Lotte Corp

###### ESG Governance

Sustainability Council

LOTTE E&C operates a Sustainability Council under the CEO's leadership to enhance the understanding of sustainable management among all employees and systematically promote it. The Sustainability Council is the highest decision-making body for matters related to economic, environmental, and social aspects of sustainable management, composed of the CEO and the Chairs of each Subcommittee. Currently, there are 7 subcommittees in total: Ethics Management, Safety and Environmental Management, Customer Satisfaction Management, Shared Growth, Social Contribution, Human Resources, and Compliance Management. These subcommittees report on a semi-annual basis, and major issues are reported on a quarterly basis in principle. According to the regulations of the Sustainability Council, a meeting can be convened with the presence of the Chairperson and a majority of the members, and with the attendance of a majority of the Secretaries. In case there is no agenda to discuss, a meeting can be skipped. Furthermore, each department consistently shares activity results and improvements with their respective subcommittees regarding significant company issues. The Chairs of the Subcommittees must report the selected matters to the Committee through the Secretariat. Meeting minutes are openly disclosed within the company, and specific content can be disclosed to external stakeholders.

###### Sustainability Secretariat

Sustainability Secretariat, an operational organization to execute sustainable management under the Sustainability Council, is in charge of adjusting and implementing mid-to-long term strategies and specific targets for each subcommittee.

To enhance the ESG management system and strengthen its capabilities, LOTTE Shopping established the ESG Committee in 2021. We operate an ESG Working Group composed of ESG teams from each Business Division, centered around the LOTTE Retail HQ. Based on our ESG governance framework, we proactively identify and manage risks related to ESG, while developing and reviewing mid- to long-term strategies to continuously advance our ESG management practices. [...] The ESG Committee, established to promote systematic ESG management, is the highest consultative body for ESG management at LOTTE Shopping. It comprises three directors (one executive director and two independent directors). The committee is responsible for establishing mid- to long-term ESG management plans, reviewing the implementation status of each Business Division, and overseeing the management and response activities for key non-financial risks, including carbon neutrality, resource circulation, respect for human rights, supply chain ESG management, and health and safety. In addition, the committee plays a role in preemptively reviewing risks when pursuing new business initiatives. Matters deliberated on and resolved by the ESG Committee, along with risks that may impact business operations in the long term, are reported to the Board of Directors, the company's highest decision-making body. [...] To set the direction and strengthen the continuity of company-wide ESG management, LOTTE Shopping operates a working group consisting of dedicated ESG teams from each Business Division. The ESG Working Group, centered around the Compliance Office at the LOTTE Retail HQ, is composed of practitioners from the dedicated ESG management teams of each Business Division. The group reviews the implementation status of ESG activities in each division to ensure alignment with the strategic direction and convenes immediately to discuss emerging issues. Major matters such as activity outcomes, future plans, and potential risks are reported to the ESG Committee.

Lotte Global Logistics established the ESG Management System in 2021 to respond to the enhanced ESG management requirements and established an ESG Committee within the Board of Directors after enacting the ESG Committee Regulation. The ESG Committee is responsible for establishing the company's ESG strategy and policies, and for reviewing and advising on ESG initiatives. [...] The ESG Committee makes decisions on establishing ESG strategies and policies, monitors the progress of major ESG implementation tasks, and discusses other ESG management matters delegated by the Board of Directors. To ensure independence and diversity, the ESG Committee comprises one inside director and three outside directors.

###### Sound Governance

Board of Directors Composition

LOTTE P&D's Board of Directors consists of three inside directors and one independent director with the goal of achieving efficient checks and balances and transparent decision-making. The independent director is a figure verified in terms of interests and qualifications as determined by relevant laws and company regulations. In the same way, the CEO concurrently serves as the Chair of the Board for swift decision-making and board members are appointed by approval of the general meeting of shareholders.

###### Board of Directors Operations

Basically LOTTE P&D holds a monthly regular board meeting and irregular board meetings as needed. In the last 3 years, an average 12 board meetings were held yearly to deliberate and vote on items concerning the general meeting of shareholders, items on transactions with specially-related persons and key pending issues on management/finance.

In addition, varied programs, such as item briefings, tours of domestic and international business sites and management status briefings by industry, are conducted so that independent directors can fully understand LOTTE P&D's business environment and sales status.

###### Committees within the Board

As committees within the board, LOTTE P&D operates a transparent management committee for deliberating internal transactions and improving transparency between subsidiaries as well as a compensation committee for deliberating executive compensation and strengthening management transparency. Members of the committees consist of three members-an independent director, an inside director and a non-executive director. To guarantee the transparency and independence of the committees within the board, the independent director concurrently serves as the committee chair.

In 2023, LOTTE ENERGY MATERIALS instituted the ESG Committee and appointed an ESG oversight department to proactively address the sustainability and ESG imperatives, as well as international standards mandated by the secondary battery industry. The ESG Committee is responsible for making critical decisions, functioning as the principal management and supervisory entity concerning customer demands and ESG management-related matters. The ESG oversight department, on the other hand, oversees the management and monitoring of the ESG requirements across the company. LOTTE ENERGY MATERIALS is poised to establish a specialized ESG organization and augment professional expertise in the domains of sustainability and ESG. [...] The ESG Committee of LOTTE ENERGY MATERIALS, constituted under the Board of Directors, acts as the pivotal management and oversight body dedicated to sustainability and ESG matters. It is tasked with making decisions on critical issues such as climate response, human rights, and supply chain management, based on proposals from the ESG oversight department. Comprising one inside director and two outside directors, the committee convenes quarterly, and the chairperson, elected from among the members in accordance with regulatory stipulations, is responsible for executing committee resolutions and reporting on deliberations. [...] The ESG oversight department takes charge of the execution of strategies and plans related to sustainability and ESG, addressing both internal and external requirements. This department works in close collaboration with relevant departments to implement comprehensive ESG management tasks and improve performance.