South Korea-based LG Innotek, an affiliate of LG Group, has secured $200 million funding from the International Finance Corporation (IFC) to expand its production facility in Vietnam.

LG Innotek said in a statement on Tuesday that it applied for the IFC’s Sustainability-Linked Loan (SLL) last year to invest in the expansion of its production facility in Hai Phong, Vietnam, becoming the first Korean company to secure the loan. The loan has a maturity of eight years.

“This IFC funding is a meaningful financial outcome of the company’s authentic ESG management activities,

“Going forward, we will continue to lead in environmental, social, and governance (ESG) management while delivering exceptional value to our customers,” LG Innotek Chief Financial Officer and Executive Vice President Jihwan Park said.

LG Innotek also highlighted that the funding is in recognition of its outstanding performance in ESG management.

“LG Innotek’s satisfying the rigorous standards of a reputable international organization to successfully secure SLL funding once again demonstrates its unrivaled ESG management capacity worldwide,” an LG Innotek official.

In 2022, the company set the ambitious goals of converting 100 percent of its electricity use to renewable energy (RE100, Renewable Electricity 100) by 2030 and achieving carbon neutrality by 2040.

It has since established a comprehensive roadmap to achieve the first goal, and as of 2024, 60 percent of its electricity use is renewable.

This is the highest conversion rate among Korean companies that have joined RE100, with the exception of the Korea Water Resources Corporation, which engages in a renewable energy business.

Notably, its plants in Paju and Gumi in South Korea, along with its facilities in Vietnam, achieved RE100 status last year.

“We are delighted to sign the first SLL with LG Innotek. We look forward to continuing our work with LG Innotek to promote sustainability,” said Carsten Müeller, the IFC’s Regional Industry Director for Manufacturing, Agribusiness, and Services in Asia and the Pacific.

Introduced in 2017, the SLL is an international financial mechanism designed to promote ESG management among global companies.

Companies with higher ESG performance and compliance metrics benefit from greater interest rate reductions.

Most importantly, unlike the Green Loan, which requires the funds to be applied only to ESG-specific projects, the SLL can be used for various purposes.

This is the reason for the rigorous approval process and strictly regulated loan execution management and supervision.

Throughout the term of the loan, the company must meet ESG management targets agreed upon in advance with the bank to continue to benefit from the low interest rate.

#LGInnotek #Sustainability #ESG #RenewableEnergy #CarbonNeutral