[Herald Interview] LG Chem CTO says ESG is survival of the fittest

The Korea Herald is publishing a series of interviews with executives of South Korea’s leading corporations on their response to environmental, social and corporate governance (ESG) issues, which have become central factors globally in measuring the sustainability of an investment or business decision. – Ed.

Even for South Korea’s leading petrochemical company LG Chem, the global environmental, social and governance drive means the survival of the fittest — those who manage to keep up with the ESG paradigm will flourish, while those who fail to do so will perish.

“If LG Chem fails to transition to 100 percent renewable energy, it will not only lose its potential business opportunities but also face threats for its very existence in the long term,” LG Chem Executive Vice President and Chief Technology Officer Yu Ji-yung said.

“Rather than worrying about increasing costs or losing price competitiveness (for pursuing ESG), we must pay attention to opportunities that will arise amid this change.”

According to Yu, businesses worldwide are requiring ESG commitment from suppliers, even excluding those with heavy carbon emissions from entering bidding processes in the first place.

To live up to the expectations of global clients, LG Chem announced last July that it would pursue Renewable Energy 100 — a global initiative to source electricity 100 percent from renewables — at all its business sites around the world, becoming the first petrochemical firm to pledge RE100 in Korea, according to the company.

“This year, LG Chem purchased total 260 gigawatt-hours of electricity generated from renewables at home and abroad using a green premium policy and power purchase agreement. The amount is enough to power 60,000 households for one year. Thanks to these deals, LG Chem will run one factory in China and two factories in Korea 100 percent with renewables this year,” the 55-year-old executive said.

LG Chem aims to operate all business sites overseas with 100 percent of its energy coming from renewable sources by 2030. The same will apply to domestic operations by 2050.

“If all business sites transition to 100 percent renewables, LG Chem will be able to cut 60 percent of its carbon emissions,” Yu added.

Including non-factory emissions, LG Chem’s carbon emissions, which stood at 10 million metric tons as of 2019, will quadruple to 40 million tons in 2050 at the current pace of expansion. Partly with the help of RE100, LG Chem aims to offset 30 million tons, which is equivalent to carbon emitted by 12.5 million internal combustion engine vehicles for one year. It takes 220 million pine trees to curb that amount, according to the company.

Moreover, Yu emphasized that the petrochemical industry can coexist with ESG movements, as industries are willingly accepting a “green premium” — higher prices for products with a better environmental footprint. The trend has created a whole new market and incentivized petrochemical companies to develop eco-friendly products.

“As increasingly more global IT companies are requesting raw materials with low carbon footprints, LG Chem is conducting research to expand the use of post-consumer recycled plastic,” Yu said.

Products made of recycled plastic waste are more expensive.

“But, this is not just about price. Compared to general plastic products, those made of recycled plastics can reduce carbon emissions by 40-50 percent.”

LG Chem currently produces polycarbonate and ABS with recycled plastic wastes. Polycarbonate is widely used for building and construction products from windows to wall panels. ABS, short for acrylonitrile butadiene styrene, is used to make light, rigid, molded products such as pipes, auto body parts and helmets.

In addition to recycled plastic products, LG Chem last year introduced the world’s first 100 percent biodegradable plastic with identical mechanical properties and functions to petroleum-based synthetic ones.

The new material is made of glucose from corn and waste glycerol generated from biodiesel production. Compared to existing biodegradable materials, which have to be mixed with additional plastic materials or additives to strengthen their properties or elasticity, LG Chem’s newly developed material doesn’t require such extra processes, the company says.

“With our carbon capture and utilization technology and advanced life-cycle assessment, we will become the leader of total circular economy,” Yu said.

To further accelerate its ESG drive, LG Chem last month raised 820 billion won ($720 million) through sales of ESG bonds, breaking a record held by Hyundai Steel, which issued ESG bonds worth 500 billion won in January.

The entire 820 billion won will be used for the company’s transition to renewable energy sources, establishment of manufacturing processes using eco-friendly raw materials, expansion of electric vehicle battery materials production such as cathodes and so on.

In recognition of LG Chem’s ESG efforts, Yu was appointed as the co-chairman of Korea’s “Carbon Neutral Technology Planning Committee” launched Feb. 8 together with Kim Sung-soo, vice minister for the Ministry of Science and ICT.

In lock step with the government’s plan to achieve carbon neutrality by 2050, Yu will help the committee to draw up carbon neutrality strategies for five core sectors — energy, carbon-intensive industry, transportation and traffic, city and land and environment — and designate core technologies to pursue by June.

By Kim Byung-wook (kbw@heraldcorp.com) (The Korea Herald)