Sustainability Management Strategy

Greetings to our valued stakeholders,

“I would like to express my sincere gratitude for your loyalty to LG H&H as well as your ongoing support.”

2017 was the most challenging year for LG H&H with the business environment taking a sudden turn for the worse after the THAAD deployment issue,which affected the overall cosmetic and household goods industries.While other companies suffered a decrease in sales due to such an unfavorable business environment, LG H&H promoted distinctive premium cosmetic brands
such as The History of Whoo and Su:m37° and proactively developed its business in China, achieving a remarkable yearon-year growth and outstanding performance compared to rival companies. 2018 is expected to be another challenging year full of variables, including a slowdown of the economic growth in China, uncertainties in the domestic
economy, strengthened protectionism in many
countries, and the ever everchanging political
mood between the two Koreas. We will be dedicated
to leading the market in 2018 with a focus
on the following core challenges, thereby
turning our achievements into a foundation
for sustainable growth.

First, LG H&H will grow into a leading global company in Asia beyond Korea.

We will reinforce our crisis-resistant design to keep our business sound and stable, regardless of any changes in the external environment. LG H&H will promote the growth of luxury brands and build stronger competitiveness for premium brands in the cosmetic business division. We will also strengthen our overseas business with distinctive new products in the household goods business division, as well as boost our mineral water business in the beverage business division. We will continue to develop new business items to lay the groundwork to become a leading consumer goods company in Asia, going beyond the No. 1 position in Korea.

Second, we will build a sound foundation to win the trust of consumers and the community.

We will identify issues associated with quality, safety, the environment, and compliance that threaten stable business operation and take preemptive measures to remove factors that may have negative impact on our business performance and brand values. When it comes to major social issues related to quality, safety and the environment, we will build sufficient capacity with a standard that is stricter than the laws and regulations so that we can earn consumers’ trust. We will also check and improve our progress in this area with thorough methods. Through such efforts, we will become a reliable company that enjoys the trust of consumers and the community.

Third, we will innovate our capacity in manufacturing and R&D.

We need a production system that maximizes manufacturing productivity and flexibly responds to changes in the paradigm, particularly those that will accompany the Fourth Industrial Revolution. Our new cosmetics manufacturing plant is under construction and is slated to be completed by the end of 2019. It will be established as a “smart factory” with manufacturing capacity that can keep up with industrial and technological changes. Focusing on the LG Science Park, we will combine a wide range of technologies owned by LG’s subsidiaries to create synergy, as well as accelerate the development of products with core technologies for the future.

There is a Chinese idiom, “行百里者 半九十里,” meaning that ninety li (unit of length) is only half of a hundred-li journey. Keeping this idiom in mind, we will move forward step by step with honesty and humility. We sought to provide the data about our activities and performance of sustainability management achieved together with customers, suppliers, local communities, and employees in a transparent way in our 9th CSR Report.

As a global leader in sustainability management, LG H&H will continue to make efforts to observe the UNGC’s Ten Principles and fulfill its social responsibility and roles to help create a better future.

Your continued loyalty and support is greatly appreciated.
Thank you.

May 2018
Suk Cha, CEO & Vice Chairman
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