ericsson-lg un global compact communication on progress 2011

Ericsson-LG UN Global compact Communication on Progress 2011


Contents

03 CEO Message

04 Vision and Value

05 Sustainability Management System

07 About the Company

11 About this Report

12 Corporate Governance

13 Stakeholders

15 Implementation of Global Compact Principles

40 Memberships and Awards

41 GRI Index

www.ericssonlg.com

the first report of Ericsson-LG on the implementation of thE promise

Ericsson-LG 2011 UNGC COP 03

Overview

CEO Message

Ericsson-LG is a wired/wireless communication equipment and networking solution

company established in July 2010 by LG Electronics, Inc., which has led the IT industry

in Korea, and Ericsson, the number one company in the world wireless network market.

Based on the cutting-edge technical capabilities and development experiences accumu-

lated for a long period of time, Ericsson-LG recorded the biggest turnover in 2011 since

its foundation despite the environment of increasing uncertainty in the global economy,

rapidly changing technical advancement, and fierce competition.

In addition to financial achievement, we have strengthened global business capability

by providing differentiated customer value through our products and solutions and es-

tablished the base for sustainability management by operating a CSR Committee and

building a sustainability management achievement administration system. We are paying

careful attention to social and environmental concerns to become a responsible mem-

ber of the community and are appropriately and correctly coping with the demands of

stakeholders.

Ericsson-LG believes that the products and services it has provided as a global leader in

the communication field have potential to bring enormous profit to society. At the same

time, we know that it is important to act with a sense of social and ethical responsibili-

ties. We have interest in the people who have participated in production and the people

who support our products and services spread across the whole world, and we are

endeavoring to improve productivity and minimize the environmental impact on society

where we are working.

Ericsson-LG is supporting the UN Global Compact Initiative, which handles issues re-

lated to human rights, labor, environment, and anti-corruption. We have established a

corporate code of conduct based on the 10 principles of the UN Global Compact to

keep the promise for the Initiative made to employees, partners, customers, and diverse

stakeholders, with the content posted on the website.

This is the first report of Ericsson-LG on the implementation of that promise, wherein

not only the UN Global Compact but also the activities of Ericsson-LG in relation to its

social responsibilities in all aspects of environment, society, and economy are compre-

hensively put in place.

Ericsson-LG will keep supporting the UN Global Compact continuously and make every

effort to become a company that caters to the interest and expectations of stakehold-

ers, fulfills its responsibilities, and pursues sustainability growth and advancement.

Thank you.

Martin Wiktorin, CEO


Overview

Vision and Value

ProfessionalismCustomer. First

Innovate. Everyday

Speed. Quality

Empower. Action

Perform. Team

Innovating to

empower people,

business,

and society

Respect

Perseverance

The prime driver in an all communicating world

VALUES MISSIONPRINCIPLES

VISION

Customer first/Execution/Accountability

Empowerment/Trust/Diversity

Change agent/Courage/Passion to Win


Overview

Sustainability Management System

█

Continuously reduce the environmental impact of our own operations

█

Increase the knowledge and awareness about sustainability among employees

█

Use Design for Environment (DfE) strategies to achieve continuous environmental improvements regarding mass and energy flows related to Ericsson-LG´s product portfolio

█

Engage in selected activities that, in addition to promoting Ericsson-LG’s business, have positive socio-economic impacts and promote the vision of communication for all

█

Use Life-Cycle Assessment (LCA) methodology as a means for determining significant aspects and as a basis for communicating environmental performance of our operations, products, services and solutions

█

Engage our suppliers to ensure adequate sustainability standards in our supply chain

█

Actively engage with our stakeholders about our sustainability performance

█

Meet or exceed applicable legal requirements in the socio-economic and environmental areas

█

Provide product take-back services to our customers as part of our producer responsibility, to assist them in the end-of-life management of products and solutions

Sustainability Policy


Overview

Sustainability Management System

█ Improve our own sustainability performance : We do this by continuously reducing our environmental impact, deepening our understanding of the business potential within sustainability and by further integrating sustainability in our culture and ways of working.

█ Provide products, solutions and services so that customers improve their own environmental performance : Our ambition is to be the undisputed leader in energy efficiency and environmental performance to reduce our own and our customers’ environmental impact throughout the value chain. We set ambitious targets, provide our customers with products, services, and solutions aimed at greater energy efficiency, and drive standardized metrics to capture improvements in energy efficiency and life-cycle impacts including product take back.

█ Enable a low-carbon economy : To promote ICT as a catalyst for change, we actively engage in global policy to address climate change and we also strive to capitalize on business opportunities to drive the transition to a low-carbon economy, from smarter and connected cities and villages to the intelligent grid and sustainable transport.

█ Enable communications for all : We demonstrate how ICT can contribute to socio-economic development and contribute to the Millennium Development Goals. We build our strategy on sustainable business models and alliances with stakeholders who share our commitment.

█ Be a trusted partner : We are recognized for high standards of business ethics and manage corporate responsibility business risks to secure that Ericsson-LG is a trusted partner among our stakeholders. We fulfill this aim by engaging to address global challenges, and ensuring a robust system of corporate governance which includes the Code of Business Ethics, Supplier Code of Conduct and Sustainability Policy.

Sustainability ManagementOrganization

S&CR Work Group

>> Consisting of S&CR related organizations>> S&CR implementation and achievement review※ S&CR : Sustainability & Corporate Responsibility

Board of DirectorsCEO

S&CR Committee

S&CR Work Group

S&CR Office

Sustainability strategy


Ericsson-LG is a company launched on July 1, 2010 when Ericsson purchased

the entire shares of Nortel in LG-Nortel. We are doing our best to help

customers have access to the desired information more conveniently using

advanced technical capabilities and competitiveness in the development and

sales fields of communication equipment and network solution products and to

enhance opportunities and quality of communication not only in business but

also in daily life.

·Company name : Ericsson-LG

·Date launched : July 1, 2010

·President & CEO : Martin Axel Wiktorin

·Number of employees : About 1,200 (as of December 2011)

·Adress : GS tower, 679 Yeoksam-dong, Gangnam-gu, Seoul, Korea 135-985 (www.ericssonlg.co.kr)

Organization CEOEnterpriseSolutions

Deputy COO

COOBusiness

Operations

CTOTechnology &

Innovation

CFOFinance &

Business Control

Human Resources

& OrganizationDeputy CFO

SalesOperations

SD&O CS&E R&D KT Account LGU+ Account SKT Account

Integration &Sourcing

※ As of April 16, 2012

Overview

About the Company

General Status


1984

2006

2011

1995

2007

2001

2009

2012

2005

2010

Business fields and representative products

Started commercialization of fully electronic switching system

Mobile phone-based HSDPA network opened for the first time in the world (by SK Telecom) Ultra-high-speed wireless network opened (by Korea Telecom)

Selected as 4G/LTE supplier for LGU+, SK Telecom and Korea Telecom

Completed commercialization of CDMA for the first time in the world

Started LG U + CDMA Rev. A service

Completed commercialization of asynchronous IMT-2000 system (UMTS)

Commercial WDM-PON I service started (by Agder Broadband, Norway)Completed development of multimedia phone with embedded Android for the first time in the world

Company renamed Ericsson-LG

Joint venture (LG-Nortel) established by LG Electronics, Inc., and Nortel

Nortel’s share of LG-Nortel acquired by Ericsson, company renamed LG-EricssonService of Korea Telecom Cloud Communication Center commercialized

Major milestones of the company

CaRRIER NETWORKS

- Wireless (LTE, WCDMA, CDMA)

- Wireline (IP & Optic) - EFA (WDM-PON)

- Small Cell - Services

ENTERPRISE SOLUTIONS

- Voice Solution (IP PBX, IP Hybrid solutions)

- Applications (NMS,UMS,UCS,UDM,SIP Clients etc )

- Client Devices (IP Phone, Multimedia terminal)

Ericsson-LG possesses diverse portfolios such as wired/wireless communication

equipment, enterprise solutions, services, and various applications. Aside from supporting

optimized network and communication infrastructure for small/medium businesses and

large companies as well as communication service providers not only in Korea but also in

the global market, we also provide efficient solutions suitable for each environment.

Overview

About the Company

Business fields


Global OfficeThe Company has a great number of customers in more than 58 countries all over the world.

Korean Office The Company has about 1,200 employees including some 700 R&D employees throughout the country.

Headquarters (Seoul)

Daejeon office

Busan office

R&D (Anyang)

Cheongju site

Gwangju office

Daegu office

CIS OFFICE MOSCOW

YKX HANOI, VIETNAM

LNSC(SRITHAI COMM)CHACHOENGSAO, THAILAND

UK OFFICE LONDON

Ericsson-LG EUROPE AMSTERDAMEricsson-LG CANADA

OTTAWAEricsson-LG USA IRVINE

Overview

About the Company

Business places


Overview

About the Company

Market Share

Ericsson-LG

46%42%

12%

A COMPANY B COMPANY

Status of domestic market share of Carrier Networks Business

as of 2011

as of 2011

Domestic market share of Carrier Networks Business

3g

lte

Ericsson-LG A COMPANY B COMPANY


Reporting purpose This is the first report of Ericsson-LG on the progress of implementation of the

UN Global Compact. Ericsson-LG seeks to make available -- in a transparent

manner -- its implementation results achieved in 2011 to stakeholders through

this report and continue meaningful communication with them by consolidating

their opinions.

Reporting period and scope This report is prepared based on data from Jan. 1 to Dec. 31, 2011. Part of

quantitative data of 3 ~ 4 years are presented together for trend analysis. The

quantitative and qualitative data required for the report include the achievements

in implementing the 10 major UNGC principles and track record and detailed

sustainability management activities of all the domestic business places of

Ericsson-LG.

Reporting principle This report is prepared by taking into account the G3 guidelines presented by

GRI (Global Reporting Initiative).

Inquiries on the reportAdditional information related to this report can be found at www.ericssonlg.co.kr (domestic) and www.ericssonlg.com (global). For more details, please contact:

CSR Team, HR&O Division, Ericsson-LGLG R&D Complex I, Hogye-1-dong, Dongan-gu, Anyang-si, Gyeonggi-do, Korea Tel : +82-31-8054-5775

Overview

About this Report

About this Report


Shareholder status With LG-Nortel established jointly by LG Electronics, Inc., and Nortel on

November 3, 2005, Ericsson became the largest shareholder of Ericsson-

LG after taking over all shares owned by Nortel in July 2010. As of April 2012,

Ericsson and LG Electronics, Inc., have 75 % and 25 % shares, respectively.

Board of Directors The Board of Directors of Ericsson-LG is made up of a total of 7 directors and is

chaired by Mats Olsson, president of Ericsson RCNA.

A total of four board meetings (March, June, September, and November) were held in

2011; special board meetings are held when needed in accordance with the issues.

Name

Mats Olsson*

Patrick Johansson

Ulf Ewaldsson

Martin Wiktorin

Jan Signell

Do-hyun Jung

Sang-hoon Koo

※ As of June 2012

* Chairperson

Company/Position

President of Ericsson RCNA

CFO of Ericsson BNET

CTO of Ericsson

CEO of Ericsson-LG

President of Ericsson Japan

CFO of LGE

CFO of Ericsson-LG

Date

Mar.

Jun.

Sept.

Dec.

Particulars

- Approval of 2010 business report and financial statements

- Approval of designation of 2011 external audit organization and expense

- Approval of limits on pay for directors and auditors

- Report on business achievements in the first quarter of 2011

- Report on business achievements in the second quarter of 2011

- Report on the Five-Year Growth Plan

- Approval of the Five-Year Growth Plan

- Report on business achievements in the third quarter of 2011

- Report on business achievements in the fourth quarter of 2011

- Approval of the 2012 business plan

- Approval of the 2012 financial plan

- Approval of promotion of directors

Board of directors composition Board of directors activities in 2001

Overview

Corporate Governance

Shareholders & Board of Directors

Ericsson-LG classifies stakeholders having practical or potential interest in

or influence on its corporate activities into employees, suppliers, customers,

shareholding companies, and local communities. It seeks to become the most

trusted company by understanding their expectations and demand and reflecting

such on its corporate activities.

Survey To grasp the recognition of employees on the current level of sustainability

management activities of the Company and the activities whose importance is

deemed by the employees to increase in the future, a survey was conducted through

the company intranet in April 2011.


Activities whose importance will increase in the future

Activities recognized at present

· Invigoration of communication with stakeholders

· Reinforcement of sustainability management governance

· Reinforcement of environmental management such as release of environmentally friendly products

· Protection of rights of employees and enhancement of their satisfaction

· Ethical management· Social contribution activities · Development of environmentally friendly products

· Union-management relations

Ericsson-LG

Overview

Stakeholders

Stakeholders

Ericsson-LG is conducting materiality analysis to grasp the issues whose preferential

consideration is being requested by stakeholders and determine the priorities of the

issues that it should promote intensively.


· Implementation of responsibilities to customers such as product quality and customer safety

· Periodic execution of survey on customer satisfaction and opinions

· Operation of a unit exclusively in charge of customer protection and product responsibilities

· Execution of sufficient investment in the education/training of employees

· Support for the maintenance of balance between work and personal life

· Operation of fair evaluation and compensation system

· Eradication of unfair demand on suppliers by abusing the superior position

· Operation of a system that ensures the transparent and fair execution of tender and contract with suppliers

· Development of a system related to suppliers wherein they are recognized as partners

· Positive operation of a support system that can encourage employees to participate in social contribution activities

· Operation of a unit exclusively in charge of social contribution

· Disclosure of information on community contribution activities

· Positive operation of a development procedure for the improvement in energy efficiency of products

· Consideration of environmental issues across the entire process from product development and sales to disposal

· Positive operation of a system for saving of direct/indirect energy and resources

Customer

Employees

Suppliers

Local Communities

Environment

Overview

Stakeholders

Materiality Analysis

Implementation of GLOBAL COMPACT PRINCIPLEs

human rightsPrinciple 1: Businesses should support and respect the protection of internationally proclaimed human rights.

Principle 2: Make sure that they are not complicit in human rights abuses.


Implementation of Global Compact Principles

human rights

Code of Business Ethics OHSAS 18001

Commitment

Ericsson-LG respects the human rights of individuals and observes domestic

and foreign laws related to human rights and labor in all its business places.

Our obligation is to avoid involvement in the maltreatment of people or

violation of human rights in countries where laws/regulations and ethical

standards are not applied.

The key technologies of Ericsson-LG will help in promoting a democratic

society, creating economic opportunities, and improving the quality of life.

System

Ericsson-LG has established a code of business ethics based on the 10

principles of the UN Global Compact. It is asking the board of directors,

management, and employees to act based on honesty and ethics.

In addition, a “Grievance Committee” is organized within the Employee

Management Council to hear and resolve the grievances of employees.

Ericsson-LG is operating a unit exclusively in charge of safe working

environment for and health of employees in its business places and is

participating in Global OHS 18001 certification.



human rights

Classification

Support for medical examination and safety of the aged

Female welfare system

Particulars

- Support for medical expenses of employees and family members- Execution of general medical examination of employees older than 35 and their spouses - Execution of periodic medical examination and preventive examination every year- Group insurance: Payment of insurance when an accident occurs and the victim receives treatment

- Operation of nursing room- Operation of pregnant women support system (leave system, selective working hours, etc.)

CSR Education of employees Operation of medical examination system

>> Human rights support program

Implementation activities

Respect for human rights of employees

Ericsson-LG has -- within EMC (Employee Management Council) -- a

“Grievance Committee” that hears and resolves the grievances of employees.

The Grievance Committee consists of a total of 4 members to whom

employees can report grievances orally, in writing, or via e-mail. When

grievance is received from an employee, the committee should notify such

employee of the action taken and the result of other processing within 10

days.

In addition, Ericsson-LG is providing professional education on sexual

harassment prevention to all employees for about 2 hours every year to foster

recognition on the issue of sexual harassment in its business places.

Ericsson-LG is operating reasonable welfare systems such as enhancement

of health and female welfare system based on respect for the human rights of

employees. We shall not be satisfied with the current level, however. Instead,

we shall further explore diverse systems that can uphold better the human

rights of employees in their working lives.



2009 2010 2011

2009 2010 2011

176

806

6055

65

750 802

165 121

human rights

Learning & Development

Ericsson-LG is ensuring the proper execution of occupational health and

safety management works by establishing the OHS operation procedure. No

major accident related to occupational health and safety has occurred in 2011

since we have identified potential risks through risk assessment and carried

out activities to prevent accidents.

Ericsson-LG is prioritizing the health of employees and safety across the

entire working environment in business places by controlling the noise

level, temperature, ventilation, lighting, hygienic facilities, and hazardous

substances of business places, guided by the principle that a pleasant, safe

working environment translates into a more efficient working environment.

Occupational health & safety management

Ericsson-LG is ensuring the proper execution of occupational health and

safety management works by establishing the OHS operation procedure. No

major accident related to occupational health and safety has occurred in 2011

since we have identified potential risks through risk assessment and carried

out activities to prevent accidents.

Ericsson-LG is prioritizing the health of employees and safety across the

entire working environment in business places by controlling the noise

level, temperature, ventilation, lighting, hygienic facilities, and hazardous

substances of business places, guided by the principle that a pleasant, safe

working environment translates into a more efficient working environment.

Training Course

Talent attraction program

Essential program

Language program

Business issue

Functional job training

Particulars

Leadership program

Education of promoted employees, education of new employees

In-house language school, internal TOEIC Speeking Test

Book education, 6 sigma, Ethical management, prevention of sexual harassment, etc.

Ericsson Academy, My Learning, Technical Certification Program, etc.

>> Training program

OHS Communication

>> Number of employees trained

>> Training hours per person

Essential program Job/Language/Others



human rights

Participation in local communities

Ericsson-LG is practicing “Sharing Management” under the slogan “A

Life Lived Together” and leading the realization of a warm, happy future

society. We are positively cooperating with international relief organizations,

domestic welfare organizations, and volunteer activity organizations in local

communities to respond to corporate social responsibilities positively and

performing our responsibilities as a corporate citizen and a member of

society.

Ericsson-LG Social Service Group

The Ericsson-LG Social Service Group consists of about 100 employees led

by the CEO and includes an Employee Board, Facilitators of each unit (Change

Agents), unit heads, and pure volunteers. The group was launched when we

participated in the removal of oil slick in Tae-an, Chungcheongnam-do in April

2008. Having assumed the form of the current organization in 2009 when

informal groups that had been independently active joined the group, it is

continuing diverse social service activities quarterly.

EmployeeBoard

Social Service Group

Employees who want to participate in volunteer activities

InformalGroup

Secretariat

Team LeadersChangeAgent

Launch of Social Service Group (2008)

2008 2009 2010 2011

>> Number of participants in social contribution activities

194 197

179

224

2008 2009 2010 2011

>> Expenditure for social contribution

(million Won)35

53

80

37



human rights

Volunteer activities

Ericsson-LG is holding various social contribution activities through the Social

Service Group for the welfare of local communities as a corporation that

creates a warm society and a happy future.

Farm village service activities

Ericsson-LG is practicing the spirit of win-win between cities and farm

villages by helping farmers in the harvest of crops, repair of home appliances,

and purchase of agricultural products. We visit the home town recommended

by employees during the busy season once a year.

Taking beautiful photographs

Ericsson-LG is practicing respect for the elderly by periodically performing a

volunteer activity of taking photographs of the aged to make framed “pictures

of the deceased” and give them twice a year.

Sisterhood relations service activities

Ericsson-LG is sharing close friendship with military units by establishing

sisterhood relations with them. We carry out volunteer activities once a year in

cooperation with them in villages near their bases and give them consolatory

money at the same time.

Service activities conducted jointly with other companies

Ericsson-LG is conducting service activities for local communities jointly with

9 companies around the Volunteer Center of Anyang-si where the Company

Research Center is located. The companies are playing the leading role in

providing services and funds as a very unique form of volunteer activity.

Charity Activities

Ericsson-LG seeks to become a reliable friend and neighbor of local

communities through activities that keep dreams alive and inspire courage

among socially neglected neighbors in achieving self-reliance.

Visit to welfare foundations

Ericsson-LG is carrying out activities such as experiencing environment

cleaning service, playing the role of one-day helper by visiting welfare

foundations in local communities such as Hansarang House of the Disabled

(Gwangju, Gyeonggi-do) and House of Anyang (Anyang, Gyeonggi-do) once

a year, and empathizing with the socially underprivileged.

Making Kimchi of love

With employees and their family members in attendance, the Employee Board

of Ericsson-LG is holding an event of making Kimchi for winter every year and

giving it to welfare foundations in local communities and scholarship students

it supports.

Helping orphans

“Sarang Society,” an informal group in Ericsson-LG, is doing mentoring to

give hope and courage to orphans through periodic meetings and exchange

of letters and holding an event of giving basic supplies and cakes at the end

of every year.



human rights

Donation event

Ericsson-LG is donating to needy neighbors using the Social Contribution

Fund raised voluntarily by the employees (odd-numbered amount of monthly

pay and fixed amount donation), with the Company making a corresponding

contribution (Matching Grant System).

Helping needy neighbors

Ericsson-LG is holding events such as “Briquette of Love Sharing,” “Home

Appliances Donation,” “Winter Kimchi Donation,” and “Book Donation”

for low-income neighbors/foundations having difficulty making a living by

themselves.

Scholarship support

Ericsson-LG is supporting poor youngsters in areas where its business places

are located in the form of monthly scholarship using the Social Contribution

Fund raised jointly by the employees and the Company to help them

overcome their difficult environment and grow into future persons of talent.

Support for children’s foundations

Ericsson-LG is sponsoring the “Milk Prince Campaign,” which provides milk

support to a designated number of children of low-income families based on

a donation agreement, and helping growing children foster trust and nurture

dreams in society.



human rights



human rights

Supplier Code of Conduct (S-CoC)

Ericsson-LG’s S-CoC is based on Ericsson’s S-CoC prepared based on the

10 principles of the UN Global Compact. S-CoC includes risk assessment,

audit, education of suppliers, and knowledge sharing. The Company is

helping suppliers achieve by themselves improvements in many parts

regarding respect for the human rights of employees through S-CoC learning.

Communication with suppliers

Ericsson-LG is recognizing suppliers not as vertical but as horizontal partners

having organic relations and sharing visions and goals and pursuing mutual

win-win with the Company.

Customer information protection

Ericsson-LG is faithfully observing the Act on Customer Information

Protection. It operates the “Personal Information Handling Policy” it

established and prevents the illegal outflow of personal information by

designating a department and a manager exclusively in charge of personal

information management.

S-CoC

Partners Conference

laborPrinciple 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.

Principle 4: The elimination of all forms of forced and compulsory labor.

Principle 5: The effective abolition of child labor.

Principle 6: The elimination of discrimination in respect of employment and occupation.



laborCommitment

Ericsson-LG is encouraging employees to establish or join organizations

peacefully and legally and of their own volition and to exercise their right to

collective bargaining. It respects the equality and diversity of employees in

business and prohibits compulsory labor and discrimination.

System

Ericsson-LG is operating various communication channels such as EMC

(Employee Management Council) organized by representatives of employees

and management, EB (Employee Boar), which is an autonomous body of

employees, TDC (Top Direct Communication) carried out by the CEO, and

AEM (All Employee Meeting) for communication between the relevant director

and employees of each unit to consolidate the opinions of employees on the

working conditions and overall matters related to working life and to reflect

them positively.

In addition, the Company has declared related regulations and internal

policies for all aspects of labor such as service, working hours, employment,

evaluation, and diversity for observance by all employees.



labor

EMC TDC AEM


Communication between union and management

Ericsson-LG is operating various communication channels to cope promptly

with changes in management and labor environment in and outside the

Company and to ensure smooth communication within the organization.

EMC (Employee Management Council)

EMC is organized and operated by the same number of executives and

employees for enhancement related to the rights and interests of employees

and advancement of the Company.

TDC (Top Direct Communication)

The CEO explains the vision, strategy, and management issues of the

Company to employees by visiting each business place every quarter and

collects the opinions of the employees to reflect them on policies.

AEM (All Employee Meeting)

Business achievements are shared, and management issues are conveyed

quarterly and semiannually on unit basis; the opinions of employees are

collected and reflected on the operation of the organization to build trust

between the units and employees.

Classification

Convening

Main issues discussed

Others

Particulars

Quarterly

Pay, bonus, welfare, and other management issues

Operation of the Grievance Committee



labor

UNGC 원칙 실행

EB (Employee Board)

As an autonomous body of employees, EB collects the opinions of employees

and executes communication with the management team. It is conducting

diverse activities aimed at upholding the rights and interests of employees.

CA (Change Agent)

Members of CA are employees performing the roles of communicators and

motivators who proactively lead the change activities of the organization.

Last year, 61 change agents were selected; they actively participated in

organization invigoration activities such as reading forum, companywide

events, and social contribution activities.

Corporate culture activities

Ericsson-LG is steadily operating companywide events such as spring

picnic, athletic meeting, business conference, family day, and “Hanmadang

for Takeoff” once or twice a year. In addition, a total of 19 informal in-house

groups organized for sports, leisure, culture, knowledge learning, and

volunteer activity are active as of the end of 2011.

Classification

Compensation

HR System

Social Responsibilities

Major Issues

Suggestions on pay and bonus

Suggestions on education system and welfare program improvement

Suggestions on and participation in matching grant and social service activities

Regular Meeting of EB

CA Workshop

Family Day Event

Biz. Conference



labor Employee diversity

Ericsson-LG employs human resources through fair procedures in

accordance with domestic and international regulations and respects the

diversity of employees.

Expansion of female manpower

Ericsson-LG is making efforts to provide opportunities for fair employment

and promotion as well as appropriate working environment for female

manpower. Employees newly employed in 2011 numbered 80, 27 % of

whom were women. Female manpower is steadily increasing every year.

Furthermore, the ratio of male and female managers is taken into account

to expand the ratio of female managers; various programs such as female

leadership training are also operated for the expansion of female manpower.

Fair evaluation and compensation

Ericsson-LG applies a standardized evaluation system to all employees

(exceptions: new employees, dispatched employees, and contract

employees). Performance and competency evaluations are conducted, and

results are reflected on incentives and annual pay of each individual.

The Company induces excellent performance by providing differentiated

compensation to employees who have demonstrated high performance

based on the evaluation results. It encourages and assists employees with

poor performance to improve their performance by providing clear feedback

and coaching.

As of the end of 2011, the pay for a new employee is higher than the legal

minimum wage; fair compensation is given to males and females based on

their abilities, without any difference in the basic pay.

Less than 5 years

5~10 years

11~15 years

More than 15 years

10.5%

23.3%

28%

38.1%

Classification

Evaluation

Compensation

Particulars

- Performance evaluation: Goal achievement level/Level of difficulty/Level of goals of the relevant rank

- Competency evaluation: Job competency and common competency

- Basic annual pay: Differentiated adjustment by annual pay grade every year (accumulated pay)

- Incentive: Incentive paid to employees demonstrating superior performance

- �Management bonus: Management bonus paid in accordance with the business performance

>> Manpower status (2011)

>> Years of consecutive service (2011)

Male

Total

Female

87.4%

1,195 12.6%

20102009 2011

>> Temporary employees

2.1%2.0%3.1%

20102009 2011

>> Separation rate

7.3%

3.8%5.8%



labor Work and life balance

Ericsson-LG is operating rational and competitive welfare systems such as

stabilization of livelihood, health enhancement, leisure activities, and support

for work life so that employees can take pride in being part of the Company

and enhance work efficiency.

Family-friendly system

Ericsson-LG is operating the various systems it adopted such as “Selective

Working Hour System,” “Recommended Leave System,” and “Family Day” to

help employees derive satisfaction from both work and personal life.

Classification

Classification

Support for stable living

Selective Working Hour System

Recommended Leave System

Evaluation

Support for work life

Selective welfare system

Legal welfare

Utilization of leisure

Particulars

Particulars

- Housing support: Support for the purchase and lease of house - Support for expenditure for family events: Payment of expenditure for

family events and granting of family event leave for family events of employees and their family members

- Support for school expenses: Full subsidy of school expenses for children attending middle/high school and college

The time of coming to work and leaving the office is decided by each employee (coming to work: 08 ~ 10 o’clock, leaving: 17 ~ 19 o’clock).

Fifteen recommended annual leave are designated (2011).

Leaving the office at the designated time every 25th of the month

- �Lunch and dinner support: Provision of meals in each business place - Commuting bus support: Payment of transportation expenses, operation

of commuter and shuttle buses- Loyalty award: Reward and travel support for employees who have

served the Company for a continuous, long period

- Payment of points equivalent to 1 million KRW every year- Points used for purchase of articles, self-development, and leisure

utilization purposes

- Support in the form of National Pension, Health Insurance, Employment Insurance, and Employees’ Compensation Insurance

- Execution of Retirement Pension System

- Resort facilities: Support for use of GS Gangchon Resort, Daemyeong Condominium, LG Life Training Center, Hanwha Condominium, and Koresco Condominium

- Language education: Support for language school courses- Sports game watching: Support for tickets of LG Twins and FC Seoul

Operation of welfare point system

environmentPrinciple 7: Businesses should support a precautionary approach to environmental challenges.

Principle 8: Undertake initiatives to promote greater environmental responsibilities.

Principle 9: Encourage the development and diffusion of environmentally friendly technologies.



environmentCommitment

Ericsson-LG is observing the Sustainability Policies in order to contribute to

the sustainability advancement of society and provide products and solutions

delivering high environmental performance.

System

To minimize the impact of business activities on the environment, Ericsson-

LG has acquired ISO 14001 in 2009, based on which the environmental

management system is adopted to make efforts for systematic, continuous

management.

Moreover, we are conducting energy-saving activities wherein all employees

participate and recognize the importance of addressing the problem of

climate change. We are also operating the Environmental Operation and

Management System we established in 2010 to manage greenhouse gas

emissions systematically.

We are operating the IT system that we developed and which manages

information on the use of hazardous substances (HSMS: Hazardous

Substance Management System) to manage efficiently information on the

hazardous substances contained in raw materials and parts.

Env i ronmen ta l Ope ra t i on and Management System

Hazardous Substance Management System

ISO 14001 Certification


Greenhouse gas emission reduction

Travel efficiency

Environmental Operation and Management

System

Energy saving in

office

CO2 emission

from transport

Life Cycle Assessment

Classification

Travel efficiency

CO2 emission from transport

Life Cycle Assessment

Energy saving in office

Major Activities

- Utilization of videoconference system- Expansion of smart tools

- Distribution data management

- Carbon Footprint Labeling Certification

- Energy management of IT equipment- �Management of energy use data of business places- Green life practice campaign


Greenhouse gas emission reduction

Though it is not a company that emits direct pollutants, Ericsson-LG

recognizes the importance of addressing the problem of climate change as a

communication equipment company. We have been carrying out greenhouse

gas reduction activities in 2011, placing emphasis on 4 areas: travel efficiency

; energy saving in our office and facility; CO2 emission from our product

transport, and; control of CO2 emission across all processes from the product

manufacturing phase to disposal.


environment


Travel efficiency

Ericsson-LG determines the expected greenhouse gas emission of business

travels of employees and continuously makes efforts to reduce such through

the enhancement of efficiency of works during business travels. In 2009,

videoconference systems were built in all domestic and overseas business

places. Smart work solutions such as webconferencing and individual

audioconferencing were also adopted in 2011.

Energy saving in office

The greenhouse gases emitted by the business places of Ericsson-LG are

those generated by two energy sources: electricity and gas. Last year, we

improved the energy efficiency of the air inflow control equipment in the Data

Center, one of the places with the biggest energy consumption in the office.

For 2012, we are planning to have energy-saving activities concentrated

in STP and LAB in the R&D Center, the place with the biggest energy

consumption.

Videoconference System

>> Energy consumption

Classification

2010

2011

Gas (m2)

422,409

365,193

Electricity (Kwh)

11,929,012

13,414,061


environment

Smart solutions were expanded

CO2 emissions of business traveltravels were calculated

Business travel data are managed2009Videoconference systems

were built

2011Smart tools are

adopted

2012~

Environmental Management Education


Acquisition of Carbon Footprint Labeling Certification


environment

Verification of Product by a Third-Party Certification Institute

Sponsored Establishment of WDM-PON International Standard

Participation in Carbon Footprint Labeling Certification for product

Ericsson-LG understands the environmental impact wielded by products and

makes efforts to reduce the emission of greenhouse gases. Last year, we

acquired Carbon Footprint Labeling Certification by executing evaluation on

the entire process of the VoIP phone set on a trial basis.

Carbon Footprint Labeling Certification means indicating on the product the

total quantity of CO2 emitted in all processes from production, distribution,

and consumption of a product to disposal. Certification in the field of office

phone set was carried out by Ericsson-LG for the first time in Korea.

Environmentally friendly products development

As the direction in which Ericsson-LG develops environmentally friendly

products, it responds in a timely manner to domestic and international

environmental regulations and control and minimizes environmental impact

by taking into account the environmental aspects in the life cycle of products.

Energy efficiency enhancement of products

Ericsson-LG is applying the “Energy Efficiency Design Check Sheet”

it developed to improve the energy efficiency of products. We are also

observing the ErP Directive to minimize standby power.

In addition, we are participating in ESP (Energy Standby Program) operated

by a government organization (Korea Energy Management Corporation) as a

standby power reduction activity.

Verification of environmentally friendly products

Ericsson-LG not only evaluates autonomously whether a product is an

environmentally friendly product at the development phase of the product

but also assesses the inflow of hazardous substances periodically at the

production phase using an external third-party certification institute.


Hazardous substance management

Ericsson-LG is operating the IT system that it developed and which manages

information on the use of hazardous substances (HSMS: Hazardous

Substance Management System) to manage efficiently information on the

hazardous substances contained in raw materials and parts. Furthermore,

we require suppliers to prepare analysis reports for parts at the product

development phase and manage whether hazardous substances are used or

not in accordance with the management standard of each supplier.

Basic information (Parts, Company, Environmental control)

Design New Product

(Development, Purchase)

Response to buyer

requirements and

regulations

Suppliers / Buyer

Registration of part information

Evaluation of part information

Mail / Board

HSMS


environment

Environmental impacts reduction of customers

Ericsson-LG developed the CCC (Cloud Communication Center) system,

which improved communication quality, network speed, and energy efficiency,

and applied it to several areas such as Gangnam, Myeong-dong, and Jongro,

Seoul starting from Anyang through telecommunications provider KT from

February 2011 for the first time in the world.

KT expects CO2 emission to be reduced by 10,000 tons per annum – which

is equivalent to the CO2 emissions of about 3,000 automobiles -- by reducing

power consumption by 67 % through the performance of the CCC equipment

itself and improvement in the network structure.

Provision of solutions with improved energy efficiency

The goal of Ericsson-LG with regard to the reduction of environmental impact

by customers is to provide products and solutions with improved energy

efficiency at the right time. Energy efficiency is divided into minimizing energy

consumption at the network phase, optimizing site power at the site phase,

and investing in alternative energy sources. Announcement of CCC Operation Result by KT

ES Development Test

CN Development Test

Anti-CorruptionPrinciple 10:Businesses should work against corruption in all its forms including extortion and bribery.



Anti-Corruption

Hotline system

Cyber Information System

Commitment

Ericsson-LG considers honesty and ethics to be the most important key

values in corporate activities, and it is trying to deal with customers, suppliers,

employees, shareholders, and other stakeholders based on mutual trust as

well as on such values.

System

Ericsson-LG is operating the Cyber Sinmungo System, a whistleblowing

system, to protect the Company and employees from misconducts and to

cope with incidents and accidents promptly.

Moreover, we are operating a hotline that plays the role of a practical,

constructive problem-solving venue through the provision of information

related to ethical culture and Ethical Management. We are continuously

reinforcing monitoring for the establishment of a right view of value by

employees and fair performance of their jobs.

We are providing compulsory education on the Code of Business Ethics to

all employees to foster business ethics and instill a sense of responsibility.

Employees are required to observe related regulations, provisions, and

instructions.

Ethical management practicing program

● Preparation of written pledge to practice

● Ethical management campaign

● Audit of expense appropriateness

● Diagnosis of overseas corporation



Anti-Corruption

Ethical management education

Ericsson-LG is providing compulsory education on ethical management to

all employees periodically every year to foster business ethics and sense of

responsibility. Occasional ethical management education is provided when

necessary such as for new employees, etc.

Incidents/accidents

receipt

Status checking/Audit plan establish-

ment

Disciplinary committee/Disciplinary

action

Audit execution

Audit result report

Code of Business Ethics

Item

2010

Irregular (Online)

Irregular (Offline)

No. of Employees

1,214

36

22

Education Time (Hour) Object

2 h All employees

1 h

1 h

New employees

CTO sector

>> Ethical management education records (2011)

Item

Internal

Total

External

No. of reports submitted and disciplinary actions

4/4

5/5

1/1

>> No. of reports submitted and disciplinary actions (2011)


Cyber Information System

Ericsson-LG is invigorating the whistleblowing system by promptly and fairly

taking care of information reported with regard to unethical behaviors of

employees such as unfair demand using position, dishonesty, and corruption

of employees and by guaranteeing that all stakeholders -- such as customers,

employees, suppliers, and local communities -- reporting such a problem

shall not be placed at a disadvantage.


Overseas

Memberships and Awards

NGMC Korea Invention Promotion Association

KANI KINPA

KINCOA Future Network 2000 Forum

Forum: Leaders in Korean IT Femtocell (FMC) Forum

TTA Korea Society of Information and Telecommunications Facilities

Spectrum Engineering Forum Korea Information and Communication Contractors Association

Korea Information and Communication Society

Korea Electrical Contractors Association

MSS Forum Korea Engineering and Consulting Association

3GPP

Small Cell Forum

ITU-T SG15

Full Service Access Network (FSAN)

Metro Ethernet Forum (MEF Forum)

Date Award Name

Jul. 25, 2007 Grand prize in third 2007 CEO Awards of Korea

Nov. 14, 2007 Grand prize in third Korean Internet Awards – Minister of Information and Communication

Nov. 19, 2007 8th Radio Broadcasting New Technology Award – Prime Minister

Jan. 29, 2008 Commendation from the Mayor of Seoul Metropolitan City

Dec. 16, 2008 German IF Product Design Award 2009 – International Design Award

Dec. 23, 2008 2008 Hi-Tech Award – Grand Prize in the Field of Information and Telecommunications Facilities

Jun. 17, 2009 2009 Vietnam Labor Order

Jul. 14, 2011 2011 Frost & Sullivan Korea Excellence Awards

Memberships status

List of awards received

Domestic

GRI INDEX

GRI INDEX

No. Index Content Page Related Content

Strategy and Analysis

Organization Outline

2.1 Name of the organization 5 About the company

2.2 Primary brands, products, and/or services 6 About the company

2.3 Operational structure of the organization 5 About the company

2.4 Location of organization’s headquarters 5, 7 About the company

2.5 Number and names of countries where the organization operates 7 About the company

2.6 Nature of ownership and legal form 10 Corporate governance

2.7 Markets served 8 About the company

2.8 Scale of the reporting organization 5 About the company

2.9 Significant changes during the reporting period 10 Corporate governance

2.10 Awards received in the reporting period 36 Status of Organization Memberships and List of Awards Received

Report Parameters

3.1 Reporting period for information provided 9 Outline of the report

3.2 Date of most recent previous report 9 Outline of the report

3.3 Reporting cycle 9 Outline of the report

3.4 Contact point for questions regarding the report or its content 9 Outline of the report

3.5 Process for defining report content 9 Outline of the report

3.6 Boundary of the report 9 Outline of the report

3.7 State any specific limitations on the scope or boundary of the report 9 Outline of the report

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities

- Joint venture agreement to be followedand BOD regulation

3.9 Data measurement techniques and the bases of calculations - Measurement by sustainability management performance index

3.10 Explanation of any re-statements of information provided in earlier reports

- Published for the first time

3.11 Significant changes from previous reporting periods - Published for the first time

3.12 Table identifying the location of the Standard Disclosures in the report

37~39 GRI Index

3.13 Policy and current practice with regard to seeking external assurance - No external verification

1.1 Statement from the most senior decision-maker of the 2 CEO message organization about the relevance of sustainability to the organization

1.2 Description of key impacts, risks, and opportunities 2, 4, 12 Stakeholder


GRI INDEX

No. Index Content Page Related Content


4.7 Process for determining the qualifications and expertise of the members of the highest governance body

4.10 Processes for evaluating the highest governance body’s own performance

4.11 Explanation of whether and how precautionary approach or principle is addressed

4.15 Basis for identification and selection of stakeholders with whom to engage

4.16 Approaches to stakeholder engagement, including frequency of engagement

4.17 Key concerns that have been raised through stakeholder engagement

4.12 Externally developed charters to which the organization subscribes

4.14 List of stakeholder groups engaged by the organization

4.13 Memberships in associations

4.9 Procedures of the highest governance body for overseeing the management of economic, environmental, and social performance

4.8 Internally developed statements of mission and principles

- Shareholding company BOD operation process

10 Corporate governance

15, 27 ISO 14001, OHSAS 18001

11 ~ 12 Stakeholders



36 Status of Organization Memberships and List of Awards Received


36 Status of Organization Memberships and List of Awards Received

4 Sustainability management system

13, 21, 26, 34 Shareholding company BOD operation process

4.1 Governance structure of the organization 10 Corporate governance

4.2 Whether the Chair of the highest governance body is also an executive officer

10

4 Sustainability management system



4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highes governance body

4.5 Linkage between compensation for members of the upper management and the organization’s performance

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided

4.3 State the number of members of the highest governance body - No external director

Corporate governance

Corporate Governance, Responsibility, Participation

GRI INDEX

No. Index Content

Page Remarks

Application Level

● Reported ◐ Partly reported ○ Not reported N/A Not applicable


Economy

EC1

EC2

EC3

EC4

EC5

EC6

EC7

EC8

EC9

EN1

EN2

EN3

EN4

EN5

EN6

EN7

EN8

EN9

EN10

EN11

EN12

EN13

EN14

EN15

EN16

EN17

Financial statements are disclosed on the company website.

National pension and retirement pension are being executed.

Not applicable

Higher than the legal minimum

Status of materials is managed.

Recycled plastic is used.

Greenhouse gas emission is being measured.

Water consumption is being measured.

Located inside the R&D complex


Not applicable

Not applicable

Not applicable

Not applicable

Not applicable



○

●

●

○

○

◐

◐

◐

◐

○

○

●

○

◐

●

●

○

○

○

N/A

N/A

N/A

N/A

N/A

◐

◐

-

33

25

-

-

20

24

16 ~ 19

12, 24

-

-

29

-

30

33

30, 33

-

-

-

-

-

-

-

-

29

29

Direct economic value generated and distributed

Financial implications for the organization’s activities due to climate change

Coverage of the organization’s defined benefit plan obligations

Signif icant f inancial assistance received from government

Range of ratios of standard entry level wage compared to local minimum wage

Policy, practices, and proportion of spending on locally-based suppliers

Procedures for local hiring and proportion of local senior management

Development and impact of infrastructure investments and services provided

Understanding and describing significant indirect economic impacts

Materials used by weight or volume

Percentage of materials used that are recycled input materials

Direct energy consumption by primary energy source

Indirect energy consumption by primary energy source

Energy saved due to conservation and efficiency improvements

Reductions in energy requirement as a result of energy efficient or renewable energy initiatives

Initiatives to reduce indirect energy consumption and reductions achieved

Total water withdrawal by source

Water sources significantly affected by withdrawal of water

Percentage and total volume of water recycled and reused

Location and size of areas of high biodiversity value

Description of significant impacts of activities on biodiversity

Habitats protected or restored

Strategies, current actions, and future plans for managing impacts on biodiversity

Number of IUCN Red List species and national conservation list species

Total direct and indirect greenhouse gas emissions by weight

Other relevant indirect greenhouse gas emissions by weight

Environment

GRI INDEX

No. Index Content

Page Remarks

Application Level



EN18

EN19

EN20

EN21

EN22

EN23

EN24

EN25

EN26

EN27

EN28

EN29

EN30

Not applicable




No outflow accident occurred.

Not applicable

Not applicable

-

No violation case

-

●

○

○

○

○

○

N/A

N/A

●

○

○

●

○

30, 33

-

-

-

-

-

-

-

30, 33

-

-

28 ~ 29

-

Initiatives to reduce greenhouse gas emissions and reductions achieved

Emissions of ozone-depleting substances by weight

NOx, SOx, and other significant air emissions by type and weight

Total water discharge by quality and destination

Total weight of waste by type and disposal method

Total number and volume of significant spills

Weight of exported, imported, transported, or treated hazardous waste under the terms of Basel Convention

Identity, size, protected status, and biodiversity value of water bodies and related habitats

Initiatives to mitigate environmental impacts of products and services

Percentage of products sold and their packaging materials

Monetary value of significant fines for noncompliance with environmental regulations

Significant environmental impacts of transporting products and other goods

Total environmental protection expenditures and investments


GRI INDEX

No. Index Content

Page Remarks

Application Level


Labor

LA1

LA2

LA3

LA4

LA5

LA6

LA7

LA8

LA9

LA10

LA11

LA12

LA13

LA14

HR1

HR2

HR3

HR4

HR5

HR6

HR7

HR8

HR9

There is no union. Union-management meeting is operated.



No accident

Medical expenses for employees are paid.

Occupational Health and Safety Committee is operated.

Reflected on the contract

S-CoC is applied.

No employee under 18

Being general/office employees, no compulsory labor

Located within the R&D complex

●

◐

●

N/A

N/A

○

●

○

◐

●

●

◐

●

○

N/A

○

●

●

●

N/A

N/A

○

N/A

24

24

14, 25

22

22

22

15

14

15

15

15

24

10, 24

24

-

-

14

35

21 ~ 22

-

-

-

-

Total workforce by employment type, employment contract, and region

Total number and rate of employee turnover by age group, gender, and region

Benefits provided to full-time employees

Percentage of employees covered by collective bargaining agreements

Minimum notice period(s) regarding operational changes

Percentage of total workforce represented in formal joint management-worker health and safety committees

Rates of injury, occupational diseases, lost days, absenteeism, and fatalities

Programs to assist workforce members, their families, or community members regarding serious diseases

Health and safety topics covered in formal agreements with trade unions

Average hours of training per year per employee

Programs for skills management and lifelong learning

Percentage of employees receiving regular performance and career development reviews

Composition of governance bodies and breakdown of employees per category

Ratio of basic salary of men to women by employee category

Percentage and total number of significant investment agreements that include human rights clauses

Percentage of significant suppliers that have undergone screening on human rights and actions taken

Total hours of employee training on policies/procedures concerning aspects of human rights

Total number of incidents of discrimination and actions taken

Operations identified in which the right to exercise freedom of association and collective bargaining

Operations identified as having risk for incidents of child labor and measures taken

Operations identified as having risk for incidents of forced or compulsory labor and measures taken

Percentage of security personnel trained in the organization’s policies or procedures

Percentage of security personnel trained in the organization’s policies or procedures

Human Rights


GRI INDEX

No. Index Content

Page Remarks

Application Level


Society

SO1

SO2

SO3

SO4

SO5

SO6

SO7

SO8

PR1

PR2

PR3

PR4

PR5

PR6

PR7

PR8

PR9

Ethical management

Ethical management

Ethical management

Participating in activities of domestic/overseas associations/ organizations

Provision of political fund by companies is prohibited by the Political Fund Law.

No violation

No violation

No violation

Development of environmentally friendly products

No violation

Supplementation of customer satisfaction investigation activity

Operating the customer participation program

No violation

Customer personal information protection

No violation

◐

○

●

◐

○

N/A

N/A

N/A

◐

N/A

○

N/A

○

○

N/A

N/A

N/A

16 ~ 19

-

35

35

-

-

-

-

30

-

30 ~ 33

-

-

-

-

20

-

Effectiveness of any programs/practices that asses and manage the impacts of operations

Total number of business units analyzed for risks related to corruption

Percentage of employees trained in organization’s anti-corruption policies

Actions taken in response to incidents of corruption

Public policy positions and participation in public policy development and lobbying

Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

Total number of legal actions for anticompetitive behavior, antitrust, and monopoly practice and their outcomes

Monetary value of significant fines for noncompliance with regulations

Life cycle stages in which health and safety impacts of products and services are assessed for improvement

Total number of non-compliance incidents with regulations concerning health and safety

Type of product and service information required by procedures

Total number of non-compliance incidents with regulat ions concerning products and services information & Labeling

Practices related to customer satisfaction including survey results on satisfaction

Programs for adherence to standards and voluntary codes related to marketing communications

Total number of non-compliance incidents with regulations concerning marketing communications

Total number of substantiated complaints regarding customer privacy and data losses

Monetary value of significant fines for non-compliance with laws concerning the provision and use of products and services

Product Liability


Published By

Ericsson-LG Co., Ltd.

Corporate Social Responsibility Team

LG R&D Center, 533 Hogye 1-dong, Dongan-gu

Anyang-si, Gyeonggi-do, 431-749, Korea

Tel +82 31 8054 5775

[email protected]

www.ericssonlg.com

ericsson-lg un global compact communication on progress 2011

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