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LG Electronics going green?

TU Delft SSPM Environmental Management Systems

Sanne de Groot, 30 December 2011

st. nr. Leiden: 1190431, Delft: 1188313

This report investigates the environmental policy o

!G "lectronics in its conte#t and $ith other

electronics companies in partic%lar& The main

so%rces o inormation are environmental reports

rom !G"& 's in the period rom 200( to 2008 there

are only s%stainability reports available and no

environmental reports, the environmental reports

rom 2002, 2004, 200), 2009 and 2010 are st%died&

'll inormation abo%t !G" is rom these reports&

The rame$or* rom the boo* Creating Ecological

Value +oons 2009- is %sed to str%ct%re the

inormation&

.n addition $e have set criteria that $e handle %nder

strategies as indicators o ecological val%e/

• s%pply chain

• material scarcity

• haardo%s

• recycling

• energy emissions

• prod%ct %se phase

These criteria are assessed in the chapter Strategies&They $ill help to ans$er the research %estion/ o$

can the changes in the ecological strategy o !G" be

%nderstood by loo*ing at internal dynamics and

conte#t%al events

Contents

'bbreviations 1

'- strategic position 1 Market

!"erations

- deinition o ecological val%e 2#eduction of environmental effects $

Legitimate %usiness $

5- ro%tines 3

&ormative '

Co(rdinative '

!"erative '

D- strategies 4

Cost reduction and com"liance )

*ood governance and stake+olders )

,e- green markets )

5oncl%sions 4

6eerences )

Abbreviations

5S6 5orporate Social 6esponsibility

""S "nergy, "nvironment, Saety and ealth

".55 "lectronic .nd%stry 5itienship 5oalition

"76 "#tended 7rod%cer 6esponsibility

"%7 "nterprise %niied 7rocess directive

!5' !ie 5ycle 'ssessment!G" !G "lectronics

6"'5 6egistration, "val%ation, '%thorisation and

restriction o 5emical s%bstances

6oS 6estriction o aardo%s S%bstances

directive

S5 S%pply 5hain anagement

""" aste "lectrical and "lectronic "%ipment

A) strategic position

Market

The mobile phone mar*et is inl%enced by telecom

providers that let their c%stomers replace their

phone every t$o years& 'n other development o the

last e$ years is the pop%larity o smart phones that

have ast development in ashion and sot$are&

:pcoming mar*ets li*e .ndia are as*ing or simple

phones& !G" is s%ccess%l $ith rerigerators and air

conditioning %nits& 5ons%mer a$areness is mostly

aimed at labo%r conditions and political aspects o

cobalt mining& 5S6 and h%man rights aspects are

o%tside the bo%ndary o this report& Global $arming

is p%t on the agenda $ith /n 0nconvenient Trut+&

Government reg%lations are increasingly important

rom 2003& The ;yoto protocol is ratiied by the

6ep%blic o ;orea& 'chieving the greenho%se gas

targets rom ;orea is done in cooperation $ith

companies& ;orea also made reg%lations abo%t

recyclability $ith "76 reg%lations& "%ropean

reg%lations li*e ""S, "%7, 6oS and 6"'5 have to

be obeyed in order to prod%ce or the "%ropean

mar*et&

Operations

Technology o !G "lectronics consists o the design,

man%act%re and distrib%tion o electronic devices&

Some parts $ill be bo%ght rom s%ppliers b%t the

inal assembly is done in actories o$ned by !G"&

ost o these actories are located in 5hina& This is

%nli*e most electronics companies $ho o%tso%rce

the man%act%ring& !G" has a relative large inl%ence

on the prod%ction chain and is more v%lnerable to

negative p%blicity on its actories& 'lso the recycling

o %sed appliances is done $orld$ide by !G"&

1<)



S%pply 5hain anagement +S5-

5orporate Social 6esponsibility +5S6-

green

""S

B) definition of ecological value

Reduction of environmental effects

The environmental eorts rom !G "lectronics are

aimed at red%cing the environmental impacts rom

its prod%cts d%ring the entire lie cycle& The irst

environmental reports rom 2002 to 2004 have p%t

the $ater and energy %se d%ring the prod%ction

central& This is deco%pled rom the economic

gro$th& This so%nds li*e a red%ction o

environmental eects b%t it is only relative to the

prod%ction, not in absol%te sense& 'lso saety and

health are being addressed as part o the ""S

policy&

ore topics are deined rom 200)& ;orean and

"%ropean reg%lations are p%tting prod%ct recycling,

health and energy %se on the agenda& 'nd

environmental aspects are becoming more comple#&

This greater comple#ity is a res%lt o both internal as

e#ternal sta*eholder involvement +lec*er, ;ersten

and eyer 200)-& .nternal and e#ternal

environmental a$areness is p%shing this

involvement&

.n 2010 there is a tendency to prod%cts $ith an

environmental beneit li*e energy prod%ction and

$ater p%riication& !G" is =%mping in ne$ mar*et

opport%nities li*e eicient air conditioning %nits& The

%nderlying technology is still conventional and aimed

at red%cing the environmental impact&

Legitimate business

To be accepted as a ma=or player and be an attractive

employer, every company needs to act legitimate&

"ven i environmental concern is not the core

b%siness, a company $ill try to give itsel a green

image& 5riticism on the mobile phone ind%stry is

mostly beca%se o illegal mining practices in 5ongoby rebels +6a= 2011-& >rom 2009 on this is mentioned

in the reports and that illegal mining $ill not be

allo$ed& !abo%r conditions in actories are ollo$ing

local reg%lations li*e a minim%m age o 1) years in

;orea& !G" is not maintaining e#tra strict labo%r

conditions&

"#ternal a%dits li*e the G%ide to Greener "lectronics

+Greenpeace 2010- can determine the companies

rep%tation& anning o 7?5 and >6s ca%sed the

score o !G" to improve the 2009 score& '$ards orits prod%cts and prod%ction methods are highlighted

as a distinctive eat%re in the reports& .n 2002 a$ards

are abo%t saety and health d%ring prod%ction, in

2010 more abo%t the prod%cts themselves&

.t is dangero%s to dra$ concl%sions rom the $ord

co%nt belo$& >irstly the n%mber o pages diers or

each report& Secondly a $ord li*e green can be %sed

in dierent conte#ts li*e greenho%se& 'nd thirdly

systematic deviations can occ%r& 'll the reports

st%died have the $ord @green@ in their name andnone %se page headers& The %se o @green@ seems to

be rising over the years& This might mean that !G"

thin*s a green image is more important no$& Ar the

vocab%lary has chained rom precise +""S, S5- to

more general +green, 5S6-&

2<)

2002 2003 2004 2005 2006 2007 2008 2009 2010

0

50

100

150

200

250

300

350

&igure 1 -ord count for EES21 Su""ly C+ain

Management1 green and Cor"orate Social

#es"onsi%ility including a%%reviations. Solid

lines are in environmental re"orts and das+ed

lines in sustaina%ility re"orts. See a%ove for an

evaluation.



C) routines

ormative

>ormative ro%tines are getting more transormative&

This comes rom a changing deinition o ecological

val%e& The company is not visibly trying to inl%ence

p%blic policy& . this is the case than ormative

ro%tines are stable as orm%lated by oons +2009-&

The ;orean government on the other hand has

ambitions that inl%ence many ;orean companies

+"D7 2010-& !G"@s changes are mostly driven by

reg%lations b%t some environmental meas%res are

called @vol%ntary@ in the reports& ormative routines

are managed by the "nvironmental 5ommittee rom

1992 and later more specialied committees&

Be#t to reg%lations, imitation +oons 2009- o other

electronics man%act%rers co%ld be a driver behind

environmental development& Ather companies li*e

Bo*ia +Schoon 2011-, 7 +Schipper 2011- and Sony

"ricsson +a**in* 2011- earlier adopted

transormative strategies&

34it+ a goal of 5*lo%al To" ' %y $667 in electronic

and 0T industries1 L* Electronics makes every effort

to %e a -orld class com"any1 -+ic+ ac+ieves

environmentally friendly and sustaina%le

develo"ment and meets its social res"onsi%ility.3

+!G" 2004-& 5S is a tool to reach and sec%re this

goal& This higher ambition is a point $hen ormative

ro%tines are getting more transormative&

Co!rdinative

!ie cycle thin*ing is deeply integrated so

coCrdinative ro%tines are dynamic& .mplementation

o g%idelines is done in a time rame o ;orean

prod%cts<plants irst, to a larger application the years

ater& >or e#ample .SA14001 certiication is as*ed

rom s%ppliers rom 200(& The greenho%se gas policyalso sets targets or its s%ppliers or the year 2020&

The 2010 report addresses sta*eholders as the *ey

or improvement o ecological val%e& "uppl# c$ains

are being assessed %pstream to prevent illegal

mining and bad $or*ing conditions& 'lso

do$nstream there are initiatives or prod%ct labeling

to have a distinctive eat%re in the mar*et $ith less

harm%l s%bstances and lo$er energy %se&

OperativeAperative ro%tines o !G" are mostly dynamic in the

sense that the environmental impact o prod%cts are

ta*en into acco%nt& Material scarcit# has been

addressed since the 2002 report in the orm o !5'@s&

o$ever these iss%es are not being transormed into

collaborative system $ith other companies& So a

transormative step seems missing& a*ing

demo%ntable and rec#clable prod%cts is developing

rom 199( $ith the 'T6AiD program& The collection

and recycling program is set %p in 2003 to comply

$ith "76 and """ reg%lations& CO% red%ctiontargets rom 200) are realied in 2008 and 2009&

3<)

&igure $1 e8ternal dynamics and routines L*E adding u" to t+e rig+t



&) strategies

Strategies are the e#ec%tion o ro%tines b%t some go

%rther than the overall vision and react on certain

circ%mstances&

Cost reduction and compliance

6ed%ction o energy and $ater %se is mainly being

done rom cost eiciency& This only aects the

companies o$n activities so it is a stable strategy&

Government reg%lations are leading or most change

processes& !abo%r conditions, saety and health are

ollo$ing local reg%lations& >rom 200) there is an

increased activity o vol%ntarily initiatives and

targets& 'a(ardous materials are vol%ntarily being

replaced or certain applications or totally banned&

?ol%ntary red%ctions co%ld be a res%lt rom

dereg%lation and to prevent more reg%lations& The

2010 report mentions stricter reg%lations on energy

eiciency as a ris*& This is also stable strategy&

Good governance and stake$olders

5ollaboration $ith suppliers is already done in 2004

$hen !G" $as giving technical assistance to adopt

the ""S policy&

Materials are in the irst place made lighter& This

ma*es them also more cost eective $hich is a

stable strategy& 6ecycled and bio content is %sed $ith

environmental reasons so it is getting more dynamic&

Energ# and $ater savings are irstly done in cost

eective order& !ater emission red%ctions are

promoted by the ;orean government& >rom 2009 the

emission red%ction targets e#tend to the s%ppliers

$hich is a more dynamic strategy&

e* +green+ markets

!"D lights, thin ilm solar cells, smart grids and $ater

treatment are the latest products o !G "lectronicsthat have a green image& This is going in the

direction o a transormative strategy& 7art o this

co%ld be related to image b%ilding and so called

green$ashing& The scale o these activities is small in

comparison $ith other prod%cts b%t has a potential

to gro$ i governments *eep promoting them&

eca%se they are creating ne$ prod%ction and

cons%mption systems they have transormative

aspects& o$ever transmission to other companies is

missing&

Conclusions

The strategic position o !G" has had a gro$ing

governmental and sta*eholder inl%ence in the last

ten years& To remain legitimate !G" has ad=%sted its

deinition o ecological val%e& The strategy is getting

more dynamic as a res%lt o this& 6o%tines are

changing less visible& This co%ld be beca%se the oc%s

o the reports is on res%lts and best practices&

The diverse meas%res can be e#plained $ith the

comple#ity& .t is impossible to predict ho$ meas%res

$ill contrib%te to a green image& Strategies that

ma*e activities loo* transormative are then l%r*ing&

>or !G" this might also be the case $ith 7? and

$ater p%riication activities& o$ever i there is

eno%gh demand these niches co%ld gro$&

.n comparison $ith other electronics man%act%rers

!G" is a bit late to develop a dynamic strategy& This

co%ld be a res%lt o oc%sing on lo$ cost prod%cts&

ith the goal o being a ma=or player it is logical to

adopt a dynamic or even transormative strategy&

4<)

&igure '1 strategies L*E adding u" to t+e rig+t



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http://www.greenpeace.org/






http://mpra.ub.uni-muenchen.de/5284/

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