LG ENERGY SOLUTION ESG REPORT 2022

Risk Factors

Business Business
Risks
Environment
Change for
Productionand Sales

Potential Impact

Mitigation Activities· Possibility of long-term
growth decline andinefficient resource
operations due toinappropriate businessportfolio composition· Allocate resources mainly to nurturing businesses
through company-wide business portfolio review· Concentrate on examining changes in the businessenvironment during the establishment of mediumto long-term strategies and business plans· Develop response measures for key indicators such as
material and component supply and exchange rates· Examine short-term business environment and risk
factors at headquarter and overseas subsidiaries· Fundamental competitiveness improvement
activities for struggling businesses

IT System
Management
andInformation
Security· LG Energy Solution’s
business is operated andmanaged based on IT
systems, and leakage ofconfidential information
or data manipulation
can adversely affectmanufacturing and logistics
processes· Legal liabilities orcompetitivenessdegradation can occur
due to inadequate internal
information management· Establish a company-wide information security
organization and operate an information security
council· Establish a digital innovation system through Digital
Transformation· Strengthen DB access control systems· Conduct information security and data
management education for employees

Investment· Financial loss and cash flow
deterioration concerns due
to incorrect investment
decisions or changes in thebusiness environment· Enhance investment efficiency and early response
to risks through investment management systems· Conduct corporate-level investment review
and corporate investment committee for major
investments· Strengthen change management through progress
checks for ongoing major investments

Financial· Exposure to various risks
such as market risk, credit
risk, and liquidity risk due toglobal business expansion
and expansion of business
scope· Manage risks by each dedicated department
according to policies approved by the management
committee· Conduct pre-identification and evaluation offinancial risks through collaboration between
operational departments

Response to
Carbon Policy
Changes· Increase in production
costs due to investments inenergy reduction· Decision-making on energy reduction investments
based on the maximization of effectivenessperspective

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Compensation Policy
Board of Directors: Compensation Policy
LG Energy Solution has a fair and transparent compensation determination process. The
compensation of Board members is measured following our goals and the interests ofshareholders, and a clear guideline and evaluation process are in place to implement thecompensation policy.

Board of Directors: Compensation Determination Process
The compensation of directors is paid within the total compensation amount approved at theshareholders’ meeting following internal regulations and other relevant rules based on theprovisions of Article 388 of the Commercial Act. The compensation of registered directors
consists of salaries based on factors such as the inflation rate, external competitiveness,financial performance, incentive pay based on roles according to positions, and performance
incentives based on business and individual achievements.
For the determination of performance-based compensation, both quantitative
indicators, such as sales revenue, and qualitative indicators, key task evaluations andthe implementation status of medium- to long-term expectations, are comprehensively
evaluated. Financial / quantitative indicators are considered in evaluating performance, alongwith the non-financial / qualitative indicators, such as strategic efforts for discovering future
growth drivers and enhancing business competitiveness.

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Shareholder Policy
LG Energy Solution is enhancing shareholder value and rights through a rational
shareholder policy. As stated in the Corporate Governance Charter, we ensure shareholder
rights to dividend entitlement, to attend, and to vote at shareholders’ meetings.

Shares and Capital Structure
The largest shareholder of LG Energy Solution is LG Chem Ltd., which owns 81.84% of stock.
As of end of 2022, total number of shares to be issued by LG Energy Solution is 800,000,000(KRW 500 per share), and the shared issued is 234,000,000. Shareholders of LG Energy Solution
have one voting right per share, following Article 23 (Voting Rights) of the Commercial Act andthe Articles of Incorporation. Efforts are made to ensure fair voting rights for shareholders
following the Commercial Act and relevant laws.

Shareholder Structure
Renumeration and compensation of external directors are determined based on their role,risk, and industry peers. The evaluation results of directors are used as reference material for
their reappointment. We make sure that no discrimination is allowed, and the independenceof external directors are valued.
Shareholders’ Status

Board of Directors: Compensation Status
Despite the challenging circumstances such as the COVID-19 pandemic and global economiccrisis, LG Energy Solution achieved sales of KRW 25,598.6 billion and operating profit of
KRW 1,213.7 billion in 2022. The approved Board of Directors’ compensation for 2022 is
KRW 8 billion.

Category
Shareholders
with more than
5% of share

Shareholder

Number of Shares

Stake (%)

LG Chem

191,500,000

81.84

National Pension Service

12,709,084

5.43

7,882,723

3.37

Our Employee Stock Ownership Association* As of December 31, 2022
* The ownership ratio is based on the total number of shares issued; as of December 31, 2022, the total number ofshares issued is 234,000,000.
* The ownership of shares and the above mentioned ownership ratio are based on the shareholder registered as ofDecember 31, 2022. The current actual ownership status may differ.

Minority Shareholders’ Status
Shareholders
Category

Minority
Shareholders

Number of
Minority
Shareholders

Number of
Minority
Shareholders

792,636

792,639

Number of Shares
Ratio (%)
100.00

Number of
Minority Stake
27,812,263

Total Stake
234,000,000

Ratio (%)
11.89

* As of December 31, 2022

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Shareholder Policy

Enhancing Shareholder Value
Establishing a System for Shareholder Rights
LG Energy Solution enforces shareholder policies to uphold the promise of protecting
shareholders’ interests. We ensure transparency, fairness, and accountability, guaranteeing
equal treatment and providing essential information to all shareholders. Through this policy,
we aim to build trust, encourage active shareholder participation, and safeguard the rights ofall stakeholders.

Fair Treatment of Shareholders
Regardless of the volume of share, all shareholders are entitled to one vote per share,
receiving equal treatment. We ensure timely and equitable disclosure of information that is
not mandatory, guaranteeing transparency. LG Energy Solution has established and operates
Internal Trading Committee to protect shareholders and adhere to proper procedures fordisclosing transaction records.

To prevent the infringement of shareholder rights, LG Energy Solution has established
Corporate Governance Charter that mandates significant changes such as amendments
to articles of incorporation, mergers, acquisitions, business transfers, corporate divisions,dissolutions, capital reductions, comprehensive stock exchanges, and transfers, which
require proper procedures and decisions at shareholder meetings.

Shareholder Dividend and Shareholder Return Policy
LG Energy Solution currently has a deficit according to the separated financial statement, andwe are not legally permitted to conduct shareholder returns at the moment according to theCommercial Act. Significant investments are required as we target to increase our share in
the global market and achieve sustained growth in the rapidly growing rechargeable battery
industry. Nonetheless, we plan to achieve growth centered on profitability, generating stable
cash flows, and enhancing shareholder value in the long term. Once legal dividend sources
are secured under the Commercial Act, we will develop a shareholder return policy, based on
our business performance, cash flows, strategic investments for future sustained growth, anddomestic and international business environments. The implementation of shareholder return
policies, including dividends, will be decided by the Board of Directors and communicatedthrough the electronic disclosure system following relevant laws. Furthermore, wewill communicate our medium-to-long-term shareholder return policy through publicannouncements, corporate briefings, and shareholder letters, ensuring comprehensive
communication with shareholders.

We notify shareholder meeting dates, venues, and agendas at least two weeks in advanceto ensure voting rights on important matters. Shareholders who own more than 1% of thevoting shares receive individual notices, allowing them to review proposals and exercise theirvoting rights. Additionally, LG Energy Solution facilitates proxy and electronic voting to ensure
shareholder participation.
Furthermore, LG Energy Solution maintains open communication channels with shareholders,
including minority shareholders. We conduct quarterly performance announcements, offer
real-time webcasting services (in Korean / English), and provide access to information throughpublications on our website (in Korean / English). We also disclose contact information (email/ phone) of the Investor Relations department on our website, listening and responding toshareholders’ inquiries.

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COMPANY OVERVIEW

Shareholders and Investors Communication
Communication Channels and Programs
LG Energy Solution holds regular quarterly performance briefings which is organized by
the management through webcasting on our website (www.lgensol.com) using a conference
call format. The briefings are conducted simultaneously in Korean and English to provide
performance information to domestic and foreign shareholders. The performance
presentation materials are also available in both languages on the website. Critical agendas
are disclosed on a rolling basis in English to deliver timely information on important matters.
Furthermore, we engage in Non-Deal Roadshows (NDRs)*, attend conferences organized by
securities firms to address investor queries, and conduct numerous IR meetings, including
meetings requested by shareholders and conference calls. Inquiries from individual
shareholders are handled directly by the IR department via telephone, and a separate IR
inquiry channel is available through the website, demonstrating proactive communication
efforts.
LG Energy Solution will continue communicating with domestic and foreign shareholders tofacilitate smooth communication and enhance investors’ understanding of the company’sbusiness. Relevant management information can be accessed through our website (www.
lgensol.com) and electronic disclosure systems such as DART (dart.fss.or.kr) and KIND (kind.krx.co.kr).

Quarterly Performance Briefing Conference Calls
4 conference calls were conducted in 2022, and 2 conference calls were conducted in
2023, targeting domestic and foreign investors, securities analysts, and the media toshare management updates and quarterly performance. For more details, please referto the 2022 Corporate Governance Report.

LG Energy Solution participated in 15 conferences and NDRs in 2022 and 11 in 2023 todisclose management information to domestic and foreign institutional investors.
For more details, please refer to the 2022 Corporate Governance Report.

LG ENERGY SOLUTION ESG REPORT 2022

APPENDIX

ʻCustomer-value Creation’ and ʻPeople-oriented Management’ are our management
principles. In addition, we practice ʻCustomer-value Creation’ and ʻPeople-oriented
Management’ through our behavioral mode of Jeong-Do Management. To this end,
LG Energy Solution established the Compliance Management System focused on
identifying and preventing risks, and revised and implemented the compliance control
standards on areas of quality, environmental safety, information security, ethicalmanagement among others.

Jeong-Do Management
LG Energy Solution pursues Jeong-Do Management following ethical norms. LG’s JeongDo Management refers to the distinctive approach of LG Group focused on cultivating
capabilities steadily based on ethical management principles and integrity. Jeong-Do
Management means generating tangible results based on the ability to win in the competition
with ethical management. Both domestic and foreign employees, and all business sites of LG
Energy Solution perform their duties under the principles of Jeong-Do Management.
Regular education is conducted for employees and suppliers following an education andpromotion system to practice and internalize Jeong-Do Management. Efforts have been
focused on expanding online-based cultural activities to promote Jeong-Do Management
and to enhance education for key targets. The compliance management campaign “I AGREE”
targets all members, including global business sites, encouraging voluntary participation by
employees and raising their interest through promotional activities utilizing the Jeong-Do
Management portal. Jeong-Do Management newsletters are regularly sent to team leaders
and above, sharing real-life cases, and remote live education is conducted for members who
require concentrated training.

LG wayOverseas NDRs and Conference Participation

Domestic NDRs and Conference Participation

ESG MANAGEMENT

Jeong-Do Management

Shareholder Policy

LG Energy Solution participated in 14 overseas conferences and NDRs in 2022 and7 in 2023, targeting international institutional investors. For more details, please referto the 2022 Corporate Governance Report.

ESG IMPACT

2022 Corporate
Governance Report

No.1
LG

VisionThe ultimate goal of LG is to be recognized as
the market leader in business performance aswell as in management practices“Jeong-Do”
Management

Behavioral Mode
Ethical management and code of conduct
to enable capability development and faircompetition

Customer-value creation
People-oriented management

Management Principles
The fundamental organizational principle
guiding LG from beginning as a firm

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Jeong-Do Management

Code of Ethics

Compliance Management System

Respecting the free-market principle that pursues free and fair competition, LG sets thegroup’s Code of Ethics as the standards for proper conduct and value judgment where all
employees must adhere to, aiming for mutual trust, cooperation, and the pursuit of sharedinterests with all stakeholders. LG’s Code of Ethics consists of responsibilities and obligations
toward customer, fair competition, fair trade, basic ethics for employees, responsibilities
toward employees, and responsibilities toward the nation and society.

LG Energy Solution has established a corporate-level legal compliance management systemand emphasizes the importance of legal activities through CEO Compliance messages.
We operate an integrated compliance management system through compliance expert
development, policy, compliance system operation, ongoing monitoring and inspection
processes, and dissemination of organizational culture to enhance compliance management.
In 2021, LG Energy Solution became the first company in the battery industry to obtain ISO
37301 certification, a global standard for compliance management, and underwent a followup review.

Responsibilities andObligations for
Customers

Fair Competition

Fair Transactions· Respecting Customers· Creating Value· Providing Value· Pursuing Free Competition· Complying with Laws andRegulations· Equal Opportunity· Fair Trade Process· Pursuing Mutual Growth

Basic Ethics of
Employees

Corporate
Responsibilities
for Employees

Responsibilities
to the Nation andSociety· Basic Ethics· Accomplishing Mission· Self-development· Fair Handling of Job· Avoiding Conflict of Interests
with the Company· Respecting Humanity· Fair Treatment· Promoting Creativity· Rational Business Operation· Protecting Shareholder
Returns· Contributing to Social
Development· Conservation of theEnvironment

All employees must comply with compliance set based on compliance guidelines as thehighest standard. These guidelines include “Honesty and Integrity toward Customers,”“Desirable Work Environment,” “Fair Competition,” “Responsibility toward the Local
Community,” and “Enhancement of Shareholder Value.” In addition, we establishedCompliance Officer following the Commercial Act, formulated compliance control standards,
and implemented rules for compliance control to operate a systematic compliance program.
To ensure the effectiveness of compliance management activities, LG Energy Solution
collaborates with relevant departments in 13 areas, including fair trade, environmental,
health, and safety (EH&S), and information security, to systematically manage and operatecompliance. Checklists have been prepared for risk in each area, and compliance adherence
at domestic and international business sites are checked at least once a year. Furthermore,through the corporate-level compliance monitoring activity, deficiencies or areas requiring
compliance-related policy improvements are periodically identified, and the relevant
departments participate in voluntary improvement.
The company reports to the Board of Directors and management for legal risks identified
through compliance assessments and implements improvement activities. In particular, for
key risks, all possible measures, including education, improvement of systems and policies,and disciplinary actions, are taken to prevent the recurrence of similar incidents. Employees
who intend to engage in work with potential legal risks can request legal review and receive
compliance guidelines through the legal support system and compliance advisory.

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Jeong-Do Management

Compliance System

Compliance Governance
Board of Directors
Reporting Compliance Results and Legal Risks

Compliance Officer
Overall compliancemanagement at the company

13 Relevant Departments
Fair Trade, EH&S, andInformation
Security and others

Collaboration

Compliance Office

Establishment of Internal
Compliance Control Standards and
Implementation Rules
Legal Advisory(For tasks involving legal risks)

Employees

Compliance Program ProceduresCompliance Risk
Checklist

Compliance of
Headquarterand Domestic/ Overseas
Business Sites
Check

Identification of
Deficiencies andImprovement
Plans / Tasks
Established

Reporting to
the Board of
Directors

Follow-up
Actions (Support
for system
improvements)

Investigation Process
Violation
Reported

Investigation
Plan

Execution of
Investigation

Investigation
Completed

Postmanagement

Registration ofreported violence

Developmentof investigation
scenarios,
determinationof subjects
and schedule,
confirmation of
investigation
contents

Preliminary
investigation, onsite investigation,
post-investigation

Report writing,reporting tomanagement,
notification of
investigation
results

Follow-up
actions,checking for
any retaliatory
actions
against thewhistleblower

LG ENERGY SOLUTION ESG REPORT 2022

01 Internalizing Compliance Capabilities
Compliance education is conducted twice a year for all employees worldwide to enhance
employees’ compliance awareness. The education program is a company-wide mandatory
training course in consultation with the HR department. The program is designed to include
essential compliance areas and legal obligation education every year.
In the first half of 2022, education was conducted on topics such as “Improving Awarenessand Understanding People with Disabilities in the Workplace,” “National Core Technology
Education,” “Ethical Norms,” “Understanding Customer Experience,” “Understanding
Revised Fair Trade Act,” “Fundamental Legal Knowledge for Employees,” “Anti-Corruption,”“Responding to Serious Accidents Punishment Law,” and “Environmental Safety Incident
Classification and Reporting System.” In the second half, education was conducted on topics
such as “Preventing Workplace Harassment,” “Personal Information Protection,” “EthicalNorms,” “The Importance of Compliance,” “Fair Trade, Safe Working Environment, and NonDiscrimination,” “Understanding Chemical Substances Regulations,” “Understanding ESG
and the Current Status of LG Energy Solution,” and “Education on Lithium-ion Batteries.”
02 Handling Compliance Violations
Compliance-related reports are received through a centralized online reporting system.
Issues related to compliance, such as leaks of the company’s management information,
infringement of other companies’ intellectual property rights, unauthorized use of confidential
information, unfair trading practices toward suppliers, and legal violations by employees,
are reviewed and inspected through collaboration between the Compliance Office and theJeong-Do Management Department. Compliance check reports, and reports on complianceviolations are subjected to legal review, and based on that, appropriate disciplinary actions
are decided through the HR department. In compliance with the principle of whistleblower
protection, no information is disclosed or implied that reveals the whistleblower’s identity
without consent. We take responsibility for rectifying any damages incurred due to noncompliance with this principle. Furthermore, a system of rewards for reporting corruption is inplace to strengthen the transparency and accountability of our business and eliminate acts ofcorruption that undermine customer value.

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Stakeholder Communication
LG Energy Solution defines all individuals and groups impacted by our business and management practices as important stakeholders and communicates with them. We reach out to ourstakeholders through various channels to reflect these expectations for LG Energy Solution’s ESG management.

Stakeholders

Shareholders / Investors

Customers

Employees

Business Partners

Human Capital Managment

Purpose /Expectations

Communication
Methods

Purpose /Expectations

Communication
Methods

Promotion of ESG Management

Long-term Growth

Communication Facilitation
Addressing Climate Change

Leadership the Battery Industry
Ecosystem

Transparent Disclosure

Official Company Website

Shareholder Meeting

Receiving Customer Feedback

ESG Report

Conference Calls

CDP Reporting

SNS

Financial / Non-financial data disclosure

Annual / Business Report

Annual / Business Report

Annual / Business ReportIndustry Conference / Exhibitions

Local Communities / NGOs

Academia / Experts

Industry Associations

Establishing Social
Contribution Strategies

Industry-Academia Cooperation

Adapting to New Regulations

Business Innovation and R&D

Community Engagement

Conducting Surveys andGathering Opinions
Collaborative Social
Contribution Projects

LG ENERGY SOLUTION ESG REPORT 2022

Collaborative Labor
Management Relations

Building Strategic/ Collaborative Partnerships

Enhancement of Welfare Benefits

Management Support and Training
Activities

Strengthening Safety, Health andRespecting Human Rights
EnTalk (CEO Hotline)
Labor-Management Council
Junior Board
Employee Satisfaction Surveys
Industrial Safety and Health Committee

Government Institutions

Global Initiatives

Fair Trade and Regulatory Compliance

Collaboration for Global ESG Standard
Compliance

Shared Growth

Industry Policy Advisory
Joint Research and Development

Industry and Sector Associations

Business Partner Explanation Sessions
Business / Technical Support Programs

Participation in Government Pilot
Projects

Improving Opinions through Working
Groups and Board of Directors
Participation
Disclosure and Submission of
Implementation Progress

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Stakeholder Communication

Communication
LG Energy Solution operates channels such as the website, Battery Inside (blog), and SNS (e.g., Facebook, YouTube, LinkedIn) to communicate with stakeholders, including our customers. In addition,
we participate in domestic and international industry exhibitions, conferences, forums, and more, aiming to meet and communicate with a wider range of stakeholders through diverse channels.

Linkedinwww.linkedin.com/company/lgenergysolution

Naver Post

post.naver.com/lgensolpr

Instagram
Homepagewww.lgensol.com
news.lgensol.com

Facebook

bit.ly/LGES_FBLG ENERGY SOLUTION ESG REPORT 2022

Quick Links

Quick Links

Youtubewww.youtube.com/lgenergysolution

Battery Inside

inside.lgensol.com

Quick Links

Quick Links

instagram.com/lgenergysolution

Digital Virtual Exhibition Hallvirtual.lgensol.com

Quick Links

Quick Links

Quick Links

Quick Links

78

APPENDIXLG ENERGY SOLUTION ESG REPORT 2022

79Special Report

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
The Task Force on Climate-related Financial Disclosures (TCFD) is an initiative established by the Financial Stability Board, which includes participation from G20 member countries.
TCFD provides recommendations for disclosing information that may impact climate change, aiming to facilitate easy access and understanding of such information for stakeholders,
including customers and investors. LG Energy Solution thoroughly manages climate change factors and transparently discloses them to meet the demands of ESG management activities ofcustomers and investors. In February 2023, we became the first battery company in Korea to declare support for TCFD publicly.
We have adopted the framework of climate-related risk and financial information by incorporating the recommendations of the TCFD, which structured around four thematic areas that
represent core elements of how organizations operate: ❶ Governance, ❷ Strategy, ❸ Risk management, and ❹ Metrics and targets. As part of our efforts to disclose climate-related
information transparently, we will continue to participate in the global initiatives that address climate change.

LG Energy Solution’s Goals and Commitments for Climate Change
LG Energy Solution aims to achieve carbon neutrality across the entire value chain by 2050 and ultimately strives for carbon negative. Alongside our long-term goals, LG Energy Solution alsoestablished the intermediate targets that contribute to visualizing progress of these long-term goals. We believes that our ultimate goal of fulfilling carbon negative can be truly reached byachieving these intermediate targets.

2040:
Achieving carbon
neutrality throughout
LG Energy Solution

Developing
low-carbon materials andproducts

Maximizing
material
recycling & reuseEngaging
in global carbon offset
programs

Beyond 2050: Achieving carbon negative after 2050

LG ENERGY SOLUTION ESG REPORT 2022

By 2030

2050: Achieving carbon neutrality throughout the value chain by 2050

By 2040

Beyond carbon neutrality,
Energy Solution
aspires 지향하는to be a leader
climateby aiming for carbon negative.
탄소중립을LG
넘어(Beyond)탄소네거티브를ClimateinAction
선도action
기업, LG에너지솔루션

Reduce 53% Scope 1&2 emissions from2030 BAU emission

Achieving carbon neutrality
at all business sites

By 2050

We CHARGE
Toward a Better Future

Achieving carbon neutrality
in the entire battery value chain

Beyond 2050

Achieving RE100 (Renewable Electricity 100%)and EV100 (Electric Vehicle 100%)
at all business sites

Achieving carbon negative
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COMPANY OVERVIEWSpecial Report

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Climate Governance
The ESG Committee establishes the fundamental policies, strategies, and medium to long-term goals in environment, human rights, safety, social responsibility, customer value, shareholder
value, and corporate governance. It is responsible for deliberating and making decisions regarding the operation of ESG-related matters. Additionally, we have been regularly reporting ourprogress and implementation to the Committee. The Carbon Neutrality Council convenes quarterly and is comprised of departments responsible for implementing carbon negative strategies.
Within the Council, climate-related risks are identified and shared, response measures are discussed, progress in implementing strategic tasks is checked, and insights are shared.
The ESG Impact Team identifies risks and opportunities that may impact the company due to climate change and formulates a carbon negative strategy by 2050. It also operates the Carbon
Neutrality Council and communicates with internal and external stakeholders through external disclosures such as CDP (Carbon Disclosure Project) and TCFD.

Climate Governance and Organization

Climate Change Response at the Board

Board ofDirectors

June 14, 2021

March 17, 2022

October 24, 2022

Approval
ESG Committee
establishment
within the Board of
Directors

Reporting –Directions andplans for ESG
management

Reporting ESG management
progressfor 2022

Progress on strategic tasks
such as greenhouse gas reduction,energy efficiency management /improvement, and carbon emission
reduction were reported

Carbon negative
progress was reported

ESG Committee

CarbonNeutrality Council

ESG Impact Team

EnergyR&D

LG ENERGY SOLUTION ESG REPORT 2022

Business
SupportProcurement

Manufacturing

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COMPANY OVERVIEWSpecial Report

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Climate Change Strategy and Risk Management
LG Energy Solution has categorized the risks and opportunities related to climate change. In particular, In particular, by following the recommendations of the TCFD, we focused on the ʻphysicalrisks’ that arise when we fail to respond to climate change and the ʻtransition risks’ that may occur due to social and economic changes when implementing climate change response efforts. We
use a four-step process to understand the impact of tangible risks and opportunities on our company and formulate our business response.

Climate Risk Identification Process

Defining Key Risks

Climate Materiality
Assessment

Relevant items were selected by referringto the TCFD guidelines and utilizing thereference pool of transition risks, physicalrisks, and opportunities

Conducting climate-related materiality
assessment by internal and external
stakeholders by scaling the likelihood andimpact of each item

LG ENERGY SOLUTION ESG REPORT 2022

Scenario Selection

Comparing and selecting scenariosthat reflect our materiality assessment
issue items

Impact Assessment andResponse Measures

Identifying short- / medium- / long-term
impacts based on the selected scenario
analyses and establishing corporate
response plans

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COMPANY OVERVIEWSpecial Report

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Climate-related Risks and Materiality Assessment
We identified 31 risk and opportunity factors by conducting peer analysis, stakeholder surveys, and media research while drawing reference to risk and opportunity pools listed in the TCFD
Guidelines. We conducted the climate materiality assessment of the following issues based on short-term (~2025), medium-term (~2040), and long-term (~2050) period.

Categories
Transition
Risks

Physical
Risks

Opportunity

No.

Business Impact

T1

Increased carbon credit prices

T2

Strengthened new carbon-related regulations / systems

T3

Strengthened disclosure obligation on greenhouse gas reduction information

T4

Increased demand for product specification regarding carbon footprint and requirements for carbon reduction

T5

Increased costs for low-carbon raw material procurement

T6

Increased costs for renewable energy procurement

T7

Prolonged periods of abnormal high temperatures above average temperatures

T8

Increased Capex / Opex for carbon reduction

T9

Increased Capex / Opex for the development, installation, and operation of low-carbon facilities in production processes to reduce carbon emissions

T10

Increased threat of roof collapse and facility damage due to floods and heavy snowfall

T11

Increased conflicts and misalignment due to discrepancies between corporate / investor carbon-related policies / strategies

T12

Increased reputation risks due to non-compliance with carbon-related commitments

P1

Prolonged periods of high temperatures

P2

Increased likelihood of loss from tropical cyclones and concentrated heavy rainfall

P3

Increased likelihood of floods and snow damage caused by heavy rainfall

P4

Increased likelihood of loss from persistent hot and dry climate conditions

P5

Increased difficulties in water supply due to abnormal temperatures

P6

Increased occurrences of extreme climate events (heat / cold, floods / droughts, humid / moisture)

P7

Increased likelihood of direct and indirect loss from rising sea levels (ex: flooding)

P8

Increased prevalence of heat-related and cold-related illnesses

P9

Increased fluctuations in precipitation, temperature zones, and relative humidity due to climate zone shifts (temperate to subtropical)

O1

Reduced production costs through energy optimization and fuel-to-electricity conversion

O2

Strengthened mandatory use of recycled raw materials and exploration of water reuse methods

O3

Improved transportation methods and reduction of carbon emissions

O4

Enhanced renewable electricity source and better-equipped procurement system / infrastructure

O5

Increased conversion to low carbon raw materials and green fuelO6

Increased demand for EV / ESS technologies

O7

Increased number of newly-invented applications using batteries such as the smart mobility

O8

Increased investment to secure low carbon energy source (ex: hydrogen, biomass) among other energy sources

O9

Increased incentives to companies that use renewable energy (ex: tax redemption)

O10

Increased opportunity to sell carbon credits created from in / external business sites

LG ENERGY SOLUTION ESG REPORT 2022

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ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Climate Materiality Assessment Results from Short-term, Medium-term, and Long-term Perspectives
After conducting the materiality assessment, the 15 risks were derived based on the likelihood and impact according to short-term (~2025), medium-term (~2040), and long-term (~2050).
▼ Top 15 Material Issues in the Short-term (~2025) Perspective
Category▼ Top 15 Material Issues in the Medium-term (~2040) Perspective

Business Impact

Score*

Category

Business Impact▼ Top 15 Material Issues in the Long-term (~2050) Perspective
Score*

Category

Business Impact

Score*

T3

Strengthened disclosure obligation on greenhouse gas
reduction information

14.43

T3

Strengthened disclosure obligation on greenhouse gas
reduction information

18.57

T4

Increased demand for product specification regarding
carbon footprint and requirements for carbon reduction

20.85

T4

Increased demand for product specification regarding
carbon footprint and requirements for carbon reduction

13.68

T4

Increased demand for product specification regarding
carbon footprint and requirements for carbon reduction

18.49

T3

Strengthened disclosure obligation on greenhouse gas
reduction information

20.75

T2

Strengthened new carbon-related regulations / systems

17.82

T2

Strengthened new carbon-related regulations / systems

19.45

Increased demand for EV / ESS technologies

18.91

T2

Strengthened new carbon-related regulations / systems

13.44

T1

Increased carbon credit prices

12.41

T5

Increased costs for low-carbon raw material procurement

16.72

O6

T5

Increased costs for low-carbon raw material procurement

12.32

T6

Increased costs for renewable energy procurement

16.44

O7

18.31

T6

Increased costs for renewable energy procurement

11.94

O6

Increased demand for EV / ESS technologies

16.28

Increased number of newly-invented applications using
batteries such as the smart mobility

P1

Prolonged periods of high temperatures

11.58

T1

Increased carbon credit prices

16.17

T5

Increased costs for low-carbon raw material procurement

18.30

O6

Increased demand for EV / ESS technologies

11.21

P1

Prolonged periods of high temperatures

15.47

T6

Increased costs for renewable energy procurement

18.20

T8

Increased Capex / Opex for carbon reduction

11.04

T12

14.95

Prolonged periods of high temperatures

18.17

P3

Increased likelihood of floods and snow damage caused byheavy rainfall

10.79

Increased reputation risks due to non-compliance withcarbon-related commitments

P1
T1

Increased carbon credit prices

17.00

T8

Increased Capex / Opex for carbon reduction

14.52

T8

Increased Capex / Opex for carbon reduction

16.99

P8

Increased prevalence of heat-related and cold-related
illnesses

10.74

P8

Increased prevalence of heat-related and cold-related
illnesses

14.01

T11

16.62

T12

Increased reputation risks due to non-compliance withcarbon-related commitments

10.67

T10

Increased threat of roof collapse and facility damage due tofloods and heavy snowfall

13.94

Increased conflicts and misalignment due to discrepancies
between corporate / investor carbon-related policies /strategies

T9

Increased likelihood of loss from tropical cyclones andconcentrated heavy heavy rainfall

10.49

P2

Increased likelihood of loss from tropical cyclones andconcentrated heavy rainfall

13.82

Increased Capex / Opex for the development, installation,and operation of low-carbon facilities in production
processes to reduce carbon emissions

16.45

P2
O9

Increased incentives to companies that use renewableenergy (ex: tax redemption)

10.30

Increased number of newly-invented applications using
batteries such as the smart mobility

13.76

O2

Strengthened mandatory use of recycled raw materials andexploration of water reuse methods

16.37

O7

T10

Increased threat of roof collapse and facility damage due tofloods and heavy snowfall

10.17

T11

Increased conflicts and misalignment due to discrepancies
between corporate / investor carbon-related policies /strategies

13.60

P2

Increased likelihood of loss from tropical cyclones andconcentrated heavy rainfall

16.35

T12

Increased reputation risks due to non-compliance withcarbon-related commitments

16.18* Score = Likelihood × Impact* Score = Likelihood × Impact

Impact3.80

Impact

4.30

T5
O6
P2
T11

3.00
O4 O5
O8

O10

O1

T9

T10

T12
P6

O7

O9

T7

P4

T1

T2 T4

P3 T8

4.60

T3

O6

T6

3.40

2.60

* Score = Likelihood × Impact

Impact

3.90
P1

O7

T11

O2

T7

3.50

P9

O4

O5
O1

O2

3.10

P5

P7

P6

T9

O8

P5
O10

T12

O9T10
P2

T8

T5
T1

T6

T2 T4

T4
O7
T5

T3

4.20

P1

T11

O1

3.80

O9

P4

O8

P9

O10

3.40

P7

P3

T9

T8

T3

T6
T1

P2
O5
T7
O4

T10

P8

P3

O2
T12

O6

T2

P8

P4
P6

P9

P5

P7

O3

2.20

O3

2.70
2.50

2.90

3.30

LG ENERGY SOLUTION ESG REPORT 2022

3.70

4.10

Likelihood

2.50

O3

3.00
3.30

3.70

4.10

4.50

Likelihood

3.20

3.60

4.00

4.40

4.80

Likelihood

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COMPANY OVERVIEWSpecial Report

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Business Impact and Response Strategies through Scenario Analysis
LG Energy Solution has incorporated various climate scenario analysis for our 14 material issues. Through this assessment, we plan to establish response strategies for the uncertain future ofclimate change and strengthen our management system to adapt to risk and opportunity factors.
For transition risks, we have utilized the estimated carbon prices from years 2030 to 2050 based on the NZE (Net-Zero Emissions) scenario, which assumes achieving carbon neutrality by the year
2050, as suggested by the International Energy Agency (IEA). For physical risks, we have utilized the Representative Concentration Pathways (RCP) scenarios, specifically RCP 2.6 and RCP 8.5 fromthe Fifth Assessment Report (2014) of the Intergovernmental Panel on Climate Change (IPCC).

Climate Change Scenarios
Management Area
Transition Risks

Physical Risks

Scenario

Overview

Projected Temperature Rise

SourceNZE (Net-Zero Emissions)

Scenario based on assumption achieving Net-Zero by 2050 through strong
climate-related policies to reduce greenhouse gas emissions

1.5℃

IEA

STEPS (Stated Policies Scenario)

Scenario based on the current climate policies announced by major countries

2.6℃

IEA

RCP 2.6

Scenario where immediate greenhouse gas reduction is performed, allowing the
Earth to recover on its own

0.3 ~ 1.7℃

IPCC

RCP 8.5

Scenario where greenhouse gas emissions continue without mitigation, following
the current trend (BAU: Business As Usual)

2.6 ~ 4.8℃

IPCC

LG ENERGY SOLUTION ESG REPORT 2022

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COMPANY OVERVIEWSpecial Report

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Short / Medium / Long-term Impacts of Climate Risk and Opportunities and LG Energy Solution’s Response Strategies
Based on climate change scenarios, we have analyzed a total of 14 material issues and assessed their impacts on our company, followed by a response measures. With these analyses, we aim to
reduce uncertainty caused by climate change and establish appropriate risk mitigation to increase visibility of our climate change response strategy.

Risk / Opportunity Factors
Transition
Risks

Shortterm

Mediumterm

Longterm

Business Impact

Response Status

Increased carbon credit prices

Increasing costs for exceeding emission permit trading quotas Promotion of emission reduction through energy efficiency,
introduction of renewable energy, and external reduction
performance certification to minimize emissions

Strengthened new carbon-related regulations /systems

Increasing Capex / Opex due to investment in new facilities
or alternative raw materials procurement to comply with the
emerging regulations

Continuous monitoring of newly established carbon
regulations and development of carbon reduction
technologies domestically and internationallyStrengthened disclosure obligation on
greenhouse gas reduction information

Increasing internal information management costs,
and certification costs to respond to carbon disclosure
requirements

Promotion of internal carbon management system to respondto domestic and international regulatory policies andinformation disclosure requirements

Increased demand for product specification regarding
carbon footprint and requirements for carbon
reduction

Deteriorating competitiveness and revenue loss fromdecreased orders and contracts due to failure to meetcustomer demands

Active response to customer / stakeholder demands while
enhancing communication on carbon reduction status andplans with customers / stakeholders

Increased costs for low-carbon raw material
procurement

Decreasing profitability due to procurement of low-cost, lowcarbon raw materials that meet carbon emissions targets

Encouragement and support of suppliers’ transition to RE100
and joint efforts with suppliers in the development of lowcarbon materials through continuous R&D

Increased costs for renewable energy procurement

Declining profitability due to increased procurement costs
for renewable energy needed to achieve RE100 and carbon
reduction targets

Prioritization of energy efficiency to optimize usage, efforts
to secure renewable energy under conditions of mid-to-longterm stable procurement such as power purchase agreements(PPA)

Increased Capex / Opex for carbon reduction

Increasing costs due to facility alterations, new investments,
and adoption of low-carbon technologies for carbon
reductions

Minimization of Capex / Opex through active energy efficiency
and carbon reduction activities and advanced management

Increased conflicts and misalignment due todiscrepancies between corporate / investor
carbon-related policies / strategies

Increasing concerns of stakeholder actions such as
shareholder letters, proxy voting, and potential reduction ordivestment

Establishment and maintenance of a leading position in
the low-carbon sector and promotion of communication
with shareholders and expansion of information disclosure
channels

Increased reputation risks due to non-compliancewith carbon-related commitments

Increasing credit / stock price risks due to low evaluation
scores from investors and external rating agencies

Active response to external ESG evaluations and related
information disclosure, operation of internal consensusbuilding bodies for the achievement of established plans anddeclarations

LG ENERGY SOLUTION ESG REPORT 2022

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COMPANY OVERVIEWSpecial Report

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD (Task Force on Climated-related Financial Disclosures)
Risk / Opportunity Factors
Physical
Risks

Opportunity

Shortterm

Mediumterm

Longterm

Business Impact

Response Status

Prolonged periods of high temperatures

Increasing costs for air conditioning and humidity control
coupled with decreasing productivity and production
disruption due to heat-related worker illnesses

Optimization of operation efficiency for production / utility
facilities and maintenance of appropriate indoor temperatures

Increased likelihood of loss from tropical cyclones andconcentrated heavy rainfall

Increasing damage to assets such as production facilities andproduction disruption

Classification of crisis levels according to the our crisis
management policy, and establishment of Emergency
Committees that handles decision-making on risk measures

Increased prevalence of heat-related and cold-related
illnesses

Decreasing productivity from increased production
disruptions due to diseases and work interruptions, resulting
in revenue loss

Implementation of measures to prevent the spread ofillnesses within the workplace based on the experienceof COVID-19, and implementation of appropriate work
environment conditions (temperature, humidity, weather, etc.)
through adjustments in work attendance (telecommuting /flexible office work or adjustment of work attendance rates)
to provide employees with a safer and more comfortableworking environment

Increased demand for EV / ESS technologies

Increasing revenue and sales growth due to increased
demand for ESS from intermittent supply for EV batteries andrenewable energy

Expansion of production capacity through timely expansionof in-house production capabilities and establishment of joint
ventures with overseas customers to meet increasing demand

Increased number of newly-invented applications
using batteries such as the smart mobility

Increasing revenue from battery applications and demand
growthDevelopment of batteries with long lifespan, high safety,
high performance, and low carbon materials to meet various
customer and market demands, and efforts for eco-friendly
production

LG ENERGY SOLUTION ESG REPORT 2022

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COMPANY OVERVIEWSpecial Report

TCFD (Task Force on Climated-related Financial Disclosures)

ESG IMPACT

ESG MANAGEMENTAPPENDIXTCFD Index

Metrics and Target
We have reflected the definitions and requirements of globally-recognized raters such as
DJSI, MSCI, and KCGS to enable our management metrics to comply with the requirementsof global regulatory authorities and institutions. As for disclosure standards, we analyzed
600 indicators, including climate change disclosure from the Carbon Disclosure Project (CDP),
sustainable reporting standards from the European Sustainability Reporting Standards (ESRS),
climate-related disclosure from the U.S. Securities and Exchange Commission (SEC), andclimate-related disclosure (IFRS S2) from the International Sustainability Standards Board (ISSB)
to collect and disclose information on energy, greenhouse gases, water resources, waste,
and other climate-related issues at our business sites as recommended by TCFD.
* Korea: headquarter, Ochang Energy Plant and Ochang Energy Plant 2, along with the Magok, Daejeon, andGwacheon R&D Center.
* Aborad: China (LGESNJ, LGESNA, LGESNB), Poland (LGESWA), and US (LGESMI, GM JV)

To quantify the greenhouse gas emissions, the Global Warming Potential (GWP) has followed
the Korea Emission Trading System (K-ETS) and adopted the IPCC Second Assessment Report(SAR-100yr) for domestic sites. For global sites, AR5 has been applied. Please refer to pg. 90-91
for more specific information.

LG ENERGY SOLUTION ESG REPORT 2022

NO

Topic

Disclosures

Page

1

Governancea) Describe the board’s oversight of climate-related risks andopportunities.

81

2

Governanceb) Describe management’s role in assessing and managing climaterelated risks and opportunities.

81

3

Strategya) Describe the climate-related risks and opportunities the organization
has identified over the short, medium, and long term.

84

4Strategyb) Describe the impact of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning.

86

5Strategyc) Describe the resilience of the organization’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or
lower scenario.

85

6

Risk
Managementa) Describe the organization’s processes for identifying and assessing
climate-related risks.

82

7

Risk
Managementb) Describe the organization’s processes for managing climate-relatedrisks.

82

8

Risk
Managementc) Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organization’s overall risk
management.

82

9Metrics andTargetsa) Disclose the metrics used by the organization to assess climaterelated risks and opportunities in line with its strategy and risk
management process.

90-91

10

Metrics andTargetsb) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas(GHG) emissions and the related risks.

90-91

11

Metrics andTargetsc) Describe the targets used by the organization to manage climaterelated risks and opportunities and performance against targets.

90-91

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COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Financial

Unit: Million KRW
Category

IncomeStatement

Unit: Million KRW
Category

2022

2021

1. Net sales



2. Cost of sales



3. Gross Profit



4. Selling and marketing expenses

5. Operating income

6. Financial income
7. Financial expenses

Total Assets
Current Assets


1. Cash and Cash Equivalents





2. Accounts Receivable





3. Other Receivables







4. Other Current Financial Assets





5. Prepaid Corporate Income Tax





()()6. Other Current Assets



7. Inventory

10. Others non-operating expenses



11. Profit (loss) before income tax





8. Assets Held for Sale
Non-current Assets







--



12. Income tax expense



1. Long-term Accounts Receivable



13. Net income (loss) from continuing operations



2. Other Long-term Receivables



14. Net income (loss) from discontinued operations
15. Profit (loss) for the year



3. Other Non-current Financial Assets





4. Investments in Associates and Joint Ventures

* As of the 2022 Business Report published in March 2023
Unit: Million KRW
Category
Total Sales

Regional
Sales

2021




9. Others non-operating income

8. Equity method profit (loss)

2022

2022

2021

25,598,609

17,851,906

Korea 1)

1,349,928

2,235,338

China

6,067,389

2,910,541

Asia

1,451,499

1,110,368

America

7,075,353

2,827,944

Europe9,654,428

8,767,715

Africa12-1) Domestic sales follows the criteria of the Local L/C* As of the 2022 Business Report published in March 2023

Summary ofConsolidated
Statementsof Financial
position

5. Deferred Corporate Income Tax Assets



6. Property, Plant, and Equipment



7. Intangible Assets



8. Investment Properties



9. Other Non-current Assets







Current Liabilities



Non-current Liabilities







Total Liabilities

Equity of the Parent Company (Owners of the Parent Company)
1. Share Capital
2. Additional Paid-in Capital
3. Other Equity Items
4. Accumulated Other Comprehensive Income
5. Retained Earnings (Accumulated Deficit)
Non-controlling Interests







--











Total Equity



Revenue (Sales)



Operating Profit (Loss)



Net Profit (Loss) for the Period



Equity Attributable to Owners of the Parent Company













Basic operating profit (loss) per common share (Unit: KRW)
Number of the groups* As of the 2022 Business Report published in March 2023

LG ENERGY SOLUTION ESG REPORT 2022

89

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Environmental(E)
Index

2022

2021

2022

2021





Total Scope 1&2 Emissions(tCO2eq) 5)



Electricity



Korea GHG Emissions(tCO2eq)



LNG





Global GHG Emissions(tCO2eq)



Stream





Total Scope 1 Emissions(Direct emissions(tCO2eq)



Korea(TJ)





Electricity





CO2

Energy Consumption at business sites(TJ)

Index

Scope 1 Emissions(Korea)







LNG





CH4





Stream





N 2O





Global(TJ)







Electricity
LNG





Stream





Direct Energy Use(TJ)









Korea
Global *









Korea





GlobalIndirect Energy Use(TJ)



Energy Use 1) Total Energy Intensity(TJ/100 million KRW) 2)





Korea(TJ/100 million KRW)





Electricity





LNG





Stream









Electricity





LNG





Stream





Global(TJ/100 million KRW)

Direct Energy Intensity(Korea)(TJ/100 million KRW)





Direct Energy Intensity(Global)(TJ/100 million KRW)





Indirect Energy Intensity(Korea)(TJ/100 million KRW)





Indirect Energy Intensity(Global)(TJ/100 million KRW)





Renewable Energy Consumption(TJ)



Renewable Energy Conversion Rate(%)

%

%

Plan





Performance





Scope 1 Emissions(Global)
GHG
emissionsmanagement
4)

Total Scope 2 Emissions(Indirect emissions)(tCO2eq) 6)
Scope 2 Emissions(Korea)
CO2















CH4





N 2O













Scope 2 Emissions(Global)
GHG Emissions Intensity(Scope1+Scope2)(tCO2eq/100 million KRW) 7)
Scope 1 Emissions Intensity





Scope 2 Emissions Intensity





Scope 3 Emissions(tCO2eq)



(1) Fuel-related Activities



(2) Employee Business Trips(3) Waste Treatment(Composting, Incineration)



1) Data for 2021 has changed from the 2021 ESG Report due to changes in calculation method
2) Energy Intensity: Energy consumption (TJ) ÷ Sales on a consolidated basis (100 million KRW)
3) Conversion rate based on manufacturing sites: 61% (for Korea: Green Premium, REC; for Global: Green Pricing, REC)
4) Data for 2021 has changed from the 2021 ESG Report due to changes in calculation method
5) Calculation based on IPCC Second Assessment Report (SAR-100yr), IPCC Guideline (Location-based)
6) GHG emissions reflects the (martket-based) offset in renewable energy use
7) GHG Emissions Intensity: Emissions (tCO2eq) ÷ Sales on a consolidated basis (100 million KRW)
* “Global” refers to countries excluding Korea

Renewable Energy Conversion(Company-wide) 1), 3)

Energy Conservation(TJ)

LG ENERGY SOLUTION ESG REPORT 2022

90

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Environmental(E)Index
Total air pollutant emissions(kg)Index
Total wastewater discharge(ton)

2022

2021







Nitrogen oxides(Nox)



Korea



Sulfur oxides(SOx) and other significant atmospheric emissions





Global















Korea









Global










Particulate matter(PM)Volatile organic compounds(VOCs)
Air Pollutant
Management Air pollutant emissions intenstiy(kg/100 million KRW) 1)

Wastewater discharge intensity(tons/100 million KRW) 2)

Wastewater Wastewater treatment volume(ton)Management
Water pollutant discharge(kg)
1)





Nitrogen oxides(Nox)





Sulfur oxides(SOx) and other significant atmospheric emissions





COD



Hazardous air pollutants(HAP)





TOC





Particulate matter(PM)





SS






Volatile organic compounds(VOCs)
Total water intake(ton)
Korea
Global





T-N







T-P









BOD









Amount of waste generated(ton)







Korea



Industrial water



Global



Surface water

-

-





Groundwater

-

-

Korea









Global





Rainwater collection or storage--





Other

-

-





Korea



Global



-

-

Korea

-

-

Landfill--

Global--Incineration



Recycling



Water intake by type(ton) 3)

2)

2021



Hazardous air pollutants(HAP)

WaterManagement2022

Tap water

Wastewater intake intensity(ton/100 million KRW) 4)

Total water discharge(ton)1) Air pollutant emissions intenstiy: Total air pollutant emissions (kg) ÷ Sales on a consolidated basis (100 million KRW)
2) Data for 2021 has changed from the 2021 ESG Report due to changes in calculation method
3) In 2021, industrial water and domestic water were separated on in Korea. Both Korea and China separated industrial
water and domestic water supply in 2022 in which we compiled them in this table.
4) Water intake intensity: Water intake (ton) ÷ Sales on a consolidated basis (100 million KRW)LG ENERGY SOLUTION ESG REPORT 2022

Total Waste intensity(ton/100 million KRW) 3)

Amount of general waste generated(ton)Wastemanagement

LandfillIncineration



Recycling



Others









Amount of designated waste generated(ton)OthersWaste Recycling rate(%)

-



%

%

1) Changes in data due to changes in company wastewater management standards
2) Wastewater discharge intensity: Wastewater discharge (in ton) ÷ Sales on a consolidated basis (100 million KRW)
3) Waste Intensity: Amount of waste generated (in ton) ÷ Sales on a consolidated basis (100 million KRW)91COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Environmental(E)Social(S)
Index

2022

Investment Expenditure for Environmental safety(in million KRW)
Violated Cases(in number) 1)

2021

Index







-

By Age(Permanent Workforce)(in hours)

Safety and Health Management System(ISO 45001) 1)
Overall

Environmental
SafetyManagement
at Business
Sites

2021





20s



30s



40s



Certified Site(in number)





50s





Total Site Subject to Certification(in number)





60s





%

%









Certified Site(in number)

Associate



Total Site Subject to Certification(in number)Specialist



%

%

Professional



Certified Rate(in %)Others 1)
By Position(Permanent Workforce)(in hours)

Production Sites 2)

Certified Rate(in %)Non-Productioin Sites(HQ, Sales, R&D) 3)
Certified Site(in number)Total Site Subject to Certification(in number)
Certified Rate(in %)







%

%

TalentManagement
andTraining

Senior Operator





Lead Operator





Research Fellow





Senior Research Fellow





Others 2)

Mandatory Education Hours Received by Gender(in hours)

Social(S)
Index

2022





Male



Female









Male





Female









Employees in Charge of Education / Traning Programs(in person)

2021

Labor union membership
Labor
Relations2022

Number of employee in Korea(in person)





Number of applicable employee in Korea(in person)





Employee Education and Training Cost(in million KRW)

Union Members in Korea(in %)

%

%

Average Education hours per persons(hours/persons) 3)

















Korea





China





North America





Europe





By Gender(Permanent Workforce)(in hours)
TalentManagement
Maleand
Training 4)
Female



Average Education cost per persons(million KRW/persons) 4)



New Hires(Permanent + Fixed-term)(in person)



1) 2022 Environmental Law violations
In 2022, on October 31st, we violated the [Toxic Substances Control Act] in the US by exceeding the permitted
import amount of chemical substances at the facility. As a result, we were fined $327,334 by the US Environmental
Protection Agency. The fine was voluntarily paid, and in order to prevent future occurrences, we reached a Consent
Order Agreement concerning the excess import of materials, which required prior reporting approval. Additionally,
we participated in the TSCA program, which included education and investigation measures. For the status ofsanctions related to environmental violations by other companies, please refer to the 2022 Business (Annual)
Report.
2) Energy Plant, Energy Plant 2, LGESNJ, LGESNA, LGESNB, LGESWA, LGESMI, LGESGM
3) For sales: LGESVT, LGESAU, LGESEG, LGESTW; For R&D: Magok, Gwacheon, Daejeon; and Headquarter4) Online + Offline education

LG ENERGY SOLUTION ESG REPORT 2022

by Country(in person)
Newly
Hired

1) Others (ages): No information on age2) Others (positions): Intern and so on3) Average education hours per persons: Education hours of permanent employees ÷ Number of total permanent
employees4) Average education cost per persons: Education cost of permanent employees ÷ Number of total permanent
employees* “Global” refers to countries excluding Korea

92

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Social(S)Index
by Age and Gender(in person)

2021

Index





< 30 years





Male



Femaleby Age and Gender(in person)

2022

2021




< 30 years







Male









Female30-50 years





30-50 years





Male





Male





FemaleFemale> 50 year





> 50 year





Male





Male





FemaleFemale







New Permanent Hires(in person)
by Country(in person)

Newly
Hired

2022

Newly
Hired

#of Total Workforce(Permanent + Fixed-term)(in person)
Korea(in person)



Korea





Male





China





Female





North America





Global(in person)

Europe





by Age and Gender(in person)

Male











Female





< 30 years





Permanent(%) 2)

%

%

Male





Fixed-term(%) 3)

%

%

Female





Permanent(in person)



Korea(in person)



30-50 years





Male





Female> 50 year





Male





Male

FemaleFemale









Fixed-Term(in person)





Korea(in person)









Fixed-term Employee Hires(in person)
by Country(in person)





Korea





China





-

-





North America
EuropeWorkforce
Composition(in person) 1)

Male





Female





Global(in person)







Male
Female









Male





Female

Global(in person)

1) 2021 data change due to change in calculation method2) Ratio of permanent: Number of permanent employees / Number of Total Employees
3) Ratio of fixed-term: Number of fixed-term employees / Number of Total Employees* “Global” refers to countries excluding Korea

LG ENERGY SOLUTION ESG REPORT 2022

93

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Social(S)Index
Breakdown of Permanent Workforce (in person)

Workforce
Composition(in person)

2022

2021

Index
Resignation(Permanent Workforce)(in %)

2022

2021
%

%





Korea(in person)



Korea

%

%

< 30 years





Global

%

%

Male





by Region(in %)

%

%

Female30-50 years



Male
Female

Asia

%

%



America

%

%





Europe

%

%





Oceania%-> 50 year





Male





Male

%

%

FemaleFemale%%

Global(in person)



< 30 years



Male

%

%

Male





Female%%Female





30-50 years

< 30 years

%

%

Male





30-50 years

%

%

Female





> 50 years

%

%





> 50 year

Breakdown by Gender(Korea)(in %)Breakdown by Gender(Global)(in %)Breakdown by Age(Korea)(in %)Workforce
Composition(in person)

Breakdown by Age(Global)(in %)

Male





< 30 years

%

%

Female30-50 years

%

%





> 50 years

%

%

Asia









America





Korea





Europe





Global





by Region(in person)









by Region(in person)

Oceania

Resignation(Permanent Workforce)(in person)













America





Male





EuropeFemale

Oceania



-





Male





Male





FemaleFemale

R&D(in person)





Male





Female

Breakdown by Job Category(Permanent Employee)(in Person)
Employees in Sales(Managerial Position and Above)(in person)

Employees in Sales(Non-managerial Position)(in person)

LG ENERGY SOLUTION ESG REPORT 2022

Asia

Breakdown by Gender(Korea)(in person)

94

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Social(S)
Index

2022

2021

Index

Breakdown by Gender(Global)(in person)

2021

Male





Overall(in %)Female





Male

%

%

Female

%

%

Breakdown by Age(Korea)(in person)< 30 years





Korea(in %)30-50 years





Male

%

%

> 50 years

Female

%

%

Breakdown by Age(Global)(in person)

Global(in %)< 30 years





Male

%

%

30-50 years





Female

%

%

> 50 years

Breadkdown of Management Position by Gender(in %)









Overall(in %)





Male

%

%

Male





Female

%

%

Female

Korea(in %)Employees with Managerial Position(in person) 1)
Korea
Workforce
Composition(in person)

2022

Permanent Workforce(in %)Global





Male

%

%

Male





Female%%Female

Global(in %)Breakdown by Position(Permanent Employee)(in person)

DEI

Korea(in person)
OfficeField

Management(Professional and above)





Associate and Specialist





ExecutivesSenior and Lead Operator









Associate and Advanced Operator

Employee satisfaction(in %)1st Half%

2nd Half

%1) Positionor: Persons with responsibility and authority over business and functional organizations

Male

%

%

Female

%

%

Management(Professional and above)

%

%

Associate and Specialist

%

%

Executives

%

%

Senior and Lead Operator

%

%

Associate and Junior / Advanced Operator

%

%

Breakdown of Women in Executive Leadership(in %)Office(Korea)
Field(Korea)Breakdown of Women in Executive Leadership by Country(in %)
Korea

%

%

China

%

%

US

%

%

Poland

%

%

Germany

%

%

Taipei

%

%

Australia

%

%

Breakdown of Women Employee by Department(in %)LG ENERGY SOLUTION ESG REPORT 2022

Sales-related

%

%

R&D

%

%

95

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Social(S)
Index

2022

2021

Index

Parental Leave(in person)
Total(in person)





Male





FemaleTotal Return(in person)

DEI

Completion rate of on-site assessment for high-risk suppliers%%



FemalePercentage(%)

%

%

Male

%

%

Female

%

%

Total(in person)





Korea





Certified Rate(in %)GlobalTotal(in %)

%

%

Korea

%

%

Global

%

%





% of Employee(in %)

%

%

# of Employee (in person)





Not conducted
due to theimprovement of
the purchasing
supplier
management
systemSafety and Health Management System(ISO 45001) 1)

Employee with Disability 1)(in person) 1)%Number of improvement tasks in overseas issues(cases)Tier-1 Suppliers subject to Regular Evaluations(# of Company)

2021

Completion rate of on-site assessment for key suppliers

Overseas Employee with Position(non-expatriate)

OverallCertified Site(in number)Total Site Subject to Certification(in number)





%

%

Certified Site(in number)Total Site Subject to Certification(in number)





%

%





Certified Rate(in %)Production Sites 2)

Non-Productioin Sites(HQ, Sales, R&D) 3)
Certified Site(in number)
Environmental,
Total Site Subject to Certification(in number)
Health,and Safety
Certified Rate(in %)(EH&S)
Safety Audit(in number)Management
CRO-led Safety and Environment-related Meetings





%

%





Improvement Tasks(Korea)





Improvement Tasks(Global)





Work-related Illnesses(Employees)

Tier-1 Suppliers Completing SAQ(in %)%Employee Deceased(in person)

Tier-1 Core Suppliers Completing SAQ(in %)%Employee Illness(in person)

Occupational illness frequency rate(OIFR)(per 1 million hours) 4)

Employee Deceased(in person)

Employee Illness(in person)

Occupational illness frequency rate(OIFR)(per 1 million hours) 4)

Tier-1 Supplier's SAQ Score(in point)

Sustainable
Value Chain

Sustainable
Value Chain

Male

Employee of National Merit Beneficiaries(in person)2022

On-site Assessment of ESG for Primary SuppliersWorking conditions and human rights

Ethical managemen



CSR



Energy & GHG

Environment, health, and safety

Total score

Tier-1 Supplier Risk Assessment(in %)High-risk group%Mid-risk group%

Low-risk group%

Not conducted
due to theimprovement of
the purchasing
supplier
management
systemWork-related Illnesses(Supplier)

1) 2021 data change due to change in calculation method
2) Energy Plant, Energy Plant 2, LGESNJ, LGESNA, LGESNB, LGESWA, LGESMI, LGESGM
3) Sales (LGESVT, LGESAU, LGESEG, LGESTW), R&D (Magok, Gwacheon, Daejeon), HQ
4) OIFR (Occupational illness frequency rate): (Number of illnesses cases ÷ total working hours) × 1,000,0001) Data is collected only from those who ʻself-Identification’ whether or not they have a disability.

LG ENERGY SOLUTION ESG REPORT 2022

96

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG Data
Social(S)
Index

2022

2021

Index

Work-related Injury(Employees, Korea)-

Lost Time Incident(LTI)(in number)

LTFIR(per 1 million hours) 1)Board Expertise 2)

Audit Committee









Committee Member(in person)

Injured Employee(in person)Committee Meeting(in number)

Agenda Reported(in number)

Agenda Approved(in number)





-

Board ofDirectors
and ESGCommittee

Work-related Injury(Employees, Global)-

Lost Time Incident(LTI)(in number)

LTFIR(per 1 million hours) 1)





Committee Member(in person)# of Accident(in number)Committee Meeting(in number)

Injured Employee(in person)

Agenda Reported(in number)





-

Agenda Approved(in number)--

Deceased Employee(in person)
Work-related Injury(Supplier)

ESG Committee

Corruption Risks at Business Sites-

Lost Time Incident(LTI)(in number)

Ethics Violated(in number)--# of Accident(in number)Confirmed Violated Cases(in number)

Injured Employee(in person)

Confirmed Disciplinary Cases(in number)





-

-

Terminated Contracts due to Violation(in number)

-







Contracts not Renewed due to Violation(in number)





Deceased Employee(in person)
Corporate
Program(in number)SocialResponsibility Expenditures(in 1 million KRW)

Governance(G)
Index

2022

2021

Board Meeting
Board Meetings Held(in number)

Average rate of Attendance(in %)%

%

Agenda(in number)
Board ofDirectors
and ESGCommittee2021
# of Accident(in number)
Deceased Employee(in person)
Environmental,
Health,and Safety(EH&S)
Management2022

Directors with Industry Expertise(in person)

Objected or Modified Agenda(in number)--

Average Tenure of Board Member(in month)Board Composition
Board Member(in person)Internal Directors(in person)

External Directors(in person)





%

%

Female Directors(in person)

Non-standing Directors (in person)

Ratio of External Directors(in %)LG ENERGY SOLUTION ESG REPORT 2022

Jeong-Do
Management--

High-risk Site Evaluated(in %)

%

%

Total High-risk Site(in number)

-

-

Korea

%

%

US

%

%

Poland

%

%

Germaney

%

%

Australia

%

%

China

%

%

Anti-corruption Education for Employees(in %)1) LTFIR (Lost Time Injury Frequency Rate): (Number of Lost Time Incident(LTI) ÷ Total working hours) × 1,000,000
However, it is calculated based on Korea / Global production and R&D sites2) Board Expertis = (Number of Directors with Industry Expertise ÷ Total Number of Board Members) × 100* “Global” refers to countries excluding Korea

97

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIXESG IT Intelligence

ESG Data
Governance(G)
Index

2022

2021

Discrimination and Harassment(in number)
Reported Discrimination and Harassment
Jeong-Do
Legal Violations
Management
Cases(in number) 1)

-Employees Who Received Fair Trade Education(in person)

Hours of Education Provided(in hours)





-

-

Mal-practices(in number)
Ongoing Legal Cases--

Completed Legal Cases--

Loss Amount(KRW)Information
Security

Amount Fined(in 1 billion KRW)

Fair Trade

Provided Training Sessions(in count)
Investment Expenditure(in 1 billion KRW)
Employees Who Received Information Security Education(in person)

-

-









1) Cases of 2022 Environmental Law Violations
In 2022, on October 31st, we violated the [Toxic Substances Control Act] in the US by exceeding the permitted
import amount of chemical substances at the facility. As a result, we were fined $327,334 by the US Environmental
Protection Agency. The fine was voluntarily paid, and in order to prevent future occurrences, we reached a Consent
Order Agreement concerning the excess import of materials, which required prior reporting approval. Additionally,
they participated in the TSCA program, which included education and investigation measures. For the status ofsanctions related to environmental violations by other companies, please refer to the Business (Annual) Report.

LG ENERGY SOLUTION ESG REPORT 2022

LG Energy Solution has initiated the quantitative and systematic management of various nonfinancial indicators related to ESG, recognizing that these non-financial indicators may be
more important in the substantial valuation of our company. In response to ESG information
disclosure regulations and the increasing need to efficiently manage ESG data demandedby various stakeholders, LG Group and its subsidiary companies launched the ʻLG ESG IT
Intelligence’ system for ESG management in June 2023.
The LG ESG IT Intelligence is a group-wide ESG IT platform which integrates an end-to-end
process of collecting ESG-related data and disclosing non-financial information influencing
management. It is based on the LG ESG IT governance, and it covers all LG Group subsidiaries
that collaborate to establish ESG policies, standards, and processes and participating indeveloping system functionalities.
This intelligence system provides accurate ESG information to various stakeholders andderives insights into the overall ESG management direction based on accumulated data.
It is an evolving platform that enables the realization of ESG management. In the future, it will
gradually expand the scope of ESG management targets and improve functionalities to meetthe demands of subsidiaries in various industries, ensuring the completeness of the ESG
management platform through continuous improvement.
Ultimately, beyond the data collection and management system, the goal is to analyze
and predict the data collected through this system to secure proactive responsivenessto domestic and international disclosure obligations and establish a reliable data-basedrisk management system. LG Energy Solution utilizes the LG ESG IT Intelligence system torespond to related regulations and aspires to become a trusted ESG leading company forinternal and external stakeholders, including customers.

98

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global ESG Index
GRI Standards 2021
GRI 2: General Disclosures 2021
Topic
The Organizationand its Reporting
Practices

Activities andWorkers

Governance

GRI 3: Material Topics

Index

Description

Page

2-1

Organizational details

7

2-2

Entities included in the organization’s

2

2-3

Sustainability reporting2

2-4

Reporting period, frequency and contact

No such case

2-5

External assurance

106-107

2-6

Activities, value chain and other business relationships

37-39

2-7

Employees

93

2-8

Workers who are not employees

93

2-9

Governance structure and composition

45

2-10

Nomination and selection of the highest governance body

46

2-11

Chair of the highest governance body

46

2-12

Role of the highest governance body in overseeing themanagement of impacts

46

2-13

Delegation of responsibility for managing impacts

22

2-14

Role of the highest governance body in sustainability reporting

22

2-15

Conflicts of interest

46

2-16

Communication of critical concerns

47

2-17

Collective knowledge of the highest governance body

46-47

2-18

Evaluation of the performance of the highest governance body

47

2-19

Remuneration policies

72

2-20

Process to determine remuneration

72

2-21

Annual total compensation ratio-*

Strategy, Policies

2-22Statement on sustainable development strategy

6

and Practices

2-23

Policy commitments

24

2-24

Embedding policy commitments

2-25

Topic
GRI3:
Material Topics

Index

Description

Page

3-1

Process to determine material topics

26-27

3-2

List of material topics

27

3-3

Management of material topics

27

GRI 200: Economic Performance
Topic

Index

Description

Page

GRI 201:
Economic
Performance

201-1

Direct economic value generated and distributed

9, 73, 89

201-2

Financial implications and other risks and opportunities due toclimate change

80-88

GRI 205:
Anti-corruption

205-1

Operations assessed for risks related to corruption

74-76

205-2

Communication and training about anti-corruption policies andprocedures

76

205-3

Confirmed incidents of corruption and actions taken

96

206-1

Legal actions for anti-competitive behavior, anti-trust, andmonopoly practices

96

GRI 206:
Anti-competitive
Behavior

GRI 300: Environmental Performance
Topic
GRI 302:
EnergyIndex

Description

Page

302-1

Energy consumption within the organization

90

302-2

Energy consumption outside of the organization

90

302-3

Energy intensity

90

22

302-4

Reduction of energy consumption

90

Processes to remediate negative impacts

77

302-5

Reductions in energy requirements of products and services

90

2-26

Mechanisms for seeking advice and raising concerns

76-77

303-1

Interactions with water as a shared resource

91

2-27

Compliance with laws and regulations

77

303-2

Management of water dischargerelated impacts

91

2-28

Membership associations

105

303-3

Water withdrawal

91

Stakeholder

2-29

Approach to stakeholder engagement

77-78

303-4

Water discharge

91

Engagement

2-30

Collective bargaining agreements

62

303-5

Water consumption

91

GRI 303:
Water and Effluents* We made the decision to keep this information private based on the necessities of our company.

LG ENERGY SOLUTION ESG REPORT 2022

99

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global ESG Index
GRI 400: Social Performance
Topic
GRI 304:
Biodiversity

GRI 305:
Emissions

GRI 306:
Waste

GRI 308:
Supplier
Environmental
Assessment

Index

Description

Page

304-1

Operational sites owned, leased, managed in, or adjacent to,protected areas and areas of high biodiversity value outside
protected areas

59

304-2

Significant impacts of activities, products and services on
biodiversity

59

304-3

Habitats protected or restored

59

304-4

IUCN Red List species and national conservation list species with 59
habitats in areas affected by operations

305-1

Direct GHG emissions(Scope 1)

90

305-2

Energy indirect GHG emissions(Scope 2)

90

305-3

Other indirect GHG emissions(Scope3)

90

305-4

GHG emissions intensity

90

305-5

Reduction of GHG emissions

90

305-7

Nitrogen oxides(NOx), sulfur oxides(SOx), and other significant
air emissions

91

306-1

Waste generation and significant waste-related impacts

57

306-2

Management of significant wasterelated impacts

57

306-3

Waste generated

91

306-4

Waste diverted from disposal

91

306-5

Waste directed to disposal

91

308-1

New suppliers that were screened using environmental criteria

38-39

308-2

Negative environmental impacts in the supply chain and actions
taken

38-39

GRI 401 :Employment

Index

Description

401-1

New employee hires and employee turnover

92

Parental leave

96

GRI 402:
Labor / Management
Relations402-1

Minimum notice periods regarding operational changes

62

GRI 403:
Occupational Healthand Safety

403-1

Occupational health and safety management system403-2

Hazard identification, risk assessment, and incident investigation 52

403-3

Occupational health services

53

403-4

Worker participation, consultation, and communication on
occupational health and safety

53

403-5

Worker training on occupational health and safety

52

403-6

Promotion of worker health

53

403-7

Prevention and mitigation of occupational health and safety
impacts directly linked by business relationships

52

LG ENERGY SOLUTION ESG REPORT 2022

51

Description

Page

Workers covered by an occupational health and safety
management system

53

403-9

Work-related injuries

97403-10Work-related ill health

96

404-1

Average hours of training per year per employee

92

404-2

Programs for upgrading employee skills and transition assistance 60
programs

GRI 405:
Diversity and Equal
Opportunity

405-1

Diversity of governance bodies and employees

42-43, 45, 97

405-2

Ratio of basic salary and remuneration of women to men

There is no
gender-based
wage disparity

GRI 406 :Non-discrimination

406-1

Incidents of discrimination and corrective actions taken

No such case

GRI 407:
Freedom of
Association andCollective Bargaining

407-1

Operations and suppliers in which the right to freedom of
association and collective bargaining may be at risk

No such case

GRI 408:
Child Labor

408-1

Operations and suppliers at significant risk for incidents of childlabor

No such case409-1
GRI 409:
Forced or Compulsory
Labor

Operations and suppliers at significant risk for incidents offorced or compulsory labor

No such case

GRI 410:
Security Practices

410-1

Security personnel trained in human rights policies or procedures Not applicable

GRI 411:
Rights of Indigenous
Peoples411-1

Incidents of violations involving rights of indigenous peoples

No such case

GRI 413:
Local Communities

413-1

Operations with local community engagement, impact
assessments, and development programs

66-67

413-2

Operations with significant actual and potential negative impacts 37
on local communities

GRI 414:
Supplier Social
Assessment

414-1

New suppliers that were screened using social criteria

37, 38414-2

Negative social impacts in the supply chain and actions taken

37-39

GRI 415: Public Policy

415-1

Political contributions

Not applicable

GRI 416:
Customer Healthand Safety

416-1

Assessment of the health and safety impacts of product andservice categories

36

416-2

Incidents of non-compliance concerning the health and safety
impacts of products and services

No such case

GRI 418:
Customer Privacy

418-1

Substantiated complaints concerning breaches of customer
privacy and losses of customer data

No such case

Page

401-3

Index
403-8

GRI 404:
Training and
Education

GRI 400: Social Performance
Topic

Topic
GRI 403:
Occupational Healthand Safety

100

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global ESG Index
Disclosure of Sustainability Information based on ʻSASB Standards’ʻSASB Standards’ refers to the industry-specific sustainability accounting standards developed by the Sustainability Accounting Standards Board (SASB) in the US, established in 2011.
The SASB Standards categorize financially material sustainability information into 11 sectors and 77 industries according to the ʻSustainable Industry Classification System (SICS)’ considering theunique characteristics of each industry. LG Energy Solution actively supports the adoption of SASB Standards and discloses sustainability information for the Renewable Resources & Alternative
Energy sector, specifically in the Fuel Cells & Industrial Batteries industry, which is expected to have a high financial impact.

Topic

Code

Category

EnergyManagement

RR-FC-130a.1

Quantitative(1) Total energy consumed(2) Percentage grid electricity(3) Percentage renewable

90

Health and
Safety of
Employees

RR-FC-320a.1

Quantitative(1) Total recordable incident rate(TRIR)

96(2) Fatality rate

96

RR-FC-320a.2

Discussion
andAnalysis

Description of efforts to assess, monitor, andreduce exposure of workforce to humanhealth hazards

51-53

Quantitative

Average storage capacity of batteries, byproduct application and technology type

Based oncylindrical
21700(forelectric
operation):
270Wh/kg

Product
Efficiency

RR-FC-410a.1

MetricPage & Answer

RR-FC-410a.2

Average energy efficiency of fuel cells
as (1) electrical efficiency and(2) thermal
efficiency, by product application andtechnology type

N/A

RR-FC-410a.3

Average battery efficiency as coulombic
efficiency, by product application andtechnology type

Based oncylindrical
21700(forelectric
operation):
99% or more

RR-FC-410a.4

Average operating lifetime of fuel cells, byproduct application and technology type

N/A

RR-FC-410a.5

Average operating lifetime of batteries, byproduct application and technology type

Based oncylindrical
21700(forelectric
operation):With 80%
lifespan,
1,000 uses

LG ENERGY SOLUTION ESG REPORT 2022

Topic

Code

Category

Product
End-of -life
Management

RR-FC-410b.1

Quantitative

Percentage of products sold that arerecyclable or reusable

Metric100%

Page & Answer

RR-FC-410b.2

Quantitative

Weight of end-of-life material recovered,percentage recycled

Currently not
responsible
for recovering
end-of-lifebatteries

RR-FC-410b.3

Discussion
and Analysis

Description of approach to manage use,
reclamation, and disposal of hazardous
materials

57-58

Materials
Sourcing

RR-FC-440a.1

Discussion
and Analysis

Description of the management of risks
associated with the use of critical materials

37-39

Activity
Metrics

RR-FC-000.A

Quantitative

Number of units soldWe madethe decision
to keep thisinformation
privatebased on thenecessities ofour company

RR-FC-000.B

Quantitative

Total storage capacity of batteries soldWe madethe decision
to keep thisinformation
privatebased on thenecessities ofour company

101

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global ESG Index
UN SDGs
To fulfill social responsibility as a global citizen, LG Energy Solution works hard to contribute to achieving UN SDGs. We are conducting various sustainability management activities regarding 14
sustainability development goals that have high relevance by considering the direct and indirect impact on LG Energy Solution’s entire value chain.

UN SDGs

Detailed Activities

No Poverty

Activities designed to support local communities, suchas the welfare fund for the underprivileged, donation ofbooks and daily necessities

66-68

Responsible
Consumption and
Production

Promoting zero landfill to minimize environmental impact
Utilizing renewable energy during battery production

57

Good Health andWell-being

Youth health & education projects and environment
protection activities
Improving the environment underserved house

67

Climate Action

Developing goals to reduce GHG emissions
Building a decision-making system for climate change
Building / operating a global energy management system

80-88

Quality Education

Operating programs designed to nurture science andtechnology talent

67

Life on Land

Efforts to Conserve Biodiversity

59

Gender Equality

Managing an organizational culture and female talentmanagement based on gender equality

42

Peace, Justice andStrong Institutions

Conducting compliance education for employees
Obtaining the ISO 37301 (compliance management
system) certification

74-76

Clean Water andSanitation

Water / Wastewater Management

55-56

Partnerships
for the Goals

Engaging in initiatives such as UNGC, GBA, RBA / RMI /RLI, FCA, and RE100 / EV100

104-105

Affordable andClean Energy

Operating Hope Green Power Plant

66

Decent Work andEconomic Growth

Operating “Areum Nuri” to create jobs for persons withdisabilities
Supporting mutual growth with suppliers

Page

Detailed Activities

Page

42

Industry, Innovation
and Infrastructure

Conducting research to develop new technologies /products for future growth such as next-generation
batteries

16-18

Reduced Inequalities

Organizational culture based on diversity, equity, andinclusion (DEI)

42-44

LG ENERGY SOLUTION ESG REPORT 2022

UN SDGs

102

COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global ESG Index
10 Principles of the UNGCISSB Index

LG Energy Solution joined the UN Global Compact(UNGC) in May 2022, pledging to adhere to
the ten principles of the UNGC in the areas of human rights, labor, environment, and anticorruption in all business activities. In addition, we support the achievement of the United
Nations Sustainable Development Goals(UN SDGs) in the three areas of social inclusion,
economic growth, and sustainable environment. We plan to disclose the related activities andachievements.

IFRS S1: General Requirements for Disclosure of Sustainability-related Financial
information

UNGC Topic
Human
RightsLabourEnvironment

AntiCorruption

10 Principles
1

Page

Businesses should support and respect the protection of internationallyproclaimed human rights; and62

2make sure that they are not complicit in human rights abuses.

62

3

Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining;

62

4

the elimination of all forms of forced and compulsory labour;625the effective abolition of child labour; and62

6the elimination of discrimination in respect of employment and occupation.

42

7

Businesses should support a precautionary approach to environmental
challenges;

83

8

undertake initiatives to promote greater environmental responsibility; and

80-88

9

encourage the development and diffusion of environmentally friendly
technologies.

16-18

10

Businesses should work against corruption in all its forms, including
extortion and bribery.

74-76

LG ENERGY SOLUTION ESG REPORT 2022

Index

Disclosure

Page

S1-1

Governance

22, 45

S1-2

Strategy24

S1-3

Risk Management

69-71

S1-4

Metrics and Targets

89-98

S1-5

Scope

2

S1-6

Connected Information

9, 89

S1-7

Fair Presentation

89-105

S1-8

Materiality

26-27

S1-9

Comparative Information

89-98

S1-10

Timing of Reporting

2

S1-11

Location of Disclosures

2

S1-12

Measurement Uncertainty

2

S1-13

ErrorsNo such case

S1-14

Statement of Compliance

74-76

IFRS S2: Climate-related Disclosures
Index

Disclosure

Page

S2-1

Governance

81

S2-2

Strategy

85-87

S2-3

Risk Management

83-84

S2-4

Metrics and Targets

88, 91-92

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COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global Initiatives

GBA: Establishing ESG Standards in the Battery Industry

FCA: Supporting Local Communities and Eradicating Forced and Child Labor

LG Energy Solution participates in the Global Battery Alliance(GBA) initiative, a consortium
focused on the battery supply chain in Europe. Through this initiative, LG Energy Solution
monitors and proactively responds to battery policies and regulations in the EU. GBA is a
stakeholder alliance of companies, governments, international organizations, NGOs, andother stakeholders aiming to achieve a sustainable battery value chain. As a BOD member,
we provide advisory on GBA’s strategies and activities as a global battery manufacturer.
LG Energy Solution is dedicated to responsible activities for a sustainable future, such as
developing standards for calculating the carbon footprint of battery products, addressing
environmental and supply chain human rights issues, and participating in developing a
Battery Passport.

The Fair Cobalt Alliance(FCA), Established in August 2020, is an initiative to eradicate forced
and child labor issues in cobalt mines in the Democratic Republic of Congo (DRC). LG Energy
Solution joined the FCA in May 2022, becoming the first domestic company to join theinitiative and participate as a member of the steering committee member LG Energy Solution
collaborates with the FCA to address forced labor and child labor issues that may arise fromcobalt production in the DRC. Furthermore, LG Energy Solution promotes improvements inlocal communities and economic systems by supporting solar power supply to local schools,
enrollment and education support for preschool children, and conducting safety education
within the mines.

RE100, EV100: Implementing Carbon Neutrality Roadmap

RBA, RMI, RLI: Strengthening ESG Risk Management in Global Supply Chain

In April 2021, LG Energy Solution became the first company in the battery industry to join the
RE100 and EV100 initiatives. By doing so, LG Energy Solution declares and pursues the goalof achieving 100% renewable electricity for power consumption and transitioning 100% of
our vehicle fleet to electric vehicles by 2030 - 20 years ahead of the target set for 2050 inglobal campaigns. According to the “2022 RE100 Annual Report” published by The Climate
Group and the Carbon Disclosure Project (CDP), LG Energy Solution achieved a renewableenergy transition rate of 44% as of 2021, ranking first among the 14 domestic companies thatjoined RE100. In 2022, we achieved 61%. LG Energy Solution is the first domestic company
to be selected as the Advisory Committee of the RE100 Board, providing policy advice on
renewable energy participation and other key strategic planning.

LG Energy Solution is a Responsible Business Alliance (RBA) member, and we were the firstcompany in the domestic battery industry to join. We support RBA’s vision of promoting
sustainability in global supply chain and takes preventive measures for risks that may arisein labor, health and safety, the environment, and corporate ethics within the supply chain.
LG Energy Solution also adheres to the RBA code of conduct for domestic and overseas
workplaces and suppliers, conducting regular inspections and improvements. Additionally,
LG Energy Solution joined the Responsible Labor Initiative (RLI) and the Responsible Mineral
Initiative (RMI), both under the RBA, to enhance supply chain evaluation and management
according to global standards. We will continue strengthening ESG management andenhancing cooperation in human rights management, diversity, inclusivity, fairness, andresponsible mineral sourcing, solidifying our position as an industry leader.

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COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Global Initiatives

Domestic Initiative Membership Status

Overseas Initiative Membership Status

Green Business Council

Cheongju Chamber ofCommerce and Industry

Korean Society ofAutomotive Engineers

BCI(Battery Council International)

Daejeon-Sejong-Chungnam
Environmental Technician
Association

Management Corporation for
Cheonju Industrial Complex

Korea Electric Engineers Association

CNESA(China Energy Storage Alliance)

Daejeon-Chungnam Environmental
Conservation Association

Chungcheong Chemical Safety
Community

Korea Electrical Manufacturers
Association

ESA(The U.S. Energy Storage Association)

Daejeon Research andDevelopment Complex Safety
Association

Chungnam Environment
Association

Korea Electric Vehicle Association

FCA(Fair Cobalt Alliance)

Korean Industrial Safety
Association

Chungbuk Enterprises Federation

Korea Battery Industry Association

Korean Nurses Association

Chungbuk-Sejong Environmental
Conservation Association

Korea Special Library Association

Korean Nurses Association
Chungbuk

Chief Technology Officer (CTO)
Club (Korea Industrial Technology
Association)

Materials Research Society of Korea

The Korean Society of
Mechanical Engineers

Korea Exchange (KRX)

Korea Intellectual Property
Association

Korea Environmental Engineers
Association

Fair Competition Federation

CONsortium of CERTThe Korea Chamber of Commerce& Industry

The National Academy ofEngineering of Korea

Korean Standards Association (KSA)

Seoul Bar Association

Korea Association
for Radiation Application (KARA)

Korean Society
for Quality Management

Fire Safety Countermeasure
Council

Korea Industrial Technology
Protection Association

The Korean Statistical Association

Ochang Science-Industrial
Complex Management Corporation

Korea Industrial Technology
Association

Korea Chemicals Management
Association

The Korean Institute of ElectricalEngineers

Korea Listed Companies Association Korea AEO Association

CESA(California Energy Storage Alliance)
Clean Energy Council Limited
EV100(Electric Vehicle 100)
GBA(Global Battery Alliance)
INTA(International Trademark Association)
PRBA(US Rechargeable Battery Association)
RBA(Responsible Business Alliance)
RECHARGE(The Advanced Rechargeable & Lithium Battery Association)
RE100(Renewable Electricity 100)
RLI(Responsible Labor Initiative)

Korea Electric Association

Korea Fire Safety Institute

Korea Investor Relations Service

American Chamber ofCommerce in Korea (AMCHAM)

The Korean Society For
Technology of Plasticity

Korea-US Association

Korea International Trade
Association

Korea Smart Grid Association

RMI(Responsible Mineral Initiative)
UNGC(UN Global Compact)

Occupational Health Nursing
Association

LG ENERGY SOLUTION ESG REPORT 2022

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COMPANY OVERVIEW

Third-Party Assurance

ESG IMPACT

ESG MANAGEMENTAPPENDIX

To readers of LG Energy Solution 2022 ESG Report

Introduction
Korea Management Registrar (KMR) was commissioned by LG Energy Solution to conduct a third-party assurance of its 2022 ESG Report (“the Report”). The data and its presentation in the Report isthe sole responsibility of the management of LG Energy Solution. KMR’s responsibility is to perform an assurance engagement as agreed upon in our agreement with LG Energy Solution and issue
an assurance statement.
Scope and Standards
LG Energy Solution described its sustainability performance and activities in the Report. Our Assurance Team carried out an assurance engagement in accordance with the AA1000AS v3
and KMR’s assurance standard SRV1000. We are providing a Type 2, moderate level assurance. We evaluated the adherence to the AA1000AP (2018) principles of inclusivity, materiality,
responsiveness and impact, and the reliability of the information and data provided using the Global Reporting Initiative(GRI) Index provided below. The opinion expressed in the AssuranceStatement has been formed at the materiality of the professional judgment of our Assurance Team.
Confirmation that the Report was prepared in accordance with GRI standards 2021 was included in the scope of the assurance. We have reviewed the topic-specific disclosures of standards
which were identified in the materiality assessment process.
▪GRI Sustainability Reporting Standards 2021
▪Universal standards▪Topic specific standards- GRI 305: Emissions- GRI 306: Waste- GRI 308: Supplier Environmental Assessment- GRI 401: Employment- GRI 405: Diversity and Equal Opportunity- GRI 414: Supplier Social Assessment- GRI 416: Customer Health and Safety
KMR’s Approach
To perform an assurance engagement within an agreed scope of assessment using the standards outlined above, our Assurance Team undertook the following activities as part of theengagement:▪reviewed the overall Report;▪reviewed materiality assessment methodology and the assessment report;▪evaluated sustainability strategies, performance data management system, and processes;▪interviewed people in charge of preparing the Report;▪reviewed the reliability of the Report’s performance data and conducted data sampling;▪assessed the reliability of information using independent external sources such as Financial Supervisory Service’s DART and public databases.

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COMPANY OVERVIEWESG IMPACT

ESG MANAGEMENTAPPENDIX

Third-Party Assurance

Limitations and Recommendations
KMR’s assurance engagement is based on the assumption that the data and information provided by LG Energy Solution to us as part of our review are provided in good faith. Limited depth ofevidence gathering including inquiry and analytical procedures and limited sampling at lower levels in the organization were applied. To address this, we referred to independent external sources
such as DART and National Greenhouse Gas Management System(NGMS) and public databases to challenge the quality and reliability of the information provided.
Conclusion and Opinion
Based on the document reviews and interviews, we had several discussions with LG Energy Solution on the revision of the Report. We reviewed the Report’s final version in order to make surethat our recommendations for improvement and revision have been reflected. We have recommended disclosing information built on quantitative and qualitative data of the recent two years,
considering the spin-off and corporate establishment in December 2020. Based on the work performed, it is our opinion that the Report applied the GRI Standards. Nothing comes to ourattention to suggest that the Report was not prepared in accordance with the AA1000AP (2018) principles.
Inclusivity
LG Energy Solution has developed and maintained different stakeholder communication channels at all levels to announce and fulfill its responsibilities to the stakeholders. Nothing comes toour attention to suggest that there is a key stakeholder group left out in the process. The organization makes efforts to properly reflect opinions and expectations into its strategies.
Materiality
LG Energy Solution has a unique materiality assessment process to decide the impact of issues identified on its sustainability performance. We have not found any material topics left out inthe process.
Responsiveness
LG Energy Solution prioritized material issues to provide a comprehensive, balanced report of performance, responses, and future plans regarding them. We did not find anything to suggestthat data and information disclosed in the Report do not give a fair representation of LG Energy Solution’s actions.
ImpactLG Energy Solution identifies and monitors the direct and indirect impacts of material topics found through the materiality assessment, and quantifies such impacts as much as possible.
Reliability of Specific Sustainability Performance Information
In addition to the adherence to AA1000AP (2018) principles, we have assessed the reliability of economic, environmental, and social performance data related to sustainability performance. We
interviewed the in-charge persons and reviewed information on a sampling basis and supporting documents as well as external sources and public databases to confirm that the disclosed data isreliable. Any intentional error or misstatement is not noted from the data and information disclosed in the Report.
Competence and Independence
KMR maintains a comprehensive system of quality control including documented policies and procedures in accordance with ISO / IEC 17021·2015 - Requirements for bodies providing audit andcertification of management systems. This engagement was carried out by an independent team of sustainability assurance professionals. KMR has no other contract with LG Energy Solution
and did not provide any services to LG Energy Solution that could compromise the independence of our work.
July 2023 Seoul, Korea
CEO
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