LG Chem prioritizes sustainability in battery material suppliers

South Korea’s leading battery maker LG Chem has introduced sustainability as an evaluation factor for battery material suppliers to incorporate the rising importance of supply chain management and ethical purchases, the company said Thursday. 

The company recently conducted the first assessment of its material suppliers, in which it evaluated the suppliers’ sustainability by examining working conditions, human rights of employees, safety of the work environment, management of material supplies and renewable energy use.

Sustainability accounts for 20 percent of the total evaluation score, which is equivalent to the proportion for product quality and development capabilities.

“As the importance of sustainable management of material supply chains, including ethics in purchasing battery materials, is on the rise globally, the company will value sustainability of suppliers as much as their product quality,” a company official said.

LG Chem had previously offered additional scores to suppliers with constant activities related to sustainable management.

The Korean battery firm will now demand improvements from suppliers that do not meet the sustainable management evaluation factor, it said.

In a bid to help underrated suppliers, LG Chem will provide educational programs and activities.

The move is in line with the growing global trend of prioritizing ethicality and sustainability.

Germany-based automaker Volkswagen has said it will introduce a sustainability rating system for assessing its contractors starting July. Under the assessment system, Volkswagen suppliers are rated through the whole process of manufacturing parts, ranging from purchasing raw materials in the initial stage to the final stage of finishing up their products.

Meanwhile, LG Chem has adopted a blockchain-based system in a consortium with IBM, Ford and Huayou Cobalt this year for a transparent evaluation and management system.

In 2016, the company enacted 10 assessment items in the fields of human rights, labor rights, ethical management and safe environment. It also banned use of unethically purchased raw materials in 2017.

“Sustainable innovation is the foremost aspect of the battery business throughout the entire process of securing raw materials to disposing the products,” said Shin Hak-cheol, vice chairman of LG Chem. “LG Chem’s solution will contribute to creating a circular economy.”

By Song Su-hyun (song@heraldcorp.com)