Battery division split in LG Chem implies importance of ESG
The pandemic widens the gap between winners and losers One year ago, in February 2020, it was the time after Chinese New Year Holidays. At that time, people across the […]
The pandemic widens the gap between winners and losers One year ago, in February 2020, it was the time after Chinese New Year Holidays. At that time, people across the […]
One year ago, in February 2020, it was the time after Chinese New Year Holidays. At that time, people across the globe had not realized how the virus would change our life. In fact, we can say that a lot of people underestimated it. Since most of countries imposed on strict measures to avoid the spread of the virus, many people experienced the limitation of their movement. We had to work at home, and a lot of children studied through online, and many companies were forced to change their operation.
As a result, digital technologies such as Zoom and Microsoft Teams became more popular. In other words, they can be our infrastructure in 2020s. In addition to this, national governments applied economic stimulus package and many investors wanted to find next targets to invest in. As several factors were combined, the share price of digital companies such as Zoom, Tesla and Apple soared up. On the other hand, some industries such as aviation, leisure and hotel, experienced tough moments. In fact, there are clear winners and losers in the stock markets.
However, is this trend novel? The answer would be “No”. Due to globalization as well as digitalization, business environment becomes more uncertain. In fact, many experts mention that the pandemic does not change the trend but accelerates it.
Due to the pandemic, a lot of people rethink fundamental questions:
“What purposes do we have for the companies where we work?” “What are our priorities in our life?” “Does our society sustainable?” “Is our job more important than our family or our life?”
Basically, we can sum up that these fundamental questions are based on sustainability. Environmental, Social and Corporate Governance are the three key factors in measuring the sustainability and societal impact of an investment in a company or business.
In October 2020, shareholders of LG Chem, which is the largest South Korean chemical company, approved a plan. It is that the company would split its battery business into a new company, which was named “LG Energy Solution” later. This decision implies two important things.
First, the battery market is likely to grow faster and larger. According to the other article, the year, 2020, definitely changed our awareness on climate change. In fact, most of developed countries applied new public policies to increase sales of electric vehicles. In other words, it means that batteries including a lithium-ion battery are demanded more in the next few years or next few decades.
Second, many big companies cannot be ignorant of the key factors that are Environmental, Social and Corporate Governance. The battery market has huge potential and opportunities. However, companies have to invest in production facilities as well as Research & Development. Thus, they need tremendous money to win the competition. When it comes to LG Chem, chemical industry faces the challenge to realize both economic growth and sustainability. Therefore, it was better for the South Korean chemical giant to make a decision to separate battery business unit from it, and the company did as a result.