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LG Energy Solution commits to ‘transparency’ on ESG

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LG Energy Solution has joined the global Task Force on Climate-related Disclosures (TFCD), committing to transparency throughout the full lifecycle of the batteries it produces.

The lithium-ion battery and energy storage subsidiary of South Korea’s LG Group said yesterday that it has joined the initiative created by the Financial Stability Board (FSB), the international body for monitoring and making recommendations about the global financial system.

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“We will closely manage and transparently disclose the information on the business factors related to climate change, which can take place throughout the entire battery lifecycle, from manufacturing and use to disposal, thereby further strengthening our environmental, social and governance (ESG) activities,” LG Energy Solution (LGES) said in a statement sent to media including Energy-Storage.news.

Climate-related financial risks are increasingly becoming important for investors, lenders and insurance underwriters to understand so that they can be appropriately assessed and priced. Not doing so jeopardises the appropriate allocation of capital, according to the TFCD.

The FSB wants the reporting of climate-related disclosures to become a normal part of risk management and strategic planning processes. In 2017 the Task Force recommended that disclosures be made around four key themes: governance, strategy, risk management, and metrics and targets.

LGES noted that major asset managers such as Blackrock – which has a growing stake in the global energy storage market – are requiring investees to join the TFCD.

In the European Union, a directive on battery regulation is being phased in over the next few years, requiring disclosures on various metrics, including carbon footprint and gradually introducing mandatory use of recycled materials. A ‘Battery Passport’ – a digital tracking and labelling system for all components of batteries – will also become a requirement.

300GWh annual production capacity by end of year

The global demand for batteries has been forecast by LG Energy Solution’s in-house analysts to reach 890GWh during 2023, up by a third from 670GWh in 2022 across all applications and sectors. The North American market will be the fastest growing at a predicted 65%-69% increase in demand, but European and Chinese markets will see more than 40% and 20% growth respectively, the company said in January.

On announcing its 2022 financial results in late January, LGES said it would pursue an increase in consolidated annual revenue of between 25% and 30% this year, largely through expansion of its manufacturing facilities. By the end of 2023, it is planning to have an annual production capacity of 300GWh.

In 2022, the company’s consolidated revenues totalled KRW25.6 trillion (US$19.9 billion), with KRW1.2 trillion profit. CFO Chang Sil Lee said the company’s record-high annual revenues were achieved on the back of its response to growing demand for both electric vehicles (EVs) and battery energy storage for the grid.

LGES listed on the NASDAQ exchange at the beginning of last year. At present it does not break out its figures for battery energy storage system (BESS) sales versus EVs and other applications like consumer electronics. A company spokesperson has told Energy-Storage.news previously that it may begin to do this in future.

In mid-January, LGES and fellow Korean company Hanwha Group formed a partnership aiming to establish battery storage-specific manufacturing facilities in the US.

Energy-Storage.news’ publisher Solar Media will host the eighth annual Energy Storage Summit EU in London, 22-23 February 2023. A few weeks later comes the 5th Energy Storage Summit USA, 28-29 March 2023 in Austin, Texas, followed by the 1st Energy Storage Summit Asia which takes place on 11-12 July 2023 in Singapore.

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