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LG Chem issues South Korea’s biggest-ever ESG bond

LG Chem’s record-breaking ESG bond worth US$744 million will be used to fund the firm’s growth drivers including renewable energy and vaccine development

|Feb 16|magazine7 min read

South Korea’s LG Chem has raised US$744.1 million through sales of environment, social and governance (ESG) bonds, making it the largest-ever ESG bond issued in the country. IT will be used to fund new and sustainable growth drivers, including renewable energy, battery materials and new drug development. 

According to one of South Korea's leading corporations, it issued bonds totalling US$1.1 billion, including the US$744.1 million in ESG bonds and a further US$344 million won in corporate bonds, breaking previous records for bond issuance in the country.

With this, LG Chem breaks Hyundai Steel’s record for the largest ESG Bond, issued in January and worth US$454 million.

LG Chem's sustainable reinvention journey 

The chemicals company, which has vowed to achieve zero carbon emissions by 2050, has earmarked its record-breaking ESG bond funds to help the company transition to renewable energy sources and reduce carbon emissions, establishment of manufacturing processes using eco-friendly raw materials, production expansion of electric vehicle battery materials, and expansion of facilities for polio vaccine quality control. 

LG Chem has made sustainability its highest priority and is accelerating its ESG management by developing new business models that provide innovative and sustainable solutions to the environment and society, from biodeiesel-based eco-friendly resins to supply of next-generation polio vaccines. 

“LG Chem was able to sell the ESG bonds successfully thanks to the investors’ optimistic expectations of the company’s petrochemicals, advanced materials and life sciences divisions even after the split-off of its battery division, LG Chem’s CFO Dongseok Cha said in a s tatement. 

“LG Chem will establish and implement specific measures to accelerate ESG management in all business sectors, and further solidify the company’s position as the leader in the field of sustainability.”

With LG Chem’s battery businesses booming (shares in LG Chem jumped 162.4% last year as investors bet on its battery businesses to join the booming electric market), industry officials say LG Chem’s biopharmaceutical division could be main beneficiary for the new investments.

Focus will be on its Life Sciences Division

Last year, LG Chem stated it would invest 200 billion won in its Life Sciences Division in 2021 and in January, the company announced that its Sabin-Inactivated Polio Vaccine had received WHO prequalification enabling it to be supplied globally. 

As a result of beginning to supply its Eupolio vaccine to UNICEF this year, as well as expanding sales of Yvoire filler products, the company expects 10% growth in sales in its life sciences division. 

"We can't say that the company will concentrate on the biopharmaceutical business by abandoning other businesses, but it is true that the company is aware of the need to scale up the biopharmaceutical business," an LG Chem official said.

During the J.P. Morgan Health Care Conference in January 2021, Son Jee-woong, head of LG Chem’s life science business, said the company has secured more than 40 novel drug candidates in its pipeline following the merger of LG Chem and LG Life Sciences. 

LG Chem's sustainable vision
The February issue of Business Chief APAC