[Asia Economy Reporter Kim Heung-soon] LG Group, marking the 4th year of Chairman Koo Kwang-mo's tenure, has decided to consolidate company efforts to create a sustainable and transparent management environment. The group recently established an 'ESG Committee' to oversee policies related to ESG (Environment, Social, Governance), which is currently the biggest focus in the business community, and an 'Internal Transactions Committee' as a fair trade review body. Additionally, it plans to strengthen the independence and authority of the Audit Committee to reinforce compliance management.
On the 19th, LG Corporation, the holding company of LG Group, stated, "We recently gathered opinions from the board members regarding these governance improvement measures," and added, "We plan to finalize them after approval at the board meeting scheduled for this month." The boards of LG’s listed affiliates will also discuss and approve these agendas individually before implementation. Among the four major conglomerates, LG Group is the first to prepare a comprehensive governance improvement plan encompassing all listed companies. This move is known to be driven by Chairman Koo’s strong intention to enhance corporate value in line with social changes and expectations. Chairman Koo also concurrently serves as the chairman of LG’s board of directors.
Establishment of ESG and Internal Transactions Review Bodies
The core of LG Group’s governance improvement plan lies in the newly established ESG Committee and Internal Transactions Committee within the board of directors. The ESG Committee serves as the highest deliberative body for ESG management. It reviews major policies related to environment and safety, corporate social responsibility (CSR), customer value, shareholder value, and governance, and reports to the board. The committee will be composed entirely of outside directors, and to enhance policy execution, representatives from LG’s listed companies will also participate as members. To secure expertise, a 'Consulting Group' consisting of external experts in ESG-related fields will be established under the committee.
The Internal Transactions Committee reviews the transparency and appropriateness of internal transactions, including transactions subject to self-dealing regulations under the Fair Trade Act, large-scale internal transactions, self-dealing under the Commercial Act, misuse of business opportunities, and transactions with related parties. The committee regularly reports its review results to the board, and agendas requiring board deliberation, such as large-scale internal transactions and self-dealing, will first be reviewed and approved by the committee. The committee will consist of three outside directors and one inside director.
Strengthening the Authority of the Audit Committee
LG Corporation and its listed affiliates currently have audit committees composed of three outside directors, but they plan to expand these to four outside directors through resolutions at the next regular shareholders’ meetings. The audit committee independently audits the company’s financial soundness and supervises the appropriateness of operations from a compliance management perspective. An independent 'Internal Audit Department' will also be established to assist and support the committee’s work.
The 'Outside Director Candidate Recommendation Committee,' which oversees the appointment of outside directors, will enhance its independence by having an outside director serve as its chairperson. It will also strengthen its review and recommendation functions by conducting ongoing monitoring and evaluation of candidate pools. Earlier this year, some LG Group affiliates moved swiftly to recruit female outside directors, a strategic move considering board diversity.
LG Corporation appointed Lee Soo-young, an environmental expert and executive at Eco Management Holdings, as an outside director. Additionally, four affiliates?LG Electronics, LG Uplus, LG Hausys, and G2R?will recruit female outside directors with expertise in their respective business areas. Next year, other affiliates such as LG Chem, LG Household & Health Care, LG Display, and LG Innotek also plan to appoint female outside directors.
An LG official emphasized, "LG was the first major domestic company to introduce a holding company system and has received positive evaluations in terms of governance. This year, we will practically implement ESG management and accelerate governance improvements to enhance shareholder value through sustainable growth."
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