LG Innotek said on the 24th that it recently succeeded in raising a large amount of funding from the International Finance Corporation (IFC) after its ESG (environment, social, governance) management performance was recognized. The IFC, an institution under the World Bank Group, is an international financial institution that supports investment in private companies.
LG Innotek applied last year for the IFC's sustainability-linked loan (SLL) to fund the expansion of its manufacturing subsidiary in Haiphong, Vietnam, and has now become the first among Korean corporations to borrow a total of $200 million (about 279 billion won). The loan matures in eight years.
SLL is an international financial scheme first introduced in 2017 to spread ESG management among global corporations. The higher a corporation's ESG management and compliance indicators, the greater the interest rate reduction benefits.
Unlike green loans, which require loan proceeds to be used only for ESG-related projects, SLL allows funds to be used for various purposes. Accordingly, approval procedures are stringent, and regulations on loan execution oversight are strict. During the loan period, a corporation must achieve the ESG management targets pre-agreed with the bank to continue receiving low-interest benefits.
An LG Innotek official said, "By passing the rigorous standards of a credible international organization and successfully securing SLL funding, LG Innotek has once again proven its top-tier ESG management capabilities not only in Korea but globally."
In 2022, the company set ambitious goals to switch 100% of electricity used at business sites to renewable energy under the so-called "RE100" by 2030, and to achieve carbon neutrality by 2040. Last year, it converted 638 GWh—nearly 60% of the electricity used at domestic and overseas business sites—to renewable energy. Excluding the Korea Water Resources Corporation (K-water), which develops renewable energy projects, this is the highest conversion rate among domestic corporations that have declared participation in RE100. Including Vietnam, two domestic business sites—Paju and Gumi 1A—already achieved RE100 last year.
As a result, in the 2024 Carbon Disclosure Project (CDP) climate change response assessment, it received a "Leadership A rating" and was also named a top carbon management corporation for the third consecutive year.
Carsten Müller, IFC's Asia-Pacific regional industry director for manufacturing, agriculture, and services, said, "We are pleased that IFC's first SLL with a Korean corporation is being carried out with LG Innotek," adding, "IFC will continue various collaborations with LG Innotek to advance sustainability."
Park Ji-hwan, LG Innotek CFO (senior executive vice president), said, "The funds raised from the IFC are a meaningful financial outcome produced by the company's sincere ESG management efforts," adding, "LG Innotek will continue to lead in ESG management and grow as a corporation that delivers differentiated customer value."