LG Group is incorporating environmental, social and governance (ESG) matters into subsidiary management by increasing their dividend policy predictability, as reported by the Korea Economic Daily on February 14. Subsidiaries of the South Korean conglomerate, including LG Electronics [066570:KS], LG Display [034220:KS], LG Innotek [011070:KS], and LG HelloVision [037560:KS] recently announced consistent dividend policies for the next few years.

LG Electronics and LG Display have committed to spending more than 20% of their consolidated net profit on yearly dividend payments in the coming years, while LG Innotek has committed to spending 10% more of its net profit. LG Group’s two units, LG Chem [051910:KS] and LG Uplus [032640:KS], both established medium-term dividend plans earlier in 2020. In addition, LG Uplus repurchased KRW100bn (USD83.56m) in stock in 2021 to boost shareholder value. When it comes to ESG rankings, rating agencies like MSCI place a priority on companies’ dividend payments and fulfillment. A growing number of corporations are announcing stable dividend policies to improve their ESG rankings. Fidelity Investments also confirmed the link between a company’s long-term sustainability and its dividend growth, with ESG leaders appearing to be better positioned to deliver attractive dividend growth over time than ESG laggards.

Sources:

https://www.kedglobal.com/newsView/ked202202140001

https://opinion.caixin.com/2021-09-15/101773424.html